Question

Which of the following represents frictional unemployment? i) The demand for refrigerators falls when the economy enters a recession, and refrigerator manufacturers lay off some of their workers. ii) General Motors decides to close its U.S. factories and relocate its car manufacturing division to Canada. iii) You tire of working as a waiter and quit. Now you are searching for work as an actor. iv) Juan's fishing business can't cover its costs, so it closes. Juan is now looking for a new job.

Answer 1

Answer: Option (iv) is correct.

Explanation:

Frictional unemployment is always present in an economy. Frictional unemployment occur because of the transitions in the employment of the individuals. It is included in the natural unemployment, because it shows the minimum level of unemployment in the economy.

When a person quit his first job and looking for a new job, this is known as frictional unemployment.

So, option(iv) is correct.