Deck 6: Unemployment

Question 1

If more teenagers stay in school longer rather than dropping out and entering the labor force,

A)The production possibilities curve shifts outward.
B)The production possibilities curve shifts inward.
C)The production possibilities curve remains unchanged.
D)The unemployment rate goes up.

Answer 1

B

Question 2

According to Okun's Law,if unemployment rises by 5 percent while imports and exports increase at roughly the same rate,the economy will lose output equal to

A)1 percent.
B)2 percent.
C)5 percent.
D)10 percent.

Answer 2

D

Question 3

Which of the following is included in the labor force?

A)A student who is still in school but not working or looking for work.
B)A part-time store clerk who is looking for another job.
C)A person who voluntarily runs a charity.
D)A person who spends the entire day taking care of his or her own young children at home.

Answer 3

B

Question 4

If a nation experiences a year of unusually high immigration that increases the size of the labor force,we can conclude that the

A)Nation will choose a different point on the production possibilities curve.
B)Nation's production possibilities curve will shift outward.
C)Nation's production possibilities curve will shift inward.
D)Nation's capital per worker will rise.

Question 5

As of 2010,approximately what percentage of the U.S.population participated in the civilian labor force?

A)30 percent.
B)40 percent.
C)50 percent.
D)60 percent.

Question 6

When the labor force participation rate is declining,the

A)Unemployment rate is rising faster than the total population rate.
B)Percentage of the working-age population that is outside the labor force is declining.
C)Percentage of the working-age population that is willing and able to work is declining.
D)Percentage of the total population that is employed is rising.

Question 7

All of the following are true about Okun's Law except

A)It quantifies the relationship between unemployment and the production possibilities curve.
B)It allows a dollar value to be assigned to the cost of unemployment.
C)It indicates that there is a negative 2:1 relationship between output and unemployment.
D)It indicates that GDP is not affected by unemployment.

Question 8

Who among the following is included in the labor force?

A)A hardworking homemaker who does not want to be employed outside the home.
B)A man doing 10 years in prison for armed robbery.
C)The president of Microsoft.
D)A retired commander of the armed forces.

Question 9

The labor force participation rate is the number

A)Of unemployed divided by the number of employed.
B)Of employed divided by the number in the labor force.
C)Of employed divided by the total population.
D)In the labor force divided by the working-age population.

Question 10

The benefits to the United States of outsourcing include all of the following except

A)Foreign firms insource or send jobs to the United States.
B)U.S.productivity rises,resulting in higher profits at U.S.firms that outsource.
C)Higher domestic labor cost for U.S.firms.
D)Greater domestic investment by U.S.firms that outsource.

Question 11

People are not part of the labor force when they

A)Go on vacation.
B)Are old enough to work but choose not to work.
C)Suffer from a temporary illness that keeps them away from their job.
D)None of the choices are correct.

Question 12

Which of the following would not increase the physical production possibilities curve?

A)Greater constraints for oil drilling companies.
B)Increased availability of factors of production.
C)Increased technology.
D)None of the choices are correct.

Question 13

The observation that a 1 percent increase in unemployment leads to a 2 percent decrease in real output is known as

A)A recession.
B)A Lucas Wedge.
C)Okun's Law.
D)Under allocation of resources.

Question 14

The production possibilities curve

A)Represents the different quantities of goods society can consume while operating at full employment.
B)Must shift outward every year.
C)Is another name for the aggregate demand curve.
D)Tends to increase as the population grows.

Question 15

Production possibilities are the

A)Alternative combinations of output that can be produced using all available resources and technology.
B)Various production methods that producers can employ.
C)Various types of input that each manufacturing facility can choose to employ.
D)Percentage of output produced by each worker.

Question 16

When the economy is below full employment,it is producing

A)On the production possibilities curve.
B)Beyond the production possibilities curve.
C)Inside the production possibilities curve.
D)None of the choices are correct.

Question 17

From 1950 until 2000,the labor force participation rate has

A)Increased for men and increased for women.
B)Decreased for men and decreased for women.
C)Increased for men and decreased for women.
D)Decreased for men and increased for women.

Question 18

Unemployment is defined as

A)The active search and inability of labor force participants to find jobs.
B)The active search and inability of citizens to find jobs that utilize their capabilities.
C)The proportion of the total population that is unemployed.
D)A decrease in the labor force.

