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Question : Which among the following types of unemployment is also known as real wage unemployment?

Option 1: Classical

Option 2: Seasonal

Option 3: Structural

Option 4: Frictional


Team Careers360 23rd Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer: Classical


Solution : The correct option is Classical.

Classical unemployment, also known as real wage unemployment, occurs when wages are inflexible and set above the equilibrium level. In this situation, the supply of labour exceeds the demand, leading to unemployment. Classical economists argue that interference in free markets, such as minimum wage laws, contributes to this form of unemployment.

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