Deck 9: Unemployment and Its Natural Rate

Question 1

How often is data on unemployment reported?

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

Answer 1

B

Question 2

Which of the following people would be included in the labour force?

A)Holly, an unpaid homemaker
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 carrier to raise her two children

Answer 2

C

Question 3

How is the unemployment rate computed?

A)The unemployment rate is computed using the number of unemployment insurance claims filed.
B)Each adult included in a survey is classified as employed, unemployed, or not in the labour force. Then, the unemployment rate is computed by dividing the number of unemployed persons to the number of persons in the labour force.
C)The unemployment rate is computed by determining the number of unemployed in the population aged 18 and older.
D)Every person who does not have a job is considered unemployed.

Answer 3

B

Question 4

Cyclical unemployment is closely associated with which of the following?

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 5

In which of the following situations 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 15or over and looking for work

Question 6

Which of the following 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 7

Which of the following people 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 job but is looking for a new one

Question 8

Which of the following people 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)A 20-year-old student who does not work and is not looking for work

Question 9

Which of the following people 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 does only voluntary work for charity organizations

Question 10

How is unemployment data collected?

A)from unemployment insurance claims
B)through a regular survey of about 50 000 households
C)through a regular survey of about 200 000 firms
D)using Canada Revenue Agency tax files

Question 11

What does cyclical unemployment refer to?

A)the relation 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

Question 12

Which of the following correctly 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 13

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 adult population

Question 14

Which of the following best explains how unemployment relates to business cycles?

A)Unemployment can be completely 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 15

Which of the following best defines the natural rate of unemployment?

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

Question 16

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

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

Question 17

Sally is on a temporary layoff from the factory where she makes plastic tableware. 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 18

Which one of the following people 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 on temporary layoff
C)Heath, who has retired and is not looking for work
D)James, who has just graduated from university is taking a well-deserved long vacation

Question 19

Which one of the following people 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 35 hours last week
C)Karen, who neither has a job nor is looking for one
D)Kevin, who is a retiree

Question 20

Which of the following is characteristic of the natural rate of unemployment?

A)It is a constant.
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 21

Anna has just finished school and started looking for a job, but has not yet found one. To which of the following pairs of categories does Anna now belong?

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 22

In 2000 in Japan, based on concepts similar to those used to compute Canadian employment statistics, the unemployment rate was about 4.8 percent, the labour force participation rate was about 62 percent, and the adult population was about 108 million. How many people were employed?

A)about 52 million
B)about 64 million
C)about 67 million
D)about 103 million

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

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 25

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 26

How is the labour-force participation rate defined?

A)(Employed $\div$ Adult population) * 100
B)(Employed $\div$ Labour force) * 100
C)(Labour force $\div$ Adult population) * 100
D)(Adult population $\div$ Labour force) * 100

Question 27

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1. What is the adult unemployment rate in Dan?

A)4.12 percent
B)6.25 percent
C)11.11 percent
D)12.50 percent

Question 28

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

A)The unemployment rate decreases.
B)The unemployment rate increases.
C)The unemployment rate is unaffected.
D)There is insufficient information to answer the question.

Question 29

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 15or over
D)the number of unemployed plus the number of employed

Question 30

Matt loses his job and decides to sit around at home for a few months. Assuming that other things remain the same, what happens to the unemployment rate?

A)The unemployment rate decreases.
B)The unemployment rate increases.
C)The unemployment rate is unaffected.
D)There is insufficient information.

Question 31

Between 2006 and 2007, the country of Aquilonia reported an increase in the number of people who were employed. It also reported an increase in the unemployment rate. Which of the following would best explain the two reports?

A)There was an increase in the size of the labour force between 2006 and 2007.
B)There was a decrease in the size of the labour force between 2006 and 2007.
C)There was an increase in the size of the adult population between 2006 and 2007.
D)The two reports are contradictory and cannot be reconciled.

Question 32

In 2000 in the United Kingdom, the adult population was about 46.5 million, the labour force participation rate was 63.5 percent, and the unemployment rate was 5.8 percent. What was the number of people unemployed?

A)3.7 million
B)2.7 million
C)1.7 million
D)0.7 million

Question 33

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1. What is the adult labour force in Dan?

A)90 million
B)150 million
C)160 million
D)230 million

Question 34

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1. What is the adult population in Dan?

A)90 million
B)150 million
C)160 million
D)240 million

Question 35

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 36

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. Which of the following can you conclude?

A)One of them must be lying.
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 37

The U.S. Bureau of Labour Statistics recently reported that there were 48.6 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 36.9 million were employed. What was the unemployment rate in this group?

A)about 21.8 percent
B)about 24.1 percent
C)about 2.9 percent
D)about 2.3 percent

Question 38

How is Latoya, a homemaker who works as a volunteer at the local Red Cross 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 39

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 40

Tara has just finished school, but she is going to roam around the country awhile before she starts looking for work. Which of the following 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 41

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1. What is the adult female population in Dan?

A)35 million
B)40 million
C)85 million
D)105 million

Question 42

If an unemployed person quits looking for work, ceteris paribus, which of the following 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 43

Since 1951, which of the following has happened to the labour-force participation rate of women?

