Question 1

The unemployment rate will never be zero because the economy is dynamic and always changing.

Accepted Answer

The labor force is constantly changing due to factors such as technological advancements, shifts in consumer demand, and changes in government policies. These changes can lead to job creation, but they can also lead to job loss, which can result in temporary or long-term unemployment. Therefore, it is unlikely that the unemployment rate will ever be zero.

Question 2

According to classical economists, excessive unemployment does not persist in the economy because

Accepted Answer

According to classical economists, wages will always adjust in response to unemployment in order to reach equilibrium in the labor market. As unemployment rises, wages will fall, making hiring more attractive to firms and eventually leading to a reduction in unemployment. Conversely, when unemployment is low, wages will rise as firms compete for workers, eventually leading to a reduction in job vacancies and an increase in unemployment. Thus, according to classical economics, unemployment will eventually return to its natural rate, which is determined by the underlying characteristics of the labor market and not influenced by government policies or other factors.

Question 3

Cyclical unemployment is that which rises in recessions and shrinks during expansions.

Accepted Answer

Cyclical unemployment is directly linked to the business cycle, and tends to increase during economic downturns (recessions) and decrease during economic upturns (expansions).

Question 4

In the recession of 2008-2009, the unemployment rate rose to over 10 percent.

Accepted Answer

The unemployment rate did indeed rise to over 10 percent during the recession of 2008-2009.

Question 5

Sally stopped looking for work six months ago, so she would not be a part of the labor force.

Accepted Answer

If Sally stopped looking for work, she is considered to be out of the labor force.

Question 6

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow.  Figure 28.1
-Refer to Figure 28.1. At wage rate $15, there is a ________ of labor equal to ________ million people.

Accepted Answer

At wage rate $15, the quantity of labor supplied is 170 million and the quantity demanded is 50 million, resulting in a surplus of 120 million people. Therefore, the correct choice is D, surplus.

Question 7

Frictional and structural unemployment usually decrease during recessions.

Accepted Answer

Frictional and structural unemployment usually increase during recessions.

Question 8

Frictional unemployment is the type that arises due to recessions.

Accepted Answer

Frictional unemployment is the unemployment that arises due to the time lag between job transitions, such as when a person leaves a job to search for a better one. It is not caused by recessions. Recession-related unemployment is known as cyclical unemployment.

Question 9

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow.  Figure 28.1
-Refer to Figure 28.1. The equilibrium wage rate is $________ and the equilibrium number of people employed is ________ million people.

Accepted Answer

The equilibrium wage rate and number of people employed are determined where the supply and demand for labor intersect. Based on the given options, $9 and 210 million people match this intersection point.

Question 10

If the quantity of labor demanded and the quantity of labor supplied are brought into equilibrium by rising and falling wage rates, there should be no persistent unemployment and the unemployment rate should be zero.

Accepted Answer

Even in a state of equilibrium, there can be frictional and structural unemployment which are not related to wage rates. Additionally, changes in demand for goods and services can lead to cyclical unemployment which is also not caused by wage rates. Therefore, the unemployment rate cannot be expected to be zero even in equilibrium.

Question 11

If a person is not employed but is looking for work, she is in the labor force.

Accepted Answer

This is true. The labor force includes all individuals who are working or actively seeking employment.

Question 12

Structural unemployment arises when the economy changes making some jobs obsolete.

Accepted Answer

Structural unemployment is a type of unemployment that occurs when the economy undergoes a structural change, such as technological advancements or changes in consumer demand, resulting in certain jobs becoming obsolete. This means that individuals may no longer have the necessary skills or qualifications to perform the new types of jobs that are available, leading to unemployment.

Question 13

A decline in the demand for labor means the unemployment rate must rise.

Accepted Answer

A decline in the demand for labor does not necessarily mean the unemployment rate must rise, as workers may shift to other sectors, unemployment may be offset by reductions in labor supply, or policy interventions may mitigate impacts on unemployment rates.

Question 14

According to classical economists, the only types of unemployment that exist in an economy are

Accepted Answer

Classical economists believe that unemployment is a result of structural and frictional factors. Structural unemployment is caused by a mismatch between the skills of workers and the needs of employers, while frictional unemployment occurs due to the time and resources it takes for workers to search for job opportunities that match their skills and preferences. Other types of unemployment such as cyclical and seasonal are seen as temporary fluctuations in the economy rather than long-term structural factors.

Question 15

If a household member is not in the labor force, it is because he or she has decided his or her time is more valuable in nonmarket activities.

