Chapter 3R, Problem 18MCQ

To determine

The type of unemployment where a worker is unemployed due to fluctuations.

Explanation of Solution

An individual is considered unemployed who is not working, but actively looking for a job.

Types of unemployment are:

• Structural unemployment,
• Frictional unemployment,
• Cyclical unemployment,
• Seasonal unemployment, and
• Disguised unemployment.

Fluctuations in the business cycle generate cyclical unemployment in the market. Cyclical unemployment increases during the recession and falls during economic expansions or booms.

So, unemployment due to the fluctuations in the business cycle is termed cyclical unemployment.

Thus, option “c” is correct.

The other options are incorrect because:

• Structural unemployment occurs when there is a mismatch of skills required for a job and people have.
• Unemployment that occurs due to fluctuations in the business cycle (recession or boom period) is considered cyclical unemployment.<
• Disguised unemployment is a hidden unemployment in the economy. The marginal productivity of disguisedly unemployed people is usually zero or very low.
• Underemployment is a situation when workers are more qualified than the jobs available in the market.

Economics Concept Introduction

An individual is considered unemployed who is not working, but actively looking for a job.

Types of unemployment are:

• Structural unemployment,
• Frictional unemployment,
• Cyclical unemployment,
• Seasonal unemployment, and
• Disguised unemployment.