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) After graduation you take a job in financial services, but the long hours don't appeal to you so you quit to find a job elsewhere. iv) Juan's fishing business can't cover its costs, so it closes. Juan is now looking for a new job.

Answer 1

Answer:

The correct answer is option iii and option iv.

Explanation:

Frictional unemployment refers to the situation where unemployment is caused because of the shift from one job to the other.  

In the first option, the unemployment is being caused because of recession. This is an example of cyclical unemployment.  

In the second option, the unemployment caused by relocation is an example of structural unemployment.  

In the third and fourth options, the individuals are looking for a job of quitting another. This is an example of frictional unemployment.