Deck 5: Unemployment and Inflation

Question 1

Which of the following cause the unemployment rate as measured by Statistics Canada to overstate the true extent of joblessness?

A)inflation
B)discouraged workers
C)counting people as employed who are working part time,although they would prefer to be working full time
D)unemployed persons falsely report themselves to be actively looking for a job
E)people choosing not to participate in the labour force

Answer 1

unemployed persons falsely report themselves to be actively looking for a job

Question 2

Statistics Canada would categorize a retiree who is not working as

A)employed.
B)unemployed.
C)a discouraged worker.
D)out of the labour force.
E)not eligible to work in Canada.

Answer 2

out of the labour force.

Question 3

The labour force equals the number of people

A)employed.
B)unemployed.
C)employed plus unemployed.
D)in the working-age population.
E)in the entire country.

Answer 3

employed plus unemployed.

Question 4

The labour force participation rate equals the

A)(number of employed divided by the labour force)× 100.
B)(labour force divided by the number of people not in the labour force)× 100.
C)(labour force divided by working-age population)× 100.
D)(labour force divided by the total population)× 100.
E)(working age population divided by employment)× 100.

Question 5

Statistics Canada would categorize a person as ________ if they were temporarily away from their job because they were ill.

A)employed
B)unemployed
C)a discouraged worker
D)out of the labour force
E)disabled

Question 6

Table 5.1
Consider the data above for a simple economy.
Refer to Table 5.1.The unemployment rate for this simple economy equals

A)(100/1,000)× 100 percent.
B)(100/1,100)× 100 percent.
C)(100/15,000)× 100 percent.
D)(100/20,000)× 100 percent.
E)(1000/15,000)× 100 percent.

Question 7

Suppose the labour force stays constant,and the working-age population stays constant,but a greater number of persons who were unemployed become employed.The labour force participation rate will

A)increase.
B)decrease.
C)remain constant.
D)not change in a way that can be predicted.

Question 8

Table 5.1
Consider the data above for a simple economy.
Refer to Table 5.1.The labour force participation rate for this simple economy equals

A)(1,000/1,100)× 100 percent.
B)(1,000/15,000)× 100 percent.
C)(1,100/15,000)× 100 percent.
D)(1,100/20,000)× 100 percent.
E)(15,000/20,000)× 100 percent.

Question 9

In November 2015 the Purchasing Managers' Index for Canadian manufacturers was 48.6 which predicts a(n)________ in the number of persons it employed and a(n)________ in the total number of persons unemployed in the economy.

A)decrease; increase
B)decrease; decrease
C)increase; decrease
D)increase; increase

Question 10

The unemployment rate is an important economic statistic that can tell us about the health of the economy.If the unemployment rate turns out to be high or higher than anticipated,we would expect

A)it is more likely that an incumbent Prime Minister will be re-elected.
B)that stock prices are more likely to fall.
C)that jobs are less difficult to find.
D)that investors will be more optimistic about the economy.
E)consumer spending is likely to rise.

Question 11

Which of the following explains the changes in the Canadian adult male labour force participation rate since 1976?

A)More men are joining the military as compared to the past.
B)More men are retiring later in life as compared to the past.
C)Fewer men consider themselves discouraged workers as compared to the past.
D)Younger men are remaining in school longer as compared to the past.
E)There are fewer working age males than in the past.

Question 12

The economy has gone into a recession.You have majored in computer science and,because of the recession,have difficulty in finding a job.Should you go back to school and get a second major?

A)Yes,the recession will ensure that I will never find a job as a programmer.
B)Yes,the recession will lower income in my field permanently.
C)No,the recession will most likely be short-lived and I can get a job after it is over.
D)No,the recession will have no impact on my ability to get a job or my future income.
E)Yes,the recession will likely reduce the demand for computer science majors permanently.

Question 13

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

A)employed.
B)unemployed.
C)not in the labour force.
D)not in the working-age population.
E)not legally entitled to work.

