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Labour Marketeconomics-mcqs › labour-market
Published
1 Jun 2019
Last updated
28 May 2026

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Which form of unemployment arises when wages are maintained above the market-clearing equilibrium level?

Multiple choice question for Labour Market. Select an option, then review the explanation below.

Choose the correct answer

Explanation

Structural unemployment occurs when wages are kept higher than the competitive equilibrium wage, causing a mismatch between labor supply and demand. This differs from cyclical unemployment, which is tied to economic cycles, frictional unemployment, which stems from job searching, and sectoral unemployment, which relates to particular sectors.

Practice related questions from the same subject.

  1. 1.How do unions typically contribute to widening the wage gap between union members and non-union workers?
  2. 2.Under which circumstance can unions enhance efficiency?
  3. 3.Which of the following reasons explains why companies might choose to pay efficiency wages?
  4. 4.Which of the following government actions is least likely to decrease the unemployment rate?
  5. 5.What happens if the wage rate is set above the competitive equilibrium wage for any reason?

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