Question 1

Which of the following is correct?
A)The amount of unemployment that a country typically experiences is a determinant of that country's standard of living, and some degree of unemployment is inevitable in a complex economy.
B)The amount of unemployment that a country typically experiences is a determinant of that country's standard of living, and a complex economy can achieve zero unemployment.
C)The amount of unemployment that a country typically experiences is not a determinant of that country's standard of living, and a complex economy can achieve zero unemployment.
D)The amount of unemployment that a country typically experiences is not a determinant of that country's standard of living, and some degree of unemployment is inevitable in a complex economy.

Accepted Answer

The amount of unemployment that a country typically experiences is a determinant of that country's standard of living because those who are unemployed have less income and reduced access to goods and services, which affects their overall quality of life. However, some degree of unemployment is inevitable in a complex economy due to structural, productivity, and seasonal factors. Therefore, option A is the correct choice.

Question 2

​Daniel goes on vacation for four weeks. When he returns the company puts him on layoff for four weeks during which he waits to be recalled. In which weeks is Daniel counted as unemployed, if any?
A)​neither the first four or second four weeks
B)the first four weeks but not the second four weeks
C)​the second four weeks but not the first four weeks
D)​both the first four weeks and the second four weeks

Accepted Answer

Daniel is not considered unemployed during the first four weeks because he is on vacation and not actively looking for work. However, during the second four weeks, he is waiting to be recalled and is therefore considered unemployed.

Question 3

Cyclical unemployment is closely associated with
A)long-term economic growth.
B)short-run ups and downs of the economy.
C)fluctuations in the natural rate of unemployment.
D)changes in the minimum wage.

Accepted Answer

Cyclical unemployment refers to the unemployment that is caused by the fluctuations in the business cycle, which leads to short-run ups and downs of the economy. It is not associated with long-term economic growth, changes in the minimum wage, or fluctuations in the natural rate of unemployment.

Question 4

An economy's natural rate of unemployment is the
A)economy's long-run target level of unemployment.
B)amount of unemployment that the economy normally experiences.
C)lowest rate of unemployment the economy can achieve.
D)All of the above are correct.

Accepted Answer

The natural rate of unemployment refers to the amount of unemployment that the economy normally experiences. It is not necessarily the lowest rate of unemployment the economy can achieve. It is also not a long-run target level of unemployment because there will always be some level of unemployment due to factors such as job mismatch and temporary unemployment.

Question 5

​Fred operates his own business, Fred would be counted as employed
A)​in both the household and estblishment surveys.
B)in the household but not the establishment survey.
C)​in the establishment but not the household survey.
D)​in neither the household nor the establishment survey.

Accepted Answer

The answer of ​Fred operates his own business, Fred would...

Question 6

To maintain their standard of living, most people rely on
A)government assistance.
B)their personal savings.
C)their labor earnings.
D)rental income.

Accepted Answer

Most people rely on the earnings from their labor, such as a salary or wages, to maintain their standard of living. While some may receive government assistance or have rental income or savings, these sources are typically not enough to cover all living expenses.

Question 7

​After a couple of months searching for a job, Sofia is hired. Which of the following increases?
A)​the labor force and the labor force participation rate
B)​the labor force participation rate but not the labor force
C)​The labor force participation rate but not the labor force
D)​neither the labor force nor the labor force participation rate

Accepted Answer

The answer of ​After a couple of months searching for...

Question 8

The natural rate of unemployment
A)arises from a single problem that has a single solution.
B)is easy for policymakers to reduce.
C)Both a and b are correct.
D)None of the above is correct.

Accepted Answer

The natural rate of unemployment is the rate that exists when the labour market is in equilibrium, and it cannot be reduced through simple policy solutions due to the complex nature of various factors that contribute to it. This includes demographics, structural changes in the economy, and frictional unemployment, among others.

Question 9

Cyclical unemployment refers to
A)the relationship between the probability of unemployment and a worker's changing level of experience.
B)how often a worker is likely to be employed during her lifetime.
C)year-to-year fluctuations of unemployment around its natural rate.
D)long-term trends in unemployment.