Question 14

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment,but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment.The official unemployment rate as calculated by Statistics Canada would equal

A)(20/60)× 100%.
B)(20/80)× 100%.
C)(30/80)× 100%.
D)(20/100)× 100%.
E)(60/90)× 100%.

Question 15

Which of the following labour market statistics best indicates the amount of labour that is available to the economy from a given working-age population?

A)unemployment rate
B)discouraged-worker ratio
C)labour force participation rate
D)the ratio of minimum wage to inflation
E)the employment population ratio

Question 16

The unemployment rate equals the number of unemployed divided by the ________,all times 100.

A)number of employed
B)labour force
C)working-age population
D)total population
E)discouraged workers

Question 17

Suppose that homemakers are included as employed in the labour force statistics,rather than being counted as out of the labour force.This would

A)increase the measured unemployment rate.
B)increase the measured labour force participation rate.
C)decrease the number of persons in the labour force.
D)decrease the number of persons in the working-age population.
E)increase the number of people eligible to work in Canada.

Question 18

Which of the following cause the unemployment rate as measured by Statistics Canada to understate the true extent of joblessness?

A)inflation
B)discouraged workers
C)people employed in the underground economy
D)unemployed persons falsely report themselves to be actively looking for a job
E)a shrinking working age population

Question 19

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time students.This would cause

A)the unemployment rate to decrease.
B)the labour force participation rate to decrease.
C)the number of discouraged workers to increase.
D)no change in the unemployment rate.
E)the employment population ratio to increase.

Question 20

In November 2015,Canada saw an increase of ________ jobs for the same time the previous year.

A)183,000
B)124,000
C)21,500
D)3.1 percent
E)5.1 percent

Question 21

Statistics Canada counts as employed people who work part-time,but would prefer to work full-time.Suppose the people who had part-time jobs,but wanted full-time jobs,were counted as unemployed.Explain how the unemployment rate and the labour force participation rate would change.

Question 22

The recession that followed the global financial crisis of 2007-2009 caused ________ in Canada.

A)less unemployment
B)a rise in the labour force participation rate
C)an increase in the duration a typical unemployed person was out of work
D)less government spending
E)a drop in the working age population

Question 23

Fill in the missing values in the table of data collected in the fictitious Labour Force Survey below.Show your work.

Question 24

In Canada,the typical person who has lost his or her job finds another one in a few months except during severe recessions.

Question 25

In November 2015,the Purchasing Managers' Index (PMI)for Canada 's manufacturing sector was 48.6 while the PMI for Germany was 52.9.Based solely on this data,we would expect

A)employment to rise in both regions.
B)employment to fall in both regions.
C)employment to remain stable in Canada and fall in Germany.
D)employment to fall in Canada and remain stable in Germany.
E)employment to fall in Canada and rise in Germany.

Question 26

An issue with the Labour Force Survey (LFS)which overstates the extent of joblessness is

A)individuals who are working but concealing it for legal reasons are counted as unemployed.
B)they verify claims that people have actively looked for work.
C)they tend to count unemployed people more often because they are not working.
D)there is no distinction between employees who work part-time but would like to have a full-time job and those who are content with their full- or part-time job.
E)people who choose not to work are counted as unemployed.

Question 27

Counting part-time workers who are looking for full-time work as employed overstates the degree of joblessness in the economy.

Question 28

Which of the following statements is true about the Canadian economy?

A)Each year,many new jobs are created,but few existing jobs are destroyed,and the unemployed find jobs quickly.
B)Each year,few new jobs are created,but few existing jobs are destroyed,keeping unemployment low.
C)Each year,many new jobs are created and many existing jobs are destroyed.
D)Each year few jobs are created,and therefore it takes the unemployed a long time to find a new job.
E)Each year many more jobs are destroyed than are created.

Question 29

The labour force participation rates of women have rapidly increased since 1976.

