Question 1

Official unemployment rate statistics may:

Accepted Answer

The official unemployment rate only considers individuals who are actively seeking employment. Therefore, it does not account for "discouraged" workers who have stopped actively searching for jobs. This means that the actual amount of unemployment in the economy may be higher than the official rate suggests.

Question 2

Which of the following statements is correct?

Accepted Answer

Structural unemployment is caused by shifts in the economy, such as changes in technology or consumer demand, that make certain jobs or industries obsolete. Frictional unemployment refers to the time and resources it takes for workers to find new jobs or for employers to fill positions, and is not necessarily caused by conflicts between labor and management. Cyclical unemployment is caused by downturns in the business cycle. Search unemployment is a specific type of frictional unemployment that occurs when workers are in between jobs but are actively seeking employment.

Question 3

Search and wait unemployment is another way to describe:

Accepted Answer

Frictional unemployment refers to the temporary unemployment that arises from the process of matching workers with job vacancies. Job seekers may take time to search and compare job opportunities, and employers may take time to search and screen candidates. "Search and wait" unemployment is a common experience for individuals who are between jobs or entering the labor market for the first time.

Question 4

A nation has a population of 260 million people. Of these, 60 million are retired, in the military, institutionalized, or under 16 years old. There are 188 million who are employed and 12 million who are unemployed. What is the unemployment rate?

Accepted Answer

The labor force is the sum of employed and unemployed individuals, which is 188 million + 12 million = 200 million.
The unemployment rate is the number of unemployed individuals divided by the labor force, which is 12 million / 200 million = 0.06 or 6%. Therefore, the answer is B) 6 percent.

Question 5

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

Accepted Answer

The statement "Real GDP falls again as the economy slumps" suggests a contraction in the economy, which would result in a decrease in demand for goods and services. This decrease in demand would lead to a decrease in production and an increase in unemployment, specifically cyclical unemployment.

Question 6

In calculating the unemployment rate, part-time workers are:

Accepted Answer

Part-time workers are considered employed because they are receiving payment for work. The unemployment rate only includes those who are currently without work but are actively seeking employment. Therefore, part-time workers do not contribute to the unemployment rate calculation.

Question 7

Which of the following is the correct way to calculate the unemployment rate?

Accepted Answer

The unemployment rate is calculated by dividing the number of unemployed individuals by the number of individuals in the labor force, which includes both employed and unemployed individuals who are seeking work. Therefore, B is the correct formula to use. A includes the entire population, not just those who are part of the labor force, and D is the inverse of B and does not give the unemployment rate directly. C includes the entire population, not just those who are part of the labor force.

Question 8

Full-time homemakers and retirees are classified in the BLS data as:

Accepted Answer

Full-time homemakers and retirees are not considered to be part of the labor force because they are not actively seeking employment or available for work. Therefore, they are classified as "Not in the labor force" in the BLS data.

Question 9

Kevin has lost his job in an automobile plant because the company switched to robots for its welding step in 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 unemployment is a result of a shift in technology and changes in the structure of the economy, indicating that he is facing structural unemployment.

Question 10

A worker who loses a job at a call center because the company moved the call center operations to another country is an example of:

Accepted Answer

This is an example of structural unemployment because the worker lost their job due to a shift in the structure of the industry, as the call center operations were relocated to another country.

Question 11

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

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills and location of workers and the job openings available. This can occur due to changes in the structure of the economy, such as technological advancements or shifts in consumer preferences, which can lead to certain jobs becoming obsolete and new jobs emerging in different locations. Therefore, if workers are located in one area and job openings are in another area, this would result in structural unemployment.

Question 12

The following items describe the responses of four individuals to a Bureau of Labor Statistics (BLS) survey of employment. 1. Mollie just graduated from college and is now looking for work. She has had three job interviews in the past month, but still has not gotten a job offer.
2) George used to work in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in a few 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 defense spending. She has been looking for similar work for a year but no company seems interested in her aircraft design skills.
4) Ricardo 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 is when individuals are temporarily between jobs as they search for a new one. Mollie is actively seeking employment and has had job interviews, indicating that she is frictionally unemployed. George, Jeanette, and Ricardo are all experiencing different types of unemployment. George is experiencing cyclical unemployment due to the weakening economy, Jeanette is experiencing structural unemployment due to a decline in demand for her specific skills, and Ricardo is experiencing discouraged worker unemployment due to giving up on finding employment after an extended period of unemployment.

