Deck 12: Unemployment and Inflation

Question 1

People who are currently not working but are actively looking for work are officially classified as

A)unemployed and in the labor force.
B)unemployed and out of the labor force.
C)employed and in the labor force.
D)employed and out of the labor force.

Answer 1

unemployed and in the labor force.

Question 2

Employment status of the working age
population of Metropolis is approximately:
$$\begin{array} { | l | l | } \hline \text { Employed fulll-time: } & 4,200 \\\hline \text { Employed part-time: } & 700 \\\hline \text { Not employed and looking for work: } & 300 \\\hline \text { Notemployed and notlookingfor work: } & 200 \\\hline\end{array}$$ Table 12.1

-Given the data in Table 12.1, the labor force participation rate of Metropolis is approximately

A)96 percent.
B)91 percent.
C)83 percent.
D)78 percent.

Answer 2

96 percent.

Question 3

What is the threshold age for individuals to be considered as being in the ʺlabor forceʺ for statistical purposes?

A)16
B)18
C)21
D)Over 21

Answer 3

16

Question 4

Suppose an economy consists of 500,000 individuals 16 years and older, 260,000 are employed, and 21,000 are unemployed but actively seeking work. In this example the labor force is

A)239,000.
B)260,000.
C)281,000.
D)500,000.

Question 5

An economic _______ refers to either an upturn or a downturn in the economy.

A)stagnation
B)model
C)fluctuation
D)chain index

Question 6

Employment status of the working age
population of Metropolis is approximately:
$$\begin{array} { | l | l | } \hline \text { Employed fulll-time: } & 4,200 \\\hline \text { Employed part-time: } & 700 \\\hline \text { Not employed and looking for work: } & 300 \\\hline \text { Notemployed and notlookingfor work: } & 200 \\\hline\end{array}$$ Table 12.1

-Suppose that 50 percent of the part-time workers of Metropolis are looking for full-time jobs. Given the data in Table 12.1, if these workers were counted as not employed and looking for work, the unemployment rate of Metropolis would be approximately

A)6 percent.
B)13 percent.
C)16 percent.
D)21 percent.

Question 7

Economists define the unemployed as individuals who are

A)not currently working.
B)not currently working but are actively looking for work.
C)working but looking for a different job.
D)working less than their desired amount of time.

Question 8

If Sam does not have a job and is not looking for work, he is considered

A)unemployed and in the labor force.
B)unemployed and not in the labor force.
C)not in the labor force.
D)unemployed.

Question 9

The unemployment rate is the number of unemployed people

A)divided by the number of people who are working.
B)divided by the total working-age population.
C)divided by the sum of the number of people who are working and the number of people who are looking for work.
D)and the number of people working fewer than their desired number of hours, divided by the number of people who are working or looking for work.

Question 10

During periods of poor economic performance, real GDP

A)declines and unemployment rises.
B)declines and unemployment declines.
C)declines but unemployment typically does not change.
D)is unchanged but unemployment rises sharply.

Question 11

Economists define the labor force to include

A)only people who are working full time.
B)people who are working.
C)people who are not working but are actively looking for a job, and people who are working.
D)all individuals of work age, regardless of whether they are working or looking for a job.

Question 12

Suppose an economy consists of 500,000 individuals 16 years and older, 260,000 are employed, and 21,000 are unemployed but actively seeking work. In this example the unemployment rate is approximately

A)4.2 percent.
B)6.1 percent.
C)7.5 percent.
D)8.0 percent.

Question 13

People who are only working part-time, but want to be working full-time, are classified officially as

A)unemployed and in the labor force.
B)unemployed and out of the labor force.
C)employed and in the labor force.
D)employed and out of the labor force.

Question 14

The fraction of the working-age population that is in the labor force is called the

A)employment rate.
B)unemployment rate.
C)labor force participation rate.
D)nonresponse rate.

Question 15

Employment status of the working age
population of Metropolis is approximately:
$$\begin{array} { | l | l | } \hline \text { Employed fulll-time: } & 4,200 \\\hline \text { Employed part-time: } & 700 \\\hline \text { Not employed and looking for work: } & 300 \\\hline \text { Notemployed and notlookingfor work: } & 200 \\\hline\end{array}$$ Table 12.1

-Given the data in Table 12.1, the unemployment rate of Metropolis is approximately

A)6 percent.
B)9 percent.
C)12 percent.
D)22 percent.