Question 30

From 1981 until 2014 ,the labour force participation rate for adult men has ________ and for adult women has ________.

A)increased; increased
B)increased; decreased
C)decreased; increased
D)decreased; decreased

Question 31

Discouraged workers are classified by Statistics Canada as

A)part of the labour force.
B)out of the labour force.
C)unemployed.
D)employed.
E)part-time employees.

Question 32

Fill in the missing values in the table of data collected in the fictitious Labour Force Survey below.Show your work.

Question 33

Statistics Canada does not count discouraged workers as unemployed.Suppose discouraged workers were counted as unemployed.Explain how the unemployment rate and the labour force participation rate would change.

Question 34

Upon your graduation from university,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

A)the cost of additional education is always higher during recession.
B)high unemployment rates do not usually last for very long.
C)looking for work is your only option.
D)the wages of university graduates do not fall during recession.
E)recessions typically last longer than it takes to complete a second university degree.

Question 35

The most important group not identified by the unemployment rate is

A)seniors.
B)discouraged workers.
C)part-time workers seeking full-time work.
D)those under the minimum working age.
E)students.

Question 36

A full-time student who is not working is categorized as

A)unemployed.
B)employed.
C)not in the labour force.
D)a discouraged worker.
E)frictionally unemployed.

Question 37

The unemployment rate is

A)the percentage of the labour force that is employed.
B)the percentage of the working-age population that is unemployed.
C)the percentage of the labour force that is unemployed.
D)the percentage of the working-age population that is employed.
E)the percentage of the population that is unemployed.

Question 38

The labour force is the sum of

A)employed workers and discouraged workers.
B)employed workers and unemployed workers.
C)employed workers and individuals not looking for work.
D)employed workers and the working age population.
E)unemployed workers and the working age population.

Question 39

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed,you would expect this unemployment rate to ________ compared to the Statistics Canada measured unemployment rate.

A)increase
B)more than double
C)decrease
D)barely change
E)fall by half

Question 40

In the modern Canadian economy,the typical unemployed person stays unemployed for

A)a relatively long time,over a year.
B)a relatively short time,less than 13 weeks.
C)a long time during expansions and short time during recessions.
D)an amount of time that is hard to quantify.
E)a moderately long time,more than 26 weeks.

Question 41

If the number of unemployed workers is 1.9 million,the number in the working-age population is 50 million,and the unemployment rate is 4%,what is the labour force participation rate?

A)4.75%
B)7.8%
C)63%
D)95%
E)96.2%

Question 42

Discouraged workers are

A)workers who have a part time job but want a full time job.
B)workers who find their current jobs unfulfilling and are considering a job change.
C)workers who have consistently been looking for work for more than 4 weeks.
D)workers who have stopped looking for work because they believe there are no jobs for them.
E)workers who are disappointed in the labour force because they are over qualified for their current jobs.

Question 43

Except for recessions,the duration of unemployment for the typical person lasts

A)less than 4 weeks.
B)less than 13 weeks.
C)14 to 25 weeks.
D)more than 25 weeks.
E)over five years.

Question 44

After the legalization of recreational marijuana,the labour force participation rate would

A)rise.
B)fall.
C)remain unchanged.
D)rise then fall.
E)fall then rise.

Question 45

If the number of unemployed workers is 20 million,the number of employed workers is 30 million,and the working-age population is 80 million,what is the labour force participation rate?

A)12.5%
B)18%
C)37.5%
D)40%
E)62.5%

Question 46

Which of the following causes the unemployment rate to understate the true extent of joblessness?

A)Many full-time workers really want to be part-time workers.
B)Persons who collect unemployment benefits report themselves to be searching for a job.
C)Discouraged workers are not counted as unemployed.
D)A drug dealer reports herself as unemployed.
E)Some people do not want to have a paid job.