Accepted Answer

People who are not in the labor force may have other reasons for not working, such as being retired, disabled, or a full-time student, but it is possible that they have chosen to prioritize non-paid activities like caring for family members, pursuing hobbies, or volunteering over earning income in the labor market.

Question 16

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow.  Figure 28.1
-Refer to Figure 28.1. At wage rate $6, there is a ________ of labor equal to ________ million people.

Accepted Answer

The answer of Refer to the information provided in Figure...

Question 17

Employment tends to fall when aggregate output falls.

Accepted Answer

This statement is true according to standard macroeconomic theory, as a decrease in aggregate output may result in decreased demand for production and labor, leading to layoffs and decreased employment levels.

Question 18

To be unemployed, a person must be without a job and actively looking for work.

Accepted Answer

To qualify as unemployed, a person must meet both criteria of being without a job and actively seeking work. If someone is without a job but has stopped looking for work, they are not considered unemployed.

Question 19

The unemployment rate is the fraction of the labor force without a job.

Accepted Answer

The unemployment rate is indeed the fraction of the labor force that is currently unemployed.

Question 20

Changes in the ________ market affect the shape of the short run aggregate supply curve.

Accepted Answer

Changes in the labor market, such as an increase in wages, can affect the cost of production for firms. As a result, firms may be less willing or able to produce the same level of output at every price level, causing the short run aggregate supply curve to shift upward.

Quiz 28: The Labor Market in the Macroeconomy

The unemployment rate will never be zero because the economy is dynamic and always changing.

According to classical economists, excessive unemployment does not persist in the economy because

Cyclical unemployment is that which rises in recessions and shrinks during expansions.

In the recession of 2008-2009, the unemployment rate rose to over 10 percent.

Sally stopped looking for work six months ago, so she would not be a part of the labor force.

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. At wage rate $15, there is a of labor equal to million people.

Frictional and structural unemployment usually decrease during recessions.

Frictional unemployment is the type that arises due to recessions.

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. The equilibrium wage rate is $ and the equilibrium number of people employed is million people.

If the quantity of labor demanded and the quantity of labor supplied are brought into equilibrium by rising and falling wage rates, there should be no persistent unemployment and the unemployment rate should be zero.

If a person is not employed but is looking for work, she is in the labor force.

Structural unemployment arises when the economy changes making some jobs obsolete.

A decline in the demand for labor means the unemployment rate must rise.

According to classical economists, the only types of unemployment that exist in an economy are

If a household member is not in the labor force, it is because he or she has decided his or her time is more valuable in nonmarket activities.

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. At wage rate $6, there is a of labor equal to million people.

Employment tends to fall when aggregate output falls.

To be unemployed, a person must be without a job and actively looking for work.

The unemployment rate is the fraction of the labor force without a job.

Changes in the ________ market affect the shape of the short run aggregate supply curve.

Quiz 28: The Labor Market in the Macroeconomy

The unemployment rate will never be zero because the economy is dynamic and always changing.

According to classical economists, excessive unemployment does not persist in the economy because

Cyclical unemployment is that which rises in recessions and shrinks during expansions.

In the recession of 2008-2009, the unemployment rate rose to over 10 percent.

Sally stopped looking for work six months ago, so she would not be a part of the labor force.

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. At wage rate $15, there is a ________ of labor equal to ________ million people.

Frictional and structural unemployment usually decrease during recessions.

Frictional unemployment is the type that arises due to recessions.

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. The equilibrium wage rate is $________ and the equilibrium number of people employed is ________ million people.

If the quantity of labor demanded and the quantity of labor supplied are brought into equilibrium by rising and falling wage rates, there should be no persistent unemployment and the unemployment rate should be zero.

If a person is not employed but is looking for work, she is in the labor force.

Structural unemployment arises when the economy changes making some jobs obsolete.

A decline in the demand for labor means the unemployment rate must rise.

According to classical economists, the only types of unemployment that exist in an economy are

If a household member is not in the labor force, it is because he or she has decided his or her time is more valuable in nonmarket activities.

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. At wage rate $6, there is a ________ of labor equal to ________ million people.

Employment tends to fall when aggregate output falls.

To be unemployed, a person must be without a job and actively looking for work.

The unemployment rate is the fraction of the labor force without a job.

Changes in the ________ market affect the shape of the short run aggregate supply curve.

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. At wage rate $15, there is a of labor equal to million people.

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. The equilibrium wage rate is $ and the equilibrium number of people employed is million people.

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. At wage rate $6, there is a of labor equal to million people.