Structural unemployment from sectoral shifts

Steps:

• Define structural unemployment as joblessness from skill or location mismatches due to economic changes.
• Evaluate options: A and B relate to cyclical unemployment from growth fluctuations.
• Assess C: Sectoral shift from primary (e.g., agriculture) to secondary (e.g., manufacturing) demands new skills, causing temporary mismatches.
• Assess D: Flexible markets improve job matching, reducing unemployment.

Why C is correct:

• Structural unemployment increases when economies shift sectors, as workers' skills become obsolete, per economic transition theory.

Why the others are wrong:

• A: Negative growth causes cyclical unemployment from reduced demand, not structural mismatches.
• B: Positive growth boosts demand, lowering overall unemployment.
• D: Flexible labor markets enhance worker mobility, decreasing structural frictions.

Final answer: C