Question 47

Jack lost his job six months ago and he's been actively looking for a new job ever since.Statistics Canada would classify Jack as

A)unemployed.
B)out of the labour force.
C)a discouraged worker.
D)an involuntary part-time worker.
E)all of the above

Question 48

Which of the following would reduce the labour force participation rate,all else equal?

A)an increase in the number of people in the labour force
B)an increase in the unemployment rate
C)a decrease in the unemployment rate
D)an increase in the working-age population
E)an increase in minimum working age

Question 49

The federal government legalized marijuana in 2017.Before this change Statistics Canada would have considered people who made their living growing and selling marijuana for recreational use to be

A)not in the labour force.
B)unemployment.
C)employed part time.
D)employed full time.
E)not legally entitled to work in Canada.

Question 50

Mike has been unemployed for over a year.He hasn't looked for a job in the last three months,but he's just started looking for work again.Because Mike started looking for a new job,

A)the unemployment rate increased.
B)the labour force participation rate decreased.
C)the unemployment rate decreased.
D)the working-age population increased.
E)the employment population ratio has decreased.

Question 51

If the number employed is 190 million,the number unemployed is 10 million,and the working-age population is 250 million,then the labour force participation rate is

A)4%.
B)5.2%.
C)60%.
D)76%.
E)80%.

Question 52

During the month of May,300,000 workers moved from being classified as "unemployed" to being classified as "employed." As a result,

A)the unemployment rate rose.
B)the labour force participation rate fell.
C)the unemployment rate fell.
D)the labour force participation rate rose.
E)the employment population ratio fell.

Question 53

The labour force participation rate is defined as

A)the percentage of the working-age population that is employed.
B)the percentage of the working-age population that is unemployed.
C)the percentage of the labour force that is employed.
D)the percentage of the labour force that is unemployed.
E)the percentage of the working-age population in the labour force.

Question 54

Which of the following describes actual trends in the Canadian labour force participation rate?

A)The labour force participation rate of adult men has risen since 1975.
B)The labour force participation rate of adult women has fallen since 1975.
C)The labour force participation rate of adult men not in school,but too young to retire has risen since 1975.
D)The labour force participation rate of adult women has risen since 1975.
E)The labour force participation rate of all adults has fallen since 1975.

Question 55

If the number of unemployed workers is 2 million and the number in the labour force is 28 million,what is the unemployment rate?

A)0.7%
B)4%
C)7%
D)9%
E)40%

Question 56

If the number employed is 17.5 million,the working-age population is 28.5 million,and the number unemployed is 1.4 million,then the unemployment rate is

A)7.4%.
B)8%.
C)5%.
D)4.7%.
E)61%.

Question 57

In 2010,after the 2008-2009 recession,the most common length of time for a person to be unemployed was

A)less than 4 weeks.
B)5 to 13 weeks.
C)14 to 25 weeks.
D)26 weeks to 42 weeks.
E)42 weeks or more.

Question 58

If the number of unemployed workers is 1.9 million,the number in the working-age population is 50 million,and the unemployment rate is 4%,how many workers are in the labour force?

A)1 million
B)20 million
C)47.5 million
D)48.1 million
E)50 million

Question 59

An increase in the size of the underground economy would

A)have no effect on the official unemployment rate.
B)cause the official unemployment rate to fall as more people find jobs outside the formal economy.
C)cause the labour force participation rate to rise.
D)cause the labour force participation rate to fall.
E)raise the employment population ratio as reported by Statistics Canada.

Question 60

How would including members of the military in employment,labour force,and working-age population statistics affect the unemployment rate and the labour force participation rate?

A)Including members of the military would increase the unemployment rate and reduce the labour force participation rate.
B)Including members of the military would reduce the unemployment rate and increase the labour force participation rate.
C)Including the military would increase both the unemployment rate and the labour force participation rate.
D)Including the military would reduce both the unemployment rate and the labour force participation rate.

