Final answer:
Downsizing refers to the process of reducing a company's workforce, contributing to frictional unemployment as employees transition between jobs in the economy.
Step-by-step explanation:
Downsizing is the situation in which employees are terminated or empty positions are left unfilled once someone leaves an organization. Companies may reduce their workforce for various reasons, including economic downturns, technological changes leading to increased efficiency, or shifts in consumer preferences.
These actions may contribute to a form of unemployment known as frictional unemployment, which occurs even in healthy economies as employees transition between jobs. While downsizing can lead to immediate job loss, frictional unemployment includes the period of job search until new employment is found. This is a natural and inevitable aspect of a dynamic economy where workers and employers seek optimal job matches.