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Chapter 8: Q.20 (page 214)

Why is there unemployment in a labor market with flexible wages?

Short Answer

Expert verified

Because of frictional and structural unemployment.

Step by step solution

Step.1 Introduction

Unemployment can be defined as the situation when a person who is able to work and is work, is also actively looking for jobs but is not able to find one. The percentage of working population that cannot find work is known as unemployment rate.

Step.2 Explanation

When wages are flexible yet there is some unemployment remains in the economy because of the existence of frictional and structural unemployment. Frictional and structural unemployment are inevitable and unavoidable forces.

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Most popular questions from this chapter

Whose unemployment rates are commonly higher in the U.S. economy: a. Whites or nonwhites? b. The young or the middle-aged? c. College graduates or high school graduates?

After several years of economic growth, would you expect the unemployment in an economy to be mainly cyclical or mainly due to the natural rate of unemployment? Why?

If you are out of school but working part time, are you considered employed or unemployed in U.S. labor statistics? If you are a full time student and working 12 hours a week at the college cafeteria are you considered employed or not in the labor force? If you are a senior citizen who is collecting social security and a pension and working as a greeter at Wal-Mart are you considered employed or not in the labor force?

A country with a population of eight million adults

has five million employed, 500,000 unemployed, and the rest of the adult population is out of the labor force. What’s the unemployment rate? What share of population is in the labor force? Sketch a pie chart that divides the adult population into these three groups.

Are U.S. unemployment rates distributed evenly across the population?

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