Question 1

How can people who are laid off from work due to a recession eventually turn into structurally unemployed people?

Accepted Answer

When people are laid off due to a recession, it may initially be cyclical unemployment, which is a temporary downturn in the economy. However, if they remain unemployed for an extended period of time and their skills become outdated, they may transition into structural unemployment. This type of unemployment is caused by a mismatch between the skills of workers and the requirements of available jobs. As the economy shifts and new industries emerge, some workers may find it difficult to keep up with the changing demands of the labor market. Therefore, staying unemployed for too long can lead to a loss of skills and reduced employability, making it challenging to find suitable work even when the economy improves.

Question 2

When workers lose their jobs and become officially unemployed, the labor force participation rate

Accepted Answer

The labor force participation rate remains constant because it is calculated as the labor force (employed + unemployed) divided by the working-age population. When workers become unemployed, they remain part of the labor force, so the participation rate does not change.

Question 3

Which type of unemployment is likely to be higher when real GDP growth is lower?

Accepted Answer

Cyclical unemployment is directly related to the business cycle and tends to increase during economic downturns or recession when real GDP growth is lower. Structural and frictional unemployment are not directly related to changes in real GDP. Natural unemployment refers to the sum of frictional and structural unemployment and is not a specific type of unemployment itself.

Question 4

The natural unemployment rate consists of

Accepted Answer

The natural unemployment rate is the level of unemployment that exists in the absence of cyclical fluctuations in the economy. This rate is determined by the number of people who are frictionally and structurally unemployed. Therefore, the natural unemployment rate consists of frictional and structural unemployment.

Question 5

Reference: Ref 11-2 (Table: Unemployment Statistics for Country X) Using the data in the table, for the year 2005, what is the natural unemployment rate?

Accepted Answer

The natural unemployment rate is the sum of the frictional unemployment rate and the structural unemployment rate. From the table, we can see that the frictional unemployment rate is 2 percent and the structural unemployment rate is 0.9 percent. Therefore, the natural unemployment rate is 2 percent + 0.9 percent = 2.9 percent. Therefore, the best choice is C.

Question 6

The labor force participation rate is highest among those

Accepted Answer

The labor force participation rate is highest among those between 25 and 54 years of age. This age group is typically considered prime working age, and they are more likely to be part of the labor force and actively seeking employment.

Question 7

The natural unemployment rate is defined as the

Accepted Answer

The natural unemployment rate only includes structural and frictional unemployment rates, which are due to long-term shifts in the economy and the normal turnover of workers. It does not include cyclical unemployment, which is due to fluctuations in the business cycle.

Question 8

A country has a population of 160 million. Thirty million of its people are under the age of 16, and ten percent of the population is either in the military or institutionalized. Seventy million people have jobs and five million are looking for work. What is the labor force participation rate in your country?

Accepted Answer

The labor force participation rate is the percentage of the population that is either employed or unemployed. In this case, the labor force is 70 million (employed) + 5 million (unemployed) = 75 million. The labor force participation rate is therefore 75 million / 160 million * 100 = 66%.

Question 9

What is the labor force participation rate for a nation with an adult population of 20 million, 12 million employed workers and 3 million unemployed workers?

Accepted Answer

The labor force participation rate is the percentage of the adult population (above a certain age) that is either employed or actively seeking employment. In this case, the labor force is the sum of employed (12 million) and unemployed (3 million) workers, which equals 15 million people. Therefore, the labor force participation rate is 15 million (labor force) divided by 20 million (adult population), which equals 0.75 or 75 percent.

Question 10

Most economists expect labor force participation rates to:

Accepted Answer

The expected trend is for labor force participation rates to decrease over time due to factors such as an aging population and increased education enrollment.

Question 11

What type of unemployment can increase or decrease dramatically in a few months?

Accepted Answer

Cyclical unemployment is caused by changes in the economy and can increase or decrease dramatically in a short amount of time depending on the state of the economy. Frictional and structural unemployment are more long-term and are not affected by short-term changes in the economy.

Question 12

Higher implicit tax rates tend to cause labor force participation rates to

Accepted Answer

Higher implicit tax rates decrease the incentives to work, which results in a decrease in labor force participation rates.

Question 13

Why are there now more women in the U.S. labor force today than there were before?

Accepted Answer

All three explanations have played a role in the increase of women in the U.S. labor force. The trend toward greater equality for women in the workplace has led to more opportunities and better pay. The shift from a manufacturing to a service economy has created more jobs that are traditionally held by women. The availability and use of birth control has allowed women to have greater control over their reproductive choices, which has enabled them to pursue education and career goals.

Question 14

The natural unemployment rate includes the rates of I. cyclical unemployment. II. structural unemployment. III. frictional unemployment.

Accepted Answer

The natural unemployment rate includes structural and frictional unemployment, but not cyclical unemployment, which is associated with economic downturns.

Question 15

Reference: Ref 11-2 (Table: Unemployment Statistics for Country X) Using the data in the table, what is the natural unemployment rate for this country in the year 1995?

Accepted Answer

The answer of  Reference: Ref 11-2 (Table: Unemployment Statistics...

Question 16

A worker who works past retirement age but loses retirement benefits

Accepted Answer

If a worker loses retirement benefits for working past retirement age, they are essentially being taxed for working. This can discourage people from working past retirement age and may be seen as a disincentive for them to continue working.

Question 17

The labor force participation rate of a country tends to be higher if the government

Accepted Answer

Allowing retirees to work and receive government pensions without penalty incentivizes them to remain in the labor force, thus increasing the labor force participation rate. The other options discourage retirees from working and would likely lower the labor force participation rate.

Question 18

What affects labor force participation rates?

Accepted Answer

Each of these factors can affect the labor force participation rate. The demographic structure of a population can impact participation rates as certain age groups, genders, and education levels may be more or less likely to participate in the labor force. The tax structure of an economy can also play a role, as high taxes on labor can discourage participation, while incentives such as tax credits can encourage it. Technological advances such as the birth control pill can impact participation rates by giving women greater control over their reproductive choices, which can lead to more women participating in the labor force.

Question 19

The actual employment rate varies around the

Accepted Answer

The actual employment rate varies around the natural rate of unemployment, which includes both frictional and structural unemployment, but not cyclical unemployment.

Question 20

Which two nations have a high percentage of older workers participating in the labor force?

Accepted Answer

Japan and the United States have a high percentage of older workers participating in the labor force.

Quiz 28: Growth, Capital Accumulation, and the Economics of Ideas: Catching up Vs the Cutting Edge