Deck 11: Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Question 1

Inflation harms both debtors and individuals who live on fixed incomes.

Answer 1

False

Question 2

Roughly 60 percent of women participate in the labor force today.

Answer 2

True

Question 3

The natural rate of unemployment can change over time as technological, demographic, institutional, and other conditions vary.

Answer 3

True

Question 4

Nearly every society desires to achieve the macroeconomic goals of high employment, a stable price level, and high economic growth.

Question 5

Luke has lent his friend Mitch some money.However he underestimated the rate of inflation when they agreed to a repayment and interest schedule.Mitch will benefit from the inflation.

Question 6

If, over time, a greater proportion of the labor force is comprised of middle-aged individuals, one would expect the natural rate of unemployment to rise.

Question 7

Cyclical unemployment rises and falls with fluctuations in the macroeconomy.

Question 8

The cost of unemployment to society includes loss of the goods and services that might have been produced if the unemployed had been employed.

Question 9

Each person in the population can be classified as employed or unemployed.

Question 10

Unanticipated inflation will benefit creditors at the expense of debtors.

Question 11

When an office worker loses his job because he lacks the computer skills the employer requires, he becomes frictionally unemployed.

Question 12

The economy reaches full employment when the unemployment rate equals zero.

Question 13

Economists refer to the median or "typical" rate of unemployment as the natural rate of unemployment.

Question 14

Another name for the contractionary phase of a business cycle is recession.

Question 15

The Employment Act of 1946 dictated the U.S.goal of maintaining high employment through high economic growth but did not specify any requirements with regard to the price level.

Question 16

Economists consider cyclical unemployment to be the byproduct of a healthy economy.

Question 17

New inventions may displace some workers, but generally lead to the growth of jobs in new industries.

Question 18

Unanticipated deflation will benefit creditors at the expense of debtors.

Question 19

Each person in the population can be classified as employed, unemployed, or not in the labor force.

Question 20

The unemployment rate measures the number of unemployed people expressed as a percentage of the total population.

Question 21

If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals:

A)8 percent.
B)20 percent.
C)25 percent.
D)32 percent.
E)40 percent.

Question 22

A college student who is enrolled in school full-time and not seeking employment is considered:

A)out of the labor force.
B)unemployable, and not counted in official statistics.
C)employed in leisure.
D)underemployed.
E)in the labor force.

Question 23

If the unemployment rate is 8 percent, this means:

A)8 percent of the population is unemployed.
B)8 percent of the population over age 16 is unemployed.
C)8 percent of the labor force is unemployed.
D)the number of unemployed persons equals 8 percent of the employed persons.

Question 24

The first formal acknowledgement of the primary macroeconomic goals of price stability, high employment, and promoting economic growth in the United States came with passage of the:

A)Federal Reserve Act of 1913.
B)the Sherman Antitrust Act of 1890.
C)the Social Security Act of 1935.
D)the Employment Act of 1946.
E)the 1964 War on Poverty campaign.

Question 25

The total labor force equals:

A)the number of employed persons.
B)the number of unemployed persons.
C)the number of employed plus unemployed persons.
D)the number of persons aged sixteen and over in the population.

Question 26

The unemployment rate is defined as:

A)unemployed workers plus discouraged workers, divided by the total population over the age of sixteen.
B)part-time workers plus full-time workers, divided by the total population over the age of sixteen.
C)the percentage of the labor force that is unemployed.
D)the percentage of the population over the age of sixteen that is unemployed.

Question 27

Persons who do not hold a job, but are actively seeking work are considered:

A)out of the labor force.
B)unemployed.
C)unemployable, and not counted in official statistics.
D)underemployed.

Question 28

Persons who do not hold a job and are not actively seeking work are considered:

A)out of the labor force.
B)unemployable, and not counted in official statistics.
C)underemployed.
D)unemployed.

Question 29

A major macroeconomic goal of nearly every society is:

A)maintaining stability of prices.
B)maintaining high levels of employment.
C)achieving high rates of economic growth.
D)all of the above.
E)none of the above.