Accepted Answer

Cyclical unemployment refers to the temporary unemployment that occurs due to fluctuations in the business cycle. These fluctuations cause changes in the level of economic activity, which can lead to increases or decreases in employment levels. Therefore, cyclical unemployment is linked to year-to-year changes in unemployment around its natural rate.

Question 10

Cyclical unemployment
A)has a different explanation than does the natural rate of unemployment.
B)refers to the year-to-year fluctuation in unemployment around an economy's natural rate of unemployment.
C)is closely associated with short-run ups and downs of economic activity.
D)All of the above are correct.

Accepted Answer

The answer of Cyclical unemployment
A)has a different explanation than does...

Question 11

The natural rate of unemployment
(i)is the economy's desirable level of unemployment.
(ii)cannot be affected by economic policy.
(iii)is typically constant over time.
A)(i) and (ii) only
B)(iii) only
C)(i), (ii), and (iii)
D)None of the above is correct.

Accepted Answer

The natural rate of unemployment is not necessarily the desirable level, can be influenced by policies like training programs, and can change over time due to factors like demographics and technology.

Question 12

The deviation of unemployment from its natural rate is called
A)the economic rate of unemployment.
B)cyclical unemployment.
C)frictional unemployment.
D)structural unemployment.

Accepted Answer

Cyclical unemployment refers to the deviation of actual unemployment from its natural rate, which is also known as the potential or full-employment rate. This type of unemployment is caused by fluctuations in the business cycle, with high levels of cyclical unemployment experienced during recessions and low levels during expansions.

Question 13

In the long run the unemployment rate equals
A)zero.
B)the cyclical rate of unemployment.
C)the natural rate of unemployment.
D)the sum of the cyclical and natural rate of unemployment.

Accepted Answer

The natural rate of unemployment is the minimum rate of unemployment that exists in an economy given all the structural, institutional, and demographic factors. It is the rate below which inflationary pressures arise and above which deflationary pressures arise. Therefore, in the long run, the unemployment rate will tend to the natural rate of unemployment.

Question 14

Cyclical unemployment refers to
A)the portion of unemployment created by job search.
B)short-run fluctuations around the natural rate of unemployment.
C)changes in unemployment due to changes in the natural rate of unemployment.
D)the portion of unemployment created by wages set above the equilibrium level.

Accepted Answer

Cyclical unemployment refers to the short-run fluctuations around the natural rate of unemployment. This occurs as a result of the business cycle, where the economy goes through periods of expansion and contraction. During a recession or contractionary period of the business cycle, demand for goods and services falls, leading to a decrease in the demand for labor, which results in increased unemployment. Conversely, during an expansionary period, demand for goods and services increases, leading to an increase in demand for labor and decreased unemployment.

Question 15

The natural rate of unemployment is the
A)unemployment rate that would prevail with zero inflation.
B)rate associated with the highest possible level of GDP.
C)difference between the long-run and short-run unemployment rates.
D)amount of unemployment that the economy normally experiences.

Accepted Answer

The natural rate of unemployment is the amount of unemployment that the economy normally experiences. It is the rate at which the labor market is in equilibrium, with the level of unemployment that is consistent with a stable rate of inflation.

Question 16

The amount of unemployment that an economy normally experiences is called the
A)average rate of unemployment.
B)natural rate of unemployment.
C)cyclical rate of unemployment.
D)typical rate of unemployment.

Accepted Answer

The natural rate of unemployment is the amount of unemployment that an economy normally experiences. This includes frictional and structural unemployment, but not cyclical unemployment.

Question 17

To maintain their standard of living, most people rely on
A)government assistance.
B)their labor earnings.
C)their personal savings.
D)All of the above are correct.

Accepted Answer

While government assistance and personal savings may play a role in maintaining one's standard of living, the primary source of income for most people is their labor earnings.

