Deck 7: Unemployment

Question 1

In a healthy economy, the unemployment rate is

A) equal to zero.
B) increasing.
C) decreasing.
D) greater than zero.
E) less than zero.

Answer 1

greater than zero.

Question 2

Workers who lose their jobs because the skill set they possess is no longer required in the economy are considered to be

A) discouraged workers.
B) cyclically unemployed.
C) frictionally unemployed.
D) overemployed.
E) structurally unemployed.

Answer 2

structurally unemployed.

Question 3

One misconception that people often have about unemployment is that

A) unemployment is a macroeconomic topic.
B) unemployment is important to the economy.
C) as a nation, we should aim for zero unemployment.
D) the unemployment rate does not tell the whole story about the employment situation.
E) discouraged workers are not included in the official unemployment rate.

Answer 3

as a nation, we should aim for zero unemployment.

Question 4

Some jobs in the economy are no longer needed after an advancement in technology. A person who loses his or her job this way would be considered

A) frictionally unemployed.
B) cyclically unemployed.
C) structurally unemployed.
D) overemployed.
E) a discouraged worker.

Question 5

Which of the following people would be officially considered unemployed?

A) Mitchell, who is a full-time student working part-time at the bookstore
B) Janice, who is actively seeking a full-time job while currently working at a part-time job
C) Jade, who has stopped looking for a job because she feels there are no jobs available for her
D) Jenna, who just graduated college and is searching for a job that fits her graphic-design skills
E) Ralph, who is a stay-at-home father and is not currently looking for a job

Question 6

Which of the following statements about structural unemployment is true?

A) Structural unemployment can be eliminated through government intervention.
B) Structural unemployment is equal to zero when the economy is in an expansion.
C) Structural unemployment cannot be eliminated.
D) Structural unemployment is not a burden on household incomes.
E) Structural unemployment is unhealthy for the long-run growth of an economy.

Question 7

Which of the following is an example of structural unemployment?

A) Raymond loses his job as a steel worker because the economy is in a downturn.
B) Chad graduates with his master's degree in economics and is searching for an analyst job in Oklahoma.
C) Edith has decided to retire after 35 years of working at the state prison.
D) Cameron quits his job because he wants to become an astronaut.
E) Jasmine loses her job as a newspaper editor because the publication has gone digital.

Question 8

Official unemployment is identified as when a worker

A) who is not currently employed is searching for a job unsuccessfully.
B) who is not currently employed stops searching for a job.
C) leaves his or her job to attend school full-time.
D) retires from his or her job.
E) who is not currently employed stops searching for a job because he or she feels there is no job available.

Question 9

Structural unemployment is

A) unemployment caused by time delays in matching available jobs with workers.
B) unemployment caused by changes in the industrial makeup of an economy.
C) unemployment caused by economic downturns.
D) when a worker stops looking for a job because he or she feels no job is available.
E) not one of the three types of unemployment.

Question 10

Structural, frictional, and cyclical are all types of

A) jobs.
B) price levels.
C) firm structures.
D) unemployment.
E) economic models.

Question 11

Workers who lose their jobs because of market innovations are considered

A) discouraged workers.
B) cyclically unemployed.
C) frictionally unemployed.
D) structurally unemployed.
E) employed.

Question 12

Between 1979 and 2014 manufacturing employment in the United States

A) stayed constant.
B) fell by almost 50 percent.
C) rose by almost 50 percent.
D) rose by almost 90 percent.
E) fell by only 10 percent.

Question 13

Jamal works in a factory in Lake Zurich, Illinois, assembling toy trains. The factory owner updates the current equipment and installs new robots that can do Jamal's job. As a result, Jamal is laid off and is now unemployed. Jamal would be considered

A) structurally unemployed.
B) cyclically unemployed.
C) frictionally unemployed.
D) overemployed.
E) a discouraged worker.

Question 14

All three types of unemployment

A) are bad for the economy.
B) create a shortage of workers in the workforce.
C) are good for the economy.
D) are difficult on households.
E) are always the same level.

Question 15

Between 1979 and 2014 service industries employment in the United States

A) stayed constant.
B) fell by almost 50 percent.
C) rose by almost 72 percent.
D) rose by almost 90 percent.
E) fell by only 10 percent.

