Question

Q. “This is a situation when people are unemployed for a short span of time while searching for a new job or switching between jobs. It is sometimes considered as voluntary unemployment because the reason for unemployment is not a shortage of jobs, but in fact, the workers themselves quit their jobs in search of better opportunities.”

What type of unemployment does the above paragraph refer to?

• A. Structural Unemployment
• B. Frictional Unemployment
• C. Cyclical Unemployment
• D. Seasonal Unemployment

Answer 1

The correct option is B Frictional Unemployment

Explanation:

• Frictional unemployment is an outcome of voluntary employment transitions within an economy. This type of unemployment refers to a transition period of looking for a new job, for different reasons, such as seeking a better job, being fired from a current job, or having voluntarily quit a current job.
• Frictional unemployment occurs even within an economy growing at maximum potential output. It is considered as a part of natural unemployment which is the minimum unemployment rate due to forces of the market and movement of labour.