Question 1

In one year, you meet 52 people who are each unemployed for one week and eight people who are each unemployed for the whole year. What percentage of the unemployment spells you encountered was short term, and what percentage of the unemployment you encountered in a given week was long term?
A)52% was short term; 13.3% was long term
B)52% was short term; 88.9% was long term
C)86.7% was short term; 13.3% was long term
D)86.7% was short term; 88.9% was long term

Accepted Answer

The answer of In one year, you meet 52 people...

Question 2

A survey showed that in each of the past 12 months there was one person who was unemployed who worked in all other months. There were also two people who were unemployed for all 12 months. What percentage of the unemployment spells during the year was short term, and what percentage of the unemployment in a given month was long term?
A)75% was short term; 33.3% was long term
B)75% was short term; 66.7% was long term
C)85.7% was short term; 33.3% was long term
D)85.7% was short term; 66.7% was long term

Accepted Answer

The answer of A survey showed that in each of...

Question 3

The Bureau of Labor Statistics classifies people who would like to work but have given up looking for a job as
A)unemployed. If they were classified as out of the labor force, the reported unemployment rate would be larger.
B)unemployed. If they were classified as out of the labor force, the reported unemployment rate would be smaller.
C)out of the labor force. If they were classified as unemployed, the reported unemployment rate would be larger.
D)out of the labor force. If they were classified as unemployed, the reported unemployment rate would be smaller.

Accepted Answer

The Bureau of Labor Statistics classifies people who would like to work but have given up looking for a job as out of the labor force, not unemployed. If they were instead classified as unemployed, it would make the number of unemployed people larger and therefore increase the reported unemployment rate. Therefore, if they were classified as unemployed, the reported unemployment rate would be larger, making C the correct answer.

Question 4

Who would be included in the labor force?
A)Louie, who is waiting for his new job to start
B)Daisey, who has become discouraged looking for a job and has quit looking
C)Donald, an unpaid stay-at-home father
D)None of the above is correct.

Accepted Answer

Louie is included in the labor force because he is currently waiting for a job to start, which means he is available and actively seeking employment.

Answer: D 
 Daisey has quit looking for a job, which means she is not actively seeking employment and is not included in the labor force. Donald is also not included in the labor force because he is not looking for paid work outside the home.

Question 5

The reported unemployment rate should be viewed as
A)a useful but imperfect measure of joblessness.
B)clearly smaller than the true unemployment rate.
C)clearly larger than the true unemployment rate.
D)being very close to the true unemployment rate.

Accepted Answer

The reported unemployment rate is calculated based on a survey and only accounts for those who are actively seeking employment. It does not account for those who have given up looking for work or those who are underemployed. Therefore, it is a useful but imperfect measure of joblessness, and it may not accurately reflect the true extent of unemployment.

Question 6

Table 28-6 
-Refer to Table 28-6. What is the U-5 measure of labor underutilization?
A)7.5%
B)7.9%
C)8.1%
D)26%

Accepted Answer

The U-5 measure includes the unemployed, plus discouraged workers and all other marginally attached workers. The percentage given in the table for U-5 is 7.9%.

Question 7

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called
A)the natural rate of unemployment.
B)cyclical unemployment.
C)structural unemployment.
D)frictional unemployment.

Accepted Answer

Frictional unemployment is the unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills. The other choices refer to different types of unemployment: the natural rate of unemployment is the rate of unemployment that exists when the economy is in equilibrium, cyclical unemployment is the unemployment that results from fluctuations in economic activity, and structural unemployment is the unemployment that results from mismatches between the skills that workers in the economy can offer and the skills demanded by employers.

Question 8

Which of the following is correct?
A)Typically more than one-third of the unemployed are new entrants into the job market.
B)Most spells of unemployment are short.
C)Most unemployment observed at any time is long term.
D)All of the above are correct.

Accepted Answer

The answer of Which of the following is correct?
A)Typically more...

Question 9

Some individuals would like to have a job, but they have given up looking for a job after an unsuccessful search. These individuals are called
A)detached workers, and they are classified by the Bureau of Labor Statistics as unemployed.
B)detached workers, and they are not classified by the Bureau of Labor Statistics as unemployed.
C)discouraged workers, and they are classified by the Bureau of Labor Statistics as unemployed.
D)discouraged workers, and they are not classified by the Bureau of Labor Statistics as unemployed.

Accepted Answer

Individuals who have given up looking for a job are called discouraged workers, and they are not classified by the Bureau of Labor Statistics as unemployed.

Question 10

Table 28-6 
-Refer to Table 28-6. What is the U-1 measure of labor underutilization?
A)1.6%
B)3.1%
C)6.2%
D)7.0%

Accepted Answer

The U-1 measure of labor underutilization represents the percentage of the labor force that has been unemployed for 15 weeks or longer.

Question 11

Table 28-6 
-Refer to Table 28-6. What is the U-6 measure of labor underutilization?
A)8.4%
B)9.0%
C)9.2%
D)35.2%

Accepted Answer

The answer of Table 28-6 
-Refer to Table 28-6. What...

