Question 1

The demand for new motor vehicles falls when the economy enters a downturn and as a result,motor vehicle manufacturers sack some workers.This would be an example of -.

Accepted Answer

This scenario represents cyclical unemployment, which occurs due to the fluctuations in the overall economy. When the economy enters a downturn, demand for new motor vehicles falls, leading to a decline in production and subsequently, job losses in the motor vehicle manufacturing sector.

Question 2

When is the labour market considered to be at 'full employment'?

Accepted Answer

Full employment does not mean that every individual has a job or that there is zero unemployment in the economy. Rather, full employment refers to a situation where the only unemployment is due to frictional or structural factors, which means that any unemployment is temporary and due to workers transitioning between jobs, or because of a mismatch between the skills of available workers and the requirements of available jobs. This means that there are no cyclical or involuntary unemployment, which occurs due to a lack of aggregate demand in the economy. Therefore, option B is correct as it states that all unemployment is frictional or structural.

Question 3

What makes up the natural rate of unemployment?

Accepted Answer

The natural rate of unemployment is comprised of frictional and structural unemployment. Frictional unemployment refers to the time that workers spend searching for new jobs, while structural unemployment occurs as a result of mismatches between available jobs and workers' skills or locations. Cyclical unemployment, on the other hand, refers to the fluctuations in unemployment that occur as a result of changes in the business cycle, and is not considered part of the natural rate of unemployment.

Question 4

When is the labour market at 'full employment'?

Accepted Answer

Full employment refers to a situation where there is no cyclical unemployment in the economy. Cyclical unemployment is caused by a lack of aggregate demand in the economy, which leads to firms laying off workers. Therefore, if there is no cyclical unemployment, it suggests that the economy is operating at its potential output level, and all workers who want a job can find one. This does not mean that there is no unemployment in the economy, as there may still be some level of frictional or structural unemployment. Therefore, the correct answer is D - when there is no cyclical unemployment in the economy.

Question 5

Which of the following is an example of a worker experiencing 'frictional unemployment'?

Accepted Answer

Frictional unemployment occurs when a worker is between jobs, voluntarily or involuntarily, and is searching for a new job that matches their skills and preferences. Choice A describes a worker who voluntarily leaves their job to find more interesting work, which is an example of frictional unemployment.

Question 6

People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of people who are experiencing -.

Accepted Answer

These hand-drawn animators are experiencing structural unemployment, which is caused by changes in the economy, technology, or consumer demand that lead to an industry or jobs becoming obsolete. This is different from frictional unemployment, which is when individuals are between jobs, cyclical unemployment, which is caused by changes in the business cycle, or seasonal unemployment, which is caused by changes in demand for certain types of workers during certain times of the year.

Question 7

Many economists argue that 'frictional unemployment'

Accepted Answer

Frictional unemployment is the natural and unavoidable occurrence of employment turnover as workers switch between jobs, industries, and locations. It is considered a type of unemployment that cannot and probably should not be eliminated entirely, as it indicates a healthy level of job search and labor market dynamism.

Question 8

When would 'structural unemployment' increase?

Accepted Answer

Structural unemployment is caused by a mismatch between the skills of the workforce and the skills required for available jobs. When workers are replaced by machines and do not have the skills to perform new jobs, structural unemployment increases. Options A, B, and C are associated with cyclical unemployment, frictional unemployment, and discouraged workers respectively.

Question 9

Joe just told his boss that he thinks his boss is stupid.What type of unemployment is Joe likely to experience in the near future?

Accepted Answer

Insulting one's boss is likely to result in a termination of employment, which would lead to frictional unemployment. Frictional unemployment occurs when an individual is temporarily between jobs due to factors such as voluntarily leaving a job or being fired.

Question 10

'Frictional unemployment' can be defined as unemployed that

Accepted Answer

Frictional unemployment occurs when people are between jobs or are re-entering the labour force, and it's considered a normal part of a healthy economy. It's not caused by changes in technology or a recession, and there's no specific time requirement for someone to be considered frictionally unemployed.

