Question 1

A software firm moves its headquarters from California to Ireland. The CFO of the software firm is given the opportunity to move to Ireland. He turns down this opportunity because he does not want to move out of the country. While he is searching for a new job within the United States he would be classified as

Accepted Answer

The answer of A software firm moves its headquarters from...

Question 2

If Samantha quits her job voluntarily and actively searches for other work, then she is considered

Accepted Answer

Samantha is frictionally unemployed since she is voluntarily leaving her job and actively seeking other work. This type of unemployment is a result of the time and effort it takes for workers to search for jobs that best match their skills and preferences.

Question 3

During the early 1980s, companies started expanding. One of the results of this expansion was the long-term increase in the number of middle management positions. This change in the way businesses operate would have

Accepted Answer

The increase in middle management positions would have decreased the natural rate of unemployment as it would have created more job opportunities, thereby decreasing the number of individuals who are unemployed and looking for work.

Question 4

A structurally unemployed person is

Accepted Answer

A structurally unemployed person is someone who cannot find a job because their job skills have become obsolete. This can happen due to technological advancements or changes in the structure of industries. They are not counted as part of the labor force because they are not actively seeking employment, but they are still considered unemployed. Switching jobs within the same industry does not necessarily make someone structurally unemployed. A recession may contribute to unemployment, but it is not the defining factor in structural unemployment.

Question 5

The ________ in unemployment that occurs during recessions and depressions is called ________ unemployment.

Accepted Answer

The increase in unemployment that occurs during recessions and depressions is called cyclical unemployment.

Question 6

Telephone operators who have lost their jobs as a result of computerized switchboards are an example of

Accepted Answer

Structural unemployment refers to unemployment caused by changes in the structure of the economy, such as technological advancements and shifts in consumer demand. The example given of telephone operators losing their jobs due to computerized switchboards is a clear illustration of structural unemployment.

Question 7

The unemployment rate that occurs in a normal functioning economy is often referred to as

Accepted Answer

The natural rate of unemployment, also known as the non-accelerating inflation rate of unemployment (NAIRU), is the unemployment rate that occurs in a normal functioning economy where there is neither a recession nor an expansion. It is caused by structural and frictional factors in the labor market, such as job turnover and skill mismatches, and is considered unavoidable and necessary for economic growth. Cyclical unemployment is caused by fluctuations in the business cycle, while seasonal unemployment is caused by seasonal fluctuations in demand for labor, such as agriculture or tourism. Labor force unemployment is not a commonly used term in economics.

Question 8

Which of the following is a cost associated with recessions and unemployment?

Accepted Answer

Unemployment causes psychological harm to those who are out of work, leading to lower levels of overall well-being and increased rates of mental health problems.

Question 9

The portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries is ________ unemployment.

Accepted Answer

Structural unemployment is caused by changes in the economy that result in a significant loss of jobs in certain industries. This can be due to changes in technology, international competition, or shifts in consumer preferences. It is different from cyclical unemployment, which is caused by fluctuations in the business cycle, or frictional unemployment, which is the temporary unemployment that occurs as workers move between jobs. Seasonal unemployment is another type of temporary unemployment that occurs during certain times of the year, such as in the agricultural or tourism industries.

Question 10

When the Fed increases the rate of growth of the money supply to jump start the economy, the unemployment type that will be directly affected is the

Accepted Answer

When the Fed increases the rate of growth of the money supply to stimulate the economy, it leads to an increase in aggregate demand, which leads to an increase in output and employment. This rise in output and employment should, in theory, decrease cyclical unemployment, which is the type of unemployment caused by business cycle fluctuations.

Question 11

Any unemployment that does not occur as a part of a normal functioning economy is most likely ________ unemployment.

