Deck 17: Unemployment

Question 1

According to the Bureau of Labor Statistics, a person who is self-employed is considered

A) unemployed.
B) employed.
C) not in the labor force.
D) a discouraged worker.

Answer 1

employed.

Question 2

According to the Bureau of Labor Statistics, a person who does not have a job but is currently available for work and has been actively looking for a job in the past four weeks is considered

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

Answer 2

unemployed.

Question 3

According to the Bureau of Labor Statistics, a person who does not have a job and has not been actively looking for a job in the past four weeks is considered

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

Answer 3

not in the labor force.

Question 4

The labor force participation rate is calculated as:

A) (number of unemployed) ÷ (labor force).
B) (number of employed) ÷ (adult population).
C) (number of employed + number of unemployed) ÷ (labor force).
D) (labor force) ÷ (adult population).

Question 5

The unemployment rate is calculated as:

A) (number of unemployed) ÷ (number of employed + number of unemployed).
B) (number of unemployed) ÷ (number of employed).
C) (number of employed + number of unemployed) ÷ (labor force).
D) (labor force) ÷ (number of unemployed).

Question 6

Table 17.1 : Consider the data above for a simple economy.

-Refer to Table 17.1. The unemployment rate for this simple economy is

A) 6%.
B) 10%.
C) 20%.
D) 25%.

Question 7

Table 17.1 : Consider the data above for a simple economy.

-Refer to Table 17.1. The labor force participation rate for this simple economy is

A) 25%.
B) 40%.
C) 50%.
D) 60%.

Question 8

Table 17.1 : Consider the data above for a simple economy.

-Refer to Table 17.1. The employment rate for this simple economy is

A) 40%.
B) 50%.
C) 75%.
D) 80%.

Question 9

In which decade did the labor force participation rate for women in the United States first rise to above 50%?

A) 1940s
B) 1960s
C) 1970s
D) 1990s

Question 10

The unemployment rate tells us

A) the fraction of people who want to be working but are not.
B) the fraction of people who are not working and do not want to be working.
C) the fraction of people who are not working and have quit looking for jobs.
D) all of the above

Question 11

Since 1948, the average unemployment rate in the United States has been about

A) 3%.
B) 6%.
C) 8%.
D) 10%.

Question 12

The organization that releases the official unemployment data in the United States is the Bureau of Labor Statistics.

Question 13

In the United States in 2014, more people were classified as being not in the labor force than being employed.

Question 14

If the labor force consists of 1,000 people and and the unemployment rate is 7%, then 930 people must be considered employed.

Question 15

As GDP decreases during recessions, unemployment generally increases. Unemployment is therefore said to be procyclical.

Question 16

When people who are willing and able to work cannot find jobs, ________ is said to exist.

Question 17

In the nation of Gonzo, the number of employed is 95 million, the adult population is 125 million, and the number of unemployed is 5 million. Calculate the unemployment rate, the employment rate, and the labor force participation rate in Gonzo.

Question 18

If someone who was working full time is now only working part time, this change in status will cause the unemployment rate to

A) increase.
B) decrease.
C) remain unchanged.
D) It depends on how many hours this person is now working each week.

Question 19

Javier lost his job as a chemical engineer when the company he worked for shut down, so he took a full time job as a convenience store clerk to help pay the bills. Javier is now considered

A) a discouraged worker.
B) underemployed.
C) unemployed.
D) out of the labor force.

Question 20

A discouraged worker is defined as

A) someone who is working at a job he dislikes.
B) someone who is overqualified for the job she currently holds.
C) someone who would like to work full time but is only working part time.
D) someone who has given up actively looking for a job after an extended period of unemployment.

Question 21

Discouraged workers are ________ in the unemployment rate, and this tends to ________ the unemployment rate.

A) counted; overstate
B) counted; understate
C) not counted; overstate
D) not counted; understate

Question 22

The town of Marble Falls has 10 workers, of which 8 are employed and 2 are actively seeking work. The unemployment rate in Marble Falls is

A) 5%.
B) 10%.
C) 20%.
D) 25%.

