One of the key macroeconomic problems that governments and policymakers work to solve is unemployment. Increasing unemployment has a number of detrimental social and economic effects on society.
Frictional unemployment is defined as unemployment brought on by job searching and the matching of workers and positions. Sectoral changes in output demand result in higher unemployment because of job searching. For instance, a drop in oil prices causes Texas oil businesses to lay off employees.
At the same time, sales of trucks and SUVs rise as a result of falling oil prices. As a result, some people will lose their jobs in some areas due to changes in demand, while the need for labor increases in other sectors.
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