Question 16

The main statistic that is used to monitor unemployment in the economy is

A) real GDP.
B) the unemployment rate.
C) the unemployed-employed ratio.
D) real GDP per capita.
E) discouraged workers.

Question 17

Between 1960 and 2012, the average unemployment rate in the United States was about

A) 4 percent.
B) 6 percent.
C) 0 percent.
D) 8 percent.
E) 9 percent.

Question 18

The government has decided to give governmental grants to community colleges that offer job training for individuals who have recently been laid off due to their outmoded skills. The government is trying to reduce the level of

A) structural unemployment.
B) frictional unemployment.
C) cyclical unemployment.
D) real GDP.
E) household consumption.

Question 19

Which of the following two types of unemployment occur even when the economy is healthy and growing?

A) frictional and structural
B) cyclical and frictional
C) structural and cyclical
D) frictional and practical
E) structural and practical

Question 20

Which of the following lists the three types of unemployment?

A) frictional, structural, and practical
B) practical, structural, and cyclical
C) frictional, unavailable, and structural
D) cyclical, practical, and unavailable
E) frictional, structural, and cyclical

Question 21

Some individuals are unemployed because it takes time for them to find jobs that fit their skill sets. These individuals would be considered to be

A) frictionally unemployed.
B) cyclically unemployed.
C) structurally unemployed.
D) overemployed.
E) discouraged workers.

Question 22

The government can assist in reducing the level of structural unemployment by

A) providing unemployment insurance.
B) establishing government regulations on firing employees.
C) taxing employers who hire low-skilled workers.
D) providing job-training programs.
E) incentivizing companies to update their current technology.

Question 23

Suppose that over time, the majority of people who read books shift toward reading on an electronic device as opposed to reading physical books. As a result, a number of bookstores go out of business. This leads to what type of unemployment?

A) cyclical
B) structural
C) natural
D) frictional
E) seasonal

Question 24

Dido loses her job because sales are slow at her firm, due to a general slowdown in the entire economy. This is an example of _______ unemployment.

A) cyclical
B) structural
C) natural
D) frictional
E) seasonal

Question 25

Frictional unemployment is

A) unemployment caused by time delays in matching available jobs and workers.
B) unemployment caused by changes in the industrial makeup of an economy.
C) unemployment caused by economic downturns.
D) when a worker stops looking for a job because he or she feels no job is available.
E) not one of the three types of unemployment.

Question 26

Thalia graduates from college and begins to look for a job. After two months she finds a job. This is an example of _______ unemployment.

A) cyclical
B) structural
C) natural
D) frictional
E) seasonal

Question 27

Frictional unemployment is present in an economy because

A) workers often need to update their skills.
B) workers take time to decide which jobs are best for them.
C) firms often lay off workers due to economic recession.
D) the unemployment rate is too low.
E) there are often changes in the industrial makeup of an economy.

Question 28

The government can assist in reducing the level of structural unemployment by

A) providing unemployment benefits.
B) establishing government regulations on hiring employees.
C) subsidizing the relocation of workers who lose their jobs.
D) instituting a minimum-wage law.
E) incentivizing companies to move their production overseas.

Question 29

Brian Murphy is a political consultant for a candidate in Massachusetts. Mr. Murphy's candidate is defeated in the November election, and as a result, Mr. Murphy finds himself unemployed. Mr. Murphy's unemployment is classified as _______ unemployment.

A) discouraged
B) structural
C) frictional
D) cyclical
E) long-term

Question 30

The government adopts new regulation that requires all firms to contribute to their employees' retirement funds. All else the same, we would expect _______unemployment to _______.

A) frictional; increase
B) structural; decrease
C) cyclical; decrease
D) structural; increase
E) frictional; decrease

Question 31

The government adopts a new regulation that requires all firms to give their employees a raise each year that is not less than the rate of inflation. All else the same, we would expect _______ unemployment to_______.

A) frictional; increase
B) structural; decrease
C) cyclical; decrease
D) structural; increase
E) frictional; decrease

Question 32

Unemployment caused by delays in matching available jobs and workers is called _______unemployment.

