Question 1

Scenario 7.2
Suppose it has been recently predicted that in the year 2020, the total number of residents in the United States will be 315.5 million, the number of residents under 16 years of age will be 85 million, the number of institutionalized adults will be 17 million, the number of adults not actively looking for work will be 39 million, and the number of unemployed will be 21.5 million.
-Refer to the data in Scenario 7.2. What is the predicted unemployment rate in the United States for the year 2020?
A) 6.8 percent
B) 8.3 percent
C) 11.5 percent
D) 12.3 percent
E) 16.5 percent

Accepted Answer

The answer of Scenario 7.2
Suppose it has been recently predicted...

Question 2

Scenario 7.1
Of 1,350 people surveyed, 318 are not working.
The status of those not working is as follows:
122 full-time students
29 discouraged workers
18 in long-term-care facilities
21 seeking employment and age 16 or older
50 retirees
63 under age 16
15 working in the underground economy and not looking for a "real" job
Eight of those working were under 16 years of age.
-Refer to Scenario 7.1. According to the data provided, the official unemployment rate is:
A) 0.02 percent.
B) 2.0 percent.
C) 10 percent.
D) 3.6 percent.
E) 33.7 percent.

Accepted Answer

The answer of Scenario 7.1
Of 1,350 people surveyed, 318 are...

Question 3

In the official labor statistics, discouraged workers are:
A) counted as employed.
B) counted as unemployed.
C) included in the labor force.
D) not included in the labor force.
E) considered to be seasonally unemployed.

Accepted Answer

Discouraged workers are not included in the labor force according to official labor statistics. They are individuals who have given up looking for work because they believe there are no job opportunities available. As a result, they are not considered unemployed because they are not actively seeking employment.

Question 4

Suppose Jess resigns from her low paying job. After looking for a new job for two weeks she is highly frustrated and gives up looking for a better-paying job. According to the U.S. Bureau of Labor Statistics, Jess would:
A) be considered unemployed.
B) be considered employed.
C) be considered temporarily unemployed.
D) not be considered as a part of the labor force.
E) be considered as seasonally unemployed.

Accepted Answer

If Jess gives up looking for a job, she is no longer considered part of the labor force and therefore not unemployed. In order to be considered unemployed, one must be actively seeking employment. Jess is considered a discouraged worker who has dropped out of the labor force.

Question 5

To be counted as part of the labor force, a person must:
A) be less than 65 years old.
B) have worked at some time in the past.
C) be employed in some productive activity.
D) be working or actively looking for work.
E) be above 16 years of age.

Accepted Answer

To be counted as part of the labor force, a person must be either currently employed (working) or actively looking for work. Option A is incorrect because there is no universal maximum age for working. Option B is incorrect because having worked in the past does not necessarily mean they are currently part of the labor force. Option C is incorrect because they may be employed, but not in a productive activity. Option E is incorrect because some individuals may not be of legal working age but still be part of the labor force (e.g. looking for a summer job).

Question 6

Which of the following persons would be considered unemployed?
A) A house wife
B) A 15-year-old looking for summer employment
C) A person who worked more than 20 hours in a family-owned business
D) A recent college graduate looking for her first job
E) A full-time student

Accepted Answer

An unemployed person is considered someone who is willing and able to work but is unable to find employment. Therefore, a recent college graduate looking for her first job would be considered unemployed. The other options do not fit this definition. A housewife is not considered unemployed as she is not actively seeking employment. A 15-year-old looking for summer employment may be considered unemployed if they actively seek employment but is not of legal age to work. A person who worked more than 20 hours in a family-owned business is considered employed, regardless of the amount of pay or industry. A full-time student is not considered unemployed as they are not currently seeking employment.

Question 7

Scenario 7.1
Of 1,350 people surveyed, 318 are not working.
The status of those not working is as follows:
122 full-time students
29 discouraged workers
18 in long-term-care facilities
21 seeking employment and age 16 or older
50 retirees
63 under age 16
15 working in the underground economy and not looking for a "real" job
Eight of those working were under 16 years of age.
-Refer to Scenario 7.1. According to the data provided, the number of workers officially unemployed is:
A)122.
B)36.
C) 40.
D) 21.
E)55.

Accepted Answer

To find the number of workers officially unemployed, we need to subtract all categories of non-working people except for those who are seeking employment and age 16 or older. 
So, 
Number of workers officially unemployed = 318 -122 (full-time students) -29 (discouraged workers) -18 (in long-term-care facilities) -50 (retirees) -63 (under age 16) -15 (working in underground economy) +8 (under 16 years of age who are working) 
= 318 - 309 
= 9

Therefore, the number of workers officially unemployed is 9, which corresponds to option D.

