Deck 9: Unemployment and Its Natural Rate

Question 1

Who would NOT be included in the labour force?

A) Jay, who is on temporary layoff
B) Mike, who has retired and is not looking for work
C) Jane, who does not have a job, but has applied for several in the last week
D) Joan, who has a part-time job but is looking for a full-time one

Answer 1

B

Question 2

Which of the following constitutes the labour force?

A) the number of people who are employed
B) the number of people who are unemployed
C) the number of people employed plus the number of people unemployed
D) the number of people in the adult population

Answer 2

C

Question 3

How is unemployment data collected?

A) from employment insurance applications
B) through a regular survey of about 54,000 households
C) through a regular survey of about 200,000 firms
D) using Canada Revenue Agency tax files

Answer 3

B

Question 4

Who would be counted as unemployed according to official statistics?

A) Shasta, who is currently not working and is waiting for her new job to start
B) Mary, who worked only 25 hours last week
C) Karen, who neither has a job nor is looking for one
D) Kevin, who is a retiree

Question 5

What does cyclical unemployment refer to?

A) the relation between the probability of unemployment and a worker's years of experience
B) how often a worker is likely to be unemployed during her lifetime
C) year-to-year fluctuations of unemployment around its natural rate
D) long-term trends in unemployment

Question 6

Who would be included in the labour force?

A) Derrick, who is waiting for his new job to start
B) Brett, who has become discouraged looking for a job and has quit looking for a while
C) Homer, an unpaid homemaker
D) Dave, a 20-year-old student who does not work and is not looking for work

Question 7

In which situation would Statistics Canada count a person as unemployed?

A) when that person is not in the labour force
B) when that person is not looking for work
C) when that person is under the age of 15
D) when that person is age 15 or over and looking for work

Question 8

Which statement best explains how unemployment relates to business cycles?

A) Unemployment can be eliminated through economic policies when the economy grows at normal rates.
B) Unemployment only exists during periods of economic slowdown.
C) Cyclical unemployment is inversely related to short-run economic fluctuations.
D) Unemployment is unrelated to short-run economic fluctuations.

Question 9

Who would be counted as unemployed according to official statistics?

A) Brian, a full-time student who is not looking for work
B) Kate, who is waiting to be recalled after a temporary layoff
C) Heath, who has retired and is not looking for work
D) James, who has just graduated from university and is taking a year off to volunteer abroad

Question 10

Which statement best defines the natural rate of unemployment?

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

Question 11

How is the unemployment rate computed?

A) by counting the number of employment insurance applications filed
B) by dividing the number of unemployed by the number of persons in the labour force
C) by determining the number of unemployed in the population aged 18 and older
D) by counting the number of working-age persons who don't have a job

Question 12

Which data does Statistics Canada NOT produce?

A) monthly data on unemployment
B) data on types of employment
C) data on length of the average workweek
D) daily data on unemployment

Question 13

How often is data on unemployment reported?

A) weekly
B) monthly
C) quarterly
D) yearly

Question 14

Which statement is characteristic of the natural rate of unemployment?

A) It is a consistent rate, year after year.
B) It is the desirable rate of unemployment.
C) It is a variable that cannot be altered by economic policy.
D) It is the amount of unemployment that the economy normally experiences.

Question 15

Who would be included in the labour force?

A) Holly, instead of being paid, cares for children in exchange for room and board
B) Tiffany, a full-time student not looking for work
C) Cody, who does not have a job, but is looking for work
D) Kara, who has interrupted her career to raise her two children

Question 16

Which statement ranks categories from smallest to largest according to recent Canadian statistics?

A) unemployed, employed, not in labour force
B) unemployed, not in labour force, employed
C) not in labour force, employed, unemployed
D) not in labour force, unemployed, employed

Question 17

Which of the following lists includes all the categories into which Statistics Canada divides the adult population?

A) employed, unemployed
B) discouraged workers, employed, unemployed
C) employed, unemployed, not in the labour force
D) discouraged workers, employed, not in the labour force

Question 18

Who would NOT be included in the labour force?

A) Karen, who works most of the week in a steel factory
B) Beth, who is waiting for her new job at the bank to start
C) Dave, who does not have a job, but is looking for work
D) Jeremiah, who plans to travel for a few months before looking for work

Question 19

What is cyclical unemployment 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) seasonal fluctuations in spending

Question 20

Sally is on a temporary summer layoff from the public school where she works as an administrator. If Sally participates in the Statistics Canada survey, how will she be classified?

