Question 1

Scenario 7.1?Of 1,350 people surveyed, 318 are not working.?The status of those not working is as follows:?122 full-time students?29 discouraged workers?18 in long-term-care facilities?21 seeking employment and aged 16 or older?50 retirees?63 under age 16
15 working in the underground economy and not looking for a "real" job?Eight of those working were under 16 years of age.
-Refer to Scenario 7.1. According to the data provided, the number of people officially in the labor force is:

Accepted Answer

The answer of Scenario 7.1?Of 1,350 people surveyed, 318 are...

Question 2

In the official labor statistics, discouraged workers are:

Accepted Answer

Discouraged workers are not included in the labor force, as they have given up on finding a job and are not actively seeking employment. Therefore, they are not classified as either employed or unemployed in the official labor statistics.

Question 3

Which of the following persons would be considered unemployed?

Accepted Answer

To be considered unemployed, a person must be willing and able to work but not currently have a job. A housewife, a 15-year-old looking for summer employment, and a full-time student are not considered part of the labor force and therefore not counted as unemployed. A person who worked more than 20 hours in a family-owned business is considered employed. A recent college graduate looking for her first job is actively seeking employment and would be considered unemployed.

Question 4

The effect of _____ is to produce an unemployment rate that understates actual unemployment.

Accepted Answer

Discouraged workers and underemployment both contribute to the phenomenon of "hidden unemployment," which is not captured in the official unemployment rate. Discouraged workers are individuals who have given up actively seeking employment and are therefore no longer counted as part of the labor force. Underemployment refers to workers who are employed part-time but would prefer to work full-time, or those who are working in jobs that do not fully utilize their skills and education. These individuals may be counted as employed in the official unemployment rate, but they are not truly fully employed, which means the official rate will be an understatement of the true level of unemployment.

Question 5

Which of the following statements about frictional unemployment is true?

Accepted Answer

Frictional unemployment is caused by the natural turnover in the labor market as individuals leave their current jobs to seek new employment opportunities. This type of unemployment is characterized by a short period of unemployment and is considered to be a normal and healthy part of a dynamic economy. Therefore, option E is the correct choice. The other options are incorrect as frictional unemployment is not necessarily eliminated in a free society (option A), it is not a long-term unemployment (option B), it exists in all economies including developed ones (option C), and it is not the same as structural unemployment (option D).

Question 6

The Bureau of Labor Statistics defines a person as unemployed if he or she does not:

Accepted Answer

The Bureau of Labor Statistics defines a person as unemployed if they do not have a job but are actively seeking one, regardless of whether they work full time, earn a specific wage, or are above the poverty level. Therefore, option B is the correct answer.

Question 7

Who among the following people will an economist consider underemployed?

Accepted Answer

Underemployment refers to a situation where a person is employed but is working fewer hours or at a job that is below his or her skill level or education. Therefore, a person who is working part-time but prefers full-time employment falls under this category of underemployment.

Answer: D 
 A person who is willing to work but cannot do so due to a constraint such as imprisonment is considered as "marginally attached to the labor force" or "discouraged worker" as per the Bureau of Labor Statistics. However, if such a person is willing to work from his or her cell, it can be considered as underemployment.

Other options do not fit the definition of underemployment. Option A represents a personal choice and not a shortage of employment opportunities. Option C is also a personal choice, and the person is not willing to work more. Option E implies a lack of job satisfaction but not a shortage of job opportunities.

Question 8

To be counted as part of the labor force, a person must:

Accepted Answer

To be considered as part of the labor force, an individual should either be working or actively seeking work. Therefore, option D is the correct choice.

Option A is incorrect as there is no age limit for individuals to be considered part of the labor force.

Option B is incorrect as a person who has never worked before can still be a part of the labor force if they are currently working or looking for work.

Option C is incorrect because not all productive activities classify as being part of the labor force.

Option E is incorrect because the minimum age requirement to be part of the labor force varies by country, and 16 years old is not universally accepted.

Question 9

Who among the following individuals is not an underemployed or a discouraged worker?

Accepted Answer

The nuclear physicist unable to work because of illness is not underemployed or discouraged, but rather physically unable to work due to health reasons. Everyone else listed is either underemployed (working part-time when they want to work full-time) or discouraged (unable to find work or no longer looking for work).

Question 10

Scenario 7.2?Suppose it has been recently predicted that in the year 2020, the total number of residents in the United States will be 315.5 million, the number of residents under 16 years of age will be 85 million, the number of institutionalized adults will be 17 million, the number of adults not actively looking for work will be 39 million, and the number of unemployed will be 21.5 million.
-Refer to the data in Scenario 7.2. What is the predicted unemployment rate in the United States for the year 2020?

Accepted Answer

The answer of Scenario 7.2?Suppose it has been recently predicted...

Question 11

Scenario 7.1?Of 1,350 people surveyed, 318 are not working.?The status of those not working is as follows:?122 full-time students?29 discouraged workers?18 in long-term-care facilities?21 seeking employment and aged 16 or older?50 retirees?63 under age 16
15 working in the underground economy and not looking for a "real" job?Eight of those working were under 16 years of age.
-Refer to Scenario 7.1. According to the data provided, the official unemployment rate is:

Accepted Answer

The official unemployment rate is calculated by dividing the number of unemployed individuals actively seeking employment by the labor force and then multiplying by 100. In this scenario, 21 people are seeking employment and are aged 16 or older, which makes them part of the labor force. The labor force consists of those working (1,350 - 318 = 1,032) plus those seeking employment (21), totaling 1,053. Therefore, the unemployment rate is (21 / 1,053) * 100 = 1.99%, which rounds to approximately 2.0%.