A)It is impossible to tell if the labour-force participation rate of women has increased or decreased.
B)It has increased, and they are now playing a more equal role in the economy.
C)It has decreased, because they stay in school longer.
D)It has decreased, because they now retire earlier.

Question 44

How do male and female groups compare based on unemployment rates in Canada?

A)Men have similar unemployment rates compared to women.
B)Men have lower rates of unemployment than women.
C)Men have higher rates of unemployment compared to women.
D)It depends on the age group.

Question 45

Which of the following 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 unemployment insurance 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

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

A)about 84% and about 73%
B)about 75%
C)about 70%
D)about 63%

Question 47

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1. What is the adult female labour-force participation rate in Dan?

A)4.76 percent
B)37.03 percent
C)38.10 percent
D)66.67 percent

Question 48

Which of the following groups has the highest labour-force participation rate in Canada?

A)Females
B)Males
C)It depends on when the individuals entered the labour force.
D)There are no significant differences in participation rates across these groups.

Question 49

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 2.1 times the one after World War II.
B)Today, labour-force participation rate of women is about 2.6 times the one after World War II.
C)Today, labour-force participation rate of women is about 3.2 times the one after World War II.
D)Today, labour-force participation rate of women is about 4.2 times the one after World War II.

Question 50

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1.What is the adult male labour-force participation rate in Dan?

A)7.40 percent
B)33.33 percent
C)37.03 percent
D)66.67 percent

Question 51

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 52

Since World War II, which of the following 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 53

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1.What is the adult female labour force in Dan?

A)35 million
B)40 million
C)70 million
D)85 million

Question 54

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

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

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)67 percent
D)75 percent

Question 56

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1. What is the adult male population in Dan?

A)85 million
B)105 million
C)120 million
D)135 million

Question 57

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1. What is the adult male unemployment rate in Dan?

A)3.70 percent
B)4.00 percent
C)5.56 percent
D)5.88 percent

Question 58

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1.What is the adult male labour force in Dan?

A)85 million
B)90 million
C)100 million
D)120 million

Question 59

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1. What is the adult female unemployment rate in Dan?

A)4.76 percent
B)5.56 percent
C)7.14 percent
D)7.69 percent

Question 60

Table 28-1. This table shows the 2007 data for males and females aged 15 and over in the country of Dan.

Refer to Table 28-1. What is the adult labour-force participation rate in Dan?

A)4.12 percent
B)12.50 percent
C)37.50 percent
D)66.67 percent

Question 61

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 62

In one year you meet 45 people who are each unemployed for one week, and five people who are each unemployed for the whole year. Which of the following statistics best describe this situation?

A)90 percent are short-term unemployed, and 85.3 percent are long-term unemployed
B)10 percent are short-term unemployed, and 90 percent are long-term unemployed
C)90 percent are short-term unemployed, and 10 percent are long-term unemployed
D)88 percent are short-term unemployed, and 22 percent are long-term unemployed

Question 63

According to your text, which of the following is not a reason that actual labour markets experience unemployment?

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

Question 64

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 65

According to Statistics Canada data, which of the following categories had the highest percentage of the labour force in 2009?

A)unemployed 1 to 4 weeks
B)unemployed 5 to 13 weeks
C)unemployed 14 to 25 weeks
D)unemployed 26 to 52 weeks

Question 66

Which of the following 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 67

What fraction of the unemployed persons have been unemployed for less than a month?

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

Question 68

How is the unemployment rate reported by Statistics Canada likely to relate to the actual unemployment rate?

A)It is somewhat higher than the actual unemployment rate.
B)It is somewhat lower than the actual unemployment rate.
C)It is fairly close to the actual unemployment rate.
D)It could be higher or lower than the actual unemployment rate. We cannot be certain.

Question 69

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 marginally attached workers.
B)Statistics Canada considers neither Bernie nor Bev to be marginally attached workers.
C)Statistics Canada considers only Bernie to be a marginally attached worker.
D)Statistics Canada considers only Bev to be a marginally attached worker.

Question 70

Consider two people who are currently out of work. Deb is not currently looking for work but would like a job. Although she is not currently searching for work, she has done so at some time in the recent past. Ted is not looking for work, because he doesn't think there are jobs available for which he would qualify. Who does Statistics Canada consider to be a discouraged worker?

A)both Deb and Ted
B)only Ted
C)only Deb
D)Neither Deb nor Ted

Question 71

Is the reported unemployment rate statistic, as reported by Statistics Canada, reliable? If not, are there easy ways to improve it?

A)No, but there is no easy way to improve it.
B)No, but there are several easy ways economists have identified to improve it.
C)No, but there is one easy way of improving it.
D)Yes, and there are several easy ways of improving it even more.

Question 72

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 73

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 74

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 75

How is the number of long-term unemployment spells compared to short-term spells in Canadian economy?

A)about the same
B)much lower
C)much higher
D)it could be either higher or lower

Question 76

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 77

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 of the following best describes the nature of these persons' 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 78

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 79

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 80

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