A) as unemployed and in the labour force
B) as unemployed and out of the labour force
C) as employed and in the labour force
D) as employed and out of the labour force

Question 21

Which of the following best defines the labour force?

A) the number of employed
B) the population minus the number of unemployed
C) the population aged 15 or over
D) the number of unemployed plus the number of employed

Question 22

What does the labour-force participation rate measure?

A) the percentage of the total adult population that is in the labour force
B) the percentage of the total adult population that is employed
C) the percentage of the labour force that is employed
D) the percentage of the labour force that is either employed or unemployed

Question 23

How is the unemployment rate computed?

A) as the number of unemployed divided by the labour force times 100
B) as the number of unemployed divided by the number of people employed times 100
C) as the number of unemployed divided by the adult population times 100
D) as the number of unemployed times the participation rate times 100

Question 24

Prime Minister Bigego is running for re-election against Finance Minister Pander. Bigego proclaims that more people are working now than when he took office. Pander says that the unemployment rate is higher now than when Bigego took office. What can you conclude?

A) Both of them could be telling the truth if the labour-force participation rate and the labour force both grew.
B) Both of them could be telling the truth if the labour-force participation rate and the labour force both fell.
C) Both of them could be telling the truth if the labour force grew slower than employment.
D) Both of them could be telling the truth if the labour force grew faster than employment.

Question 25

How is the labour-force participation rate computed?

A) as the number of adults in the labour force divided by the adult population times 100
B) as the number of adults in the labour force divided by the number of unemployed times 100
C) as the number of adults in the labour force divided by the unemployment rate times 100
D) as the number of adults in the labour force times the participation rate times 100

Question 26

Emma`s contract position just finished and she is looking for another job, but has not yet found one. Which pair of categories does Anna now belong to?

A) unemployed and not in the labour force
B) unemployed and in the labour force
C) employed and not in the labour force
D) employed and in the labour force

Question 27

Matt loses his job in April and decides play golf for a few months. Assuming that other things remain the same, what happens to the unemployment rate?

A) The unemployment rate decreases because he is not in the labour force anymore.
B) The unemployment rate increases because he is still in the labour force.
C) The unemployment rate decreases because he is still in the labour force.
D) The unemployment rate increases because he is not in the labour force anymore.

Question 28

Tara has just finished school, but she is going to roam around the country awhile before she starts looking for work. Which statement best characterizes the changes that occur in labour statistics?

A) The unemployment rate increases, and the labour-force participation rate increases.
B) The unemployment rate is unaffected, and the labour-force participation rate is unaffected.
C) The unemployment rate increases, and the labour-force participation rate decreases.
D) The unemployment rate increases, and the labour-force participation rate is unaffected.

Question 29

Refer to the Table 9-1. What is the adult unemployment rate in Bolivar?

A) 4.12 percent
B) 7.4 percent
C) 11.11 percent
D) 12.50 percent

Question 30

How is the labour-force participation rate defined?

A) (Employed ÷ Adult population) × 100
B) (Employed ÷ Labour force) × 100
C) (Labour force ÷ Adult population) × 100
D) (Adult population ÷ Labour force) × 100

Question 31

In 2014 in Japan, based on concepts similar to those used to compute Canadian employment statistics, the unemployment rate was about 3.4 percent, the labour force participation rate was about 59 percent, and the adult population was about 127 million. How many people were employed?

A) about 52 million
B) about 64 million
C) about 72 million
D) about 103 million

Question 32

Last year, a government reported an increase in the number of people who were employed and an increase in the unemployment rate. Which statement would best explain the report?

A) There was an increase in labour force.
B) There was a decrease in labour force.
C) There was an increase in adult population.
D) There was a decrease in adult population.

Question 33

Refer to the Table 9-1. What is the adult labour force in Bolivar?

A) 90 million
B) 135 million
C) 160 million
D) 230 million

Question 34

How is a college student who is not working or looking for a job counted?

A) as neither employed nor part of the labour force
B) as unemployed and in the labour force
C) as unemployed, but not in the labour force
D) as employed and in the labour force

Question 35

In 2014 in the United Kingdom, the adult population was about 65 million, the labour force participation rate was 62percent, and the unemployment rate was 5.7 percent. What was the number of people unemployed?