Accepted Answer

Cyclical unemployment is directly related to the macroeconomic situation of an economy. It occurs during downturns or recessions when there is a lack of demand for goods and services, leading to job losses. This type of unemployment is not part of the normal functioning of an economy, unlike structural or frictional unemployment, which can occur even in a healthy economy. Natural unemployment includes both structural and frictional unemployment and represents the baseline unemployment that occurs even in a healthy economy.

Question 12

If the labor market becomes less efficient so that the unemployed are more slowly matched with jobs, then

Accepted Answer

The natural rate of unemployment is the rate of unemployment that exists when the labor market is in equilibrium, meaning that there is no cyclical unemployment caused by a recession. Any decrease in efficiency in the labor market would lead to a slower matching of workers with job openings, resulting in an increase in frictional and structural unemployment, which are components of the natural rate of unemployment. Therefore, the natural rate of unemployment would increase.

Question 13

During a recession

Accepted Answer

During a recession, businesses may have lower profits, which leads to a decrease in investment. Option A is incorrect because during a recession, people tend to spend less, resulting in a decrease in consumption. Option C is incorrect because during a recession, there is generally a decrease in demand for goods, which often results in a decrease in exports. Option D is incorrect because during a recession, there is generally a decrease in demand for goods, which often leads to a decrease in imports.

Question 14

The unemployment that occurs during recessions and depressions is

Accepted Answer

Cyclical unemployment occurs when there is a downturn in the economy, leading to a decrease in demand for goods and services and consequently less demand for labor. This results in workers losing their jobs, leading to unemployment. Therefore, the unemployment that occurs during recessions and depressions is cyclical unemployment.

Question 15

The demand for automobiles rises when the economy experiences an expansion. If an automobile manufacturer hires additional workers during an expansion, this would be best described as an example of a reduction in

Accepted Answer

Cyclical unemployment occurs when there is a downturn in the economy and businesses start to lay off workers. Conversely, during an economic expansion, businesses will typically begin to hire more workers to meet increased demand for their goods and services. In this scenario, if an automobile manufacturer hires additional workers during an economic expansion, it would be an example of a reduction in cyclical unemployment.

Question 16

Estimates for the ________ rate of unemployment that routinely occurs in the United States range from 4 to 6 percent.

Accepted Answer

The term "natural rate of unemployment" refers to the level of unemployment that exists when the labor market is in equilibrium and there is no cyclical unemployment. It is also sometimes called the "full employment" rate. Estimates for the natural rate of unemployment in the United States typically range from 4-6%, making choice C the correct answer. Frictional unemployment and structural unemployment are both types of unemployment that can exist even when the labor market is in equilibrium, but they are not related to the natural rate. Cyclical unemployment is caused by fluctuations in the business cycle, so it is not a natural or equilibrium rate of unemployment.

Question 17

The economy is in an expansion and the housing market is growing. As a result of this, a home builder doubles his sales force. This would be best described as an example of a reduction in

Accepted Answer

Cyclical unemployment fluctuates with the economy's level of output or business cycle. In an expansion, when the housing market is growing, businesses often expand their workforce to meet increased demand, thus reducing cyclical unemployment.

Question 18

A customer service representative in Nebraska who loses his job because the company relocated the customer service department to India represents an example of

Accepted Answer

This is an example of structural unemployment because the job loss is due to a structural change in the economy, namely the relocation of the customer service department to India.

Question 19

Unemployment that occurs during the normal workings of an economy as people change jobs and move across the country is called

Accepted Answer

Frictional unemployment occurs when people are in between jobs or are searching for new ones. It is a natural part of a functioning economy and can be caused by various factors, such as changes in the labor market or personal choices of the workers.

Question 20

During the recession of 2008-2009, cyclical unemployment increased as the recession continued. This increase in cyclical unemployment would have

Accepted Answer

Cyclical unemployment is associated with the ups and downs of the economy and does not affect the natural rate of unemployment, which is the long-term rate of unemployment determined by structural factors in the labor market.

Quiz 7: Unemployment, Inflation, and Long-Run Growth