Question 19

Jack graduated from college last month,but he has not yet started looking for a job.Jack is

A)Frictionally unemployed.
B)Structurally unemployed.
C)A discouraged worker and is part of the unemployment statistic.
D)Not part of the labor force and is not counted in the unemployment rate.

Question 20

For the labor force to definitely increase,

A)There must be an increase in total population.
B)There must be an increase in immigration.
C)People must turn from being discouraged workers into people actively seeking employment.
D)None of the choices are correct.

Question 21

$\begin{array}{lll} & \text { Year 1 } & \text { Year 5 } \\\text { Population } & 200 \text { million } & 250 \text { million } \\\text { Labor Force } & 110 \text { million } & 145 \text { million } \\\text { \# Employed } & 106 \text { million } & 135 \text { million }\end{array}$

Table 6.3
Population and Labor Force What is the labor force participation rate in Year 1 in Table 6.3?

A)96.4 percent.
B)3.6 percent.
C)53.0 percent.
D)55.0 percent.

Question 22

To be officially counted as unemployed,one must be

A)Either not working or working only part-time.
B)Not employed at a full-time job.
C)Actively seeking employment and currently not working.
D)None of the choices are correct.

Question 23

If the population of a country is 250,000 people,its labor force consists of 145,000 people,35,000 people are unemployed,10,000 are unable to work,and 5,000 are unwilling to work,the unemployment rate is

A)22.1 percent.
B)14.0 percent.
C)24.1 percent.
D)19.4 percent.

Question 24

Suppose that in a population of 50 million persons,40 million are in the labor force,36 million are employed,2 million are classified as unable to work,and 1 million are classified as unwilling to work.The unemployment rate is

A)10.0 percent.
B)72.0 percent.
C)8.0 percent.
D)80.0 percent.

Question 25

$\begin{array}{lrrr}&1998&1999&2000\\\text { Population } & 85 & 95 & 110 \\\text { Employed } & 60 & 65 & 72 \\\text { Unemployed } & 5 & 8 & 13\end{array}$
$\text { *all numbers are in millions }$

$\text { Table } 6.2$ Based on Table 6.2,what was the labor force participation rate in 2000?

A)77.27 percent.
B)65.45 percent.
C)11.81 percent.
D)18.05 percent.

Question 26

The macro consequence of unemployment is

A)Lost output for the economy.
B)Lost income for the individual worker.
C)A leftward shift in the production possibilities curve.
D)A 1 percent decrease in GDP for every 1 percent decrease in unemployment.

Question 27

Suppose a country has 1 billion people.75 percent of its citizens are in the labor force,with 90 million unemployed.Full employment occurs at 2 percent.Based on this information,what is the unemployment rate?

A)12.0 percent.
B)25.0 percent.
C)9.0 percent.
D)8.3 percent.

Question 28

$\begin{array}{lrrr}&1998&1999&2000\\\text { Population } & 85 & 95 & 110 \\\text { Employed } & 60 & 65 & 72 \\\text { Unemployed } & 5 & 8 & 13\end{array}$
$\text { *all numbers are in millions }$

$\text { Table } 6.2$ Based on Table 6.2,what was the labor force participation rate in 1998?

A)5.88 percent.
B)8.33 percent.
C)70.58 percent.
D)76.47 percent.

Question 29

Suppose a country has 10 million people.Three-fourths of those individuals are in the labor force,with 500,000 unemployed.Full employment occurs at 5 percent.Based on this information,what is the unemployment rate?

A)6.67 percent.
B)75 percent.
C)7.5 percent.
D)5 percent.

Question 30

$\begin{array}{lrrr}&2004&005&2006\\\text { Population } & 200 \text { million } & 225 \text { million } & 275 \text { million } \\\text { Labor Force } & 150 \text { million } & 165 \text { million } & 200 \text { million } \\\text { Unemployed } & 5 \text { million } & 15 \text { million } & 35 \text { million }\end{array}$

$\text { Table } 6.1$ What was the unemployment rate in 2006 in Table 6.1?

A)12.7 percent.
B)72.7 percent.
C)51.6 percent.
D)17.5 percent.

Question 31

$\begin{array}{lrrr}&2004&005&2006\\\text { Population } & 200 \text { million } & 225 \text { million } & 275 \text { million } \\\text { Labor Force } & 150 \text { million } & 165 \text { million } & 200 \text { million } \\\text { Unemployed } & 5 \text { million } & 15 \text { million } & 35 \text { million }\end{array}$

$\text { Table } 6.1$ What was the labor force participation rate in 2004 in Table 6.1?