A) 0.7 million
B) 1.7 million
C) 2.3 million
D) 6.5 million

Question 36

Refer to the Table 9-1. What is the adult population in Bolivar?

A) 90 million
B) 150 million
C) 160 million
D) 210million

Question 37

How is Latoya, a homemaker who works as a volunteer at the local police station and is currently not looking for a job, counted?

A) as employed and in the labour force
B) as unemployed and in the labour force
C) as unemployed and not in the labour force
D) as not in the labour force

Question 38

How does Statistics Canada define the unemployment rate?

A) as the percentage of those unemployed relative to the percentage employed
B) as the percentage of the labour force that is unemployed
C) as the percentage of the adult population that is unemployed
D) as the percentage of the labour force without full-time employment

Question 39

Rick loses his job and immediately begins looking for another. Other things equal, what happens to the unemployment rate?

A) The unemployment rate decreases because he is not in the labour force anymore.
B) The unemployment rate increases because he is still in the labour force.
C) The unemployment rate decreases because he is still in the labour force.
D) The unemployment rate increases because he is not in the labour force anymore.

Question 40

A foreign governmental statistics agency recently reported that there were 47.6 million people over age 25 who had at least a bachelor's degree. Of this number, 38.0 million were in the labour force and 35.9 million were employed. What was the unemployment rate in this group?

A) about 2.3 percent
B) about 5.5 percent
C) about 22.8 percent
D) about 55.1 percent

Question 41

Refer to the Table 9-1. What is the adult female labour-force participation rate in Bolivar?

A) 4.76 percent
B) 37.03 percent
C) 38.10 percent
D) 63.16 percent

Question 42

Since World War II, what has happened to the labour-force participation rate?

A) It has increased for both men and women.
B) It increased for women and decreased for men.
C) It has decreased for both men and women.
D) It decreased for women and increased for men.

Question 43

Which group has the highest unemployment rate in Canada?

A) females, 45-64 years
B) males, 45-64 years
C) females, 25-44 years
D) males, 25-44 years

Question 44

Refer to the Table 9-1. What is the adult female unemployment rate in Bolivar?

A) 4.76 percent
B) 5.56 percent
C) 7.14 percent
D) 8.33 percent

Question 45

What led to the decrease in labour-force participation rates among Canadian men since World War II?

A) longer schooling, an increase in stay-at-home dads, earlier retirement, and longer lives
B) longer lives, laws that prevent mandatory retirement, and an increase in stay-at-home dads
C) better employment insurance benefits and laws that prevent mandatory retirement and age discrimination in hiring
D) easier job searches, better training, and laws that prevent mandatory retirement and age discrimination in hiring

Question 46

Refer to the Table 9-1. What is the adult male unemployment rate in Bolivar?

A) 3.70 percent
B) 4.00 percent
C) 5.56 percent
D) 6.67 percent

Question 47

Refer to the Table 9-1. What is the adult male labour-force participation rate in Bolivar?

A) 7.40 percent
B) 33.33 percent
C) 37.03 percent
D) 65.22 percent

Question 48

How does the labour-force participation rate of women just after World War II compare to the same statistic today?

A) Today, labour-force participation rate of women is about 1.5 times the rate after World War II.
B) Today, labour-force participation rate of women is about 2.6 times the rate after World War II.
C) Today, labour-force participation rate of women is about 3.6 times the rate after World War II.
D) Today, labour-force participation rate of women is about 4.2 times the rate after World War II.

Question 49

What was the labour-force participation rate of men just after World War II?

A) about 68%
B) about 75%
C) about 80%
D) about 84%

Question 50

If an unemployed person quits looking for work, other things equal, which statement best describes the changes in the labour statistics?

A) The unemployment rate decreases, and the labour-force participation rate increases.
B) The unemployment rate decreases, and the labour-force participation rate decreases.
C) The unemployment rate stays the same, and the labour-force participation rate decreases.
D) The unemployment rate and the labour-force participation rate stay the same.

Question 51

Refer to the Table 9-1. What is the adult labour-force participation rate in Bolivar?

A) 4.12 percent
B) 12.50 percent
C) 37.50 percent
D) 64.28 percent

Question 52

Refer to the Table 9-1. What is the adult female labour force in Bolivar?