A) structural
B) cyclical
C) discouraged
D) frictional
E) seasonal

Question 33

Pietro quits his job in New York and moves to California. After two months he finds a job. This is an example of _______ unemployment.

A) cyclical
B) structural
C) natural
D) frictional
E) seasonal

Question 34

The invention of the Internet has reduced _______ unemployment because it allows for workers and employers to find each other more quickly.

A) structural
B) cyclical
C) discouraged
D) frictional
E) seasonal

Question 35

Which of the following is an example of frictional unemployment?

A) Raymond loses his job as a steel worker because the economy is in a downturn.
B) Chad graduates with his master's degree in economics and is searching for an analyst job.
C) Edith has decided to retire after 35 years of working at the state prison.
D) Cameron quits his job at the circus to volunteer for the Red Cross.
E) Jasmine loses her job as a newspaper editor because the publication has gone digital.

Question 36

Suppose the government reduces the number of weeks a worker who becomes unemployed can collect unemployment insurance payments. All else the same, we would expect _______ unemployment to _______ .

A) frictional; decrease
B) structural; decrease
C) cyclical; decrease
D) structural; increase
E) frictional; increase

Question 37

A major casual dining chain decided to install tablet computers at the booths in their restaurants. Customers can now browse the menu at their leisure and place their orders without the help of servers. Thousands of workers lose their jobs. They can best be classified as_______unemployed.

A) cyclically
B) structurally
C) naturally
D) frictionally
E) seasonally

Question 38

Estelle loses her job when the factory in her local area closes. She is unable to find another factory job. This is an example of _______ unemployment.

A) cyclical
B) structural
C) natural
D) frictional
E) seasonal

Question 39

Maria is a high school math teacher. When her husband is transferred to another state with his company, she quits her job so she can move with him. She can be classified as _______unemployed.

A) cyclically
B) structurally
C) naturally
D) frictionally
E) seasonally

Question 40

Nina has a part-time job as she finishes her degree in fashion design. After obtaining her degree she decides to quit her part-time job to search for a job that better fits her now-improved skill set. Nina has a few interviews, but it is taking time to find the job that suits her best. Nina would be considered

A) structurally unemployed.
B) cyclically unemployed.
C) frictionally unemployed.
D) overemployed.
E) a discouraged worker.

Question 41

The root cause of cyclical unemployment is

A) unemployment insurance.
B) labor market regulations.
C) delays in matching available workers with open jobs.
D) downturns in the business cycle.
E) changes in the industrial makeup of the economy.

Question 42

Daniel, Steven, and Chris work as engineers in Connecticut. The demand for engineers starts to decline as their company's profits start to decrease during a recession. As a result, Daniel and Steven are laid off from their jobs. Daniel and Steven would be classified as

A) frictionally unemployed.
B) discouraged workers.
C) structurally unemployed.
D) overemployed.
E) cyclically unemployed.

Question 43

The 2007-2009 recession lasted for_______ months.

A) 12
B) 19
C) 36
D) 6
E) 24

Question 44

Consider an economy producing at its full employment output level. In this case the unemployment rate is equal to

A) zero.
B) the natural rate.
C) the rate of cyclical unemployment.
D) the rate of frictional unemployment.
E) the rate of structural unemployment.

Question 45

Government policies such as unemployment compensation and government regulations related to hiring and firing employees result in _______ unemployment.

A) lower frictional
B) lower structural
C) higher frictional
D) lower cyclical
E) higher structural

Question 46

During normal economic times, unemployment in Europe tends to be_______ than in the United States mainly because of _______ .

A) higher; labor market regulations
B) lower; labor market regulations
C) higher; exchange rates
D) longer; exchange rates
E) higher; cyclical unemployment

Question 47

A government program that reduces the hardship of being out of work by guaranteeing that unemployed workers receive a percentage of their former incomes while they are unemployed is referred to as

A) employment insurance.
B) unemployment insurance.
C) natural unemployment.
D) frictional unemployment.
E) structural unemployment.

Question 48

One argument against unemployment insurance is that unemployment insurance

A) limits the effects of a recession.
B) is only available during recessions.
C) creates an indirect incentive that can make it less attractive for workers to stay unemployed.
D) can be extended by the government during times of recession.
E) creates an indirect incentive that can make it more attractive for workers to stay unemployed.

