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Question : The concept of "residual unemployment" refers to:

Option 1: Unemployment caused by changes in the business cycle

Option 2: Unemployment that remains even at the peak of economic growth

Option 3: Unemployment caused by the lack of job opportunities in rural areas

Option 4: Unemployment caused by the introduction of labor-saving technologies


Team Careers360 2nd Jan, 2024
Answer (1)
Team Careers360 19th Jan, 2024

Correct Answer: Unemployment that remains even at the peak of economic growth


Solution : The correct answer is (b) Unemployment that remains even at the peak of economic growth.

Residual unemployment refers to the level of unemployment that persists in an economy even when it is experiencing overall economic growth and low levels of cyclical unemployment. It represents the portion of unemployment that is not directly related to fluctuations in the business cycle. This type of unemployment is often attributed to structural factors such as skills mismatch, changes in technology, labor market rigidities, or other barriers that prevent the efficient matching of workers with available job opportunities. Residual unemployment is considered more long-term and persistent compared to cyclical unemployment, which fluctuates with the economic cycle.

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