Question 13

The unemployed are those people who:

Accepted Answer

The unemployed are individuals who are not employed but are actively seeking work. Option A may include individuals who are not seeking work, while option C may include individuals who are not seeking work and are not actively looking for work. Option D includes individuals who are not in the workforce, but may not necessarily be unemployed.

Question 14

The unemployment rate in an economy is 6%. The total population of the economy is 290 million, and the size of the civilian labor force is 150 million. The number of unemployed workers in this economy is:

Accepted Answer

The unemployment rate is calculated as the number of unemployed workers divided by the total labor force, which consists of both employed and unemployed workers.

We are given that the unemployment rate is 6%, so we can use this to find the number of unemployed workers:

Unemployment rate = (Number of unemployed workers / Labor force) x 100

6% = (Number of unemployed workers / 150 million) x 100

Solving for the number of unemployed workers:

Number of unemployed workers = (6% x 150 million) / 100

Number of unemployed workers = 9 million

Therefore, there are 9 million unemployed workers in this economy.

Question 15

If the total population is 200 million, the labor force is 100 million, and 92 million workers are employed, then the unemployment rate would be:

Accepted Answer

The unemployment rate is the percentage of the labor force that is unemployed, which is calculated by (unemployed workers / total labor force) x 100. In this case, the number of unemployed workers would be 100 million - 92 million = 8 million. Thus, the unemployment rate would be (8 million / 100 million) x 100 = 8 percent.

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 while they transition between jobs voluntarily. They are typically qualified for the positions they are applying for and their joblessness is a result of the time it takes to search for a new job that matches their skills and preferences. Option B refers to cyclical unemployment, while option D is a form of discouraged unemployment. Option A is not a definition of frictional unemployment.

Question 17

The following items describe the responses of four individuals to a Bureau of Labor Statistics (BLS) survey of employment. 1. Mollie just graduated from college and is now looking for work. She has had three job interviews in the past month, but still has not gotten a job offer.
2) George used to work in an automotive assembly plant. He was laid off six months ago as the economy weakened. He expects to return to work in a few 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 defense spending. She has been looking for similar work for a year but no company seems interested in her aircraft design skills.
4) Ricardo 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

Structural unemployment occurs when there is a mismatch between the skills that workers possess and the skills that employers are looking for. In the case of Jeanette, she lost her job due to a decrease in demand for her specific skill set (aircraft design) in the job market, and despite actively searching for similar work, she has been unable to find a job. This mismatch between her skills and the available job openings classifies her as structurally unemployed. Mollie is currently unemployed but actively searching for work, so she is not structurally unemployed. George is experiencing cyclical unemployment due to the economic downturn and expects to return to work when conditions improve. Ricardo voluntarily left the labor force after being unsuccessful in finding a job, so he is not considered structurally unemployed.

Question 18

In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are:

Accepted Answer

Discouraged workers who are not actively seeking employment are not considered to be a part of the labor force and are therefore excluded from the calculation of the unemployment rate. This is because the unemployment rate only measures the percentage of people who are actively seeking employment but are unable to find a job.

Question 19

Unemployment that occurs when there is deficient demand for the goods and services of an economy is called:

Accepted Answer

Cyclical unemployment is a type of unemployment that arises due to fluctuations in the business cycle. When there is a recession or a slowdown in the economy, the demand for goods and services diminishes, and firms reduce production, leading to layoffs and job losses. This type of unemployment occurs due to deficient demand and is, therefore, the best choice. Frictional unemployment occurs when people are transitioning between jobs, and structural unemployment arises due to a mismatch between the skills of workers and the available jobs. Natural unemployment represents the unemployment rate that exists when the labour market is in equilibrium.

Question 20

New college graduates still looking for their first jobs would be classified in the BLS data as:

Accepted Answer

College graduates who are actively seeking employment but have not yet found a job are classified as frictionally unemployed. This type of unemployment is short-term and occurs when individuals are transitioning between jobs or entering the workforce for the first time.

Quiz 9: Business Cycles, Unemployment, and Inflation