Question 1

A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?

Accepted Answer

A fall in real GDP and a slumping economy suggest a recession, which is a characteristic of cyclical unemployment. This type of unemployment occurs due to a decline in the overall demand for goods and services in the economy, leading to firms laying off workers.

Question 2

Working as an elevator operator used to be a common job in the workforce four decades ago,but today few jobs remain.The unemployment created by introduction of automatic elevators would be considered:

Accepted Answer

Structural unemployment refers to a mismatch between the skills of the workforce and the available job opportunities. In this case, the introduction of automatic elevators resulted in a structural shift in the job market, rendering elevator operator jobs obsolete and creating a long-term mismatch between the demand for and supply of such jobs.

Question 3

When a group of workers find that their job skills and work experience have become obsolete and are not needed by industry,this type of unemployment is:

Accepted Answer

The description provided indicates that the workers are experiencing structural unemployment - meaning their skills are no longer in demand due to changes in the structure of the industry or economy. Search unemployment involves people looking for jobs, frictional unemployment occurs when people are between jobs or transitioning, and cyclical unemployment is related to changes in the business cycle.

Question 4

The descriptions give the responses of four individuals to Statistics Canada.
1.Mollie just graduated from university and is now looking for work.She has had three job interviews in the past month.
2.George works in an automotive assembly plant.He was laid off six months ago as the economy weakened.He expects to return to work in several months when national economic conditions improve.
3.Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the federal government cut defence spending.She has been looking for similar work for a year but no company seems interested in her aircraft design skills.
4.Ryan lost his job last year when his company downsized and laid off middle-level managers.He tried to find another job for a year,but was unsuccessful and quit looking for work.
-Refer to the above information.Which individual is cyclically unemployed?

Accepted Answer

Cyclically unemployed individuals are those who lose their jobs due to economic downturns and are expected to return to work when national economic conditions improve. George fits this description as he was laid off from his job in an automotive assembly plant due to weakening economic conditions and expects to return to work when the economy improves.

Question 5

Structural unemployment:

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills and qualifications of workers and the requirements of available job openings, or a mismatch between where job openings are located and where unemployed workers are located. This can lead to long-term unemployment as it may take time for workers to acquire the necessary skills or move to where jobs are available.

Question 6

The descriptions give the responses of four individuals to Statistics Canada.
1.Mollie just graduated from university and is now looking for work.She has had three job interviews in the past month.
2.George works in an automotive assembly plant.He was laid off six months ago as the economy weakened.He expects to return to work in several months when national economic conditions improve.
3.Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the federal government cut defence spending.She has been looking for similar work for a year but no company seems interested in her aircraft design skills.
4.Ryan lost his job last year when his company downsized and laid off middle-level managers.He tried to find another job for a year,but was unsuccessful and quit looking for work.
-Refer to the above information.Which individual is structurally unemployed?

Accepted Answer

Jeanette is structurally unemployed because her skills are not in demand due to changes in the industry (reduced defense spending).

Question 7

Kimberly voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree.With degree in hand she is now searching for a position in management.Kimberly presently is:

Accepted Answer

Kimberly is temporarily out of work and actively seeking employment in her chosen field of management. This situation is known as frictional unemployment, which occurs when individuals are between jobs or transitioning from one career to another. She is not structurally unemployed since she has the necessary skills and education to qualify for jobs in her field. She is not cyclically unemployed since her unemployment is not linked to fluctuations in the overall economy. She is also a member of the labor force since she is actively seeking employment.

Question 8

The type of unemployment associated with recessions is called:

Accepted Answer

Cyclical unemployment is the type of unemployment associated with recessions. This type of unemployment occurs due to a decline in demand for goods and services, which leads to a decrease in production and, in turn, layoffs or reduced hours for workers.

Question 9

A headline reads: "Steel industry suffers slump as import competition increases and unemployment rises." This type of unemployment can best be characterized in economic terms as:

Accepted Answer

The fact that the slump in the steel industry is due to increased import competition and not enough demand for domestic steel suggests that this type of unemployment is structural. Structural unemployment occurs when there is a mismatch between the skills of the unemployed workers and the skills needed for available jobs in the economy. In this case, workers in the steel industry may lack the skills needed for other available jobs in the economy, leading to long-term unemployment.

Question 10

Dr.Homer Simpson,an economics professor,decided to take a year off from teaching to run a commercial fishing boat in P.E.I.That year,Professor Simpson would be officially counted as:

Accepted Answer

Professor Simpson is employed as he is working and generating income through running the commercial fishing boat.

