Deck 7: Costs of Not Working and Living: Unemployment and Inflation

Question 1

If a very small town has 25 people unemployed and 75 people employed, the unemployment rate is

A) 25 percent.
B) 20 percent.
C) 40 percent.
D) 33 percent.
E) 50 percent.

Answer 1

25 percent.

Question 2

Charles has a part-time job selling jeans at the Dixie Mall. Charles would rather work more hours, but he keeps busy making an army of super-hero robots in his father's garage. Statistics Canada classifies Charles as

A) discouraging.
B) unemployed.
C) not in the labour force.
D) discouraged.
E) underutilized.

Answer 2

underutilized.

Question 3

If a very small town has 20 people unemployed and 80 people employed, the unemployment rate is

A) 25 percent.
B) 20 percent.
C) 40 percent.
D) 33 percent.
E) 60 percent.

Answer 3

20 percent.

Question 4

In a country with a population of 20 million, there are 9 million employed and 1 million unemployed. What is the labour force (in millions)?

A) 20
B) 10
C) 9
D) 8
E) 1

Question 5

In a country with a population of 500 million, there are 300 million employed and 20 million unemployed. What is the labour force (in millions)?

A) 500
B) 300
C) 20
D) 280
E) 320

Question 6

Which type of unemployment is a problem that requires worker retraining?

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

Question 7

Which type of unemployment is a healthy part of a changing economy, and also a problem that needs fixing?

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

Question 8

Heather is serving a six-month sentence in a West Vancouver jail. She had $2,000 in parking tickets in less than a year! When released, Heather is joining the Armed Forces for adventure. Statistics Canada classifies Heather as

A) discouraged.
B) not in the labour force.
C) unemployed.
D) underutilized.
E) overutilized.

Question 9

Sylvia quit her job as a college teacher to maintain the family home and raise her six children. Her husband works as a doctor. Statistics Canada classifies Sylvia as

A) underutilized.
B) discouraged.
C) not in the labour force.
D) underappreciated.
E) overutilized.

Question 10

Anyl graduated from high school and is travelling in Europe. Statistics Canada classifies him as

A) underutilized.
B) discouraged.
C) unemployed.
D) retired.
E) not in the labour force.

Question 11

Which type of unemployment has a mismatch between workers' skills and the skills new jobs require?

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

Question 12

Which type of unemployment is caused by international competition?

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

Question 13

A person is counted as unemployed if she is

A) not employed and is actively seeking work.
B) retired.
C) a full-time student.
D) too young to work.
E) at home because she gave up looking for a job.

Question 14

Anka works part-time at Humber College and full-time at the University of Toronto. Statistics Canada classifies Anka as

A) overemployed.
B) underutilized.
C) overutilized.
D) employed.
E) redundant.

Question 15

The labour force includes

A) Andrew, who is looking for a job.
B) Britney, who quit her job to raise her new baby.
C) Charles, who is retired.
D) David, who is Britney's baby boy.
E) Eve, who is a full time student.

Question 16

In a country with a population of 20 million, there are 8 million employed and 4 million unemployed. What is the unemployment rate?

A) 20 percent
B) 33.3 percent
C) 50 percent
D) 25 percent
E) none of the above

Question 17

In a country with a labour force of 10 million, 8 million are employed. What is the unemployment rate?

A) 20 percent
B) 25 percent
C) 40 percent
D) 80 percent
E) There is not enough information to calculate the unemployment rate.

Question 18

Unhealthy unemployment is

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

Question 19

Who is cyclically unemployed?

A) A Saskatchewan farmer who lost his farm and is unemployed until retrained.
B) A Prince Edward Island fishery worker searching for a better job closer to home.
C) A steelworker who is laid off but expects to be called back soon.
D) An office worker who lost her job because of a general slowdown in economic activity.
E) None of the above are cyclically unemployed.

Question 20

In a country with a population of 20 million, there are 8 million employed and 2 million unemployed. What is the unemployment rate?

A) 2 percent
B) 10 percent
C) 20 percent
D) 25 percent
E) none of the above

Question 21

If your 13 year old brother works 20 hours each week at McDonald's, Statistics Canada counts him as employed.

Question 22

Involuntary part-time employment is counted as unemployment.

Question 23

Which event(s) increase cyclical unemployment?

A) Real GDP growth turns negative.
B) Unemployment benefits increase.
C) The pace of technological changes increases.
D) Both job destruction and job creation increase.
E) All of the above increase cyclical unemployment.

