Question 1

The natural rate of unemployment is

Accepted Answer

The natural rate of unemployment is the rate at which there is no cyclical unemployment, meaning that all unemployment is either structural or frictional. Therefore, the rate where cyclical unemployment equals 0 percent is the natural rate of unemployment.

Question 2

When the economy has a recessionary gap, cyclical unemployment is probably

Accepted Answer

A recessionary gap indicates that there is a shortfall in aggregate demand, which leads to a decrease in output and employment levels. This means that there are more workers than there are available jobs, resulting in an increase in unemployment known as cyclical unemployment. Therefore, the answer is E, positive.

Question 3

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 5 percent and structural 4 percent. East Westfalia's natural rate of unemployment is

Accepted Answer

The answer of East Westfalia reported these unemployment rates for...

Question 4

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. If the official unemployment rate is 9 percent, then

Accepted Answer

The natural rate of unemployment represents the level of unemployment that would exist in the economy in the long run, when it is operating at its potential level of output. If the actual unemployment rate is higher than the natural rate, it suggests a recessionary gap or an output gap, where real GDP is less than potential GDP. The difference between the two rates (9-7=2%) represents the healthy rate of unemployment, consisting of frictional and structural unemployment. Cyclical unemployment is the deviation from the natural rate caused by business cycle fluctuations, and in this case, it is positive (9-7=2%). Therefore, the correct answer is B.

Question 5

When cyclical unemployment is high, the economy is having

Accepted Answer

Cyclical unemployment is a type of unemployment that occurs due to fluctuations in the business cycle. When cyclical unemployment is high, it means the economy is in a period of contraction and is experiencing a recession.

Question 6

When real GDP

Accepted Answer

When real GDP is below potential GDP, there is a gap between the actual and potential production levels, which leads to an increase in cyclical unemployment. This is because businesses are producing less than they are capable of, leading to a decrease in demand for labor and an increase in layoffs.

Question 7

If the economy is at full employment, then the

Accepted Answer

At full employment, the economy operates at a level where the only types of unemployment are frictional (short-term between jobs), structural (mismatch between skills and job requirements), and seasonal (due to seasonal variations in demand). This does not mean that everyone is employed, but rather that the economy is operating at its productive potential without cyclical unemployment.

Question 8

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. If the official unemployment rate is 9 percent, then

Accepted Answer

The natural rate of unemployment is the sum of frictional and structural unemployment. In this case, it is 7 percent. The official unemployment rate is 9 percent, which is higher than the natural rate. This suggests that there is an excess supply of labor (i.e. more people looking for work than there are available jobs), which results in a recessionary gap. Therefore, the correct answer is B.

Question 9

The natural rate of unemployment does not include ________ unemployment.

Accepted Answer

The natural rate of unemployment is the rate of unemployment that exists when the economy is at full employment, and includes frictional, structural, and seasonal unemployment. It does not include cyclical unemployment, which is unemployment that results from fluctuations in economic activity.

Question 10

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 4 percent, and structural 6 percent. The official unemployment rate is 15 percent.

Accepted Answer

The official unemployment rate is the sum of all types of unemployment: cyclical, seasonal, frictional, and structural. Adding these rates (3% + 2% + 4% + 6%) equals 15%.

Question 11

When real GDP

Accepted Answer

When real GDP is above potential GDP, the economy is operating at a level of output higher than what it can sustain in the long run, which typically results in lower unemployment rates than normal. This includes reductions in frictional (time spent between jobs), structural (mismatch between skills and job requirements), and seasonal (variations in employment due to seasonal patterns) unemployment, as demand for labor is high.

Question 12

The natural rate of unemployment is the

Accepted Answer

The natural rate of unemployment is the rate where the economy is operating at full employment, meaning there is no cyclical unemployment. The other types of unemployment (frictional and structural) are considered to be natural and unavoidable in any economy, so the natural rate of unemployment is not zero. Therefore, choice A is not correct. Choice B is incorrect because the natural rate of unemployment is not the same as cyclical unemployment. Choice C is also incorrect because the natural rate of unemployment includes frictional unemployment, so it is not when frictional unemployment equals zero. Choice E is incorrect because it includes both types of natural unemployment (frictional and structural), not just structural.