Question 30

High rates of unemployment are undesirable because:

A)they cause increased levels of societal tension.
B)society loses potential production of goods and services.
C)families of the unemployed may find it difficult to survive.
D)of all of the above.

Question 31

The unemployment rate measures:

A)unemployed workers as a percentage of the population.
B)unemployed workers as a percentage of the population over the age of sixteen.
C)unemployed workers as a percentage of the labor force.
D)the number of people unemployed divided by the number of people employed.

Question 32

Real gross domestic product is the total value of all:

A)goods and services adjusted for inflation.
B)goods and services without an adjustment for inflation.
C)final goods and services adjusted for inflation.
D)final goods and services without adjustment for inflation.
E)intermediate goods and services without adjustment for inflation.

Question 33

In November 1995 the labor force in Aberdeen, South Dakota, was 14,800.There were 14,483 persons employed.The local unemployment rate:

A)was 1.2 percent.
B)was 2.1 percent.
C)was 5.6 percent.
D)was 7.1 percent.
E)cannot be determined from the information provided.

Question 34

Which piece of legislation committed the government to pursuing unemployment policies that are consistent with maintaining price stability?

A)Effective Pricing Act of 1971
B)Employment Initiative Act of 1998
C)Employment Act of 1946
D)Stable Growth Act of 1960

Question 35

The unemployment rate is calculated as:

A)the number of unemployed persons divided by the number of employed persons.
B)the number of employed persons divided by the number of unemployed persons.
C)the number of unemployed persons divided by the number of employed plus unemployed persons.
D)the number of unemployed persons divided by the population.

Question 36

The total labor force consists of:

A)the entire population.
B)the population over the age of sixteen.
C)the number of employed persons.
D)the number of employed persons plus the number of unemployed persons.

Question 37

The unemployment rate is the number of people classified as unemployed as a percentage of:

A)the entire population.
B)the population over the age of sixteen.
C)the labor force.
D)the number of people over the age of sixteen who are employed.

Question 38

Unemployment rises and falls in the same direction as output over the business cycle.

Question 39

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals:

A)11 percent.
B)14.4 percent.
C)16.8 percent.
D)20.2 percent.
E)cannot be determined from the information provided.

Question 40

The most significant real economic cost of high unemployment is:

A)the money cost of unemployment insurance payments to the unemployed.
B)the lost tax revenue that might have been paid by persons if they had worked.
C)the money cost of retraining persons to obtain new jobs.
D)the difference in income between a person's lost job and new job.
E)the potential goods and services that might have been produced but weren't.

Question 41

A city in which 320,000 persons are employed has a labor force of 359,500 persons.The unemployment rate for the city is:

A)7.8 percent.
B)11.0 percent.
C)12.3 percent.
D)14.5 percent.
E)none of the above.

Question 42

Which of the following individuals would be considered unemployed?

A)a lawyer temporarily working as an assistant in a law firm
B)a computer technician who has not worked for 10 months and gave up looking 4 months ago
C)a full time student who feel that he is taking too many classes to work
D)none of the above

Question 43

____ experience lower rates of unemployment than do ____.

A)Teenagers; adults
B)Adult females; adult males
C)Skilled workers; unskilled workers
D)Black females; white females

Question 44

Persons who do not have jobs and who do not look for work are considered:

A)unemployed.
B)out of the labor force.
C)underemployed.
D)overemployed.
E)part of the underground economy.

Question 45

Which of the following groups of people would be included in the official unemployment rate?

A)part-time workers
B)workers temporarily laid off from jobs to which they expect to return
C)discouraged workers
D)all of the above

Question 46

Which of the following statements is incorrect?

A)Job losers typically account for 50 to 60 percent of the unemployed.
B)Unemployment rates in the United States during the Great Depression exceeded 50 percent.
C)The labor force participation rate is the percentage of the population that is in the labor force.
D)The increase in the labor force participation rate since 1950 can be partly attributed to the entry of baby boomers into the labor force.

Question 47

A person who works part-time is considered to be:

A)employed.
B)unemployed.
C)out of the labor force.
D)overemployed.
E)none of the above.