Question 16

Employment status of the working age
population of Metropolis is approximately:
$$\begin{array} { | l | l | } \hline \text { Employed fulll-time: } & 4,200 \\\hline \text { Employed part-time: } & 700 \\\hline \text { Not employed and looking for work: } & 300 \\\hline \text { Notemployed and notlookingfor work: } & 200 \\\hline\end{array}$$ Table 12.1

-Given the data in Table 12.1, if the workers who are ?not employed and not looking for work? were counted as not employed and in the labor force, the unemployment rate of Metropolis would be approximately

A)4 percent.
B)7 percent.
C)9 percent.
D)10 percent.

Question 17

In August 2010, the U.S. labor force consisted of 139,250,000 employed and 14,860,000 unemployed. The U.S. unemployment rate for August 2010 was about

A)7.7 percent.
B)9.4 percent.
C)9.6 percent.
D)10.9 percent.

Question 18

Suppose an economy consists of 500,000 individuals 16 years and older, 260,000 are employed, and 21,000 are unemployed but actively seeking work. In this example the labor force participation rate is approximately

A)4 percent.
B)48 percent.
C)52 percent.
D)56 percent.

Question 19

If Sam does not have a job and is not currently looking for work but has looked in the past, he is considered

A)unemployed and in the labor force.
B)unemployed and not in the labor force.
C)not in the labor force.
D)unemployed.

Question 20

Recall the Application about women in the U.S. labor force to answer the following question(s). The labor
force participation rate for women 20 years and older grew from 32 percent in 1948 to 43 percent in 1970
and reached 60 percent by 1997.
According to this Application, the growth in the labor force participation rate for women between 1948 and the mid 1990s was due in part to

A)the decrease in the labor force participation rate for men.
B)labor-saving devices for the home.
C)the ratification of the Equal Rights Amendment.
D)the large increase in the number of ʺstay-at-homeʺ fathers.

Question 21

Recall the Application about women in the U.S. labor force to answer the following question(s). The labor
force participation rate for women 20 years and older grew from 32 percent in 1948 to 43 percent in 1970
and reached 60 percent by 1997.
According to this Application, one explanation as to why the labor force participation rate for women has peaked in the United States is

A)fewer women are choosing to enter the labor force.
B)women tend to provide fewer household services than do men.
C)women may have run out of available time.
D)women tend lack the technical skills necessary to fill jobs in the service sector.

Question 22

Individuals who have stopped looking for work after an active search because of the lack of transportation or lack of affordable child care, etc. are classified as _______ workers.

A)non-contributing
B)nonfunctional
C)marginally attached
D)very lazy

Question 23

The labor force participation rate is the fraction of the population over 16 years of age that is looking for work.

Question 24

If a person without a job is not actively looking for work, that person is classified as not being in the labor force.

Question 25

Seasonally adjusted unemployment rates

A)adjust for the predictable summer increase in the unemployment rate for teenagers.
B)adjust for the predictable summer decrease in the unemployment rate for teenagers.
C)are the same as the unadjusted rates in periods of bad weather.
D)are not calculated for the U.S. economy.

Question 26

People who want to work but have stopped looking for work because they could not find jobs after actively searching are called

A)employed.
B)unemployed.
C)discouraged workers.
D)empowered.

Question 27

Recall the Application about women in the U.S. labor force to answer the following question(s). The labor
force participation rate for women 20 years and older grew from 32 percent in 1948 to 43 percent in 1970 and reached 60 percent by 1997.
According to this Application, since 1997, the labor force participation rate for women in the United States has

A)remained virtually constant.
B)increased more than 10 percent.
C)decreased more than 20 percent.
D)equaled the participation rate for men.

Question 28

Recall the Application about the impact of the federal Disability Insurance program on the
unemployment rate to answer the following question(s).
Recall the Application. If the federal Disability Insurance program leads to a decrease in the labor force participation rate, the _______ will be _______.

A)frictional unemployment rate; higher
B)structural unemployment rate; higher
C)measured unemployment rate; lower
D)measured unemployment rate; higher

Question 29

If a large number of workers are classified as being out of the labor force when they are really looking for work, this will lead to an official unemployment rate that is

A)overstated.
B)understated.
C)either overstated or understated.
D)unbiased.

Question 30

Recall the Application about the impact of the federal Disability Insurance program on the
unemployment rate to answer the following question(s).
According to this Application, the federal Disability Insurance Program has had _______ on the measured unemployment rate.