Question 13

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 5 percent and structural 4 percent. The official unemployment rate is ________ percent.

Accepted Answer

The official unemployment rate includes cyclical, frictional, and structural unemployment but does not include seasonal unemployment. Therefore, the correct calculation is 3% (cyclical) + 5% (frictional) + 4% (structural) = 12%. However, since 12% is not an option and assuming a typo in the question or choices, none of the provided choices accurately reflect the correct calculation based on the given data.

Question 14

When cyclical unemployment is high, the economy is having

Accepted Answer

Cyclical unemployment refers to the deviation of actual unemployment from the natural rate of unemployment, which is influenced by the business cycle. When cyclical unemployment is high, it means that the actual unemployment rate (which includes frictional and structural unemployment) is greater than the natural rate of unemployment. This occurs during a recession or a period of low economic activity, when real GDP is less than potential GDP.

Question 15

The natural rate of unemployment does not include seasonal unemployment.

Accepted Answer

The answer of The natural rate of unemployment does not...

Question 16

When real GDP is above potential GDP,

Accepted Answer

When real GDP is above potential GDP, the economy is operating at a high level of output, which typically leads to lower unemployment rates across the board. Frictional unemployment, which is the short-term unemployment that occurs when people are between jobs or entering the workforce, is likely below normal levels because jobs are more readily available in such an economic environment.

Question 17

When the economy has an inflationary gap, cyclical unemployment is probably

Accepted Answer

The answer of When the economy has an inflationary gap,...

Question 18

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 5 percent and structural 4 percent. East Westfalia has a(n)

Accepted Answer

A recessionary gap occurs when the actual unemployment rate is higher than the natural rate of unemployment. The natural rate includes frictional, structural, and seasonal unemployment, which totals 11% in this case. With an additional 3% cyclical unemployment, the total unemployment rate is 14%, indicating a recessionary gap.

Question 19

The natural rate of unemployment does not include cyclical unemployment.

Accepted Answer

The natural rate of unemployment is the unemployment rate that exists when the economy is in a stable state and there is no cyclical unemployment. Therefore, it does not include cyclical unemployment.

Question 20

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. The table below lists unemployment rates from the Labour Force Survey for selected months.  During which months did Olliestan have a recessionary gap?

Accepted Answer

The answer of Economists in Olliestan estimate the natural rate...

Quiz 7: Costs of Not Working and Living: Unemployment and Inflation

The natural rate of unemployment is

When the economy has a recessionary gap, cyclical unemployment is probably

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 5 percent and structural 4 percent. East Westfalia's natural rate of unemployment is

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. If the official unemployment rate is 9 percent, then

When cyclical unemployment is high, the economy is having

When real GDP

If the economy is at full employment, then the

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. If the official unemployment rate is 9 percent, then

The natural rate of unemployment does not include ________ unemployment.

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 4 percent, and structural 6 percent. The official unemployment rate is 15 percent.

When real GDP

The natural rate of unemployment is the

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 5 percent and structural 4 percent. The official unemployment rate is ________ percent.

When cyclical unemployment is high, the economy is having

The natural rate of unemployment does not include seasonal unemployment.

When real GDP is above potential GDP,

When the economy has an inflationary gap, cyclical unemployment is probably

East Westfalia reported these unemployment rates for 2015: cyclical 3 percent, seasonal 2 percent, frictional 5 percent and structural 4 percent. East Westfalia has a(n)

The natural rate of unemployment does not include cyclical unemployment.

Economists in Olliestan estimate the natural rate of unemployment is 7 percent. The table below lists unemployment rates from the Labour Force Survey for selected months. During which months did Olliestan have a recessionary gap?