Question 49

Which type of unemployment can be negative?

A) No type of unemployment can be negative.
B) cyclical
C) frictional
D) structural
E) natural

Question 50

If the actual unemployment rate is less than the natural rate of unemployment, then

A) the economy is in an expansionary phase.
B) cyclical unemployment is rising.
C) frictional unemployment is rising.
D) structural unemployment is rising.
E) This is not possible.

Question 51

During a recession, fewer individuals fly across the country for vacations. As a result, many pilots and flight attendants lose their jobs. These individuals would be classified as

A) frictionally unemployed.
B) discouraged workers.
C) structurally unemployed.
D) overemployed.
E) cyclically unemployed.

Question 52

Anything that lengthens the job search process _______ unemployment.

A) increases structural
B) increases frictional
C) decreases frictional
D) increases cyclical
E) decreases structural

Question 53

During healthy economic periods, cyclical unemployment

A) rises.
B) will equal structural unemployment.
C) falls toward zero.
D) will equal frictional unemployment.
E) will equal the natural rate of unemployment.

Question 54

Some individuals are unemployed because they are laid off from their jobs when the economy is sluggish. These individuals would be considered

A) frictionally unemployed.
B) cyclically unemployed.
C) structurally unemployed.
D) overemployed.
E) discouraged workers.

Question 55

The Internet has enabled workers and companies to find each other more quickly and to make better matches with substantially lower costs. The result is

A) lower frictional unemployment.
B) lower structural unemployment.
C) higher frictional unemployment.
D) lower cyclical unemployment.
E) higher structural unemployment.

Question 56

In November 2009, the United States was in a deep recession. To help keep the economy afloat, the government extended the period of time one could receive unemployment insurance to 99 weeks. This policy had an unintended consequence because

A) workers searched for jobs for longer, which reduced the unemployment rate.
B) many workers quit their jobs so they could receive unemployment insurance.
C) workers spent more time searching for the perfect jobs, which increased frictional unemployment.
D) employers were more hesitant to fire workers, which reduced the unemployment rate.
E) employers were more hesitant to fire workers, which increased the unemployment rate.

Question 57

Cyclical unemployment is

A) unemployment caused by time delays in matching available jobs and workers.
B) unemployment caused by changes in the industrial makeup of an economy.
C) unemployment caused by economic downturns.
D) when workers stop looking for jobs because they feel no jobs are available for them.
E) not one of the three types of unemployment.

Question 58

An economic downturn can lead to mainly which type of unemployment?

A) cyclical
B) frictional
C) seasonal
D) structural
E) practical

Question 59

When it is difficult to hire employees, firms take _______ to hire, which increases _______ unemployment.

A) less time; frictional
B) less time; structural
C) longer; frictional
D) longer; cyclical
E) longer; structural

Question 60

JTKB is an accounting firm in South Orange County, Florida. Company policy is that whenever JTKB decides to open up a new accounting position, the hiring manager must conduct at least five interviews over a two-week span, even if a qualified candidate is found earlier. Because of this process, JTKB is increasing _______ in South Orange County, Florida.

A) the number of discouraged workers
B) structural unemployment
C) cyclical unemployment
D) frictional unemployment
E) labor force participation

Question 61

The natural rate of unemployment is

A) the average unemployment rate during a recession.
B) equal to zero percent.
C) constant over time.
D) the typical rate of unemployment when the economy is growing normally.
E) equal to the rate of cyclical unemployment.

Question 62

When actual unemployment is less than its natural rate, the

A) economy is expanding beyond its long-run capabilities.
B) economy is producing within its long-run capabilities.
C) numbers must be wrong because the actual unemployment rate can never be less than the natural rate.
D) economy is in a recession.
E) economy must be experiencing high inflation.

Question 63

Which of the following statements about unemployment is true?

A) To be officially unemployed, a person has to be in the labor force.
B) A person who is not working is officially unemployed.
C) A person who is working part-time but would like to be working full-time is considered to be unemployed.
D) A person who is retired and not looking for a job is still considered unemployed.
E) A person who is a full-time student and not seeking employment is still considered unemployed.

Question 64

Economists refer to full-employment output as

A) GDP per capita.
B) natural GDP.
C) real GDP.
D) nominal GDP.
E) potential GDP.

