Question 1

Official unemployment statistics:

Accepted Answer

The official unemployment statistics understate unemployment because "discouraged workers" who have given up looking for a job are not counted as unemployed, even though they are able and willing to work. This means that the true unemployment rate may be higher than what is officially reported. Choice A and D are incorrect as they suggest that the official statistics overstate employment rather than understating unemployment. Choice C is also incorrect as official unemployment statistics do include frictional unemployment, which refers to the temporary unemployment experienced by workers who are in between jobs or in the process of changing careers.

Question 2

Waiting for employment and "searching for employment" are both types of:

Accepted Answer

Waiting for employment and searching for employment are both examples of frictional unemployment, which is a type of unemployment that occurs when workers are in-between jobs and searching for new opportunities.

Question 3

The following information is about a hypothetical economy:
Full-time employed = 80
Part-time employed = 25
Unemployed = 15
Discouraged workers = 5
Members of underground economy = 6
Consumer Price Index = 110
-Refer to the above information.If 6 members of the labour force are presently counted as part of the unemployed when in fact they are employed,the official unemployment rate is overstated by:

Accepted Answer

The official unemployment rate is calculated as the number of unemployed divided by the total labor force. The total labor force is the sum of the full-time employed, part-time employed, unemployed, and discouraged workers. In this case, the total labor force is 80 + 25 + 15 + 5 = 125. The official unemployment rate is therefore 15 / 125 = 12%. If 6 members of the labor force are presently counted as part of the unemployed when in fact they are employed, the actual number of unemployed is 15 - 6 = 9. The actual unemployment rate is therefore 9 / 125 = 7.2%. The official unemployment rate is therefore overstated by 12% - 7.2% = 4.8 percentage points.

Question 4

The total population of an economy is 175 million,the labour force is 125 million,and the number of unemployed is 8 million.The unemployment rate for this economy is:

Accepted Answer

The formula to calculate the unemployment rate is: 
Unemployment Rate = (Number of Unemployed / Labour Force) x 100%
Using the information given,
Unemployment Rate = (8 million / 125 million) x 100%
Unemployment Rate = 6.4%
Therefore, the unemployment rate for this economy is 6.4 percent, which is option C.

Question 5

The unemployment rate is the:

Accepted Answer

The unemployment rate is the percentage of the labour force which is out of work. This definition includes workers who are actively seeking employment but are unable to find a job. Options A, B, and D all have some relation to employment or unemployment, but they do not accurately define the unemployment rate.

Question 6

A college or university graduate using the summer following graduation to search for a job would best be classified as:

Accepted Answer

Graduates searching for a job immediately after graduation fall under the category of frictional unemployment as they are temporarily unemployed due to the time it takes to search for a job and find the right fit for their skills and qualifications. They are actively seeking employment and are considered part of the labor force.

Question 7

The unemployment rate in an economy is 7.5 percent.The total population of the economy is 250 million and the size of the civilian labour force is 180 million.The number of employed workers in this economy is:

Accepted Answer

The answer of The unemployment rate in an economy is...

Question 8

In an economy,35 million workers are employed out of a labour force of 50 million and a total population of 70 million.The unemployment rate is:

Accepted Answer

The answer of In an economy,35 million workers are employed...

Question 9

A nation has a population of 300 million people.Of these,80 million are retired,in the military,in institutions,or under 15 years old.There are 210 million who are employed.What is the unemployment rate?

Accepted Answer

The total labor force in this nation is 300 million - 80 million = 220 million (excluding retired, military, institutionalized, and under-15 individuals). The number of employed individuals is 210 million. 
Therefore, the number of unemployed individuals is 220 million - 210 million = 10 million. 
To calculate the unemployment rate, we divide the number of unemployed individuals by the total labor force (excluding retired, military, institutionalized, and under-15 individuals): 
Unemployment rate = (10 million / 220 million) x 100% = 4.5% 
Therefore, the best choice is C) 4.5 percent.

Question 10

A nation has a population of 260 million people.Of these,60 million are retired,in the military,in institutions,or under 15 years old.There are 188 million who are employed.What is the unemployment rate?

