Question 1

Suppose that Allison has an accounting degree, but she lost her job two months ago when her company merged with another firm. Allison hasn't been able to find another accounting job, so she has taken a part-time job as a sales clerk at a clothing store. As a result, the official unemployment rate will:

Accepted Answer

The answer of Suppose that Allison has an accounting degree,...

Question 2

If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who were looking for a job but have given up, and 5 million people who are unemployed and seeking employment, then the number of discouraged workers is _____ million.

Accepted Answer

Discouraged workers are people who have given up on finding a job and are no longer counted as unemployed. Therefore, the number of discouraged workers in this country is 10 million.

Question 3

Suppose that Allison has an accounting degree, but she lost her job two months ago when her company merged with another firm. Allison hasn't been able to find another accounting job, so she has taken a part-time job as a sales clerk at a clothing store. The Bureau of Labor Statistics classifies Allison as:

Accepted Answer

Allison is still employed, but her job as a sales clerk is not commensurate with her accounting degree, so she is considered to be underemployed.

Question 4

The official unemployment rate reported by the government may tend to understate the amount of unemployment because it:

Accepted Answer

The official unemployment rate reported by the government only includes individuals who are actively seeking employment but unable to find a job. This excludes individuals who have become discouraged and stopped looking for work. Therefore, the official unemployment rate tends to understate the amount of unemployment as it does not account for discouraged workers.

Question 5

Use the following to answer questions: 
-(Table: Labor Force Data) Use Table: Labor Force Data. If the labor force participation rate is 70%, the unemployment rate is _____%.

Accepted Answer

The unemployment rate is calculated as the number of unemployed individuals divided by the labor force, then multiplied by 100. If the labor force participation rate is 70%, this means 70% of the eligible population is either working or actively looking for work. Without specific numbers from the "Labor Force Data" table, we can't calculate exact figures. However, given the options provided and assuming a standard calculation method, the correct answer would be chosen based on the information typically associated with these rates in economic studies. Since we don't have the table or further data, we can't directly calculate the unemployment rate, but if option A is marked as correct, it suggests that based on the given or assumed data, 7.6% of the labor force is not currently employed but is actively seeking employment.

Question 6

Jim has a part-time job. He would prefer to have a full-time job but has been unable to find one. Jim is classified as:

Accepted Answer

Jim is working, but not in a full-time job which he prefers, hence he is underemployed.

Question 7

Discouraged workers:

Accepted Answer

Discouraged workers are individuals who have given up looking for a job because they believe there are no job opportunities available for them. These individuals are not counted in the official unemployment rate as they are not actively seeking work.

Question 8

If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who were looking for a job but have given up, and 5 million people who are unemployed and seeking employment, then its labor force is _____ million.

Accepted Answer

The answer of If a country has a working-age population...

Question 9

The official unemployment rate ignores:

Accepted Answer

The official unemployment rate, also known as the U-3 rate, only includes those who are actively seeking employment and currently unemployed. It does not include those who are not actively seeking employment, known as discouraged workers. Additionally, it does not include those who have part-time jobs but are seeking full-time employment, known as underemployed individuals. Therefore, the best choice is C, as it correctly identifies that discouraged workers are not included in the official unemployment rate.

Question 10

According to official statistics, discouraged workers are:

Accepted Answer

Discouraged workers are individuals who are willing and able to work but have given up looking for employment due to a lack of job opportunities or other reasons. They are not included in the labor force and therefore not reflected in employment statistics or unemployment rates.

Question 11

Use the following to answer questions: 
-(Table: Labor Force Data) Use Table: Labor Force Distribution. The unemployment rate is _____%.

Accepted Answer

The unemployment rate is calculated by dividing the number of unemployed people by the total labor force and multiplying by 100. In this case, the unemployment rate is 3.85%.

Question 12

An INCREASE in the number of discouraged workers in the economy tends to:

Accepted Answer

Discouraged workers are not actively seeking employment and therefore are not counted in the labor force. This decreases the labor force, which can lower the official unemployment rate since it is calculated as a percentage of the labor force that is not employed but actively seeking employment.

Question 13

Economists claim that the unemployment rate can understate the true level of unemployment because the ONLY group that is included is:

Accepted Answer

The unemployment rate typically includes individuals who are without jobs and have actively looked for work in the past four weeks, excluding discouraged workers, marginally attached workers, and underemployed workers from its calculation.

Question 14

Which situation is likely to lead to an INCREASE in discouraged workers?

Accepted Answer

When the availability of jobs falls, it becomes more difficult for individuals to find employment, leading to an increase in discouraged workers who give up on finding a job and drop out of the labor force.

Question 15

Donna was laid off at the beginning of 2017. She looked for a job for three months but could not find anything suitable. She then decided to volunteer for a soup kitchen and stopped looking for a job. Donna is considered to be:

Accepted Answer

Donna is considered a discouraged worker because she stopped looking for a job after an unsuccessful search, indicating she has given up on finding employment for the time being.

Question 16

Use the following to answer questions: 
-(Table: Labor Force Distribution) Use Table: Labor Force Distribution. The total population is _____ million.

Accepted Answer

The total population is listed in the first row of the table under the "Total, 16 years and over" column, which is 278 million.

Question 17

Which federal agency calculates and reports the official unemployment rate?

Accepted Answer

The Bureau of Labor Statistics (BLS) is responsible for calculating and reporting the official unemployment rate in the United States. They survey households and businesses to gather data on employment and labor force participation, and then use that data to calculate the unemployment rate.

Question 18

The Bureau of Labor Services calculates U-6. This statistic measures the:

Accepted Answer

U-6 is a measure of labor underuse that includes not only the unemployment rate (people without jobs actively seeking work) but also includes the underemployed, marginally attached workers, and discouraged workers. This is a more comprehensive measure than the traditional unemployment rate (U-3) as it takes into account a broader range of individuals who are not fully utilizing their labor potential.

Question 19

The Bureau of Labor Statistics calls a person who is out of work, would like to work, but has given up looking for work:

Accepted Answer

According to the Bureau of Labor Statistics, a person who is out of work, would like to work, but has given up looking for work is classified as a discouraged worker. Therefore, choice C is the best answer.

Question 20

Suppose that roughly 8 million people in the United States were actively seeking jobs but had not found them this month, the same number as last month. Suppose that 2 million of the people who were unemployed last month gave up their search this month and stopped looking for work. What will happen to the official unemployment rate this month, all other things unchanged?

Accepted Answer

The official unemployment rate is calculated by dividing the number of unemployed individuals by the labor force (those who are employed or actively seeking employment). Since 2 million people who were previously unemployed have stopped looking for work, they are no longer counted as part of the labor force. Therefore, the denominator of the unemployment rate calculation (the labor force) will decrease, resulting in a lower unemployment rate.

Quiz 8: Unemployment and Inflation