Question 24

A country has a working-age population of 30 million, with 18 million employed and 2 million unemployed. 2 million of the employed are working part-time, and half of these persons wish to work full-time. The unemployment rate is

A) 9.1 percent.
B) 10 percent.
C) 11.1 percent.
D) 14.3 percent.
E) 50 percent.

Question 25

Involuntary part-time workers are counted in the labour underutilization rate.

Question 26

A country has a working-age population of 30 million, with 18 million employed and 2 million unemployed. 2 million of the employed are working part-time, and half of these persons wish to work full-time. The labour force participation rate is

A) 10 percent.
B) 11.1 percent.
C) 60 percent.
D) 63.3 percent.
E) 66.7 percent.

Question 27

Tiago graduated, but gave up looking for work. Tiago is considered to be unemployed.

Question 28

After spending five months actively searching for employment, Scott gave up. Statistics Canada classifies Scott as disappointed.

Question 29

Andrea is only 13 but she works as a lifeguard during the week and baby sits every weekend. Statistics Canada classifies Andrea as not part of the labour force.

Question 30

Including discouraged workers in the official unemployment rate will

A) not change the official unemployment rate.
B) lower the official unemployment rate.
C) raise the official unemployment rate.
D) raise the natural rate of unemployment.
E) raise the full employment rate.

Question 31

When there are part-time workers who wish to work full-time, the official unemployment rate

A) rises when these workers find full-time jobs.
B) falls when these workers find full-time jobs.
C) overstates the unemployment problem.
D) understates the unemployment problem.
E) counts these workers as discouraged.

Question 32

Andrei has a PhD in animal magnetism but spends 20 hours a day driving a taxi in downtown Montreal. The official unemployment rate includes Andrei because he is underemployed.

Question 33

Discouraged workers are counted in the official unemployment rate.

Question 34

Discouraged workers are counted in the labour underutilization rate.

Question 35

Tiago graduated, and is actively looking for work. Tiago is considered to be unemployed.

Question 36

A country has a working-age population of 30 million, with 18 million employed and 2 million unemployed. 2 million of the employed are working part-time, and half of these persons wish to work full-time. The size of the labour force is

A) 16 million.
B) 18 million.
C) 20 million.
D) 22 million.
E) 30 million.

Question 37

Unemployment rates in western Canada are usually higher than the national unemployment rate.

Question 38

Discouraged workers - those who gave up actively seeking employment - are considered to be unemployed.

Question 39

Unemployment caused by a permanent collapse of the East Coast fishery is

A) cyclical unemployment.
B) frictional unemployment.
C) structural unemployment.
D) discouraged unemployment.
E) underutilized unemployment.

Question 40

Homemakers are not part of the labour force.

Question 41

Structural unemployment is not a problem that policymakers need to address.

Question 42

Cyclical unemployment decreases during economic expansions.

Question 43

Frictional unemployment is a problem that policymakers need to address.

Question 44

When unemployed workers get discouraged and stop looking for work, the labour force participation rate does not change.

Question 45

When the economy is at full employment

A) cyclical unemployment is zero.
B) frictional unemployment is zero.
C) seasonal unemployment is zero.
D) structural unemployment is zero.
E) sessional unemployment is zero.

Question 46

If you are not doing paid work, you are officially counted as unemployed.

Question 47

Cyclical unemployment increases during economic contractions.

Question 48

At full employment there is no

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

Question 49

Cyclical unemployment arises from fluctuations over the business cycle.

Question 50

Structural unemployment is a problem that policymakers need to address.

Question 51

Seasonal unemployment is unhealthy unemployment.

Question 52

Frictional unemployment is not a problem that policymakers need to address.

Question 53

When the economy is at full employment

A) cyclical unemployment is zero.
B) frictional unemployment is zero.
C) seasonal unemployment is zero.
D) structural unemployment is zero.
E) all forms of unemployment are zero.

Question 54

Structural unemployment can be caused by business innovations.

Question 55

Cyclical unemployment decreases during economic contractions.

Question 56

Unemployment rates in Atlantic Canada are usually higher than the national unemployment rate.

Question 57

Structural unemployment arises from fluctuations over the business cycle.

Question 58

Structural unemployment comes from a mismatch between the skills workers have the the skills new jobs require.

Question 59

Cyclical unemployment increases during economic expansions.