A)a very large effect
B)no effect
C)a negligible
D)an inconsequential effect

Question 31

Individuals who are not working and are not actively looking for work are counted as unemployed if they have looked for work in the past.

Question 32

Recall the Application about the impact of the federal Disability Insurance program on the
unemployment rate to answer the following question(s).
Recall the Application. Assume 5,000 unemployed workers left the workforce to participate in the federal Disability Insurance program, leaving the size of the labor force at 195,000. If 13,000 workers remain unemployed and in the labor force, what was the unemployment rate before and after the 5,000 unemployed workers left the workforce?

A)9.0 percent; 6.7 percent
B)6.5 percent; 2.3 percent
C)12.8 percent; 4.3 percent
D)38.5 percent; 27.8 percent

Question 33

A person who is not working and who has looked for work in the past, but is not looking for work now is not considered ʺunemployed.ʺ

Question 34

If a large number of people are classified as being out of the labor force when they are really looking for work, this will lead to an official unemployment rate that is lower than the true unemployment rate.

Question 35

For the purpose of statistically reporting the unemployment rate, ʺdiscouraged workers,ʺ are

A)counted.
B)not counted.
C)offered other jobs.
D)trained to do different work.

Question 36

The unemployment rate is calculated by dividing the number unemployed and looking for work by the sum of the number employed and the number unemployed and looking for work.

Question 37

People who stopped looking for work because they could not find jobs are called discouraged workers.

Question 38

Which specific government agency monitors unemployment?

A)Commerce Department
B)Bureau of Labor Statistics
C)Executive Branch
D)Labor Department

Question 39

The existence of discouraged workers will lead to an official unemployment rate that is

A)overstated.
B)understated.
C)either overstated or understated.
D)unbiased.

Question 40

The unemployment rate

A)rises during booms and falls during recessions.
B)rises during recessions and falls during booms.
C)rises during times of rapid economic growth and falls during times of slow economic growth.
D)tends to remain the same in booms and recessions.

Question 41

Marginally attached workers are discouraged workers who have stopped their job search for reasons other than the lack of jobs.

Question 42

Economists say that the economy is at ʺfull employmentʺ when the

A)structural unemployment rate is zero.
B)total unemployment rate is zero.
C)frictional unemployment rate is zero.
D)cyclical unemployment rate is zero.

Question 43

When displaced workers require retraining before entering the labor force again, it is the result of _______ unemployment.

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

Question 44

Auto workers laid off from Hot-Rod Autoworks as the result of a recession are considered

A)structurally unemployed.
B)cyclically unemployed.
C)frictionally unemployed.
D)seasonally unemployed.

Question 45

Hector voluntarily left his job to search for a job in accounting, the field in which he has his bachelorʹs degree. Hector is considered

A)structurally unemployed.
B)cyclically unemployed.
C)frictionally unemployed.
D)not to be unemployed.

Question 46

_______ unemployment is most closely associated with periods of falling GDP.

A)Structural
B)Cyclical
C)Frictional
D)Voluntary

Question 47

Cyclical unemployment occurs

A)because the government labels some people who arenʹt really in the labor force as unemployed.
B)with economic fluctuations; it increases during bad times and decreases during good times.
C)naturally during the normal workings of an economy, as people change jobs, move across the country, etc.
D)because of a mismatch between the jobs that are available in the economy and the skills of workers seeking jobs.

Question 48

Unemployment that naturally occurs during the normal workings of an economy as people change jobs and move across the country is called

A)natural unemployment.
B)frictional unemployment.
C)structural unemployment.
D)cyclical unemployment.

Question 49

Name two types of jobs most likely affected by ʺseasonal unemployment.ʺ

Question 50

Steel workers laid off from their jobs as the result of a recession are considered

A)structurally unemployed.
B)cyclically unemployed.
C)frictionally unemployed.
D)seasonally unemployed.

Question 51

Explain what is meant by the terms ʺlabor force,ʺ ʺunemployment rate,ʺ and ʺlabor force participation rate.ʺ

Question 52

In the United States today, economists estimate that the natural rate of unemployment is between _______ and _______ percent.

A)3; 5.5
B)3; 4
C)5; 6.5
D)6.5; 7.5

Question 53

The economy needs some unemployment to operate efficiently, because without it

A)firms will find it difficult to recruit workers, leading to increased wages and prices.
B)firms will find it difficult to recruit workers, leading to reduced wages and prices.
C)workers will find it difficult to find a job, leading to increased wages and prices.
D)workers will find it difficult to find a job, leading to reduced wages and prices.