Question 11

In the depth of the Great Depression,the unemployment rate in Canada was about:

Accepted Answer

The answer of In the depth of the Great Depression,the...

Question 12

Eckstein has lost her job in a Quebec textile plant because of import competition.She intends to take a short course in electronics and move to B.C.where she anticipates new jobs will be available.We can say that Eckstein is faced with:

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills of workers and the available jobs in the market. In this case, Eckstein lost her job due to import competition, which suggests that the textile industry is facing structural changes that may not immediately offer employment opportunities to workers like her who may not have the necessary skills. Her decision to take a course in electronics and move to an area where she anticipates new jobs will be available suggests that she is taking steps to address this structural unemployment.

Question 13

Unemployment that occurs when there is a decline in total spending is called:

Accepted Answer

Cyclical unemployment occurs due to a decline in total spending or during an economic downturn where businesses may cut back on production and lay off workers due to decreased demand for goods and services.

Question 14

Cyclical unemployment is the result of:

Accepted Answer

Cyclical unemployment is the result of a decline in total spending, which often occurs during a recession or economic downturn. As businesses see a decrease in demand for their goods and services, they may need to lay off workers in order to cut costs, leading to an increase in cyclical unemployment.

Question 15

Cyclical unemployment is a consequence of:

Accepted Answer

Cyclical unemployment is a type of unemployment that occurs as a result of a decline in aggregate spending, often caused by an economic recession or slowdown. When businesses are not selling as many goods and services, they may need to lay off workers, leading to an increase in unemployment. Choice B refers to structural unemployment, while choice C refers to frictional unemployment, both of which are different types of unemployment. Technological change can lead to structural unemployment, but it is not necessarily the cause of cyclical unemployment.

Question 16

The best example of a "frictionally unemployed" worker is one who:

Accepted Answer

A "frictionally unemployed" worker is one who is temporarily unemployed because they are in the process of voluntarily switching jobs. This type of unemployment is considered to be a normal and healthy part of the labor market as it allows workers to find better job opportunities that fit their skills and preferences. Option A refers to a worker who causes inefficiencies in the workplace, not necessarily someone who is frictionally unemployed. Option B refers to someone who is unemployed due to a downturn in the economy, which is not the same as frictional unemployment. Option D refers to someone who is discouraged and has given up on finding work, which is not an example of frictional unemployment.

Question 17

A mismatch between the geographic location of workers and the location of job openings would result in what type of unemployment?

Accepted Answer

Structural unemployment refers to a mismatch between the skills and location of workers and the requirements and location of job openings, resulting in unemployment.

Question 18

The descriptions give the responses of four individuals to Statistics Canada.
1.Mollie just graduated from university and is now looking for work.She has had three job interviews in the past month.
2.George works in an automotive assembly plant.He was laid off six months ago as the economy weakened.He expects to return to work in several months when national economic conditions improve.
3.Jeanette worked as an aircraft design engineer for a company that produces military aircraft until she lost her job last year when the federal government cut defence spending.She has been looking for similar work for a year but no company seems interested in her aircraft design skills.
4.Ryan lost his job last year when his company downsized and laid off middle-level managers.He tried to find another job for a year,but was unsuccessful and quit looking for work.
-Refer to the above information.Which individual is frictionally unemployed?

Accepted Answer

Frictional unemployment refers to the unemployment that occurs when people are between jobs, such as Mollie who just graduated from university and is actively looking for work.

Question 19

Unemployment involving a mismatch of the skills of unemployed workers and the skills required for available jobs is called:

Accepted Answer

Structural unemployment refers to unemployment caused by a mismatch between the skills and qualifications of workers and the requirements of available jobs, as opposed to cyclical unemployment which is caused by fluctuations in the business cycle and frictional unemployment which is temporary unemployment resulting from transitions between jobs. Compositional unemployment refers to changes in the composition of the labor force, such as the aging of the population, that can affect employment levels.

Question 20

Kevin has lost his job in an automobile plant because of the use of robots for welding on the assembly line.Kevin plans to go to technical school to learn how to repair microcomputers.The type of unemployment Kevin is faced with is:

Accepted Answer

Kevin's job loss is due to the adoption of new technology, so it is a structural unemployment.

Quiz 9: Business Cycles, Unemployment, and Inflation