A)18.3 percent.
B)133.3 percent.
C)75.0 percent.
D)77.5 percent.

Question 32

The most widely used measure of the unemployment rate is found by the

A)U.S.Department of Labor in surveys of businesses to determine the number of employees as a percentage of the total labor force.
B)U.S.Census Bureau in monthly surveys that examine whether people are working or are willing to work.
C)U.S.Census Bureau in its census of the population every 10 years.
D)Council of Economic Advisers,which summarizes its nationwide surveys in its yearly report to the president.

Question 33

$\begin{array}{lrrr}&2004&005&2006\\\text { Population } & 200 \text { million } & 225 \text { million } & 275 \text { million } \\\text { Labor Force } & 150 \text { million } & 165 \text { million } & 200 \text { million } \\\text { Unemployed } & 5 \text { million } & 15 \text { million } & 35 \text { million }\end{array}$

$\text { Table } 6.1$ What was the unemployment rate in 2004 in Table 6.1?

A)3.9 percent.
B)75 percent.
C)3.3 percent.
D)2.5 percent.

Question 34

$\begin{array}{lll} & \text { Year 1 } & \text { Year 5 } \\\text { Population } & 200 \text { million } & 250 \text { million } \\\text { Labor Force } & 110 \text { million } & 145 \text { million } \\\text { \# Employed } & 106 \text { million } & 135 \text { million }\end{array}$

Table 6.3
Population and Labor Force What is the unemployment rate in Year 5 in Table 6.3?

A)7.4 percent.
B)6.9 percent.
C)4.0 percent.
D)54.0 percent.

Question 35

Suppose a country has 1 billion people.75 percent of its citizens are in the labor force,with 90 million unemployed.Full employment occurs at 2 percent.Based on this information,by what percentage has real output failed to reach its potential according to the revised Okun's Law?

A)2 percent.
B)10 percent.
C)12 percent.
D)20 percent.

Question 36

There is a/an ________________ relationship between educational level and the unemployment rate.

A)direct relationship
B)positive relationship
C)cyclical relationship
D)inverse relationship

Question 37

Those that work part-time and do not desire full-time employment are referred to as

A)Employed.
B)The phantom unemployed.
C)Underemployed.
D)Discouraged workers.

Question 38

$\begin{array}{lll} & \text { Year 1 } & \text { Year 5 } \\\text { Population } & 200 \text { million } & 250 \text { million } \\\text { Labor Force } & 110 \text { million } & 145 \text { million } \\\text { \# Employed } & 106 \text { million } & 135 \text { million }\end{array}$

Table 6.3
Population and Labor Force What is the number of unemployed in Year 1 in Table 6.3?

A)90 million.
B)94 million.
C)106 million.
D)4 million.

Question 39

The proportion of the labor force that is unemployed is the

A)Employment index.
B)Underemployed rate.
C)Unemployment rate.
D)Okun's Law.

Question 40

$\begin{array}{lrrr}&1998&1999&2000\\\text { Population } & 85 & 95 & 110 \\\text { Employed } & 60 & 65 & 72 \\\text { Unemployed } & 5 & 8 & 13\end{array}$
$\text { *all numbers are in millions }$

$\text { Table } 6.2$ Based on Table 6.2,what was the unemployment rate in 1999?

A)8.42 percent.
B)10.96 percent.
C)68.42 percent.
D)76.84 percent.

Question 41

Underemployment refers to

A)The same thing as unemployment.
B)A person who is lazy and not working hard at her job.
C)A person who is not able to use her full capabilities in her job.
D)A discouraged worker.

Question 42

All of the following are true when the economy is growing except

A)Duration of unemployment falls.
B)Costs associated with unemployment fall.
C)Unemployment rate falls.
D)Underemployment rises.

Question 43

Individuals who are working part-time while seeking full-time employment are classified as

A)Unemployed.
B)Underemployed.
C)Discouraged workers.
D)Phantom unemployeD.This might be someone who is teaching part-time but seeking a full-time teaching job while working the part-time job.

Question 44

After a fruitless two-year search for a job,a former executive gives up and decides to live off the land in the Rocky Mountains.This former executive is considered

A)A discouraged worker.
B)Structurally unemployed.
C)One of the phantom unemployed.
D)UnderemployeD.Discouraged workers are not actively seeking employment.