Question 54

When the ʺrealʺ GDP falls, the rate of unemployment generally

A)increases.
B)decreases.
C)stays constant.
D)equals the natural rate.

Question 55

Juanita quit her job to move to Santa Fe to be closer to her family. She is actively looking for a new job in Santa Fe. Juanita is considered

A)structurally unemployed.
B)cyclically unemployed.
C)frictionally unemployed.
D)not to be unemployed.

Question 56

_______ unemployment is NOT associated with economic fluctuations.

A)Structural
B)Cyclical
C)Frictional
D)both A and C

Question 57

Customer service representatives who have lost their jobs as a result of call centers being outsourced to India are an example of

A)structural unemployment.
B)cyclical unemployment.
C)frictional unemployment.
D)voluntary unemployment.

Question 58

At full employment the unemployment rate equals the

A)cyclical unemployment rate.
B)structural unemployment rate.
C)structural unemployment rate plus the cyclical unemployment rate.
D)structural unemployment rate plus the frictional unemployment rate.

Question 59

_______ unemployment occurs due to a mismatch between the jobs that are available and the skills of workers seeking jobs.

A)Structural
B)Cyclical
C)Frictional
D)Voluntary

Question 60

At full employment there is no

A)structural unemployment.
B)cyclical unemployment.
C)frictional unemployment.
D)all of the above

Question 61

Which one of the following statements is NOT correct?

A)The natural rate of unemployment is estimated to be between 5 percent and 6.5 percent in the U.S.
B)The term ʺfull employmentʺ means that 100 percent of the labor force is employed.
C)The line between frictional and structural unemployment is sometimes hard to draw.
D)Unemployment can occur even when an economy is growing.

Question 62

In periods when GDP fails to grow at its normal rate, the actual unemployment rate will be _______ than the natural rate of unemployment.

A)lower
B)higher
C)the same
D)falling faster

Question 63

As compared to the estimates of the natural rate of unemployment for the United States, those for Europe are

A)the same.
B)higher.
C)lower.
D)higher and more variable.

Question 64

Compared to the natural rate of unemployment, the actual unemployment rate is

A)always higher.
B)always lower.
C)always the same.
D)higher in periods when GDP fails to grow at its normal rate.

Question 65

The typical relationship between inflation and unemployment is

A)as unemployment falls, inflation falls.
B)as unemployment falls, inflation increases.
C)as unemployment falls, nothing happens to inflation.
D)unemployment changes do not directly lead to changes in inflation, but inflation changes may cause changes in unemployment.

Question 66

Actual unemployment can fall below the natural rate of unemployment due to

A)structural unemployment.
B)negative cyclical unemployment.
C)frictional unemployment.
D)all of the above

Question 67

Economists consider an economy to be at ʺfull employmentʺ when

A)the unemployment rate equals the natural rate of unemployment.
B)there is only a small amount of cyclical unemployment.
C)there is no frictional unemployment.
D)there is no structural unemployment.

Question 68

Cyclical unemployment increases during recessions.

Question 69

Unemployment occurs even during periods when the economy is growing.

Question 70

Economists consider the economy to be at ʺfull employmentʺ when there is no cyclical unemployment.

Question 71

Actual unemployment can exceed the natural rate of unemployment due to

A)structural unemployment.
B)cyclical unemployment.
C)frictional unemployment.
D)all of the above

Question 72

In periods when GDP grows very rapidly for a long period, the actual unemployment rate will be _______ than the natural rate of unemployment.

A)lower
B)higher
C)the same
D)more variable

Question 73

What is cyclical unemployment?

Question 74

The actual unemployment rate can be greater than or less than the natural rate of unemployment.

Question 75

Frictional unemployment is unemployment reflecting a mismatch of skills and jobs.

Question 76

The natural rate of unemployment

A)can vary over time and will differ across countries.
B)can vary over time but tends to be the same across countries.
C)tends to remain constant over time but at different levels for different countries.
D)tends to remain constant over time and is the same across countries.

Question 77

To operate efficiently, an economy generally ʺneedsʺ _______ unemployment.

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

Question 78

Structural unemployment exists because workers and employers try to find the right employment matches.

Question 79

Name the three types of unemployment.

Question 80

Economic expansions might lead to inflation because an expansion leads to

A)a decrease in the unemployment rate, which increases wages.
B)an increase in the unemployment rate, which increases wages.
C)a decrease in the unemployment rate, which decreases wages.
D)an increase in the unemployment rate, which decreases wages.