Question 1

Fill in the missing values in the table of data collected in the household survey for November, 2009. The working-age population, employment, unemployment, and labor force are measured in thousands. Show your work.

Accepted Answer

The answer of Fill in the missing values in the...

Question 2

The natural rate of unemployment is the amount of unemployment
A) associated with the business cycle.
B) equal to frictional plus structural unemployment.
C) that exists when the economy goes into recession.
D) that exists when the economy is in an expansion.

Accepted Answer

The natural rate of unemployment is the unemployment rate that arises from the normal churn of the labor market, including frictional and structural unemployment. It is not associated with the business cycle, nor is it specific to expansions or recessions.

Question 3

Suppose 180,000 people are employed, 20,000 people are unemployed, the working-age population is 250,000, and 50,000 people are out of the labor force. Calculate the unemployment rate.

Accepted Answer

The answer of Suppose 180,000 people are employed, 20,000 people...

Question 4

Structural unemployment is the result of
A) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.
B) the search process of matching workers with jobs.
C) the ups and downs in inflation.
D) a slowdown in the economy.

Accepted Answer

Structural unemployment occurs when there is a long-term mismatch between the skills and characteristics of workers and the requirements of available jobs. This type of unemployment is not caused by short-term economic fluctuations, but rather by changes in the economy, such as technological advancements or shifts in supply and demand. The search process of matching workers with jobs (B) is related to frictional unemployment and inflation (C) is related to cyclical unemployment, both of which are different types of unemployment from structural unemployment. A slowdown in the economy (D) can lead to higher levels of all types of unemployment, but it does not specifically cause structural unemployment.

Question 5

How would the unemployment rate and the labor force participation rate change if discouraged workers were counted as unemployed rather than counted as out of the labor force? Show using the formula for both measurements.

Accepted Answer

The answer of How would the unemployment rate and the...

Question 6

The Bureau of Labor Statistics does not count discouraged workers as unemployed. Suppose discouraged workers were counted as unemployed. Explain how the unemployment rate and the labor force participation rate would change.

Accepted Answer

The answer of The Bureau of Labor Statistics does not...

Question 7

If cyclical unemployment is eliminated in the economy, then
A) the economy is considered to be at full employment.
B) the unemployment rate is below the natural rate of unemployment.
C) the unemployment rate is above the natural rate of unemployment.
D) the economy is at less than full employment.

Accepted Answer

Cyclical unemployment refers to unemployment that is caused by economic downturns or recessions. If cyclical unemployment is eliminated, then all the remaining unemployment is considered to be structural or frictional, which are types of unemployment that are not related to the business cycle. At this point, the economy is considered to be at full employment because there is no cyclical unemployment.

Question 8

The labor force participation rates of men have gradually increased since 1948.

Accepted Answer

The labor force participation rates of men have actually gradually decreased since 1948.

Question 9

The Bureau of Labor Statistics counts as employed people who work part-time, but would prefer to work full-time. Suppose the people who had part-time jobs, but wanted full-time jobs, were counted as unemployed. Explain how the unemployment rate and the labor force participation rate would change.

Accepted Answer

The answer of The Bureau of Labor Statistics counts as...

Question 10

Suppose 180,000 people are employed, 20,000 people are unemployed, and 50,000 people are out of the labor force, then calculate the labor force participation rate.

Accepted Answer

The answer of Suppose 180,000 people are employed, 20,000 people...

Question 11

Cyclical unemployment is the result of
A) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.
B) the search process of matching workers with jobs.
C) the ups and downs in inflation.
D) a slowdown in the economy.

Accepted Answer

Cyclical unemployment is a result of fluctuations in the economy called business cycles. During periods of economic slowdown or recession, businesses may reduce their workforce, leading to higher levels of unemployment. Therefore, choice D, a slowdown in the economy, is the best answer to this question.

Question 12

Fill in the missing values in the table of data collected in the household survey for December, 1996. The working-age population, employment, unemployment, and labor force are measured in thousands. Show your work.

Accepted Answer

The answer of Fill in the missing values in the...

Question 13

The advice to "keep searching, there are plenty of jobs around here for which you are qualified," would be most appropriate for which of the following types of unemployment?
A) frictional unemployment
B) structural unemployment
C) cyclical unemployment
D) seasonal unemployment

Accepted Answer

Frictional unemployment is caused by people voluntarily leaving one job to find another and often involves a temporary period of job search. Therefore, the advice to keep searching for jobs is most appropriate for frictional unemployment. Structural unemployment is caused by a mismatch between the skills workers have and the skills employers are looking for. Cyclical unemployment is caused by changes in the business cycle, such as a recession. Seasonal unemployment is caused by seasonal fluctuations in demand for labor, such as agriculture or tourism.

Question 14

According to the text, economists consider full employment to occur when
A) everyone who wants a job has a job.
B) frictional unemployment equals zero.
C) the sum of frictional unemployment and structural unemployment equals zero.
D) the unemployment rate consists of only frictional and structural unemployment.

Accepted Answer

Economists consider full employment to occur when the unemployment rate consists of only frictional and structural unemployment, excluding cyclical unemployment. This reflects a situation where all unemployment is due to the normal turnover in the labor market (frictional) or due to mismatches between workers' skills and job requirements (structural), rather than economic downturns.