Question 65

Natural unemployment is the

A) average of frictional, structural, and cyclical unemployment.
B) sum of frictional, structural, and cyclical unemployment.
C) sum of frictional and cyclical unemployment.
D) sum of structural and cyclical unemployment.
E) sum of structural and frictional unemployment.

Question 66

When actual unemployment is less than its natural rate

A) the economy is producing below its long-run capabilities.
B) the economy is producing within its long-run capabilities.
C) resources are employed at levels that are not sustainable in the long run.
D) resources are employed at levels that are sustainable in the long run.
E) output is less than full-employment output.

Question 67

The unemployment rate is the percentage of the

A) population that is unemployed.
B) adult population that is unemployed.
C) labor force that is unemployed.
D) adult population that is in the labor force.
E) labor force that is employed.

Question 68

If a jobless person has not sought a job in_______ weeks, that person is not counted in the unemployment statistics.

A) 6
B) 4
C) 5
D) 1
E) 52

Question 69

During healthy economic periods, only _______ unemployment exist(s).

A) frictional and structural
B) cyclical
C) frictional
D) structural
E) structural and cyclical

Question 70

If the economy is expanding beyond its long-run capabilities, we know that

A) we are in a depression.
B) we are in a recession.
C) actual unemployment is above its natural rate.
D) actual unemployment is at its natural rate.
E) actual unemployment is less than its natural rate.

Question 71

Which of the following conditions might cause the unemployment rate to be less than the natural rate of unemployment?

A) Demand for products starts to decrease, so firms keep their factories open for additional hours of production to make up the difference.
B) Demand for products is so high that firms keep their factories open for additional hours of production and pay their workers overtime.
C) Demand for products is so high that firms raise their prices to take advantage of extra profits.
D) The economy enters a recession, so firms start to produce more to help boost the economy.
E) The government decreases unemployment benefits.

Question 72

When the unemployment rate is equal to its natural rate-that is, no cyclical unemployment exists-the output level produced in the economy is

A) always increasing.
B) at full-employment output.
C) below full-employment output.
D) above full-employment output.
E) always decreasing.

Question 73

What are the two types of unemployment that are consistent with a dynamic, growing economy?

A) cyclical and structural
B) real and nominal
C) frictional and cyclical
D) frictional and structural
E) natural and cyclical

Question 74

Which of the following statements is true about the natural rate of unemployment?

A) The actual unemployment rate can never be above the natural rate.
B) The actual unemployment rate can never be at the natural rate.
C) The natural rate of unemployment consists of both cyclical and structural unemployment.
D) Sometimes the actual unemployment rate is below the natural rate.
E) The natural rate of unemployment consists of both cyclical and frictional unemployment.

Question 75

When actual unemployment is less than its natural rate, the

A) economy is in a recession.
B) economy is producing within its long-run capabilities.
C) numbers must be wrong because the actual unemployment rate can never be less than the natural rate.
D) economy is in an expansion.
E) economy must be experiencing high inflation.

Question 76

Zero unemployment is

A) only possible in recessions.
B) not possible.
C) only possible in expansions.
D) the goal of macroeconomic policymakers.
E) ideal for economic growth.

Question 77

An unemployment rate that is above the natural rate indicates_______ unemployment, and we say that the economy is producing at_______ output level.

A) cyclical; more than the full-employment
B) cyclical; the full-employment
C) cyclical; less than the full-employment
D) frictional; more than the full-employment
E) frictional; the full-employment

Question 78

Which of the following equations represents the unemployment rate?

A) number of unemployed / labor force) *100
B) unemployed + employed)
C) number of employed / labor force) *100
D) number of unemployed / relevant population) * 100
E) labor force / relevant population) * 100

Question 79

A member of the labor force is defined as someone who is

A) employed.
B) above the age of 16.
C) employed on a part-time basis.
D) already employed or actively seeking work.
E) already employed on a full-time basis.

Question 80

The official unemployment rate

A) includes discouraged workers and underemployed workers.
B) does not include discouraged workers or underemployed workers.
C) includes discouraged workers but not underemployed workers.
D) includes underemployed workers but not discouraged workers.
E) counts part-time workers as unemployed.