Question 8

Scenario 7.2
Suppose it has been recently predicted that in the year 2020, the total number of residents in the United States will be 315.5 million, the number of residents under 16 years of age will be 85 million, the number of institutionalized adults will be 17 million, the number of adults not actively looking for work will be 39 million, and the number of unemployed will be 21.5 million.
-Refer to the data in Scenario 7.2. What will be the size of the labor force in the United States in the year 2020?
A) 153 million
B) 294 million
C) 174.5 million
D) 198 million
E) 315.5 million

Accepted Answer

The answer of Scenario 7.2
Suppose it has been recently predicted...

Question 9

Scenario 7.1
Of 1,350 people surveyed, 318 are not working.
The status of those not working is as follows:
122 full-time students
29 discouraged workers
18 in long-term-care facilities
21 seeking employment and age 16 or older
50 retirees
63 under age 16
15 working in the underground economy and not looking for a "real" job
Eight of those working were under 16 years of age.
-Refer to Scenario 7.1. If any two individuals who were actively looking for a job, got tired of not finding one and decided to become full-time students, then:
A) the official unemployment rate would remain unchanged.
B) the U.S. Bureau of Labor Statistics would have to be informed immediately.
C) the official unemployment rate would increase.
D) the number officially in the labor force would remain unchanged.
E) the official unemployment rate would decrease.

Accepted Answer

The answer of Scenario 7.1
Of 1,350 people surveyed, 318 are...

Question 10

Because there is no way to account for them, the official unemployment rate does not include discouraged workers. What would happen to the unemployment rate if, because of a program that gave them new hope, all discouraged workers suddenly begin reporting themselves as ready to work?
A) The official unemployment rate would remain unchanged.
B) The size of the labor force would increase.
C) The number of individuals officially in the labor force would remain unchanged.
D) The official unemployment rate would decrease.
E) The size of the underground economy would shrink.

Accepted Answer

The answer of Because there is no way to account...

Question 11

The effect of _____ is to produce an unemployment rate that understates actual unemployment.
A) the underground economy
B) discouraged workers and underemployment
C) the growth in real GDP
D) institutionalized and retired labor force
E) seasonally unemployed workers

Accepted Answer

Discouraged workers are individuals who have stopped looking for work because they believe that no jobs are available for them. Underemployment is a situation where individuals are employed, but they are not using their full potential or are working part-time when they prefer full-time work. Both discouraged workers and underemployment are not included in the official unemployment rate, which leads to an understatement of the actual unemployment rate.

Question 12

The official unemployment rate is:
A) the number of unemployed people divided by the number of employed people.
B) the number of unemployed people divided by the total size of the population.
C) the number of unemployed people divided by the size of the non-institutionalized population.
D) the number of unemployed people divided by the size of the labor force.
E) the number of unemployed people divided by the size of the non-institutionalized population, age 16 or older.

Accepted Answer

The official unemployment rate is calculated as the number of unemployed people divided by the size of the labor force. The labor force includes both employed and unemployed people who are actively seeking work. Option A is incorrect because it divides the number of unemployed people by the number of employed people only, ignoring those who are not employed nor seeking work. Option B is incorrect because it uses the total population instead of the non-institutionalized population. Option C is incorrect because it only takes into account the non-institutionalized population, ignoring those who are currently institutionalized. Option E is incorrect because it uses the non-institutionalized population age 16 or older instead of the labor force.

Question 13

Which of the following is true of seasonal unemployment?
A) It is not considered a legitimate type of employment.
B) It is reflected in the GDP gap.
C) It is always present, even in a healthy economy.
D) It causes the natural rate of unemployment to rise.
E) It inflates potential GDP.

Accepted Answer

The answer of Which of the following is true of...

Question 14

The Bureau of Labor Statistics defines a person as unemployed if he or she does not:
A) work full time.
B) have a job but is actively seeking one.
C) earn a wage above the minimum wage rate.
D) earn enough income to be above the poverty level.
E) work as much as he or she desires.

Accepted Answer

According to the definition provided by the Bureau of Labor Statistics, a person is considered unemployed only if they do not have a job but are actively seeking one. Therefore, option B is the best choice. The other options are not accurate definitions of unemployment.

Question 15

Which of the following people does an economist consider underemployed?
A) Someone who prefers to spend more time on leisure and less time on wage-earning activities
B) A person who is working fewer hours at wage-earning activities than she or he desires
C) A rock star who voluntarily chooses to work part-time
D) Someone who is in prison and is willing to work from his cell
E) A gardener who hates plants but still does the job because he or she has no other skills

Accepted Answer

An economist considers someone who is working fewer hours at wage-earning activities than they desire as underemployed, as they have the skills and desire to work more but are unable to find a suitable job. The other choices do not necessarily fit the definition of underemployed.

