The unemployment resulting when real wages are held above equilibrium is called ______ unemployment, while the unemployment that occurs as workers search for a job that best suits their skills is called ______ unemployment.
A) efficiency; inefficiency
B) efficiency; structural
C) frictional; efficiency
D) structural; frictional

Question

Quizplus · Accepted Answer

The first type of unemployment described where real wages are held above equilibrium is known as structural unemployment. This occurs when the labor market is unable to match workers with available job opportunities due to issues such as lack of necessary skills, location, or job requirements. The second type of unemployment described where workers search for a job that best suits their skills is called frictional unemployment. This type of unemployment occurs because of the time taken by workers to search and transition from one job to another.

The Unemployment Resulting When Real Wages Are Held Above Equilibrium