26. Consider the following statements about unemployment
1. Cyclical unemployment occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work.
2. Frictional unemployment occurs when people change from one job to another and remain unemployed during this interval period.
Which of the above statements is/are correct?
26. Consider the following statements about unemployment
1. Cyclical unemployment occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work.
2. Frictional unemployment occurs when people change from one job to another and remain unemployed during this interval period.
Which of the above statements is/are correct?
The correct option is C c) Both 1 and 2
Answer: C
Explanation: Cyclical unemployment is unemployment that results when the overall demand for goods and services in an economy cannot support full employment. It occurs during periods of slow economic growth or during periods of economic contraction. Frictional unemployment is always present in the economy, resulting from temporary transitions made by workers and employers or from workers and employers having inconsistent or incomplete information. For example, a first-time job seeker may lack the resources or efficiency for finding the company that has the job that is available and suitable for him and as a result does not take other work, temporarily holding out for the better-paying job. Another example of when frictional employment occurs is when a company abstains from hiring because it believes there are not enough qualified individuals available for the job, when in actuality there is.
c) Both 1 and 2
Answer: C
Explanation: Cyclical unemployment is unemployment that results when the overall demand for goods and services in an economy cannot support full employment. It occurs during periods of slow economic growth or during periods of economic contraction. Frictional unemployment is always present in the economy, resulting from temporary transitions made by workers and employers or from workers and employers having inconsistent or incomplete information. For example, a first-time job seeker may lack the resources or efficiency for finding the company that has the job that is available and suitable for him and as a result does not take other work, temporarily holding out for the better-paying job. Another example of when frictional employment occurs is when a company abstains from hiring because it believes there are not enough qualified individuals available for the job, when in actuality there is.