Accepted Answer

The total population is 260 million.
The number of people who are retired, in the military, in institutions, or under 15 years old is 60 million.
Therefore, the number of people who are eligible for employment is 260 million - 60 million = 200 million.
Out of the 200 million eligible for employment, 188 million are employed.
The number of people who are unemployed is 200 million - 188 million = 12 million.
To find the unemployment rate, we need to divide the number of unemployed by the total eligible for employment:
Unemployment rate = (12 million / 200 million) x 100% = 6%.
Therefore, the answer is B) 6 percent.

Question 11

The unemployment rate in an economy is 12 percent.The civilian labour force is 50 million.The number of employed workers in the economy is:

Accepted Answer

The answer of The unemployment rate in an economy is...

Question 12

Anne Kasperson works in her own home as a full-time caretaker and homemaker.Officially,she is:

Accepted Answer

Anne Kasperson may do important work, but as a full-time caretaker and homemaker who is not receiving a salary or wages, she is not in the labour force, as she is not actively seeking employment or earning income.

Question 13

Suppose there are 5 million unemployed workers seeking jobs.After a period of time,1 million of them become discouraged over their job prospects and cease to look for work.As a result of this,the official unemployment rate would:

Accepted Answer

The official unemployment rate only considers active job seekers, therefore when 1 million unemployed workers become discouraged and stop actively seeking work, they are no longer counted as part of the labor force. This means that the labor force has decreased by 1 million but the number of employed workers has remained the same. Therefore, the official unemployment rate would decline.

Question 14

The official unemployment rate:

Accepted Answer

The official unemployment rate is calculated by dividing the number of unemployed individuals by the number of individuals in the labor force and expressing the result as a percentage. Therefore, it represents the percentage of the labor force that is unemployed, making choice C the correct answer. Choice A is incorrect because the official unemployment rate only includes individuals who are actively seeking employment. Choice B is incorrect because it is the ratio of two groups, rather than a percentage. Choice D is incorrect because it includes individuals who may not be part of the labor force, such as retirees or children.

Question 15

Part-time workers are counted as:

Accepted Answer

Part-time workers who want full-time work are considered as "underemployed" rather than "unemployed" in official statistics. As a result, the official unemployment rate tends to underestimate the level of unemployment by excluding these workers who are willing and able to work more hours but cannot find full-time employment. Therefore, D is the correct answer.

Question 16

The presence of discouraged workers:

Accepted Answer

Discouraged workers are those who have given up looking for work, and are therefore not counted as part of the labour force. However, they are technically still unemployed, so their presence may cause the official unemployment rate to understate the amount of unemployment.

Question 17

Suppose there are 10 million part-time workers and 90 million full-time workers in an economy.Five million of the part-time workers switch to full-time work.We can conclude that:

Accepted Answer

The official unemployment rate is calculated as the number of unemployed individuals divided by the total labor force, which includes both employed and unemployed individuals. Since the 5 million part-time workers who switched to full-time work are no longer considered unemployed, the number of unemployed individuals will decrease by 5 million. However, the total labor force will also increase by 5 million, since these individuals were not previously counted as part of the labor force. As a result, the official unemployment rate will remain unchanged.

Question 18

Assuming the total population is 100 million,the civilian labour force is 50 million,and 47 million workers are employed,the unemployment rate:

Accepted Answer

The answer of Assuming the total population is 100 million,the...

Question 19

The following information is about a hypothetical economy:
Full-time employed = 80
Part-time employed = 25
Unemployed = 15
Discouraged workers = 5
Members of underground economy = 6
Consumer Price Index = 110
-Refer to the above information.The unemployment rate is:

Accepted Answer

The unemployment rate is calculated as the number of unemployed divided by the labor force (full-time employed + part-time employed + unemployed), then multiplied by 100. Here, it is (15 / (80 + 25 + 15)) * 100 = 12.5 percent.

Question 20

Assume Smith is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B.Smith will be considered as:

Accepted Answer

Smith's unemployment is frictional because he voluntarily quit his job and is only temporarily unemployed as he has already secured another job with a better opportunity.

Quiz 9: Business Cycles, Unemployment, and Inflation