Which of the following is a characteristic of the 'Search Theory' of unemployment?
A. Markets always clear instantaneously
B. Unemployment is only classical and caused by high real wages
C. Unemployment arises from the time-consuming process of matching workers and jobs
D. Only aggregate demand determines unemployment
Answer: Option C
Solution (By JKSSB Mock Tests)
Search-and-matching theory explains frictional and structural unemployment as the result of imperfect information and the costly process of matching heterogeneous workers with heterogeneous jobs.
No comments yet. Be the first to start the discussion!