Question 45

$\begin{array}{|l|c|c|c|}\hline & 1999 & 2000 & 2001 \\\hline \text { Population } & 100 & 110 & 125 \\\hline \text { Employed } & 65 & 70 & 80 \\\hline \text { Unemployed } & 5 & 10 & 20 \\\hline \text { Discouraged Workers } & 2 & 3 & 5 \\\hline\end{array}$
$\text { *All numbers are in millions }$

Table 6.4
Population and Employment in Nationland What was the labor force participation rate in Nationland in 2000?

A)67.0 percent.
B)65.0 percent.
C)72.0 percent.
D)72.7 percent.

Question 46

Which of the following is considered a discouraged worker?

A)A professional football player who is forced to play a new position.
B)A professional football player who gets cut after the preseason schedule has been completed.
C)A professional football coach coming off a 0-16 season.
D)A retired professional football player who tried to make a comeback but found no one was willing to give him a tryout,so he no longer looks for a job.

Question 47

Which of the following groups generally has the lowest unemployment rate?

A)High school dropouts.
B)High school graduates with no further education.
C)College dropouts.
D)College graduates.

Question 48

Suppose there are 6 million unemployed workers actively seeking a job.After a period of time,1,500,000 of these workers become discouraged and no longer look for employment.If everything else remains constant,the unemployment rate will

A)Decrease.
B)Increase.
C)Remain unchanged until the unemployed find a job.
D)Increase initially but decrease when the phantom unemployed receive unemployment benefits.

Question 49

Discouraged workers

A)Do not actively seek employment although they desire to be employed.
B)Are part of the labor force.
C)Are workers who are unhappy in their jobs.
D)Are counted as part of total unemployment.

Question 50

$\begin{array}{|l|c|c|c|}\hline & 1999 & 2000 & 2001 \\\hline \text { Population } & 100 & 110 & 125 \\\hline \text { Employed } & 65 & 70 & 80 \\\hline \text { Unemployed } & 5 & 10 & 20 \\\hline \text { Discouraged Workers } & 2 & 3 & 5 \\\hline\end{array}$
$\text { *All numbers are in millions }$

Table 6.4
Population and Employment in Nationland If discouraged workers are included in the labor force,what was the unemployment rate for 1999?

A)3.0 percent.
B)9.7 percent.
C)10.8 percent.
D)2.8 percent.

Question 51

Suppose a student graduates from college with a civil engineering degree and is now employed to grade papers,answer the phone,and make copies-tasks that are below the graduate's capabilities.The graduate can best be classified as

A)A discouraged worker.
B)Structurally unemployed.
C)Phantom unemployed.
D)UnderemployeD.The official unemployment figures are distorted by underemployed workers and tend to paint a better picture than is present in reality.

Question 52

Part-time workers who desire full-time employment are

A)Underemployed and contribute to the unemployment statistic.
B)Underemployed but do not contribute to the unemployment statistic.
C)Not part of the labor force and do not contribute to the unemployment statistic.
D)Discouraged workers and contribute to the unemployment statistic.

Question 53

$\begin{array}{|l|c|c|c|}\hline & 1999 & 2000 & 2001 \\\hline \text { Population } & 100 & 110 & 125 \\\hline \text { Employed } & 65 & 70 & 80 \\\hline \text { Unemployed } & 5 & 10 & 20 \\\hline \text { Discouraged Workers } & 2 & 3 & 5 \\\hline\end{array}$
$\text { *All numbers are in millions }$

Table 6.4
Population and Employment in Nationland What was the unemployment rate in Nationland in 1999?

A)7.6 percent.
B)7.1 percent.
C)5.0 percent.
D)65.0 percent.

Question 54

Which of the following falls into the largest unemployment category during a recession?

A)A recent college graduate entering the labor force for the first time.
B)A woman who left the labor force to raise children and now wants to return to work.
C)A factory worker who is laid off because of a temporary plant closing.
D)A teenager looking for his or her first summer job.

Question 55

When an economy enters a recession,the

A)Duration of unemployment rises.
B)Cost of unemployment falls.
C)Number of unemployed falls.
D)Number of discouraged workers falls.

Question 56

Underemployment is defined as

A)Individuals desiring to work but who are discouraged by the process and have given up looking.
B)People who have been laid off because of a recession and have little chance of finding a job.
C)Individuals who are lazy and will not go out looking for a job but say they are looking.
D)People seeking full-time paid employment but work only part-time or are employed at jobs below their capability.

Question 57

Of the following reasons for unemployment,which will increase most because of a recession?

A)Job losers.
B)Reentrants.
C)New entrants.
D)Job leavers.