Question 11

A woman who quit her job to search for a job that better utilises her skills represents an example of -.

Accepted Answer

This scenario represents frictional unemployment, which occurs when individuals are temporarily between jobs, voluntarily leaving their current positions to search for better opportunities that better match their skills and preferences. This is a normal and inevitable part of any healthy labor market, although it can still create short-term unemployment.

Question 12

The demand for new motor vehicles falls due to high oil prices and a move by people toward a greater use of public transport.As a result,motor vehicle manufacturers sack some workers.This would be an example of -.

Accepted Answer

Structural unemployment refers to the unemployment that occurs due to changes in the structure of an economy, such as changes in technology or consumer preferences. In this case, the shift towards greater use of public transport and the high oil prices are causing a decrease in demand for new motor vehicles, which results in motor vehicle manufacturers sacking some workers. This is an example of structural unemployment because the change in consumer preferences and oil prices has caused a structural change in the economy, resulting in fewer jobs in the motor vehicle industry.

Question 13

How is 'cyclical unemployment' defined?

Accepted Answer

Cyclical unemployment is when unemployment is caused by an economic contraction or recession. This type of unemployment occurs due to a decline in economic activity and demand for labor, leading to layoffs and job losses. It is called "cyclical" because it is a result of the natural business cycle of expansion and contraction in the economy.

Question 14

The unemployment resulting from workers laid off due to an economic contraction or a recession would be classified as -.

Accepted Answer

Unemployment resulting from an economic contraction or recession is called cyclical unemployment. This type of unemployment is due to a lack of demand for labor, which leads to layoffs and job losses. It is different from frictional unemployment, which is due to workers moving between jobs or entering the labor force. Structural unemployment refers to the mismatch between the skills of workers and the available jobs, while natural unemployment is the level of unemployment that exists when the labor market is in equilibrium.

Question 15

An example of a 'seasonally unemployed' worker would be a

Accepted Answer

A worker employed at a beachside resort who loses his job in winter is an example of a seasonally unemployed worker. This is because the resort likely experiences lower demand during the winter months, which results in a reduction in staff during that time. The other options are not examples of seasonal unemployment, as they are due to reasons such as declining demand or company downsizing, rather than a cyclical pattern of employment.

Question 16

What is the unemployment rate when the labour market is considered to be at 'full employment'?

Accepted Answer

The unemployment rate when the labour market is considered to be at 'full employment' is the natural rate of unemployment, which includes only the structural and frictional unemployment that exists even when the economy is operating at its potential level of output. It does not include cyclical unemployment, which is the result of economic downturns and is temporary in nature. Therefore, Choice D is the best answer.

Question 17

A woman named Sheila who retired becomes bored and begins to look for a job.During the time she is searching for work,she would be classified as -.

Accepted Answer

Sheila is temporarily between jobs and actively seeking work, which makes her frictionally unemployed.

Question 18

Suzanne is a full-time student who is not looking for work.Suzanne is experiencing _____________ unemployment.

Accepted Answer

Suzanne is not considered unemployed because she is not actively looking for work; instead, she is a full-time student. To be classified as unemployed, an individual must be actively seeking employment. Since Suzanne is not part of the labor force, she does not fall into any category of unemployment.

Question 19

'Frictional unemployment' would increase when

Accepted Answer

Frictional unemployment occurs when individuals voluntarily leave their job to find a new one. This type of unemployment is often seen as a healthy sign of a dynamic labor market where workers are seeking better opportunities. Choices A, B, and C describe situations related to cyclical, structural, and discouraged workers, respectively, which are different from frictional unemployment.

Question 20

Which of the following is an example of a worker experiencing 'cyclical unemployment'?

Accepted Answer

Cyclical unemployment occurs due to changes in the business cycle and economic conditions, such as during a recession when there is a decrease in demand for goods and services. The truck driver losing his job due to a recession is an example of cyclical unemployment.

Quiz 14: Unemployment and Inflation