Frictional Unemployment

question 114

Multiple Choice

Frictional unemployment:

• A)is unemployment that results from a mismatch between the skills workers can offer and the skills that are in demand.
• B)is unemployment caused by workers who are changing their location,job,or career.
• C)is the effect of wages remaining persistently above the market-clearing level.
• D)is the most alarming cause of unemployment.

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Definitions:

Profit

The financial gain realized when the revenue generated from a business activity exceeds the expenses, costs, and taxes associated with the activity.

Covered Interest Arbitrage

A strategy that involves converting currency through the spot exchange market, investing in foreign interest bearing securities, and hedging exchange risk through the forward market to earn riskless profit.

Forward Rate

The predicted interest rate for a loan or investment for a specific period in the future, differing from current rates.

Nominal Risk-Free Rate

The rate of return on an investment with no risk of financial loss, not taking into account inflation.