Deck 6:Unemployment and Inflation

Question 1

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.

Answer 1

divided by the sum of the number of people who are working and the number of people who are looking for work.

Question 2

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.

Answer 2

not currently working but are actively looking for work.

Question 3

Table 6.1
Employment status of the working age
population of Metropolis is approximately:

Given the data in Table 6.1, the labor force participation rate of Metropolis is approximately

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

Answer 3

96 percent.

Question 4

In June 2012, the U.S. labor force consisted of 142,415,000 employed and 12,749,000 unemployed. The U.S. unemployment rate for June 2012 was about

A) 7.4 percent.
B) 8.2 percent.
C) 9.0 percent.
D) 11.2 percent.

Question 5

What is the threshold age for individuals to be considered as being in the "labor force" for statistical purposes?

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

Question 6

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 7

Recall the Application about declining U.S. labor force participation since 1999 to answer the following question(s).
According to this Application, one explanation for the decline in the U.S. labor force participation rate since 1999 is

A) the decline in the overall population.
B) the increasing number of retiring baby boomers.
C) the increase in immigration to the United States.
D) the increase in outsourcing by U.S. companies.

Question 8

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 9

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 10

Table 6.1
Employment status of the working age
population of Metropolis is approximately:

Given the data in Table 6.1, the unemployment rate of Metropolis is approximately

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

Question 11

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 12

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 13

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 working age, regardless of whether they are working or looking for a job.

Question 14

Table 6.1
Employment status of the working age
population of Metropolis is approximately:

Suppose that 50 percent of the part-time workers of Metropolis are looking for full-time jobs. Given the data in Table 6.1, 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 15

Table 6.1
Employment status of the working age
population of Metropolis is approximately:

Given the data in Table 6.1, 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 16

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.

Question 17

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 18

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 19

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

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

Question 20

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 21

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 22

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 23

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 24

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 25

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 26

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 27

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

Question 28

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

Question 29

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

Question 30

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 31

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 "unemployed."

Question 32

Which specific government agency monitors unemployment?

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

Question 33

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 34

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 35

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 36

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) neither overstated or understated.
D) unbiased.

Question 37

For the purpose of statistically reporting the unemployment rate, "discouraged workers" are

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

Question 38

Recall the Application about declining U.S. labor force participation since 1999 to answer the following question(s).
According to this Application, one explanation for the decline in the U.S. labor force participation rate since 1999 is

A) higher college enrollment.
B) the increase in foreign ownership of U.S.-based companies.
C) sluggish economic growth that resulted in more discouraged workers.
D) the growing number of workers who have postponed retirement.

Question 39

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 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

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 42

Explain what is meant by the terms "labor force," "unemployment rate," and "labor force participation rate."

Question 43

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 44

When the "real" GDP falls, the rate of unemployment generally

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

Question 45

________ 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 46

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 47

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

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

Question 48

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 49

Cyclical unemployment occurs

A) because the government labels some people who aren't 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 50

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 51

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

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

Question 52

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

Question 53

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 54

At full employment there is no

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

Question 55

Economists say that the economy is at "full employment" 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 56

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 57

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 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

Name two types of jobs most likely affected by "seasonal unemployment."

Question 60

________ unemployment is NOT associated with economic fluctuations.

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

Question 61

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 62

What is cyclical unemployment?

Question 63

Economists consider an economy to be at "full employment" 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 64

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

Question 65

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

Question 66

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 67

Unemployment occurs even during periods when the economy is growing.

Question 68

Name the three types of unemployment.

Question 69

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 70

Cyclical unemployment increases during recessions.

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

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.

Question 73

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 74

Economists consider the economy to be at "full employment" when there is no cyclical unemployment.

Question 75

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 "full employment" 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 76

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 77

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

Question 78

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 79

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 80

To operate efficiently, an economy generally "needs" ________ unemployment.

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