Frictional unemployment is thought to explain relatively:

• A. short-term periods of unemployment as workers transition between jobs
• B. unemployment caused by cyclical downturns in the business cycle
• C. long-term unemployment due to structural changes in the economy
• D. unemployment resulting from government-imposed wage floors

Answer: (A)

Verified step by step guidance

1. Understand the concept of frictional unemployment: it refers to the short-term unemployment that occurs when workers are temporarily between jobs or are searching for new jobs that better match their skills or preferences.
2. Recognize that frictional unemployment is a natural part of a dynamic economy where workers move between jobs, industries, or locations, and it is not caused by economic downturns or structural changes.
3. Differentiate frictional unemployment from other types: cyclical unemployment arises from economic recessions, structural unemployment results from long-term changes in the economy affecting certain industries, and unemployment due to wage floors (like minimum wage laws) is a form of structural or institutional unemployment.
4. Conclude that frictional unemployment best explains short-term periods of unemployment as workers transition between jobs, rather than long-term or cyclical unemployment.
5. Therefore, the correct interpretation is that frictional unemployment accounts for short-term unemployment during job transitions.