A) 35 million
B) 40 million
C) 60 million
D) 85 million

Question 53

What is a rough estimate of the natural rate of unemployment in Canada?

A) 1 to 2.5 percent
B) 3 to 5.5 percent
C) 6 to 8 percent
D) 8.5 to 11 percent

Question 54

Refer to Table 9-1. What is the adult female population in Bolivar?

A) 35 million
B) 40 million
C) 95 million
D) 105 million

Question 55

What is the approximate labour-force participation rate of the Canadian adult population (aged 15 and over)?

A) 47 percent
B) 55 percent
C) 66 percent
D) 75 percent

Question 56

Refer to the Table 9-1. What is the adult male labour force in Bolivar?

A) 75 million
B) 90 million
C) 100 million
D) 120 million

Question 57

Which group has the highest labour-force participation rate in Canada?

A) females, 15-24 years
B) males, 15-24 years
C) females, 25-44 years
D) males, 25-44 years

Question 58

Refer to the Table 9-1. What is the adult male population in Bolivar?

A) 85 million
B) 105 million
C) 115 million
D) 135 million

Question 59

In Canada in recent years, how does the unemployment rate among those aged 15 to 24 compare with that of older adults?

A) less than that of older adults
B) about the same as that of older adults
C) much higher than that of older adults
D) approximately half that of older adults

Question 60

Since 1951, what has happened to the labour-force participation rate of men and women?

A) It has increased for both men and women.
B) It has increased for men and decreased for women.
C) It has decreased for men and increased for women.
D) It has decreased for both men and women.

Question 61

Who is considered unemployed?

A) Jena, who is on maternity leave
B) Leslie, who is an involuntary part-time worker
C) Kevin, who is on voluntary unpaid leave to search for a better job
D) Sandy, who is on temporary layoff

Question 62

In one year you meet 40 people who are each unemployed for one week, and 10 people who are each unemployed for the whole year. Which statistic best describes this situation?

A) 80 percent are short-term unemployed, and 25.3 percent are long-term unemployed.
B) 20 percent are short-term unemployed, and 80 percent are long-term unemployed.
C) 80 percent are short-term unemployed, and 20 percent are long-term unemployed.
D) 75 percent are short-term unemployed, and 25 percent are long-term unemployed.

Question 63

According to Statistics Canada data, which category had the highest percentage of the labour force in 2014?

A) unemployed 5 to 13 weeks
B) unemployed 14 to 25 weeks
C) unemployed 26 to 52 weeks
D) unemployed more than 52 weeks

Question 64

About what fraction of unemployed persons have been unemployed for less than a month?

A) 1/3
B) 2/3
C) 3/4
D) 4/5

Question 65

What is most likely to happen when someone becomes unemployed?

A) It is likely that the person will be unemployed a long time and that most of the unemployed he or she joins have been unemployed a long time.
B) It is likely that the person will be unemployed for a long time, even though most of the unemployed he or she joins have been unemployed for a short time.
C) It is likely that the person will be unemployed for a short time, even though most of the unemployed he or she joins have been unemployed for a long time.
D) It is likely that the person will be unemployed for a short time, and that most of the unemployed he or she joins have been unemployed for a short time.

Question 66

Some people are counted as out of the labour force because they have made no serious or recent effort to look for work. However, some of these people may want to work even though they are too discouraged to make a serious effort. If these persons were counted as unemployed instead of out of the labour force, how would the labour statistics change?

A) The unemployment rate and the labour-force participation rate would be higher.
B) The unemployment rate would be higher, and the labour-force participation rate would be lower.
C) The unemployment rate would be lower, and the labour-force participation rate would be higher.
D) The unemployment rate and the labour-force participation rate would be lower.

Question 67

According to your text, what is NOT a reason that actual labour markets experience unemployment?

A) unions
B) job search
C) flexible wages
D) minimum-wage legislation

Question 68

Suppose that some people report themselves as unemployed when, in fact, they are working in the underground economy. If these persons were counted as employed, how would the labour statistics change?

A) The unemployment rate and the labour-force participation rate would be higher.
B) The unemployment rate and the labour-force participation rate would be lower.
C) The unemployment rate would be higher, and the labour-force participation rate would be lower.
D) The unemployment rate would be lower, and the labour-force participation rate would be unaffected.

