Home › CA Foundation › Business Economics › Business Cycles › During the expansion phase, the type of unemploy…
During the expansion phase, the type of unemployment that may still remain when resources are nearly fully employed is best described as:
AFrictional or structural unemployment
BHeavy cyclical involuntary unemployment
CPermanent mass unemployment
DDisguised agricultural unemployment
Answer & Solution
Correct answer: A. Frictional or structural unemployment
1. In expansion, the chapter says involuntary unemployment is almost zero.
2. Whatever unemployment remains is either frictional (job changes, strikes, imperfect labour mobility) or structural (from structural changes in the economy).
3. So the correct choice names frictional or structural unemployment.
4. Heavy involuntary cyclical unemployment is ruled out: it belongs to contraction/depression, not expansion.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 5 "Business Cycles", p.2_
Related questions
Which of the following did monetarist economists blame for the Great Depression of the 193Businesses whose fortunes are closely tied to the rate of economic growth, such as house-bAnti-inflationary macroeconomic measures such as cutting government spending and raising tHow does the chapter say population growth running faster than economic growth tends to afWhich of the following is classified in the chapter as an EXTERNAL (exogenous) cause of buPigou explained business fluctuations chiefly in terms of:The innovation theory, which holds that trade cycles arise from innovations introduced intThe view that the trade cycle is a purely monetary phenomenon driven by unplanned changes