Deck 9: Unemploymentand the Labor Market

Question 1

The table shown displays employment statistics for two years. What was the unemployment rate in 2018?

A) 14 percent
B) 25 percent
C) 17.5 percent
D) 15 percent

Answer 1

14 percent

Question 2

The labor force participation rate:

A) can be measured by dividing the total population by the proportion of people who want to work.
B) tells us what fraction of the working-age population wants employment.
C) typically increases during periods of recession.
D) is measured by dividing the working-age population by the percentage of people employed.

Answer 2

tells us what fraction of the working-age population wants employment.

Question 3

The table shown displays employment statistics for two years. What was the labor force participation rate in 2018?

A) 70 percent
B) 75 percent
C) 50 percent
D) 69 percent

Answer 3

70 percent

Question 4

The table shown displays employment statistics for two years. In which year was the labor force participation rate the lowest?

A) 2016
B) 2017
C) 2018
D) 2019

Question 5

Which government office is in charge of collecting official employment statistics?

A) Bureau of Labor Statistics
B) Bureau of Economic Analysis
C) Bureau of Industry and Security
D) Bureau of the Census

Question 6

The unemployment rate tells us:

A) what percentage of the labor force wants to work but can't find a job.
B) what will happen in the labor market in the future.
C) why the unemployed can't find work.
D) the number of people who don't want to work.

Question 7

During a recession, unemployment is:

A) more common.
B) less common.
C) unpredictable.
D) the same for all demographic groups.

Question 8

The labor force does not include people in the working-age population who are:

A) employed.
B) not actively trying to find a job.
C) retired, a full-time student, or a stay-at-home parent.
D) employed part time.

Question 9

Economists report changes in unemployment as:

A) percentage points, not percentages.
B) percentages, not percentage points.
C) percentage points or percentages, interchangeably.
D) nominal figures.

Question 10

Unemployment:

A) exists at any time during the business cycle.
B) only occurs during times of recession.
C) is highest during times of peak economic activity.
D) tends to increase during times of economic recovery.

Question 11

Unemployment occurs when someone:

A) wants to work but cannot find a job.
B) is not working full-time.
C) should be working but chooses not to.
D) is not utilizing their full set of skills.

Question 12

In the United States, the working-age population includes people:

A) in prison.
B) in the military.
C) who are less than 16 years of age.
D) aged 16 years or older.

Question 13

The table shown displays employment statistics for two years. What was the unemployment rate in 2019?

A) 1.1 percent
B) 20 percent
C) 16 percent
D) 11 percent

Question 14

The table shown displays employment statistics for two years. What was the labor force participation rate in 2019?

A) 70 percent
B) 80 percent
C) 69 percent
D) 26 percent

Question 15

The table shown displays employment statistics for two years. The unemployment rate in 2019 was _______ percentage points _______ than in 2018.

A) 3; higher
B) 3; lower
C) 14; higher
D) 11; lower

Question 16

The table shown displays employment statistics for two years. In which year was unemployment the highest?

A) 2016
B) 2017
C) 2018
D) 2019

Question 17

In the United States, to count as unemployed, you must be:

A) younger than 65 years of age.
B) actively looking for work.
C) skilled enough to hold a job.
D) All of these are true.

Question 18

In the United States, the working-age population does not include people:

A) in the military.
B) who are 16 years of age.
C) who are 65 years of age.
D) who do not have a driver's license.

Question 19

Unemployment rates tend to be highest during periods of:

A) recession.
B) expansion.
C) recovery.
D) stagflation.

Question 20

Unemployment:

A) wastes the productive potential of the economy.
B) makes it easier for firms in other countries to find the labor they need.
C) disproportionally affects highly educated workers.
D) occurs most often during the summer.

Question 21

The unemployment rate may_______ the effect of a recession on unemployment because some people ______ the labor force.

A) understate; leave
B) understate; enter
C) overstate; leave
D) overstate; enter

Question 22

The labor supply curve:

A) shows the relationship between the total quantity of labor supplied by all firms in the economy and the wage rate.
B) shows that, all things being equal, more workers will want to work when wages are higher and fewer will want to work when wages are lower.
C) has a negative slope.
D) All of these are true.

Question 23

In 2018, the labor force participation rate was 63.1 percent. This means that:

A) 63.1 percent of all working-age people wanted a job.
B) there was 36.9 percent unemployment.
C) 63.1 percent of all working-age people were employed.
D) only 63.1 percent of the labor force was of working age.

