Deck 13: Unemployment and Inflation

Question 1

The unemployment rate is an important economic statistic that can tell us about the health of the economy.If the unemployment rate turns out to be high or higher than anticipated,we would expect

A)it is more likely that an incumbent president will be re-elected.
B)that stock prices are more likely to fall.
C)that jobs are less difficult to find.
D)that investors will be more optimistic about the economy.

Answer 1

that stock prices are more likely to fall.

Question 2

Which of the following labor market statistics best indicates the amount of labor that is available to the economy from a given working-age population?

A)unemployment rate
B)discouraged-worker ratio
C)labor force participation rate
D)the ratio of minimum wage to inflation

Answer 2

labor force participation rate

Question 3

The unemployment rate equals the number of unemployed divided by the ________,all times 100.

A)number of employed
B)labor force
C)working-age population
D)total population

Answer 3

labor force

Question 4

Table 13-1
$$\begin{array} { | l | r| } \hline \text { Total population } & 20,000 \\\hline \text { Working-age population } & 15,000 \\\hline \text { Employment } & 1,000 \\\hline \text { Unemployment } & 100 \\\hline\end{array}$$
Consider the data above for a simple economy.

-Refer to Table 13-1.The unemployment rate for this simple economy equals

A)(100/1,000)× 100.
B)(100/1,100)× 100.
C)(100/15,000)× 100.
D)(100/20,000)× 100.

Question 5

Due to slowing growth in China and other developing countries,Caterpillar ________ the number of persons it employed in 2013 and this ________ the total number of persons unemployed in the economy.

A)decreased; increased
B)decreased; decreased
C)increased; decreased
D)increased; increased

Question 6

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness?

A)inflation
B)discouraged workers
C)counting people as employed who are working part time, although they would prefer to be working full time
D)unemployed persons falsely report themselves to be actively looking for a job

Question 7

Someone who is available for work but has not actively looked for work in the previous four weeks would be classified as

A)employed.
B)unemployed.
C)not in the labor force.
D)not in the working-age population.

Question 8

The Bureau of Labor Statistics would categorize a retiree who is not working as

A)employed.
B)unemployed.
C)a discouraged worker.
D)out of the labor force.

Question 9

Suppose the government launches a successful advertising campaign that convinces workers with high school degrees to quit their jobs and become full time college students.This would cause

A)the unemployment rate to decrease.
B)the labor force participation rate to decrease.
C)the number of discouraged workers to increase.
D)no change in the unemployment rate.

Question 10

The labor force equals the number of people

A)employed.
B)unemployed.
C)employed plus unemployed.
D)in the working-age population.

Question 11

Table 13-1
$$\begin{array} { | l | r| } \hline \text { Total population } & 20,000 \\\hline \text { Working-age population } & 15,000 \\\hline \text { Employment } & 1,000 \\\hline \text { Unemployment } & 100 \\\hline\end{array}$$
Consider the data above for a simple economy.

-Refer to Table 13-1.The labor force participation rate for this simple economy equals

A)(1,000/1,100)× 100.
B)(1,000/15,000)× 100.
C)(1,100/15,000)× 100.
D)(1,100/20,000)× 100.

Question 12

The Bureau of Labor Statistics would categorize a person as ________ if they were temporarily away from their job because they were ill.

A)employed
B)unemployed
C)a discouraged worker
D)out of the labor force

Question 13

Suppose the working-age population of a fictional economy falls into the following categories: 90 are retired or homemakers; 60 have full-time employment; 20 have part-time employment; 20 do not have employment,but are actively looking for employment; and 10 would like employment but do not have employment and are not actively looking for employment.The official unemployment rate as calculated by the U.S.Bureau of Labor would equal

A)(20/60)× 100.
B)(20/80)× 100.
C)(30/80)× 100.
D)(20/100)× 100.

Question 14

Which of the following explains the changes in the U.S.adult male labor force participation rate since 1948?

A)more men are joining the military as compared to the past
B)more men are retiring later in life as compared to the past
C)fewer men consider themselves discouraged workers as compared to the past
D)younger men are remaining in school longer as compared to the past

Question 15

The economy has gone into a recession.You have majored in computer science and,because of the recession,have difficulty in finding a job.Should you go back to school and get a second major?

A)Yes, the recession will ensure that you will never find a job as a programmer.
B)Yes, the recession will lower income in my field permanently.
C)No, the recession will most likely be short-lived and I can get a job after it is over.
D)No, the recession will have no impact on my ability to get a job or my future income.

Question 16

Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness?

A)inflation
B)discouraged workers
C)people employed in the underground economy
D)unemployed persons falsely report themselves to be actively looking for a job

Question 17

Suppose that homemakers are included as employed in the labor force statistics,rather than being counted as out of the labor force.This would

A)increase the measured unemployment rate.
B)increase the measured labor force participation rate.
C)decrease the number of persons in the labor force.
D)decrease the number of persons in the working-age population.

Question 18

If the BLS counted persons that are on active military service in the totals for employment,the labor force,or the working-age population,this would

A)decrease the measured unemployment rate.
B)decrease the measured labor force participation rate.
C)decrease the number of persons in the labor force.
D)decrease the number of persons in the working-age population.