Question 12

Marginally attached workers are people who are
A)looking for a better job than they currently have.
B)not working and are not looking for work, but would work if asked.
C)working part-time while they go to school or get training for a better job.
D)only a few years from retirement.

Accepted Answer

Marginally attached workers are individuals who are not currently employed and have not looked for work in the past four weeks but indicate that they want and are available for work and have looked for work in the past 12 months. They are considered part of the labor force but not the unemployed.

Question 13

Table 28-6 
-Refer to Table 28-6. What is the U-3 measure of labor underutilization?
A)4.7%
B)6.2%
C)7.0%
D)10.9%

Accepted Answer

The answer of Table 28-6 
-Refer to Table 28-6. What...

Question 14

Consider two people who are currently out of work. Tim is not looking for work because there have been many job cuts where he lives, and he doesn't think it likely that he will find work. Bev is not currently looking for work, but she would like a job, and she has looked for work in the past. The Bureau of Labor Statistics considers
A)both Tim and Bev to be marginally attached workers.
B)neither Tim nor Bev to be marginally attached workers.
C)only Tim to be a marginally attached worker.
D)only Bev to be a marginally attached worker.

Accepted Answer

Both Tim and Bev meet the definition of marginally attached workers, as they are currently not employed but have looked for work in the past year. However, they are not counted as unemployed because they have not actively searched for work in the past four weeks, which is a requirement to be considered officially unemployed by the Bureau of Labor Statistics.

Question 15

Evidence indicates that the typical person who becomes unemployed will
A)soon find a job.
B)find a job but not before a year or more has gone by.
C)leave the labor force and never return.
D)retire soon after

Accepted Answer

The answer of Evidence indicates that the typical person who...

Question 16

Most spells of unemployment are
A)long, and most unemployment observed at any given time is long term.
B)long, but most unemployment observed at any given time is short term.
C)short, but most unemployment observed at any given time is long term.
D)short, and most unemployment observed at any given time is short term.

Accepted Answer

Studies have shown that most spells of unemployment are short term, meaning individuals are unemployed for a period of less than 6 months. However, at any given time, the majority of people who are unemployed are classified as long-term unemployed, meaning they have been without work for 27 weeks or more.

Question 17

Table 28-6 
-Refer to Table 28-6. What is the U-2 measure of labor underutilization?
A)1.5%
B)3.1%
C)4.7%
D)6.2%

Accepted Answer

The U-2 measure of labor underutilization includes the percentage of the labor force that has lost jobs or completed temporary jobs. The correct percentage from the table is 3.1%.

Question 18

Which of the following is not correct?
A)Most people who become unemployed will soon find jobs.
B)In an ideal labor market, wages would adjust to ensure that all workers are always fully employed.
C)The unemployment rate occasionally falls to zero.
D)There are always some workers without jobs, even when the overall economy is doing well.

Accepted Answer

The unemployment rate occasionally falls very low, but it is very unlikely for it to fall to zero due to factors such as search frictions, structural unemployment, and seasonal unemployment. Therefore, statement C is not correct.

Question 19

Table 28-6 
-Refer to Table 28-6. What is the U-4 measure of labor underutilization?
A)6.5%
B)6.9%
C)7.0%
D)17.9%

Accepted Answer

The U-4 measure of labor underutilization includes the unemployed plus discouraged workers, as a percentage of the labor force plus discouraged workers. The given percentage of 6.9% matches this definition.

Question 20

The BLS reports the U-6 measure of labor underutilization. Which of the following is how it computes U-6?
A)(total unemployed + marginally attached workers)/adult population
B)(total unemployed + marginally attached workers + part-time employed for economic reasons)/adult population
C)(total unemployed + marginally attached workers)/(labor force + marginally attached workers)
D)(total unemployed + marginally attached workers + part time employed for economic reasons)/(labor force + marginally attached workers)

Accepted Answer

The answer of The BLS reports the U-6 measure of...

Quiz 28: Unemployment and Its Natural Rate

In one year, you meet 52 people who are each unemployed for one week and eight people who are each unemployed for the whole year. What percentage of the unemployment spells you encountered was short term, and what percentage of the unemployment you encountered in a given week was long term?

The Bureau of Labor Statistics classifies people who would like to work but have given up looking for a job as

Who would be included in the labor force?

The reported unemployment rate should be viewed as

Table 28-6 -Refer to Table 28-6. What is the U-5 measure of labor underutilization?

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called

Which of the following is correct?

Some individuals would like to have a job, but they have given up looking for a job after an unsuccessful search. These individuals are called

Table 28-6 -Refer to Table 28-6. What is the U-1 measure of labor underutilization?

Table 28-6 -Refer to Table 28-6. What is the U-6 measure of labor underutilization?

Marginally attached workers are people who are

Table 28-6 -Refer to Table 28-6. What is the U-3 measure of labor underutilization?

Evidence indicates that the typical person who becomes unemployed will

Most spells of unemployment are

Table 28-6 -Refer to Table 28-6. What is the U-2 measure of labor underutilization?

Which of the following is not correct?

Table 28-6 -Refer to Table 28-6. What is the U-4 measure of labor underutilization?

The BLS reports the U-6 measure of labor underutilization. Which of the following is how it computes U-6?