Question 24

All else equal, if unemployment falls by 2 percentage points to 6 percent, this indicates that:

A) 2 out of every 10 in the labor force lost a job.
B) 20 out of every 1,000 unemployed found a job.
C) 2 out of every 100 in the labor force lost a job.
D) 4 out of every 100 unemployed found a job.

Question 25

The price of labor is called:

A) the wage.
B) income.
C) opportunity cost.
D) the leisure trade-off.

Question 26

In terms of supply and demand, unemployment is:

A) a surplus of labor.
B) a shortage of labor.
C) an increase in the quantity of labor demanded.
D) a decrease in the quantity of labor supplied.

Question 27

Jennifer has a PhD in economics and has been working for three years as a part-time instructor, but she would like to be hired as a full-time faculty member. Jennifer is best described as:

A) a discouraged worker.
B) unemployed.
C) underemployed.
D) overemployed.

Question 28

Sonia has a BA in art history and is currently working full-time as a waitress. The BLS would classify Sonia as:

A) employed.
B) underemployed.
C) unemployed.
D) a discouraged worker.

Question 29

The labor demand curve shows:

A) the number of workers firms want to hire at each given wage.
B) the number of people who want to work at each given wage.
C) the number of workers who are willing and able to work at higher wages.
D) that the number of people who want to work increases as the wage increases.

Question 30

During times of recession, the labor force participation rate typically:

A) rises, as labor demand increases during a recession.
B) rises, as more incomes per household are needed to make ends meet.
C) falls, as more people give up and stop looking for work.
D) stays roughly the same, as people make decisions about work independent of the overall health of the economy.

Question 31

Some people drop out of the labor force during times of recession:

A) to go back to college, because the opportunity cost is lower during a recession.
B) because they age out of the workforce.
C) because the cost of living is lower.
D) All of these are true.

Question 32

The BLS collects _______ measures of unemployment.

A) four
B) five
C) six
D) seven

Question 33

All else equal, if unemployment rises to 8 percent after a 3.5 percentage point increase, this indicates that:

A) 35 out of every 100 in the labor force have lost a job.
B) 35 out of every 1,000 in the labor force have lost a job.
C) 8 out of every 1,000 in the labor force can't find a job.
D) 8 out of every 100 in the labor force have stopped looking for work.

Question 34

The labor demand curve:

A) shows the relationship between the total quantity of labor demanded by all the firms in the economy and the wage rate.
B) shows that, all things being equal, firms will want to hire a constant amount of labor at each wage rate.
C) shows the relationship between the total quantity of employment demanded by all the workers in the economy and the wage rate.
D) has a positive slope.

Question 35

The labor force participation rate:

A) tells us what fraction of the working-age population wants employment, whether or not they actually have a job.
B) typically rises during times of recession, as more people need work.
C) is used to assess the health of the overall economy.
D) All of these are true.

Question 36

The labor supply curve:

A) is made up of firms who want to hire workers at each given wage.
B) is made up of workers who want to work for firms at each given wage.
C) shows the number of firms that are willing and able to hire workers at each given wage.
D) shows that the number of firms that want to hire workers decreases as the wage increases.

Question 37

Underemployment occurs when someone:

A) is employed part-time, but wants full-time employment.
B) is paid under the table for their work.
C) is hired for an entry-level position.
D) is paid less than the median wage in a specific profession.

Question 38

Miguel is a corrections officer at a local prison, but he would like to go back to school to train to become a police officer someday. According to the BLS, Miguel is:

A) a discouraged worker.
B) unemployed.
C) underemployed.
D) employed.

Question 39

Lian has a master's degree in writing and currently works full-time as a second grade classroom helper. She submits articles for the local paper on occasion, and gets paid only when the editor agrees to publish a submission. Lian would love to work full-time as a news reporter. Lian is best described as _______ and the BLS would classify Lian as _______.

A) underemployed; employed
B) employed; employed
C) discouraged; underemployed
D) underemployed; underemployed

Question 40

Discouraged workers are people who have:

A) looked for work in the past year but have given up looking because of the condition of the labor market.
B) not looked for work in the past year but would take a job if one was offered to them.
C) looked for work in the past year but have since decided to leave the labor market to go back to school, retire, or be a stay-at-home parent.
D) spent longer than a year looking for work.

Question 41

Which of the following is true when the prevailing market wage is above equilibrium?

A) The surplus of labor reflects the amount of unemployment in the market.
B) The difference between the quantity supplied and the quantity of labor demanded is unemployment.
C) Unemployment occurs.
D) All of these are true when the market wage is above equilibrium.