Question 19

Suppose the labor force stays constant,and the working-age population stays constant,but a greater number of persons who were unemployed become employed.The labor force participation rate will

A)increase.
B)decrease.
C)remain constant.
D)not change in a way that can be predicted.

Question 20

The labor force participation rate equals the

A)(number of employed divided by the labor force)× 100.
B)(labor force divided by the number of people not in the labor force)× 100.
C)(labor force divided by working-age population)× 100.
D)(labor force divided by the total population)× 100.

Question 21

The unemployment rate is

A)the percentage of the labor force that is employed.
B)the percentage of the number employed that is unemployed.
C)the percentage of the working-age population that is unemployed.
D)the percentage of the labor force that is unemployed.
E)the percentage of the working-age population that is employed.

Question 22

Jack lost his job six months ago,and he's been actively looking for a new job ever since.The Bureau of Labor Statistics would classify Jack as

A)unemployed.
B)out of the labor force.
C)a discouraged worker.
D)all of the above.

Question 23

Which of the following causes the unemployment rate to understate the true extent of joblessness?

A)Many full time workers really want to be part time workers.
B)Persons who collect unemployment benefits report themselves to be searching for a job.
C)Discouraged workers are not counted as unemployed.
D)A drug dealer reports herself as unemployed.
E)Discouraged workers are counted as unemployed.

Question 24

The labor force is the sum of

A)employed workers and discouraged workers.
B)employed workers and unemployed workers.
C)employed workers and individuals not looking for work.
D)employed workers and the working age population.
E)unemployed workers and the working age population.

Question 25

An advantage of the establishment survey over the household survey of the labor market is that the establishment survey

A)is based on actual payrolls, rather than on unverified answers.
B)includes the number of self-employed persons.
C)includes persons employed at newly opened firms.
D)provides an estimate of the number of persons unemployed.

Question 26

The labor force participation rate is defined as

A)the percentage of the working-age population that is employed.
B)the percentage of the working-age population that is unemployed.
C)the percentage of the labor force that is employed.
D)the percentage of the labor force that is unemployed.
E)the percentage of the working-age population in the labor force.

Question 27

Which of the following statements is true about the U.S.economy?

A)Each year, many new jobs are created, but few existing jobs are destroyed, and the unemployed find jobs quickly.
B)Each year, few new jobs are created, but few existing jobs are destroyed, keeping unemployment low.
C)Each year, many new jobs are created and many existing jobs are destroyed.
D)Each year few jobs are created, and therefore it takes the unemployed a long time to find a new job.

Question 28

Mike has been unemployed for over a year.He hasn't looked for a job in the last three months,but he's just started looking for work again.Because Mike started looking for a new job,

A)the unemployment rate increased.
B)the labor force participation rate decreased.
C)the unemployment rate decreased.
D)the working-age population increased.

Question 29

A full-time student who is not working is categorized as

A)unemployed.
B)employed.
C)not in the labor force.
D)a discouraged worker.
E)frictionally unemployed.

Question 30

Discouraged workers are classified by the BLS as

A)part of the labor force.
B)out of the labor force.
C)unemployed.
D)employed.
E)part-time employees.

Question 31

Upon your graduation from college,you find that the economy is in recession and the unemployment rate is relatively high.Nonetheless,you continue along your career path looking for a new job because

A)the cost of additional education is always higher during recession.
B)high unemployment rates do not usually last for very long.
C)looking for work is your only option.
D)the wages of college graduates do not fall during recession.

Question 32

In the modern U.S.economy,the typical unemployed person stays unemployed for

A)a relatively long time, over a year.
B)a relatively short time, less than six months.
C)for a long time during expansions and short time during recessions.
D)an amount of time that is hard to quantify.

Question 33

During the month of May,10 million workers moved from being classified as "unemployed" to being classified as "employed." As a result

A)the unemployment rate rose.
B)the labor force participation rate fell.
C)the unemployment rate fell.
D)the labor force participation rate rose.

Question 34

The average period of unemployment was ________ following the 2007-2009 recession as following any other recession since the end of World War II.

A)three times as low
B)approximately the same
C)twice as high
D)eight times as high

Question 35

Using a broader measure of the unemployment rate where discouraged workers and part-time workers who wished to work full time were counted as unemployed,the BLS estimates the unemployment rate in September 2011 would have ________ compared to the measured unemployment rate.

A)increased by more than 7 percentage points
B)more than doubled
C)decreased by less than 1 percentage point
D)barely changed

Question 36

Which of the following would reduce the labor force participation rate,all else equal?

A)an increase in the number of people in the labor force
B)an increase in the unemployment rate
C)a decrease in the unemployment rate
D)an increase in the working-age population

Question 37

After the recession of 2007-2009,the unemployment rate peaked at 10.0 percent in October 2009.18 months later,it had

A)dropped by 50 percent.
B)declined by only 1 percentage point.
C)remained at 10.1 percent.
D)fallen to the natural rate of unemployment.

