Unemployment, at the aggregate level
A)is avoidable.
B)is zero in a perfect world.
C)is consistent with a well-functioning economy.
D)is a sign of market failures.
E)can be prevented with sound government policy.

Question

Quizplus · Accepted Answer

Unemployment is a natural and necessary part of a market economy. It occurs as people enter and leave the workforce or as firms go through periods of expansion and contraction. In fact, a certain level of unemployment is necessary to ensure that resources are allocated efficiently and wages and prices can adjust to changing market conditions. While government policy can help alleviate unemployment during economic downturns, it cannot completely eliminate it. Therefore, option C is the best choice.

Unemployment, at the Aggregate Level