Wages in excess of their equilibrium level help explain
A)frictional but not structural unemployment.
B)structural but not frictional unemployment.
C)both frictional and structural unemployment.
D)neither frictional nor structural unemployment.

Question

Quizplus · Accepted Answer

Wages in excess of their equilibrium level help explain both frictional and structural unemployment. Frictional unemployment is caused by the time it takes for workers to find new jobs after they have been laid off. Structural unemployment is caused by changes in the economy that make certain jobs obsolete. Wages that are too high can make it difficult for employers to hire new workers, which can lead to both frictional and structural unemployment.

Wages in Excess of Their Equilibrium Level Help Explain