Question 38

Since 1948,the labor force participation rate for adult men has ________ and for adult women has ________.

A)increased; increased
B)increased; decreased
C)decreased; increased
D)decreased; decreased

Question 39

Discouraged workers are

A)workers who have a part time job but want a full time job.
B)workers who find their current jobs unfulfilling and are considering a job change.
C)workers who have consistently been looking for work for more than 4 weeks.
D)workers who have stopped looking for work because they believe there are no jobs for them.

Question 40

An advantage of the household survey over the establishment survey of the labor market is that the household survey

A)is based on actual payrolls, rather than on unverified answers.
B)includes the number of self-employed persons.
C)includes the number of discouraged workers.
D)omits persons employed at newly opened firms.

Question 41

The household survey asks adults about their employment status and is used to compile the monthly unemployment rate.

Question 42

In the United States,the typical person who has lost his or her job finds another one in a few months except during severe recessions.

Question 43

If the number of unemployed workers is 200 million,and the number in the labor force is 500 million,what is the unemployment rate?

A)0.4%
B)4%
C)14%
D)40%

Question 44

Jack just received a promotion at work and now works 50 hours per week instead of 35.As a result,

A)the unemployment rate increased.
B)the unemployment rate decreased.
C)the labor force participation rate increased.
D)neither the unemployment rate nor the labor force participation rate changed.

Question 45

In recent years,economists have come to rely more on the establishment survey rather than the household survey to analyze current labor market statistics.

Question 46

Following the recession of 2007-2009,the employment-population ratio

A)remained virtually unchanged for the next 36 months.
B)was even lower four years after the end of the recession.
C)began to slowly increase back to its pre-recession level.
D)began to quickly increase back to its pre-recession level.

Question 47

If the number of unemployed workers is 200 million,the number of employed workers is 300 million,and the working-age population is 800 million,what is the labor force participation rate?

A)12.5%
B)37.5%
C)40%
D)62.5%

Question 48

The household survey is compiled from firms who answer questions about the number of persons who are employed and on the company payroll.

Question 49

If the number employed is 190 million,the working-age population is 230 million,and the number unemployed is 10 million,then the unemployment rate is

A)5%.
B)5.2%.
C)8%.
D)10%.
E)50%.

Question 50

In August 2013,the U.S.unemployment rate was highest for

A)whites.
B)Hispanics.
C)high school dropouts.
D)African-Americans.
E)Asians.

Question 51

If the number of unemployed workers is 19 million,the number in the working-age population is 500 million,and the unemployment rate is 4%,what is the labor force participation rate?

A)4.75%
B)7.8%
C)95%
D)96.2%

Question 52

If the number of unemployed workers is 19 million,the number in the working-age population is 500 million,and the unemployment rate is 4%,how many workers are in the labor force?

A)1 million
B)20 million
C)475 million
D)481 million

Question 53

Jack was unemployed two weeks ago but just started a new job.As a result of this increase in the number of employed workers,which of the following occurred?

A)The labor force participation rate increased.
B)The unemployment rate increased.
C)The labor force participation rate decreased.
D)The unemployment rate decreased.

Question 54

The labor force participation rates of women have rapidly increased since 1948.

Question 55

What impact would including members of the military in employment,labor force,and working-age population statistics have on the unemployment rate and the labor force participation rate?

A)Including members of the military would increase the unemployment rate and reduce the labor force participation rate.
B)Including members of the military would reduce the unemployment rate and increase the labor force participation rate.
C)Including the military would increase both the unemployment rate and the labor force participation rate.
D)Including the military would reduce both the unemployment rate and the labor force participation rate.

Question 56

Which of the following describes actual trends in the U.S.labor force participation rate?

A)The labor force participation rate of adult men has risen since 1950.
B)The labor force participation rate of adult women has fallen since 1950.
C)The labor force participation rate of adult men not in school, but too young to retire has risen since 1950.
D)The labor force participation rate of adult women has risen since 1950.
E)The labor force participation rate of all adults has fallen since 1950.

Question 57

If the number employed is 190 million,the number unemployed is 10 million,and the working-age population is 250 million,then the labor force participation rate is

A)4%.
B)5.2%.
C)60%.
D)76%.
E)80%.

Question 58

For the last few decades,the labor force participation rates of men have ________,and the labor force participation rates of women have ________.

A)risen; risen
B)fallen; fallen
C)risen; fallen
D)fallen; risen

Question 59

Except for recessions,the duration of unemployment for the typical person lasts

A)less than six months.
B)six to nine months.
C)over nine months.
D)over one year.
E)over five years.

Question 60

Counting part-time workers who are looking for full-time work as employed overstates the degree of joblessness in the economy.

Question 61

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.

Question 62

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.

Question 63

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.

Question 64

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.

Question 65

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.

Question 66

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.

Question 67

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

Question 68

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.

Question 69

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.

Question 70

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.

Question 71

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.

Question 72

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.

Question 73

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.

Question 74

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.

Question 75

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.

Question 76

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.

Question 77

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.

Question 78

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

Question 79

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.

Question 80

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.