Question 23

The town of Marble Falls has 10 workers, of which 8 were employed and 2 were actively seeking work. After many months of seeking work, one of the unemployed workers became discouraged and stopped looking for work six weeks ago. The unemployment rate in Marble Falls is now

A) 10%.
B) 11.1%.
C) 12.5%.
D) 20%.

Question 24

The town of Marble Falls has 10 workers, of which 8 were employed and 2 were actively seeking work. After many months of seeking work, both of the unemployed workers became discouraged and stopped looking for work six weeks ago. The unemployment rate in Marble Falls is now

A) 0%.
B) 11.1%.
C) 20%.
D) 25%.

Question 25

People who were working in the formal sector and now work in the underground economy but report being unemployed will cause the unemployment rate to ________, and this action tends to ________ the unemployment rate.

A) increase; overstate
B) increase; understate
C) decrease; overstate
D) decrease; understate

Question 26

Most economists agree that the measured unemployment rate tends to ________ the unemployment problem.

A) overstate
B) understate
C) accurately represent
D) There is little agreement among economists regarding this issue.

Question 27

Due to the subjective nature of the questions that would be needed to determine if someone is underemployed or a discouraged worker, adjusting the unemployment rate to accurately reflect these situations

A) is very easy to do.
B) is somewhat difficult.
C) is impossible.
D) Since so few people are actually underemployed or discouraged workers, adjusting the unemployment rate to reflect these situations is considered an unnecessary waste of time.

Question 28

Part-time workers are considered both a part of the labor force and employed.

Question 29

Discouraged workers are considered unemployed.

Question 30

The measured unemployment rate tends to overstate the unemployment problem.

Question 31

Explain the differences in people who are classified as unemployed, underemployed, and discouraged workers. Are these people included in the labor force?

Question 32

List three ways the measured unemployment tends to understate the unemployment problem.

Question 33

Frictional unemployment is the result of

A) a slowdown in the economy.
B) more people looking for work in some labor markets than there are jobs available.
C) the search process of matching workers with jobs.
D) the unpredictability of inflation.

Question 34

Caroline tells her friend Octavia to keep searching for a job because there are plenty of jobs in the area for which she is qualified. This advice is most appropriate for which of the following types of unemployment?

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

Question 35

Which of the following is an example of a worker experiencing frictional unemployment?

A) A Carnival Cruise Line entertainment director loses his job because of lack of demand for cruise ship vacations.
B) A customer service representative loses his job because it is outsourced to India.
C) An auto worker is laid off because the economy is suffering from a recession.
D) A worker quits her job at the DMV to find more interesting work.

Question 36

Structural unemployment results in a ________ of labor which should theoretically be reduced by a(n) ________ in the wage rate.

A) surplus; decrease
B) surplus; increase
C) shortage; decrease
D) shortage; increase

Question 37

Structural unemployment exists because something is holding wages

A) naturally high.
B) artificially high.
C) naturally low.
D) artificially low.

Question 38

Theory suggests that minimum-wage laws create ________ unemployment, especially among younger workers.

A) frictional
B) cyclical
C) structural
D) under-reported

Question 39

Labor unions create ________ unemployment at the higher end of the wage ladder.

A) frictional
B) cyclical
C) structural
D) under-reported

Question 40

Employment protection laws make it ________ for firms to hire people, which can result in a(n) ________ in the number of people who are structurally unemployed.

A) more risky; increase
B) more risky; decrease
C) less risky; increase
D) less risky; decrease

Question 41

Countries that have greater employment protection laws than other countries generally have ________ unemployment rates, with spells of unemployment tending to ________.

A) lower; last longer
B) lower; be shorter
C) higher; last longer
D) higher; be shorter

Question 42

In countries that have a high degree of employment protection as measured by the World Bank's Rigidity of Employment Index, approximately ________ of jobless workers have been employed for more than one year.

A) 5%
B) 16%
C) 27%
D) 43%

Question 43

The advice to "go back to school to get retrained in a different field"would be most appropriate for which of the following types of unemployment?

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

Question 44

The more generous unemployment benefits are, the ________ the unemployment rate remains and the ________ the time frame people tend to remain unemployed.