Question 12

Scenario 7.2?Suppose it has been recently predicted that in the year 2020, the total number of residents in the United States will be 315.5 million, the number of residents under 16 years of age will be 85 million, the number of institutionalized adults will be 17 million, the number of adults not actively looking for work will be 39 million, and the number of unemployed will be 21.5 million.
-Refer to the data in Scenario 7.2. What will be the size of the labor force in the United States in the year 2020?

Accepted Answer

The labor force consists of employed and unemployed individuals. To find the size of the labor force, subtract the number of residents under 16 years of age, institutionalized adults, and adults not actively looking for work from the total number of residents. This calculation is 315.5 million - 85 million - 17 million - 39 million = 174.5 million.

Question 13

The official unemployment rate is:

Accepted Answer

The official unemployment rate is calculated by taking the number of unemployed people and dividing it by the size of the labor force. The labor force includes all people who are employed or actively seeking employment. This measure provides a more accurate representation of the unemployment situation than the options A, B, and E, which do not take into account the size of the labor force. Option C is also incorrect as it is not clear what is meant by the "non-institutionalized population", which could lead to inaccuracies in the calculation of the unemployment rate.

Question 14

Which of the following is true about workers who experience structural unemployment?

Accepted Answer

Workers who experience structural unemployment often face obstacles in finding new jobs due to a mismatch of skills or changes in the economy. As a result, they may become discouraged and give up on their job search, entering the pool of discouraged workers. Option A is incorrect because workers who experience structural unemployment may not be able to find jobs in another industry that pay the same salary as their previous job. Option B is incorrect because workers who experience structural unemployment are not affected by business cycle fluctuations but rather by long-term structural changes in the economy. Option D is incorrect because workers who experience structural unemployment may continue to search for jobs even if the process takes longer than expected. Option E is also incorrect because workers who experience structural unemployment may not have the necessary skills for other industries.

Question 15

Scenario 7.1?Of 1,350 people surveyed, 318 are not working.?The status of those not working is as follows:?122 full-time students?29 discouraged workers?18 in long-term-care facilities?21 seeking employment and aged 16 or older?50 retirees?63 under age 16
15 working in the underground economy and not looking for a "real" job?Eight of those working were under 16 years of age.
-Refer to Scenario 7.1. If any two individuals who were actively looking for a job, got tired of not finding one and decided to become full-time students, then:

Accepted Answer

The answer of Scenario 7.1?Of 1,350 people surveyed, 318 are...

Question 16

Assume that the U.S. labor force consists of 185 million workers and that 17.5 million are officially unemployed. Calculate the unemployment rate.

Accepted Answer

The formula to calculate the unemployment rate is:

Unemployment Rate = (number of unemployed workers / labor force) x 100

Substituting the given values, we get:

Unemployment Rate = (17.5 million / 185 million) x 100
Unemployment Rate = 9.46%

Rounding this to the nearest tenth, we get the answer as 9.5%, which is option C.

Question 17

Scenario 7.1?Of 1,350 people surveyed, 318 are not working.?The status of those not working is as follows:?122 full-time students?29 discouraged workers?18 in long-term-care facilities?21 seeking employment and aged 16 or older?50 retirees?63 under age 16
15 working in the underground economy and not looking for a "real" job?Eight of those working were under 16 years of age.
-Refer to Scenario 7.1. According to the data provided, the number of workers officially unemployed is:

Accepted Answer

The number of workers officially unemployed is those who are seeking employment and aged 16 or older, which is 21 according to the data provided.

Question 18

Suppose Jess resigns from her low paying job. After looking for a new job for two weeks she is highly frustrated and gives up looking for a better-paying job. According to the U.S. Bureau of Labor Statistics, Jess would:

Accepted Answer

If Jess gives up looking for a job, she is considered to have left the labor force, and therefore not counted as unemployed as per the U.S. Bureau of Labor Statistics. Thus, the correct option is D, "not be considered as a part of the labor force."

Question 19

Which of the following is true of seasonal unemployment?

Accepted Answer

Seasonal unemployment is a type of unemployment that occurs at certain times of the year when demand for labor in certain industries is lower. It is always present in a healthy economy due to the nature of certain jobs being seasonal, such as agriculture or tourism.

Question 20

Because there is no way to account for them, the official unemployment rate does not include discouraged workers. What would happen to the unemployment rate if, because of a program that gave them new hope, all discouraged workers suddenly begin reporting themselves as ready to work?

Accepted Answer

The labor force is defined as those who are employed plus those who are unemployed but seeking work. If discouraged workers, who were previously not counted in the labor force because they were not actively seeking employment, suddenly begin to report themselves as ready to work, they would be classified as unemployed but seeking work. This would increase the size of the labor force because these individuals are now considered part of the pool of people either working or looking for work.

Quiz 7: Unemployment and Inflation