Which of the following statements is true of unemployment?
A) Cyclical unemployment decreases during recessions and increases during expansions.
B) Some unemployment exists even when an economy is healthy and growing.
C) Unemployment and inflation are not related.
D) People who are willing and able to work but have given up the search for a job are considered unemployed.
E) Voluntary unemployment refers to a situation in which people who really do not want to work only pretend to look for jobs.

Question

Quizplus · Accepted Answer

Even in a healthy and growing economy, some level of unemployment is likely to persist. This is known as natural unemployment, which includes frictional unemployment (people in between jobs) and structural unemployment (mismatch between skills and job requirements). Cyclical unemployment, on the other hand, is directly related to the business cycle and tends to decrease during recessions and increase during expansions. Inflation and unemployment are typically negatively related, but not always. Lastly, voluntary unemployment refers to a situation in which individuals choose not to work, whereas involuntary unemployment occurs when individuals are willing and able to work but cannot find employment.

Which of the Following Statements Is True of Unemployment