Question 1

Structural unemployment is unemployment that results from which of the following circumstances?

Accepted Answer

Structural unemployment results from a mismatch between the available jobs and the skills of available workers. It is not caused by the restructuring of an organization (A), change in business cycles (B), or people moving to new geographical areas (D).

Question 2

What is a general upward movement of prices in the economy?

Accepted Answer

Inflation is a general upward movement of prices in the economy. A is incorrect as purchase power acceleration is not a commonly used term. B is incorrect as deflation is the opposite of inflation, meaning a general downward movement of prices in the economy. D is incorrect as upsizing is not a term related to price movements in the economy.

Question 3

Which type of inflation is triggered by increases in production that push up the costs of final goods and services?

Accepted Answer

Cost-push inflation occurs when the rising cost of production leads to higher prices for the final goods and services. This is typically caused by increases in the prices of raw materials, wages, or taxes, which lead to increased costs for businesses. As a result, businesses need to charge higher prices to maintain their profit margins, leading to inflation.

Question 4

In PEI, jobs are plentiful during the summer months, but difficult to find in September once the tourists leave and many restaurants and inns close. People who work in the island's restaurants annually become unemployed in which way?

Accepted Answer

The situation described in the question indicates that the unemployment is caused by seasonal factors, as it is linked to the fluctuations in tourist demand that occur throughout the year. Therefore, choice D (seasonally) is the most fitting option. The other choices are not appropriate because there is no evidence that joblessness is caused by geographic location (B) or structural changes in the economy (A), nor is there mention of individuals switching jobs or entering the labor market (C).

Question 5

If the tourism industry in a Canadian province had 43 percent unemployment due to an economic downturn that gripped the country, the workers in the tourism industry would be experiencing which of the following type of unemployment?

Accepted Answer

The unemployment in the tourism industry due to an economic downturn is an example of cyclical unemployment, which occurs due to fluctuations in the business cycle.

Question 6

If one of the reasons for the growing inflation rate is due to increases in production costs of goods and services that occurred as a result of a decline in a suitable labour force, this would be an example of which type of inflation?

Accepted Answer

Cost-push inflation occurs when there is an increase in the cost of production inputs such as labor, materials, or energy. In this scenario, the decline in the suitable labor force has caused an increase in production costs, which has led to an increase in prices of goods and services, ultimately causing inflation.

Question 7

Which of the following represent two types of inflation?

Accepted Answer

Demand-pull inflation occurs when there is an increase in demand for goods and services that leads to an increase in prices. Cost-push inflation occurs when there is an increase in the cost of production, which results in an increase in the prices of goods and services.

Question 8

Laron Kelly recently quit his job as a car salesperson and is now trying to find a job with another car dealership. This is an example of which type of unemployment?

Accepted Answer

Frictional unemployment refers to the temporary unemployment that occurs when a person is searching for a job or transitioning between jobs. In this case, Laron Kelly is voluntarily in between jobs, which fits the definition of frictional unemployment.

Question 9

Each January, Lopez is laid off as soon as Christmas is over. She will be hired back sometime during the summer. In terms of unemployment, Lopez is a good example of which type of unemployment?

Accepted Answer

Lopez is experiencing seasonal unemployment, which is characterized by job losses and subsequent rehiring that occur with a certain regularity each year. This type of unemployment is typically associated with industries such as agriculture, construction, and tourism, which experience predictable fluctuations in demand due to seasonal factors.

Question 10

Last year, a mother in a small African nation could buy a pound of flour for the Canadian equivalent of $1.30. Six months ago, an identical pound of flour cost $3.40. Today she would need $5.60 to buy that pound of flour. What is the term for this example of the general upward movement of prices?

Accepted Answer

The term for the general upward movement of prices is inflation. The given scenario demonstrates inflation as the cost of a pound of flour has increased from $1.30 to $5.60 in a year.

Question 11

When the economy is in a recession, many companies must lay off workers, causing which type of unemployment?