A) higher; longer
B) higher; shorter
C) lower; longer
D) lower; shorter

Question 45

Cyclical unemployment is the result of

A) a slowdown in the economy.
B) more people looking for work in some labor markets than there are jobs available.
C) the search process of matching workers with jobs.
D) the unpredictability of inflation.

Question 46

Harold was laid off from his job as a circus clown because an economic recession caused demand for tickets to the circus to dramatically decline. Harold would best be described as ________ unemployed.

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

Question 47

Okun's law states that for every 1-percentage-point increase in the cyclical unemployment rate, real GDP growth

A) must increase by 1 percentage point for the economy to keep from experiencing a recession.
B) decreases by about 2 percentage points.
C) declines for 1 year.
D) increases by 1 percentage point.

Question 48

Which of the following is a reason for the existence of sticky wages?

A) Cutting wages during an economic downturn is illegal.
B) Some wages are set by contract.
C) Increasing wages means reduced profits during economic expansions.
D) By law, if one worker's wages are changed, all workers' wages must be changed.

Question 49

In a dynamic economy, there will always be some frictional unemployment.

Question 50

The minimum wage may cause businesses to hire fewer workers, and this results in structural unemployment.

Question 51

Employment protection laws make it harder for employees to lose their jobs and as a result, these laws reduce structural unemployment.

Question 52

The cyclical unemployment rate changes with business cycle fluctuations.

Question 53

According to Okun's law, if the cyclical unemployment rate increases by 3 percentage points, real GDP growth will decrease by about 3 percentage points.

Question 54

List and briefly describe the three types of unemployment.

Question 55

Explain how labor unions may create structural unemployment.

Question 56

The inability of wages to adjust to market conditions is called ________.

Question 57

Suppose the measured unemployment rate is 7.4% and the natural rate of unemployment is 5.1%. In this situation, policymakers should

A) attempt to stimulate the economy.
B) attempt to slow the economy.
C) not intervene in the economy.
D) The actions of policymakers will depend on how much of the natural rate is frictional unemployment and how much is structural unemployment.

Question 58

Suppose the measured unemployment rate is 3.9% and the natural rate of unemployment is 5.1%. In this situation, policymakers should

A) attempt to stimulate the economy.
B) attempt to slow the economy.
C) not intervene in the economy.
D) The actions of policymakers will depend on how much of the natural rate is frictional unemployment and how much is structural unemployment.

Question 59

The Federal Reserve is best suited to alleviating

A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) The Federal Reserve is equally suited to alleviate all three types of unemployment.

Question 60

Suppose the measured unemployment rate is 7.5% and the true natural rate of unemployment is 5.1%. If the chair of the Fed believes the natural rate of unemployment to be 6.7%, then the chair will

A) stimulate the economy when it should be slowed.
B) slow the economy when it should be stimulated.
C) stimulate the economy, exactly as called for.
D) slow the economy, exactly as called for.

Question 61

Suppose the measured unemployment rate is 6.1% and the true natural rate of unemployment is 5.1%. If the chair of the Fed believes the natural rate of unemployment to be 6.7%, then the chair will

A) stimulate the economy when it should be slowed.
B) slow the economy when it should be stimulated.
C) stimulate the economy, exactly as called for.
D) slow the economy, exactly as called for.

Question 62

From the beginning of the Great Recession in December 2007 until September 2013, the average duration of unemployment in the United States averaged

A) 13.5 weeks.
B) 22 weeks.
C) 31.3 weeks.
D) 41 weeks.

Question 63

The cyclical rate of unemployment plus the measured unemployment rate equal the natural rate of unemployment.

Question 64

Difficulties in measuring the unemployment rate and its component parts make crafting policy difficult.

Question 65

How might government policies differ when attempting to reduce the three types of unemployment? Be specific.

Question 66

Suppose the measured unemployment rate is 4.5% and the true natural rate of unemployment is 5.1%. What should policymakers do in this situation?Suppose that the chair of the Federal Reserve believes the natural rate of unemployment to be 4.0%. What will the chair of the Fed do in this situation, and will this be a good decision?