Question 42

When the prevailing market wage is above equilibrium:

A) there is no unemployment.
B) there is a surplus of labor.
C) the quantity of labor demanded is higher than the quantity supplied.
D) All of these are true.

Question 43

Sarah was a great bookkeeper 20 years ago, but she left the workforce to stay home and raise her children. Now that her kids are in college, Sarah is looking for another bookkeeping job, but they all require computer skills that she doesn't have. Sarah is:

A) frictionally unemployed.
B) structurally unemployed.
C) not in the labor force.
D) seasonally unemployed.

Question 44

Weizhe just quit his job as a phone salesman and is looking for work as an accountant. Weizhe is:

A) frictionally unemployed.
B) structurally unemployed.
C) cyclically unemployed.
D) not in the labor force.

Question 45

Liam just quit his job as a librarian to pursue his lifelong dream of becoming a teacher. Liam is:

A) frictionally unemployed.
B) structurally unemployed.
C) seasonally unemployed.
D) not in the labor force.

Question 46

While working as a sales rep for a local firm, Felipe completes an MBA by taking online college courses at night. Felipe then quits his job to look for a management position at another firm. Felipe is:

A) underemployed.
B) frictionally unemployed.
C) structurally unemployed.
D) classically unemployed.

Question 47

Real-wage unemployment:

A) occurs when there is a mismatch between the skills workers can offer and the skills that are in demand.
B) is caused by workers changing their locations, jobs, or careers.
C) is the effect of wages remaining persistently above the market-clearing level.
D) is also called cyclical unemployment.

Question 48

Sanjeev just graduated from college and has landed his first job with an accounting firm, which will start in one month. Sanjeev plans to use the next month adjusting to the new area. Sanjeev currently is:

A) frictionally unemployed.
B) employed.
C) structurally unemployed.
D) not in the labor force.

Question 49

Suke used to be a music teacher at a local high school, but got let go last year due to budget cuts. Suke now works part-time as a waitress while looking for another teaching job. Suke is:

A) frictionally unemployed.
B) underemployed.
C) structurally unemployed.
D) real-wage unemployed.

Question 50

The normal level of unemployment that persists in an economy in the long run is:

A) the natural rate of unemployment.
B) the equilibrium rate of underemployment.
C) zero, as long as the market is equilibrium.
D) zero with effective public policy.

Question 51

Structural unemployment:

A) occurs when there is a mismatch between the skills workers can offer and the skills that are in demand.
B) is caused by workers changing their locations, jobs, or careers.
C) is the effect of wages remaining persistently above the market-clearing level.
D) occurs when workers voluntarily quit their jobs.

Question 52

Frictional unemployment:

A) occurs when there is a mismatch between the skills workers can offer and the skills that are in demand.
B) is caused by workers changing their locations, jobs, or careers.
C) is the effect of wages remaining persistently above the market-clearing level.
D) is not connected to natural rate of unemployment.

Question 53

Don, who has worked as a machinist all his life, was recently laid off because the plant where he worked shut down and the jobs were outsourced. There don't seem to be any machinist jobs in the area anymore. Don is:

A) frictionally unemployed.
B) structurally unemployed.
C) real-wage unemployed.
D) a discouraged worker.

Question 54

Millennials are stereotyped as changing jobs frequently to find their "dream" career. What type of unemployment is caused by these movements?

A) Frictional
B) Real-wage
C) Cyclical
D) Structural

Question 55

The natural rate of unemployment is the normal level of unemployment:

A) in an economy in the short run.
B) in an economy in the long run.
C) that exists without government intervention.
D) in an economy with a high labor force participation rate.

Question 56

Barbara has been working in a coffee shop full-time while she attends college. When she graduates, she quits the coffee shop and begins to search for full-time employment related to her college degree. Barbara is:

A) frictionally unemployed.
B) structurally unemployed.
C) cyclically unemployed.
D) classically unemployed.

Question 57

Carol is an autoworker who was laid off when the last factory in the area shut down. She has looked everywhere for another job as an autoworker, but cannot find one. Carol is:

A) frictionally unemployed.
B) structurally unemployed.
C) real-wage unemployed.
D) a discouraged worker.

Question 58

Which type of unemployment does not contribute to the natural rate of unemployment?

A) Frictional
B) Structural
C) Real-wage
D) Cyclical

Question 59

The country of Hortonia enters into a massive free trade agreement that sends most manufacturing jobs overseas. The country's workers who were previously employed in manufacturing now face:

A) frictional unemployment.
B) real-wage unemployment.
C) cyclical unemployment.
D) structural unemployment.