Question 48

Which of the following individuals are considered officially unemployed?

A)a discouraged worker
B)an individual who quits his job to raise a child
C)an individual who is not looking for a job because he works in the underground economy
D)None of the above

Question 49

Hometown, USA, has a labor force of 78,567 persons and employment of 74,382.The unemployment rate for the city is:

A)5.3 percent.
B)5.6 percent.
C)6.0 percent.
D)7.1 percent.
E)none of the above.

Question 50

Discouraged workers are defined as those:

A)whose productivity is low because working in dead-end jobs reduces their morale.
B)who are counted as frictionally unemployed, having become dissatisfied with their previous jobs.
C)who are counted as structurally unemployed, lacking training for the skilled positions for which they are applying.
D)who have given up looking for a job and are not counted as unemployed.

Question 51

Which of the following is false?

A)The unemployment rate is the number of people officially unemployed divided by the civilian labor force.
B)The labor force includes those people over the age of 14 who are either employed or unemployed.
C)Discouraged workers, who have not actively sought work for four weeks are not counted as unemployed; instead they fall out of the labor force
D)Some people working overtime or extra jobs might be considered to be overemployed.

Question 52

A discouraged worker is:

A)one who opts to quit work to attend college.
B)one who opts to quit searching for work after unsuccessfully seeking employment.
C)a part-time worker who would like to work more hours.
D)none of the above.

Question 53

Suzie Homemaker works in her home as a full-time caretaker and homemaker.Officially, she is:

A)employed.
B)unemployed.
C)not in the labor force.
D)a discouraged worker.
E)not in the labor force because she is considered a discouraged worker.

Question 54

____ experience lower rates of unemployment than do ____.

A)High school graduates; college graduates
B)College graduates; high school graduates
C)Adult females; adult males
D)Black males; white males

Question 55

A discouraged worker is someone who:

A)has a job, but wants to get a different one.
B)works part time, but is actively seeking full-time work.
C)is unemployed and looking for work.
D)quits a job and is unable to collect unemployment compensation.
E)gives up looking for work, and is no longer counted as unemployed.

Question 56

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking.What would happen to the unemployment rate?

A)It would increase.
B)It would fall.
C)It would change, but the effect cannot be predicted.
D)It would not change.

Question 57

Bill looked for work for six months but could not find a job to his liking.He now spends his time at the beach.For purposes of employment he is considered:

A)out of the labor force.
B)unemployed.
C)employed in the underground economy.
D)underemployed.
E)in the labor force.

Question 58

If a large number of individuals file unemployment claims and work in the underground economy:

A)the unemployment rate overstates the level of unemployment.
B)the unemployment rate understates the level of unemployment.
C)the unemployment rate is not affected.
D)discouraged worker statistics will underestimate the true state of frustration by job seekers.

Question 59

If the population older than 16 years of age equals 150 million, the labor force equals 110 million, and the total number of persons employed equals 98 million, then the unemployment rate is:

A)8 percent.
B)38 percent.
C)10.9 percent.
D)28 percent.
E)12.2 percent.

Question 60

Billy loses his job as a road construction worker and cannot find another position with equivalent pay and benefits.As a result, he is still checking the want ads and reporting to the unemployment office on a weekly basis.He is considered to be:

A)unemployed.
B)out of the labor force.
C)underemployed.
D)lazy.
E)part of the underground economy.

Question 61

A federal program aimed at retraining the unemployed workers of the declining auto and steel industries is designed to reduce which type of unemployment?

A)seasonal
B)cyclical
C)structural
D)frictional

Question 62

An individual who voluntarily leaves one job and spends a period of time seeking another is considered:

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

Question 63

A welder who quits his job and moves from Houston to Buffalo to try to get a better welding job is said to be:

A)frictionally unemployed.
B)underemployed.
C)cyclically unemployed.
D)structurally unemployed.
E)a discouraged worker.

Question 64

In the unemployment rate, part-time workers are:

A)not included in the labor force.
B)included in the labor force, but counted as unemployed.
C)treated the same way as discouraged workers.
D)included in the labor force and counted as employed.
E)treated as employed if they report that they desire to have a part-time job, but treated as unemployed if they report that they wish to have a full-time job instead.