Question 18

The amount of unemployment varies
A)little over time and across countries.
B)little over time but substantially across countries.
C)substantially over time but little across countries.
D)substantially over time and across countries.

Accepted Answer

Unemployment rates can vary substantially over time due to changes in the economy, like recessions, and different policies implemented by governments. It also varies greatly across countries due to differences in economic structures, labor market institutions, and government policies. Therefore, the best choice is D, which states that unemployment varies substantially over time and across countries.

Question 19

The natural rate of unemployment
(i)is the economy's desirable level of unemployment.
(ii)arises from a single problem that has a single solution.
(iii)is the amount of unemployment that does not go away on its own.
A)(i) and (ii) only
B)(iii) only
C)(i), (ii), and (iii)
D)None of the above is correct.

Accepted Answer

The natural rate of unemployment is the level of unemployment that persists in an economy in the long run, even when the economy is at full capacity. It is not necessarily desirable, nor does it arise from a single problem with a single solution.

Question 20

The designation "natural" implies that the natural rate of unemployment
A)is desirable.
B)is constant over time.
C)is impervious to economic policy.
D)does not go away on its own even in the long run.

Accepted Answer

The natural rate of unemployment refers to the level of unemployment that persists in an economy in the long run, even when the economy is at full employment. It includes frictional and structural unemployment and does not go away on its own.

Quiz 28: Unemployment and Its Natural Rate

Which of the following is correct?

Daniel goes on vacation for four weeks. When he returns the company puts him on layoff for four weeks during which he waits to be recalled. In which weeks is Daniel counted as unemployed, if any?

Cyclical unemployment is closely associated with

An economy's natural rate of unemployment is the

Fred operates his own business, Fred would be counted as employed

To maintain their standard of living, most people rely on

After a couple of months searching for a job, Sofia is hired. Which of the following increases?

The natural rate of unemployment

Cyclical unemployment refers to

Cyclical unemployment

The natural rate of unemployment (i) is the economy's desirable level of unemployment. (ii) cannot be affected by economic policy. (iii) is typically constant over time.

The deviation of unemployment from its natural rate is called

In the long run the unemployment rate equals

Cyclical unemployment refers to

The natural rate of unemployment is the

The amount of unemployment that an economy normally experiences is called the

To maintain their standard of living, most people rely on

The amount of unemployment varies

The natural rate of unemployment (i) is the economy's desirable level of unemployment. (ii) arises from a single problem that has a single solution. (iii) is the amount of unemployment that does not go away on its own.

The designation "natural" implies that the natural rate of unemployment

Quiz 28: Unemployment and Its Natural Rate

Which of the following is correct?

​Daniel goes on vacation for four weeks. When he returns the company puts him on layoff for four weeks during which he waits to be recalled. In which weeks is Daniel counted as unemployed, if any?

Cyclical unemployment is closely associated with

An economy's natural rate of unemployment is the

​Fred operates his own business, Fred would be counted as employed

To maintain their standard of living, most people rely on

​After a couple of months searching for a job, Sofia is hired. Which of the following increases?

The natural rate of unemployment

Cyclical unemployment refers to

Cyclical unemployment

The natural rate of unemployment (i) is the economy's desirable level of unemployment. (ii) cannot be affected by economic policy. (iii) is typically constant over time.

The deviation of unemployment from its natural rate is called

In the long run the unemployment rate equals

Cyclical unemployment refers to

The natural rate of unemployment is the

The amount of unemployment that an economy normally experiences is called the

To maintain their standard of living, most people rely on

The amount of unemployment varies

The natural rate of unemployment (i) is the economy's desirable level of unemployment. (ii) arises from a single problem that has a single solution. (iii) is the amount of unemployment that does not go away on its own.

The designation "natural" implies that the natural rate of unemployment

Daniel goes on vacation for four weeks. When he returns the company puts him on layoff for four weeks during which he waits to be recalled. In which weeks is Daniel counted as unemployed, if any?

Fred operates his own business, Fred would be counted as employed

After a couple of months searching for a job, Sofia is hired. Which of the following increases?