Question 1

An increase in the number of discouraged workers in the economy tends to:

Accepted Answer

Discouraged workers are those who have given up on finding a job and have stopped actively looking for work. When the number of discouraged workers increases, they are no longer counted as part of the labor force and, as a result, the official unemployment rate may decrease. This is because the unemployment rate only takes into account those who are actively seeking employment. However, it is important to note that an increase in discouraged workers also reflects a decrease in the overall health of the labor market.

Question 2

Which of the following situations is likely to lead to an increase in discouraged workers?

Accepted Answer

Discouraged workers are those who have given up looking for work because they believe there are no jobs available for them. Therefore, a decrease in the availability of jobs is likely to lead to an increase in discouraged workers.

Question 3

If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who were looking for a job but have given up, and 5 million people unemployed and seeking employment, then the number of discouraged workers is:

Accepted Answer

Discouraged workers are those who have given up looking for a job. In this scenario, there are 10 million people who were looking for a job but have given up, making the number of discouraged workers 10 million.

Question 4

According to official statistics, discouraged workers are:

Accepted Answer

Discouraged workers are those who have given up looking for work because they believe that no jobs are available for them. They are considered out of the labor force as they are not actively seeking employment, and hence they are not included in the labor force or employment statistics.

Question 5

The official unemployment rate reported by the government may tend to understate the amount of unemployment because it:

Accepted Answer

The official unemployment rate reported by the government only includes those individuals who are actively seeking employment and are currently unemployed. Discouraged workers, who have given up on their job search, are not included in the official unemployment rate. Therefore, the official unemployment rate may understate the actual amount of unemployment because it excludes discouraged workers.

Question 6

Suppose that roughly 8 million people in the United States were actively seeking jobs but had not found them this month, the same number as last month. Suppose that 2 million of the people who were unemployed last month gave up their search this month and stopped looking for work. What will happen to the official unemployment rate this month, all other things unchanged?

Accepted Answer

The unemployment rate is calculated as the number of unemployed individuals divided by the number of individuals in the labor force (employed and unemployed). Since 2 million individuals who were unemployed last month are no longer in the labor force this month, they are not counted as unemployed. This means that the denominator of the unemployment rate calculation (the number of individuals in the labor force) has decreased, which will cause the unemployment rate to fall. Therefore, the best choice is B.

Question 7

Suppose that Allison has an accounting degree, but she lost her job two months ago when her company merged with another firm. Allison hasn't been able to find another accounting job, so she has taken a part-time job as a sales clerk at a clothing store. The Bureau of Labor Statistics classifies Allison as:

Accepted Answer

Allison is considered underemployed because she is not fully utilizing her skills and education in her current part-time job as a sales clerk. She is still employed, but not in a position that matches her qualifications.

Question 8

If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who were looking for a job but have given up, and 5 million people unemployed and seeking employment, then its labor force is:

Accepted Answer

The answer of If a country has a working-age population...

Question 9

The Bureau of Labor Services calculates U-6. This measures the:

Accepted Answer

U-6 measures the underuse of labor, which includes discouraged workers, marginally attached workers, and underemployed workers, in addition to the unemployment rate. It provides a more comprehensive picture of the job market than the traditional unemployment rate (U-3), which only includes actively seeking work and available individuals.

Question 10

Use the following to answer questions : 
-(Table: Labor Force Distribution) Look at the table Labor Force Distribution. The total population is:

Accepted Answer

The column for "Total" shows that the total population is 278 million.

Question 11

Jim has a part-time job and would prefer to have a full-time job but has been unable to find one. Jim is classified as:

Accepted Answer

Jim has a job, but it is not the desired full-time position, therefore he is underemployed. A discouraged worker has given up looking for work and is no longer counted in the labor force, while Jim is still actively seeking full-time employment. Being unemployed means not having a job at all, and being out of the labor force means not being employed and not actively seeking employment.

Question 12

The official unemployment rate ignores:

Accepted Answer

The official unemployment rate only includes individuals who are actively seeking employment but unable to find a job. It does not include discouraged workers who have given up looking for work, as well as individuals who work part-time but are seeking full-time employment. Additionally, it does not distinguish between types of employment, so both professional jobs and commission-based work are included in the official unemployment rate.

Question 13

Use the following to answer questions : 
-(Table: Labor Force Distribution) Look at the table Labor Force Distribution. The unemployment rate is:

Accepted Answer

The unemployment rate is calculated by dividing the number of unemployed people by the total labor force and multiplying by 100. In this case, the unemployment rate is 3.85%.

Question 14

The Bureau of Labor Statistics calls a person who is out of work, would like to work, but has given up looking for work:

Accepted Answer

A discouraged worker is someone who is no longer seeking employment due to a belief that there are no available jobs or that they lack the necessary skills or qualifications for the jobs that are available. They are still considered part of the labor force, but not counted as unemployed by traditional measures. They are a significant factor to consider when analyzing labor market data. Choice A could be considered correct, but it is not as precise as choice C. Choice B and D are incorrect.

Question 15

Use the following to answer questions: 
-(Table: Labor Force Data) Look at the table Labor Force Data. Suppose the labor force participation rate is 70%. The number of unemployed adults is:

Accepted Answer

The labor force participation rate is the percentage of the adult population that is part of the labor force. If the labor force participation rate is 70%, and the number of unemployed adults is 8 million, it implies that the total labor force is larger, and 8 million is the correct number of unemployed within that labor force.

Question 16

Use the following to answer questions: 
-(Table: Labor Force Data) Look at the table Labor Force Data. If the labor force participation rate is 70%, the unemployment rate is:

Accepted Answer

The labor force participation rate is the percentage of the population that is either employed or unemployed. The unemployment rate is the percentage of the labor force that is unemployed. If the labor force participation rate is 70%, then the unemployment rate is 30%.

Question 17

Which federal agency calculates and reports the official unemployment rate?

Accepted Answer

The Bureau of Labor Statistics is responsible for calculating and reporting the official unemployment rate.

Question 18

Economists claim that the unemployment rate can understate the true level of unemployment because none of the following groups is included EXCEPT:

Accepted Answer

The unemployment rate includes workers without jobs who have looked for work in the past four weeks, as they are considered part of the labor force and actively seeking employment.

Question 19

Donna was laid off at the beginning of 2011. She looked for a job for three months but could not find anything suitable. She then decided to volunteer for a soup kitchen and stopped looking for a job. Donna is considered to be:

Accepted Answer

Donna is not actively looking for a job anymore, which makes her a discouraged worker. She is not technically unemployed because she is not actively seeking employment, and she is not underemployed or a part-time worker because she is not currently employed at all.

Question 20

Discouraged workers:

Accepted Answer

Discouraged workers are individuals who have given up looking for a job because they believe there are no job opportunities available for them. They are not currently employed and are not actively seeking employment.

Quiz 8: Unemployment and Inflation