Question 15

Article Summary
According to the Bureau of Labor Statistics, the unemployment rate fell from 7.4 percent in July 2013 to 7.3 percent in August, and at the same time the labor force participation rate fell to its lowest level in 35 years, from 63.4 percent to 63.2 percent. The decrease in the labor force participation rate was due to a decline in the size of the workforce of about 300,000 people. A large portion of the job growth in August was in the food service and retail sectors, areas which typically account for part-time and lower-paying jobs. On a brighter note, the average number of hours worked per week rose slightly, as did average hourly earnings and temporary employment.
Source: Peter Coy, "Not Looking for Work: Labor-Force Participation Hits 35-Year Low," Bloomberg Businessweek, September 6, 2013.
-Refer to the Article Summary. Explain how the labor force declining by 300,000 people could have led to the decrease in the unemployment rate.

Accepted Answer

The answer of Article Summary
According to the Bureau of Labor...

Question 16

Frictional unemployment is the result of
A) a persistent mismatch between the skills and characteristics of workers and the requirements of the jobs.
B) the search process of matching workers with jobs.
C) the ups and downs in inflation.
D) a slowdown in the economy.

Accepted Answer

Frictional unemployment is the result of the search process of matching workers with jobs, such as when individuals are between jobs or entering the labor force for the first time. A persistent mismatch between skills and job requirements is referred to as structural unemployment, while a slowdown in the economy can result in cyclical unemployment. Ups and downs in inflation are not directly related to frictional unemployment.

Question 17

Full employment is not considered to be zero unemployment, because
A) some cyclical unemployment always exists.
B) some people do not want a job.
C) there are not enough jobs for everyone who wants one.
D) people do not find jobs instantaneously.

Accepted Answer

Full employment acknowledges the existence of frictional unemployment, which occurs when people are between jobs or are entering the workforce. This means that even when the economy is at full employment, there will still be some level of unemployment because people are in the process of finding new jobs, not because there are no jobs available.

Question 18

During the Great Depression, cyclical unemployment increased as the recession continued. This increase in cyclical unemployment
A) increased the natural rate of unemployment.
B) decreased the natural rate of unemployment.
C) had no effect on the natural rate of unemployment.
D) could have increased or decreased the natural rate of unemployment.

Accepted Answer

Cyclical unemployment is directly related to the macroeconomic situation of an economy, such as a recession or a depression, and varies with the business cycle. The natural rate of unemployment, however, is determined by structural factors in the labor market, such as market inefficiencies, and is not affected by short-term cyclical fluctuations. Therefore, an increase in cyclical unemployment during the Great Depression would not have affected the natural rate of unemployment.

Question 19

In 2013, Caterpillar laid off employees who produced mining machinery at its South Milwaukee plant. The laid-off employees who were not able to find jobs at another factory due to a permanent decline in demand in the mining industry would be considered
A) structurally unemployed.
B) frictionally unemployed.
C) seasonally unemployed.
D) cyclically unemployed.

Accepted Answer

The employees who were laid off due to a permanent decline in demand in the mining industry would be considered structurally unemployed. This type of unemployment is caused by a mismatch between the skills and qualifications of workers and the skills and qualifications required for available jobs in the labor market.

Question 20

A student who just graduated from college but has not found a job would most likely be
A) frictionally unemployed.
B) structurally unemployed.
C) cyclically unemployed.
D) seasonally unemployed.

Accepted Answer

The student is most likely experiencing frictional unemployment, as they are temporarily in between jobs and actively seeking employment.

Quiz 20: Unemployment and Inflation

Fill in the missing values in the table of data collected in the household survey for November, 2009. The working-age population, employment, unemployment, and labor force are measured in thousands. Show your work.

The natural rate of unemployment is the amount of unemployment

Suppose 180,000 people are employed, 20,000 people are unemployed, the working-age population is 250,000, and 50,000 people are out of the labor force. Calculate the unemployment rate.

Structural unemployment is the result of

How would the unemployment rate and the labor force participation rate change if discouraged workers were counted as unemployed rather than counted as out of the labor force? Show using the formula for both measurements.

The Bureau of Labor Statistics does not count discouraged workers as unemployed. Suppose discouraged workers were counted as unemployed. Explain how the unemployment rate and the labor force participation rate would change.

If cyclical unemployment is eliminated in the economy, then

The labor force participation rates of men have gradually increased since 1948.

The Bureau of Labor Statistics counts as employed people who work part-time, but would prefer to work full-time. Suppose the people who had part-time jobs, but wanted full-time jobs, were counted as unemployed. Explain how the unemployment rate and the labor force participation rate would change.

Suppose 180,000 people are employed, 20,000 people are unemployed, and 50,000 people are out of the labor force, then calculate the labor force participation rate.

Cyclical unemployment is the result of

Fill in the missing values in the table of data collected in the household survey for December, 1996. The working-age population, employment, unemployment, and labor force are measured in thousands. Show your work.

The advice to "keep searching, there are plenty of jobs around here for which you are qualified," would be most appropriate for which of the following types of unemployment?

According to the text, economists consider full employment to occur when

Frictional unemployment is the result of

Full employment is not considered to be zero unemployment, because

During the Great Depression, cyclical unemployment increased as the recession continued. This increase in cyclical unemployment

In 2013, Caterpillar laid off employees who produced mining machinery at its South Milwaukee plant. The laid-off employees who were not able to find jobs at another factory due to a permanent decline in demand in the mining industry would be considered

A student who just graduated from college but has not found a job would most likely be