Question 16

Which of the following individuals is not among the underemployed or discouraged workers?
A) A person employed part-time but willing to work full-time
B) A homeless person who has not found work for a year and has given up looking for jobs
C) A nuclear physicist unable to work because of illness
D) A gourmet French chef working part-time at Burger King
E) A 60-year-old professor who has stopped looking for a teaching job because schools consider him too old

Accepted Answer

The individual who is unable to work because of illness is not considered underemployed or discouraged, as they are not able to work due to health reasons, rather than economic or societal factors.

Question 17

Which of the following is true about workers who experience structural unemployment?
A) They quickly accept a much lower salary in a different industry.
B) They do not adjust their expectations to the realities of the job market.
C) They sometimes enter the pool of discouraged workers.
D) They tend to quit their job search very easily.
E) They usually have the necessary skills to maintain their level of income in another industry.

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills and qualifications of workers and the requirements of available jobs. Workers who experience this type of unemployment may struggle to find new employment within their current industry or may need to transition to a different industry. This can lead to frustration and a sense of hopelessness, potentially causing them to become discouraged workers who have given up on finding a job. Therefore, choice C is correct. Choices A, B, D, and E are incorrect as they do not accurately describe the behavior of workers who experience structural unemployment.

Question 18

Assume that the U.S. labor force consists of 185 million workers and that 17.5 million are officially unemployed. What is the unemployment rate if 68.5 million are under age 16 and 6 million are institutionalized?
A) 11.4 percent
B) 10.0 percent
C) 9.5 percent
D) 7.5 percent
E) 10.8 percent

Accepted Answer

The labor force is equal to the number of employed plus the number of unemployed. Therefore,

Labor force = Employed + Unemployed

We know that the labor force is 185 million workers, and the number of unemployed is 17.5 million. Therefore,

185 million = Employed + 17.5 million
Employed = 167.5 million

However, we need to adjust the employed and unemployed numbers to account for individuals under age 16 and institutionalized individuals. Thus,

Adjusted labor force = Employed + Unemployed + Under 16 + Institutionalized
Adjusted labor force = 167.5 million + 17.5 million + 68.5 million + 6 million
Adjusted labor force = 259.5 million

To find the unemployment rate, we divide the number of unemployed by the adjusted labor force and multiply by 100%:

Unemployment rate = (Unemployed / Adjusted labor force) x 100%
Unemployment rate = (17.5 million / 259.5 million) x 100%
Unemployment rate = 6.8%

Therefore, the best choice is C) 9.5 percent.

Question 19

Which of the following statements about frictional unemployment is true?
A) It can be eliminated only in a free society.
B) It is a long-term unemployment.
C) It does not exists in developed economies.
D) It is also called structural unemployment.
E) It arises when people elect to change jobs.

Accepted Answer

Frictional unemployment is the result of people voluntarily leaving jobs to seek better ones, or entering the workforce for the first time. Therefore, choice E is the correct option.

Question 20

Scenario 7.1
Of 1,350 people surveyed, 318 are not working.
The status of those not working is as follows:
122 full-time students
29 discouraged workers
18 in long-term-care facilities
21 seeking employment and age 16 or older
50 retirees
63 under age 16
15 working in the underground economy and not looking for a "real" job
Eight of those working were under 16 years of age.
-Refer to Scenario 7.1. According to the data provided, the number officially in the labor force is:
A) 1,053.
B) 1,350.
C) 1,032.
D) 1,045.
E) 1,011.

Accepted Answer

The answer of Scenario 7.1
Of 1,350 people surveyed, 318 are...

Quiz 7: Unemployment and Inflation

In the official labor statistics, discouraged workers are:

Suppose Jess resigns from her low paying job. After looking for a new job for two weeks she is highly frustrated and gives up looking for a better-paying job. According to the U.S. Bureau of Labor Statistics, Jess would:

To be counted as part of the labor force, a person must:

Which of the following persons would be considered unemployed?

Because there is no way to account for them, the official unemployment rate does not include discouraged workers. What would happen to the unemployment rate if, because of a program that gave them new hope, all discouraged workers suddenly begin reporting themselves as ready to work?

The effect of _____ is to produce an unemployment rate that understates actual unemployment.

The official unemployment rate is:

Which of the following is true of seasonal unemployment?

The Bureau of Labor Statistics defines a person as unemployed if he or she does not:

Which of the following people does an economist consider underemployed?

Which of the following individuals is not among the underemployed or discouraged workers?

Which of the following is true about workers who experience structural unemployment?

Assume that the U.S. labor force consists of 185 million workers and that 17.5 million are officially unemployed. What is the unemployment rate if 68.5 million are under age 16 and 6 million are institutionalized?

Which of the following statements about frictional unemployment is true?