Accepted Answer

Cyclical unemployment is caused by changes in the business cycle, including recessions and economic downturns. During these times, companies may lay off workers due to decreased demand for their products or services, causing cyclical unemployment.

Question 12

The price of a basket of groceries rises from $30 to $40 but your salary remains the same. This is an example of a decline in which of the following for you, personally?

Accepted Answer

Purchasing power refers to the amount of goods and services that can be purchased with a particular amount of money. In this case, the increase in grocery prices means that you can purchase fewer goods with the same amount of money, resulting in a decline in personal purchasing power. A rise in the cost of living index would also indicate a decline in purchasing power. Standard of living and GDP index are broader factors and may not necessarily be affected by this specific scenario.

Question 13

Suppose that 50 percent of the labour force in a country is involved in the agricultural sector, but the economic growth in the nation comes from industry and tourism. What type of unemployment would such a mismatch of ability and job requirements cause?

Accepted Answer

The mismatch of ability and job requirements in this scenario leads to structural unemployment, as the skills and abilities of workers in the agricultural sector do not match the needs of the growing industry and tourism sectors. This results in a difficulty in finding alternative employment for those workers and a longer-term type of unemployment.

Question 14

The price of a decorated three-tiered wedding cake from a local supermarket deli recently increased from $105 to $119. The supermarket manager said it was due entirely to increases in sugar and labour costs. The $14 increase is an example of which of the following?

Accepted Answer

The $14 increase in price is an example of inflation, which refers to an overall increase in the prices of goods and services in an economy over a period of time. The increase is due to the rising cost of sugar and labor, indicating an increase in the cost of producing the cake.

Question 15

For the past 10 years, Kris Boja has been a welder for a local manufacturer. This morning her boss informed her that a robot would replace her. Boja's unemployment is an example of which type of unemployment?

Accepted Answer

Structural unemployment occurs when changes occur in the structure of the economy that prevent certain groups of individuals from finding employment. In this case, Kris Boja's unemployment is due to the structural change in the manufacturing process that uses a robot to replace human labor.

Question 16

What does it mean if the annual inflation rate in a country was 8.1 percent?

Accepted Answer

An annual inflation rate of 8.1 percent means that prices on average increased by 8.1 percent from the previous year. This means that the purchasing power of the people decreased from what it was in the previous year, as they can buy fewer goods and services with the same amount of money.

Question 17

Gracie Burlesford works for a peach grower in southern Ontario. In July, Burlesford was laid off because of a drought. What type of unemployment is this?

Accepted Answer

The type of unemployment in this scenario is seasonal, since the layoff resulted from the seasonal nature of peach growing and the effects of the drought on the crop.

Question 18

If a nation experienced an inflation rate of about 12 percent and then, 5 years later, had an inflation rate of about 15 percent, which of the following statements best describes what was happening to purchasing power during that period?

Accepted Answer

Inflation reduces the value of money over time, meaning that with higher inflation rates, the amount of goods and services that can be bought with the same amount of money decreases. Therefore, if the inflation rate increased from 12 percent to 15 percent over five years, the purchasing power of the average consumer would have been higher at the beginning of the period than at the end.

Question 19

The labourers displaced due to assembly-line automation may not have the skills needed to operate the computerized machines that replaced them. This is an example of which type of unemployment?

Accepted Answer

The scenario of displacement due to automation resulting in a lack of necessary skills for operating the new computerized machines is an example of structural unemployment, which occurs due to a mismatch between the skills possessed by workers and the job openings available in the market.

Question 20

Which type of inflation occurs when the demand for goods and services is greater than the supply?

Accepted Answer

Demand-pull inflation occurs when there is too much demand for goods and services, leading to a rise in prices. This can happen, for example, when levels of employment and consumer confidence are high and people have more disposable income to spend on goods and services. As a result, businesses may struggle to keep up with demand, which can lead to higher prices.

Quiz 2: Economic Environment