Regarding the Categories of Unemployment, Which of the Following Best

question 43

Multiple Choice

Regarding the categories of unemployment, which of the following best describes how the effect of sectoral changes compares to the effect of firms paying higher-than-equilibrium wages?

• A)Sectoral changes create frictional unemployment, while firms paying wages above equilibrium create structural unemployment.
• B)Sectoral changes create structural unemployment, while firms paying wages above equilibrium create frictional unemployment.
• C)Sectoral changes and firms paying wages above equilibrium both create structural unemployment.
• D)Sectoral changes and firms paying wages above equilibrium both create frictional unemployment.

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Definitions:

Great Recession

A global economic downturn that began in 2007 with the collapse of the housing bubble in the US, leading to widespread financial and economic crises.

Monetary Policy

Actions taken by a central bank to control the money supply and interest rates to achieve macroeconomic goals such as controlling inflation, consumption, growth, and liquidity.

Government Stimulus Package

A package of economic measures by a government aimed at stimulating a struggling economy by boosting spending and investment through various means such as tax cuts, spending increases, or lowering interest rates.

Depository Institutions Deregulation

The reduction or elimination of government regulations on banks and similar institutions to foster a more efficient and competitive financial environment.