Question 61

If cyclical unemployment is eliminated in the economy,then

A)the economy is considered to be at full employment.
B)the unemployment rate is below the natural rate of unemployment.
C)the unemployment rate is above the natural rate of unemployment.
D)the economy is at less than full employment.
E)the unemployment rate will be zero.

Question 62

How could a growing labour force lead to an increase in the unemployment rate?

Question 63

How would the unemployment rate and the labour force participation rate change if discouraged workers were counted as unemployed rather than as out of the labour force? Illustrate this using the formulae for both measurements.

Question 64

The advice to "keep searching,there are plenty of jobs around here for which you are qualified," would be most appropriate for which of the following types of unemployment?

A)frictional unemployment
B)structural unemployment
C)cyclical unemployment
D)seasonal unemployment
E)geographical unemployment

Question 65

Structural unemployment is the result of

A)a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.
B)the search process of matching workers with jobs.
C)the ups and downs in inflation.
D)a slowdown in the economy.
E)the entry of new workers into the labour force.

Question 66

Jack just received a promotion at work and now works 50 hours per week instead of 35.As a result,

A)the unemployment rate increased.
B)the unemployment rate decreased.
C)the labour force participation rate increased.
D)the employment population ratio has increased.
E)neither the unemployment rate nor the labour force participation rate changed.

Question 67

Suppose 180,000 people are employed,20,000 people are unemployed,and 50,000 people are out of the labour force.Calculate the labour force participation rate.

Question 68

The labour force survey is compiled from firms who answer questions about the number of persons who are employed and on the company payroll.

Question 69

A student who just graduated from college but has not found a job would most likely be

A)frictionally unemployed.
B)structurally unemployed.
C)cyclically unemployed.
D)seasonally unemployed.
E)under employed.

Question 70

Cyclical unemployment is the result of

A)a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.
B)the search process of matching workers with jobs.
C)the ups and downs in inflation.
D)a slowdown in the economy.
E)regional differences in the economy.

Question 71

In the labour force survey,all people are categorized as either employed or unemployed.

Question 72

Frictional unemployment is the result of

A)a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.
B)the search process of matching workers with jobs.
C)the ups and downs in inflation.
D)a slowdown in the economy.
E)the changing of the seasons.

Question 73

The labour force survey asks adults about their employment status and is used to compile the monthly unemployment rate.

Question 74

The labour force participation rates of men have gradually increased since 1975.

Question 75

For the last few decades,the labour force participation rates of men have ________,and the labour force participation rates of women have ________.

A)risen; risen
B)fallen; fallen
C)risen; fallen
D)fallen; risen

Question 76

Full employment is not considered to be zero unemployment,because

A)some cyclical unemployment always exists.
B)some people do not want a job.
C)there are not enough jobs for everyone who wants one.
D)people do not find jobs instantaneously.
E)not everyone is entitled to work in Canada.

Question 77

Suppose 180,000 people are employed,20,000 people are unemployed,the working-age population is 250,000,and 50,000 people are out of the labour force.Calculate the unemployment rate.

Question 78

According to the text,economists consider full employment to occur when

A)everyone who wants a job has a job.
B)frictional unemployment equals zero.
C)the sum of frictional unemployment and structural unemployment equals zero.
D)the unemployment rate consists of only frictional and structural unemployment.
E)structural unemployment is less than 2 percent.

Question 79

Jack was unemployed two weeks ago but just started a new job.As a result of this increase in the number of employed workers,which of the following occurred?

A)The labour force participation rate increased.
B)The unemployment rate increased.
C)The labour force participation rate decreased.
D)The unemployment rate decreased.
E)The employment population ratio decreased.

Question 80

In December 2015,CHCH TV cut 129 full-time positions in its local news division.The laid-off employees who were not able to find jobs at another television news station due to a permanent decline in local news programming would be considered

A)structurally unemployed.
B)frictionally unemployed.
C)seasonally unemployed.
D)cyclically unemployed.
E)permanently unemployed.