Question 69

The following people are currently out of work: Deb, who is actively looking for a job; Ted, who is not looking for a job because he doesn't think he could find one; Alex who is working part-time but is looking for full-time work; and Cam, who is not looking for a job because he takes care of his twin sons. Who does Statistics Canada consider to be unemployed?

A) Deb
B) Ted
C) Kat
D) Cam

Question 70

Suppose that some people are counted as unemployed when, to maintain unemployment compensation, they search for work only at places where they are unlikely to be hired. If these individuals were counted as out of the labour force instead of as unemployed, how would the labour statistics change?

A) The unemployment rate and the labour-force participation rate would be higher.
B) The unemployment rate and the labour-force participation rate would be lower.
C) The unemployment rate would be lower, and the labour-force participation rate would be higher.
D) The unemployment rate would be higher, and the labour-force participation rate would be lower.

Question 71

Meredith is looking for work as a computer programmer. Although her prospects are good, she hasn't yet taken a job. Julie is looking for work in a steel mill, but there aren't many job ads for steel workers and every time she shows up for an interview, there are many more people than openings. Which statement best describes the nature of their unemployment?

A) Meredith and Julie are both frictionally unemployed.
B) Meredith and Julie are both structurally unemployed.
C) Meredith is frictionally unemployed, and Julie is structurally unemployed.
D) Meredith is structurally unemployed, and Julie is frictionally unemployed.

Question 72

According to economists, how should the reported unemployment rate be viewed?

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

Question 73

Consider two people who are currently out of work. Bernie 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. While she hasn't looked for work for some time, she has looked for work in the past. How does Statistics Canada consider Bernie and Bev?

A) Statistics Canada considers both Bernie and Bev to be discouraged searchers.
B) Statistics Canada considers neither Bernie nor Bev to be discouraged searchers.
C) Statistics Canada considers only Bernie to be a discouraged searcher.
D) Statistics Canada considers only Bev to be a discouraged searcher.

Question 74

Curtis is a stockbroker. He has had several job offers, but he has turned them down because he thinks he can find a firm that better matches his tastes and skills. John is an accountant. He has looked for work for some time, but no accounting firms are hiring. Which of the following best describes the nature of their unemployment?

A) John and Curtis are both frictionally unemployed.
B) John and Curtis are both structurally unemployed.
C) Curtis is frictionally unemployed, and John is structurally unemployed.
D) Curtis is structurally unemployed, and John is frictionally unemployed.

Question 75

Consider these facts: (1) Some people who are employed or who are not making a serious effort to find employment will report themselves as unemployed. (2) Some people who want to find work will be counted as out of the labour force. How do these facts affect the reported unemployment rate?

A) Both the first and the second facts tend to make the reported unemployment rate lower than the actual unemployment rate.
B) Both the first and the second facts tend to make the reported unemployment rate higher than the actual unemployment rate.
C) The first fact tends to make the reported unemployment rate higher than the actual unemployment rate. The second fact tends to make the reported unemployment rate lower than the actual rate.
D) The first fact tends to make the reported unemployment rate lower than the actual unemployment rate. The second fact tends to make the reported unemployment rate higher than the actual rate.

Question 76

How are discouraged workers counted in unemployment statistics?

A) They are not counted either as part of the adult population or as part of the labour force.
B) They are counted as part of the adult population, but not as part of the labour force.
C) They are counted as part of the adult population and as unemployed.
D) They are counted as unemployed, but not part of labour force.

Question 77

In Canada, what fraction of the unemployed are recent entrants into the labour force?

A) about 1/6 of those who are unemployed
B) about 1/5 of those who are unemployed
C) about 1/4 of those who are unemployed
D) about 1/3 of those who are unemployed

Question 78

Which group of unemployed persons is the largest (has the highest unemployment rate) in Canada?

A) unemployed 5 to 13 weeks
B) unemployed 14 to 25 weeks
C) unemployed 26 to 52 weeks
D) unemployed more than 52 weeks

Question 79

In Canada, about what fraction of the time do spells of unemployment end with the person leaving the labour force?

A) 1/5 of the time
B) 1/4 of the time
C) 1/3 of the time
D) 1/2 of the time

Question 80

How does Statistics Canada call a person who has a temporary, part-time job?

A) not in the labour force
B) unemployed
C) partially employed
D) employed