Which of the following statements is FALSE?
A)Both frictional and structural unemployment can occur even if unemployment is at its natural level.
B)Cyclical unemployment is unemployment in excess of the natural rate.
C)A new college graduate looking for that first professional job may be frictionally unemployed.
D)Efficiency wages may cause frictional unemployment.

Question

Quizplus · Accepted Answer

Efficiency wages are a type of wage that is deliberately set above the market equilibrium wage in order to motivate workers to be more efficient and productive. This can reduce turnover and increase worker loyalty. However, this policy may cause unemployment if the higher wage attracts more workers than the employer needs. This type of unemployment is not frictional but rather a type of unemployment caused by market inefficiencies.

Which of the Following Statements Is FALSE