Question 65

Job losers typically account for ____ of the unemployed.

A)80 to 90 percent
B)50 to 60 percent
C)30 to 40 percent
D)10 to 20 percent

Question 66

Unemployment resulting from normal turnover in the labor market is called:

A)frictional unemployment.
B)cyclical unemployment.
C)structural unemployment.
D)season unemployment.

Question 67

The unemployment rate may underestimate the true extent of unemployment if:

A)many part-time employees would like to work full-time, but are unable to get the additional work.
B)employees increase the number of hours they work overtime.
C)there are a large number of people working in the underground economy.
D)any of the above occur.

Question 68

The category of unemployment that is a byproduct of geographic and occupational mobility and not generally considered to be a serious problem is:

A)frictional unemployment.
B)underemployment.
C)cyclical unemployment.
D)structural unemployment.

Question 69

A healthy economy would be characterized by a relatively ____ unemployment rate and a relatively ____ labor force participation rate.

A)low; low
B)low; high
C)high; low
D)high; high

Question 70

____ experience higher rates of unemployment than do ____.

A)Teenagers; adults
B)Adult males; adult females
C)Skilled workers; unskilled workers
D)White males; Hispanic males

Question 71

If the numbers of employed and unemployed do not change but the size of the population increases by 10%, what would be the effect?

A)an increase in the unemployment rate and an increase in the labor force participation rate
B)an increase in the unemployment rate and no change in the labor force participation rate
C)an increase in the unemployment rate and a decrease in the labor force participation rate
D)no change in the unemployment rate and a decrease in the labor force participation rate

Question 72

If the number of employed persons equals 180 million, the number of unemployed persons equals 15 million, and the number of persons over age 16 in the population equals 210 million, the unemployment rate equals ____ and the labor force participation rate equals ____.

A)7.1%; 85.7%
B)7.7%; 85.7%
C)7.1%; 92.9%
D)7.7%; 92.9%

Question 73

Frictional unemployment occurs when:

A)there is friction between an employer and employee.
B)a worker decides to quit to seek a different job.
C)a large corporation transfers a worker to another city.
D)college students go back to school at the end of the summer.

Question 74

Which of the following is false?

A)People looking for full-time work who grudgingly settle for a part-time job are counted as employed, even though they are only "partly" employed.
B)Some people working in the underground economy could be counted in labor statistics as unemployed, while others may be counted as not in the labor force.
C)Unemployment rates can be quite different across different segments of the population, as well as varying substantially over time.
D)The duration of unemployment tends to be greater when the amount of unemployment is high, and smaller when the amount of unemployment is low.
E)None of the above are false; all are true.

Question 75

The development of a nationwide computerized job bank listing of all job openings would be most likely to reduce:

A)structural unemployment.
B)frictional unemployment.
C)seasonal unemployment.
D)cyclical unemployment.

Question 76

Underemployment occurs when:

A)a firm hires fewer than the required number of workers, to save costs.
B)a firm hires workers who do not possess the required skills that the job demands.
C)a worker is over qualified and possesses more skills than what his job demands.
D)a firm hires more than the required number of workers.
E)a worker who is looking to work full-time has to settle for a part-time job.

Question 77

Since 1950, there has been ____ in the labor force participation rate.

A)no change
B)an increase
C)a decrease
D)first an increase and then a significant decrease

Question 78

The existence of discouraged workers:

A)increases the size of the labor force, but does not affect the unemployment rate.
B)reduces the size of the labor force, but does not affect the unemployment rate.
C)may cause the official unemployment rate to understate the true amount of unemployment.
D)may cause the official unemployment rate to overstate the true amount of unemployment.

Question 79

Which of the following categories account for the smallest fraction of unemployed workers?

A)Job leavers
B)Job losers
C)Reentrants
D)New entrants

Question 80

In 2010, what percentage of the unemployed were out of work for more than 27 weeks?

A)24%
B)41%
C)49%
D)54%