Why is frictional unemployment considered to be productive?
A) Search activities of workers and firms resulting in frictional unemployment improve the allocation of resources.
B) Firms do not hire a worker until they find the most educated worker.
C) There are more potential workers seeking jobs than there are jobs for workers when there is frictional unemployment.
D) The demand for highly skilled workers exceeds the supply of highly skilled workers when there is frictional unemployment.
E) Frictional unemployment leads to a decrease in the unemployment rate.

Question

Quizplus · Accepted Answer

Frictional unemployment is considered productive because it involves the search process of workers and firms trying to find a good match. This search process, although it temporarily results in unemployment, ultimately leads to a better allocation of resources in the economy as workers find jobs that better match their skills and preferences, and firms find employees who are a better fit for their needs.

Why Is Frictional Unemployment Considered to Be Productive