Question 1

When the growth rate of the labour force is greater than the growth rate of total employment, the unemployment rate

Accepted Answer

When the growth rate of the labour force exceeds the growth rate of total employment, the number of job seekers increases, leading to an oversupply of labour in the market, which raises unemployment levels. Therefore, the correct choice is A, which indicates that the unemployment rate increases.

Question 2

The total amount of unemployment in the economy is constant when the flows of individuals

Accepted Answer

The total amount of unemployment in the economy remains constant when the flows out of unemployment are equal to the flows into unemployment. This means that there is a balance of individuals entering and exiting unemployment, and therefore the total level of unemployment does not increase or decrease.

Question 3

One motivation for having publicly subsidized retraining programs is to

Accepted Answer

Publicly subsidized retraining programs can help reduce structural unemployment by providing individuals with the skills needed for available jobs in the economy. This can help match unemployed workers with open positions, reducing the overall level of structural unemployment.

Question 4

Economic models in which the NAIRU can be influenced by changes in the actual rate of unemployment are said to include

Accepted Answer

Economic models that include hysteresis suggest that the NAIRU may be influenced by changes in the actual rate of unemployment due to the long-term effects of unemployment on the labor market. This means that a period of high unemployment may permanently raise the NAIRU, while low unemployment may lower it. The other options listed do not necessarily suggest that the NAIRU is influenced by changes in the actual rate of unemployment.

Question 5

The table below shows real GDP, potential GDP and the unemployment rate for a hypothetical economy.  TABLE 31- 1
-Refer to Table 31- 1. The variations in the unemployment rate between 2003 and 2011 are due to variations in

Accepted Answer

The unemployment rate varies with the output gap, which is the difference between real GDP and potential GDP. As the output gap narrows, the unemployment rate falls, and as the output gap widens, the unemployment rate rises. Therefore, the variations in the unemployment rate between 2003 and 2011 are due to variations in the output gap.

Question 6

According to 2008 data, unemployment rates for females are unemployment rates for males for any given age group; and unemployment rates for youths (age 15- 24)are unemployment rates for all other age groups.

Accepted Answer

The answer of According to 2008 data, unemployment rates for...

Question 7

Many economists believe that the more strict rules for qualifying for employment- insurance benefits introduced by the federal government in the early 1990s have led to

Accepted Answer

The answer of Many economists believe that the more strict...

Question 8

New Classical theories of the labour market argue that

Accepted Answer

New Classical theories of the labour market suggest that labour markets will eventually clear and reach equilibrium, resulting in the elimination of involuntary unemployment. This occurs through adjustments in wages and prices, as well as the flexibility of labour markets. Therefore, no government intervention or labour unions are necessary to reduce unemployment.

Question 9

The total amount of unemployment in the economy rises when the flows of individuals

Accepted Answer

When the flows into unemployment exceed the flows out of unemployment, the total amount of unemployment in the economy increases. This means that more people are losing jobs and entering unemployment than those who are finding jobs and leaving unemployment.

Question 10

The best description of the cause of "cyclical" unemployment is that

Accepted Answer

Cyclical unemployment occurs due to a downturn in the business cycle, when the level of overall economic activity falls below its potential level. This leads to a decrease in demand for goods and services, leading to a decrease in demand for labor, resulting in cyclical unemployment. Choices A, B, and C describe other forms of unemployment not related to the business cycle. While D may be true in some instances, it is not the most accurate description for cyclical unemployment.

Question 11

An unemployed worker can be identified as being "frictionally" unemployed if

Accepted Answer

Frictional unemployment refers to temporary unemployment that arises from the process of job search. An individual who quits a job to search for a better one is an example of frictional unemployment as they are temporarily without a job while they search for a new one.

Question 12

When the actual unemployment rate is equal to the NAIRU, we can say that

Accepted Answer

NAIRU stands for Non-Accelerating Inflation Rate of Unemployment, which is the level of unemployment that does not contribute to inflation. When the actual unemployment rate is equal to the NAIRU, it means that the economy is at its potential output and there is no cyclical unemployment. Therefore, the economy is at full employment.

Question 13

Which of the following policies could the government implement to reduce cyclical unemployment?

Accepted Answer

Expansionary monetary policy can help reduce cyclical unemployment by lowering interest rates, which encourages borrowing and spending, thereby stimulating economic growth and increasing demand for labor.

Question 14

The table below shows real GDP, potential GDP and the unemployment rate for a hypothetical economy.  TABLE 31- 1
-Some economists argue that increases in labour- force participation rates by young people and females in the 1970s and 1980s caused

Accepted Answer

The increase in labor-force participation rates by young people and females in the 1970s and 1980s is argued to have led to an increase in the Non-Accelerating Inflation Rate of Unemployment (NAIRU) because these groups typically have higher rates of unemployment, thus raising the overall NAIRU.

Question 15

What economists sometimes call "voluntary unemployment" occurs when

Accepted Answer

Voluntary unemployment occurs when a worker chooses not to accept a job at the current wage rate, often because they are holding out for a better opportunity or higher wages.

Question 16

Suppose a free- trade agreement with Central America eliminates all tariffs on imported textiles from those countries. Which type of unemployment will be affected in Canada?

Accepted Answer

Structural unemployment is caused by changes in the structure of the economy, such as technological advancements, changes in consumer preferences, or in this case, changes in trade policy. The elimination of tariffs on imported textiles from Central America means that Canadian textile producers may face increased competition and be forced to lay off workers or shut down operations, leading to structural unemployment.

Question 17

"Efficiency wages" are said to exist when wages are

Accepted Answer

Efficiency wages refer to wages that are higher than the market wage in order to incentivize workers to be more productive. By paying workers more than they could earn elsewhere, employers hope to encourage greater effort, better morale, and lower turnover rates. This concept is based on the idea that higher wages create stronger incentives for workers to work harder and produce more, leading to overall better performance and profits for the company.

Question 18

Other things being equal, improvements in the efficiency of labour markets that make it easier for firms to advertise prospective jobs and which reduce the effort of workers to search for jobs will

Accepted Answer

Improvements in the efficiency of labour markets that make it easier for firms to advertise prospective jobs and reduce the effort of workers to search for jobs will reduce the time it takes for unemployed workers to find new jobs, which will decrease frictional unemployment.

Question 19

Which of the following statements best explains why unemployment rates in European countries are significantly higher than unemployment rates in Canada or the United States?

Accepted Answer

Greater labour-market flexibility in Canada and the U.S., such as easier hiring and firing processes, allows for quicker adjustments in the labour market, resulting in lower unemployment rates. In contrast, European countries have more stringent labour laws and regulations, making it harder for firms to adjust their workforce in response to changing market conditions, leading to higher unemployment rates.

Question 20

An unemployed worker can be identified as being "structurally" unemployed if

Accepted Answer

Structural unemployment occurs when a worker's skills or qualifications do not match the requirements of available jobs. In this case, the worker is unable to find a job due to a mismatch between their skills and the needs of potential employers.

Quiz 31: Unemployment Fluctuations and the Nairu