Question 60

Which type of unemployment contributes to the natural rate of unemployment?

A) Real-wage unemployment
B) Cyclical unemployment
C) Unemployment of government workers
D) All of these contribute to the natural rate of unemployment

Question 61

One way a government can attempt to minimize the effects of structural unemployment is to:

A) subsidize retraining programs.
B) increase unemployment benefits.
C) mandate that employers cannot fire any employees.
D) regulate the wage rate.

Question 62

Real-wage unemployment can be caused by:

A) minimum wage laws.
B) retraining programs.
C) low-interest student loans.
D) None of these cause real-wage unemployment.

Question 63

After the financial crisis in 2007, many firms laid off workers who struggled to find new work during the recession. These workers experienced:

A) frictional unemployment.
B) real-wage unemployment.
C) cyclical unemployment.
D) structural unemployment.

Question 64

When the economy slows down:

A) the demand for labor stays the same, then increases as firms expand their operations.
B) the demand for labor decreases.
C) the demand for labor stays the same.
D) the demand for labor increases.

Question 65

Classical unemployment can be caused by:

A) minimum wage laws.
B) union bargaining.
C) efficiency wages.
D) All these cause classical unemployment.

Question 66

When the economy is going strong:

A) firms expand their operations.
B) the demand for labor decreases.
C) GDP growth is negative.
D) firms tend to lay off workers.

Question 67

The pattern of recession and recovery is called:

A) the liquidity cycle.
B) the business cycle.
C) structural unemployment.
D) inflation.

Question 68

Wages tend to be "sticky" because:

A) contracts are often negotiated for long periods of time and cannot be easily changed.
B) workers are less likely to work hard if their pay may be cut due to market performance.
C) changing wages create uncertainty and cost employers a lot of time and energy.
D) All of these are reasons why wages might be sticky.

Question 69

When economists say wages are "sticky," they mean that wages:

A) are slow to adjust to changes in the economy.
B) are subject to a wide range of regulations from the government.
C) tend to change before other indicators of the business cycle.
D) are unpredictable in terms of how they will change.

Question 70

After an economic boom, the new equilibrium wage will be _______ because the labor demand curve shifts to the _______.

A) lower; left
B) higher; left
C) lower; right
D) higher; right

Question 71

An economic slowdown would likely cause the labor _______ curve to shift to the _______.

A) demand; left
B) demand; right
C) supply; left
D) supply; right

Question 72

We don't typically see wages fall in response to an economic downturn because:

A) labor supply adjusts so that the market stays at the original equilibrium wage level.
B) there is often little change in the labor market in response to economic conditions.
C) they are "sticky" and are slow to respond to shifts in the economy.
D) the government sets tight regulations on how firms compensate their employees.

Question 73

Unemployment is a:

A) leading indicator, because the business cycle follows it.
B) lagging indicator, because the business cycle follows it.
C) leading indicator, because it follows the business cycle.
D) lagging indicator, because it follows the business cycle.

Question 74

An increase in GDP growth would likely cause the labor _______ curve to shift to the _______.

A) demand; left
B) demand; right
C) supply; left
D) supply; right

Question 75

In 2017, the city of Seattle passed legislation implementing a $15 per hour minimum wage. Critics of the plan argued that this legislation would increase:

A) frictional unemployment.
B) real-wage unemployment.
C) cyclical unemployment.
D) structural unemployment.

Question 76

After an economic slowdown, the new equilibrium wage will be _______ because the labor demand curve shifts to the _______.

A) lower; left
B) higher; left
C) lower; right
D) higher; right

Question 77

Cyclical unemployment:

A) is caused by short-term economic fluctuations.
B) results from a mismatch between the skills workers can offer and the skills demanded.
C) results from workers changing their locations, jobs, or careers.
D) is the effect of wages remaining persistently above the market-clearing level.

Question 78

The business cycle:

A) affects the demand for labor.
B) affects the supply of labor.
C) affects both the supply of and demand for labor.
D) does not affect the market for labor.

Question 79

What happens when an economy starts to contract?

A) Labor demand will increase.
B) Cyclical unemployment will decrease.
C) Wages will approach the market-clearing level.
D) Labor supply will decrease.

Question 80

Wage stickiness in an economic downturn can result in:

A) actual wages that are temporarily above the market-clearing level.
B) cyclical unemployment.
C) a surplus of labor.
D) a shortage of labor.