Question 1

Because people move into and out of the labor force so often, statistics on unemployment are difficult to interpret.

Accepted Answer

People who enter or leave the labor force can affect the unemployment rate, making it challenging to interpret statistics on unemployment.

Question 2

The Bureau of Labor Statistics' U-3 measure of joblessness is the official unemployment rate.

Accepted Answer

The U-3 measure of joblessness, also known as the headline unemployment rate, is the official unemployment rate as reported by the Bureau of Labor Statistics.

Question 3

People who report being unemployed but who, in fact, are working for "under the table" pay to avoid taxes on their earnings are really employed and therefore cause the reported unemployment rate to be higher than it would otherwise be.

Accepted Answer

People who work for under the table pay are considered employed, but since they are not paying taxes or being counted in official employment statistics, their presence can falsely inflate the reported unemployment rate.

Question 4

People who report being not in the labor force but who, in fact, want to work but have given up trying to find a job after an unsuccessful search cause the reported unemployment rate to be lower than it would otherwise be.

Accepted Answer

This is known as the "discouraged worker effect" and it is a factor that can artificially lower reported unemployment rates.

Question 5

The Bureau of Labor Statistics' U-1 measure of joblessness is smaller than its U-6 measure of joblessness.

Accepted Answer

The U-1 measure of joblessness only counts people who have been unemployed for 15 weeks or longer, while the U-6 measure includes not only the officially unemployed but also marginally attached workers and those employed part-time for economic reasons, making U-6 a broader and typically higher measure of joblessness.

Question 6

Discouraged workers are people who want to work but have given up trying to find a job after an unsuccessful search.

Accepted Answer

This is the definition of discouraged workers. They have become discouraged and stopped actively seeking employment because they have not found a job despite their efforts.

Question 7

The Bureau of Labor Statistics' U-1 measure of joblessness is larger than its U-6 measure of joblessness.

Accepted Answer

The U-6 measure includes a broader definition of unemployment and underemployment than the U-1 measure, so the U-6 measure of joblessness is larger than the U-1 measure.

Question 8

The Bureau of Labor Statistics' U-4 measure of joblessness includes discouraged workers.

Accepted Answer

The U-4 measure of unemployment includes not only unemployed individuals who have actively looked for work in the past four weeks but also those who are available to work and have looked for work sometime in the past 12 months, including discouraged workers who have given up job search because they believe no jobs are available for them.

Question 9

Rupert is collecting unemployment insurance benefits. To continue to receive his benefits, he must be looking for work. Because he'd like to continue collecting benefits rather than take a job, he applies at places that are unlikely to hire him. People like Rupert make the reported unemployment rate less than it would otherwise be.

Accepted Answer

People like Rupert, who are actively applying for jobs (even if selectively), are counted as part of the labor force and therefore contribute to the unemployment rate, not reduce it. The reported unemployment rate includes individuals actively seeking employment.

Question 10

If people who report being unemployed are not, in fact, trying hard to find a job, then the reported unemployment rate will be baised upward.

Accepted Answer

The unemployment rate is calculated by dividing the number of unemployed individuals by the total labor force (which includes both employed and unemployed individuals actively seeking employment). If some individuals who report being unemployed are not actually trying to find a job, then they should not be included in the total labor force and the unemployment rate will be skewed upward.

Question 11

The Bureau of Labor Statistics' U-5 measure of joblessness is the official unemployment rate.

Accepted Answer

The U-5 measure is not the official unemployment rate. The official unemployment rate, also known as the U-3 measure, is a different calculation that includes only people who are actively seeking and available for work.

Question 12

Almost half of all spells of unemployment end when the unemployed person leaves the labor force.

Accepted Answer

This statement is true. According to research, about 44% of spells of unemployment end when the unemployed person drops out of the labor force, meaning they stop actively looking for work.

Question 13

The Bureau of Labor Statistics' U-1 measure of joblessness includes only very long-term unemployed.

Accepted Answer

The answer of The Bureau of Labor Statistics' U-1 measure...

Question 14

The Bureau of Labor Statistics' U-5 measure of joblessness includes marginally attached workers.

Accepted Answer

The U-5 measure of joblessness includes marginally attached workers, along with those who are unemployed and actively seeking employment.

Question 15

The Bureau of Labor Statistics defines marginally attached workers as persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.

Accepted Answer

This is the exact definition of marginally attached workers provided by the Bureau of Labor Statistics.

Question 16

The Bureau of Labor Statistics defines discouraged workers as marginally attached workers who have given a job-market related reason for not currently looking for a job.

Accepted Answer

This is the exact definition provided by the Bureau of Labor Statistics.

Question 17

The Bureau of Labor Statistics' U-2 measure of joblessness includes job losers and job leavers.

Accepted Answer

The Bureau of Labor Statistics' U-2 measure of joblessness includes only job losers, not job leavers.

Question 18

The unemployment rate reported by the Bureau of Labor Statistics clearly understates the true unemployment rate.

Accepted Answer

The answer of The unemployment rate reported by the Bureau...

Question 19

Almost nine-tenths of all spells of unemployment end when the unemployed person finds a job.

Accepted Answer

Many spells of unemployment end when the person leaves the labor force, not necessarily when they find a job. Factors such as discouragement, retirement, returning to education, or personal issues can also end unemployment spells.

Question 20

It is best to view the official unemployment rate as a useful but imperfect measure of joblessness.

Accepted Answer

The official unemployment rate only captures those who are actively seeking employment and does not account for those who have given up looking for work or are underemployed. It also may not accurately represent certain demographic groups or regions. However, it is still a widely used measure of joblessness and provides some insight into the state of the labor market.

Quiz 15: Unemployment