Frictional unemployment arises from normal labor market activities, such as people transitioning between jobs, entering or re-entering the workforce, or temporarily being unemployed after completing education. This type of unemployment is always present, even in a healthy economy, and reflects short-term gaps in employment rather than structural or economic downturns.
* Natural unemployment (Option A):Refers to the combination of frictional and structural unemployment present in an efficient economy.
* Structural unemployment (Option B):Caused by mismatches between skills workers possess and those needed by employers, often due to technological advances.
* Cyclical unemployment (Option C):Linked to economic recessions or downturns where demand for labor decreases.