Question 60

When unemployed workers get discouraged and stop looking for work, the labour force participation rate falls.

Question 61

The natural rate of unemployment is

A) the rate where unemployment equals 0 percent.
B) same as cyclical unemployment.
C) the rate where cyclical unemployment equals 0 percent.
D) the rate where cyclical unemployment equals 6 percent.
E) none of the above answers.

Question 62

When the economy has a recessionary gap, cyclical unemployment is probably

A) negative.
B) impossible.
C) zero.
D) healthy.
E) positive.

Question 63

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 5 percent and structural 4 percent. East Westfalia's natural rate of unemployment is

A) 14 percent.
B) 12 percent.
C) 11 percent.
D) 9 percent.
E) impossible to calculate without more information.

Question 64

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. If the official unemployment rate is 9 percent, then

A) cyclical unemployment is negative.
B) real GDP is less than potential GDP.
C) healthy unemployment is 2 percent.
D) cyclical unemployment is 9 percent.
E) real GDP is greater than potential GDP.

Question 65

When cyclical unemployment is high, the economy is having

A) a peak in the business cycle.
B) an inflationary gap.
C) a recession.
D) less than normal structural unemployment.
E) less than normal frictional unemployment.

Question 66

When real GDP

A) equals potential GDP, the natural rate of unemployment equals zero.
B) is above potential GDP, the unemployment rate is above the natural rate.
C) is above potential GDP, there is cyclical unemployment.
D) is below potential GDP, the unemployment rate is above the natural rate.
E) is below potential GDP, there is cyclical unemployment.

Question 67

If the economy is at full employment, then the

A) entire working age population is employed.
B) entire labour force is employed.
C) only unemployment is frictional unemployment plus discouraged and involuntary part-time workers.
D) official unemployment rate is less than 9 percent.
E) only unemployment is frictional, structural, and seasonal unemployment.

Question 68

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. If the official unemployment rate is 9 percent, then

A) cyclical unemployment is negative.
B) there is a recessionary gap.
C) healthy unemployment is 2 percent.
D) cyclical unemployment is 9 percent.
E) there is an inflationary gap.

Question 69

The natural rate of unemployment does not include ________ unemployment.

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

Question 70

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 4 percent, and structural 6 percent. The official unemployment rate is 15 percent.

Question 71

When real GDP

A) equals potential GDP, the natural rate of unemployment equals zero.
B) is above potential GDP, the unemployment rate is above the natural rate.
C) is above potential GDP, there is less than normal frictional, structural, seasonal unemployment.
D) is below potential GDP, the unemployment rate is below the natural rate of unemployment.
E) equals potential GDP, frictional unemployment equals zero.

Question 72

The natural rate of unemployment is the

A) rate where unemployment equals 0 percent.
B) same as cyclical unemployment.
C) rate where frictional unemployment equals 0 percent.
D) rate where cyclical unemployment equals 0 percent.
E) rate where frictional plus structural unemployment equals 0 percent.

Question 73

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 5 percent and structural 4 percent. The official unemployment rate is ________ percent.

A) 10
B) 11
C) 14
D) 9
E) 3

Question 74

When cyclical unemployment is high, the economy is having

A) a peak in the business cycle.
B) real GDP greater than potential GDP.
C) real GDP less than potential GDP.
D) less than normal structural unemployment.
E) less than normal frictional unemployment.

Question 75

The natural rate of unemployment does not include seasonal unemployment.

Question 76

When real GDP is above potential GDP,

A) frictional unemployment is probably above normal levels.
B) frictional unemployment is probably below normal levels.
C) structural unemployment is probably above normal levels.
D) cyclical unemployment is probably above normal levels.
E) seasonal unemployment is probably above normal levels.

Question 77

When the economy has an inflationary gap, cyclical unemployment is probably

A) healthy.
B) negative.
C) positive.
D) zero.
E) unethical.

Question 78

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 5 percent and structural 4 percent. East Westfalia has a(n)

A) full employment equilibrium.
B) monetary squeeze.
C) structural revolution.
D) recessionary gap.
E) inflationary gap.

Question 79

The natural rate of unemployment does not include cyclical unemployment.

Question 80

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. The table below lists unemployment rates from the Labour Force Survey for selected months. During which months did Olliestan have a recessionary gap?

A) March, April and May
B) March and April, but not May
C) April and May, not March
D) Only March
E) Only May