Question 58

$\begin{array}{|l|c|c|c|}\hline & 1999 & 2000 & 2001 \\\hline \text { Population } & 100 & 110 & 125 \\\hline \text { Employed } & 65 & 70 & 80 \\\hline \text { Unemployed } & 5 & 10 & 20 \\\hline \text { Discouraged Workers } & 2 & 3 & 5 \\\hline\end{array}$
$\text { *All numbers are in millions }$

Table 6.4
Population and Employment in Nationland If discouraged workers are included in the labor force,what was the unemployment rate for 2000?

A)18.6 percent.
B)3.8 percent.
C)4.3 percent.
D)15.7 percent.

Question 59

Which of the following groups typically has the highest unemployment rate?

A)White teenagers.
B)Black adults.
C)White adult females.
D)Black teenagers.

Question 60

The phantom unemployed are

A)People who report that they are actively seeking a job even when they have little or no intention of finding one.
B)People who want a job but aren't looking because they don't expect to find one.
C)People who lack the skills to be employed.
D)Workers with very high rates of absenteeism.

Question 61

All of the following are considered to be possible side effects of increased unemployment except

A)Admissions to mental institutions.
B)Fatal heart attacks.
C)Decreased stress levels.
D)None of the choices are correct.

Question 62

Studies have shown that unemployment causes

A)Increased expenditure on food.
B)More spending on child care because more mothers go to work.
C)Increased health problems.
D)Little impact since most people receive unemployment benefits.

Question 63

The type of unemployment that economists generally associate with normal growth of the labor force and expanding job opportunities in a dynamic economy is

A)Frictional unemployment.
B)Seasonal unemployment.
C)Cyclical unemployment.
D)Structural unemployment.

Question 64

Frictional unemployment goes up when

A)A student quits work to return to school at the end of the summer.
B)A corporation transfers a worker to another city.
C)A worker quits one job to search for another in the same line of work.
D)There is inadequate demand for labor.

Question 65

Frictional unemployment can be distinguished from other types of unemployment in that we assume all of the following except

A)There is an adequate demand for labor to employ the frictionally unemployed.
B)The frictionally unemployed possess the necessary education and skills to become employed.
C)Search time is relatively short for frictionally unemployed persons.
D)The skills of the frictionally unemployed are no longer in demanD.If the skills of the unemployed worker were no longer in demand,the worker would be considered structurally unemployed.

Question 66

When the U.S.unemployment rate decreased in the late 1990s,so did all of the following except

A)Poverty rate.
B)Income per capita.
C)Child abuse.
D)None of the choices are correct.

Question 67

The phantom unemployed are

A)Not part of the labor force because they do not desire to work.
B)Unemployed and cause the unemployment statistic to overstate the level of unemployment.
C)Discouraged and cause the unemployment statistic to understate the level of unemployment.
D)Classified as cyclically unemployeD.The phantom unemployed are not very eager to find work,yet they are technically searching for work.

Question 68

Frictional unemployment could result from each of the following except

A)The reallocation of employees to growing industries.
B)The inability of people to find work during certain seasons of the year.
C)The opportunity for people to leave jobs in which they are underemployed.
D)None of the choices are correct.

Question 69

Which of the following groups could increase in size and cause a significantly higher unemployment rate?

A)Discouraged workers.
B)Underemployed workers.
C)Phantom unemployed.
D)Children under the age of 16.

Question 70

After Christmas,retail sales fall and many clerks are laid off until the following Christmas.This is an example of which of the following types of unemployment?

A)Structural unemployment.
B)Frictional unemployment.
C)Cyclical unemployment.
D)Seasonal unemployment.

Question 71

A 30-year-old stay-at-home son tells his parent he is looking for work but cannot find a job.When the parent finds the son a job,he refuses to take it.The 30-year-old can best be classified as

A)A discouraged worker.
B)Phantom unemployed.
C)Structurally unemployed.
D)UnderemployeD.When one is not actively seeking work and not too excited about finding it,one may be considered phantom unemployed.

Question 72

Which of the following groups would be classified as unemployed when calculating the unemployment rate?

A)Underemployed workers.
B)Discouraged workers.
C)The phantom unemployed.
D)Individuals who are neither employed nor actively seeking a job.

Question 73

Nancy returns to school to study medicine.After graduating,she spends six months looking for a job.During this period,she is considered

A)Cyclically unemployed.
B)Structurally unemployed.
C)Frictionally unemployed.
D)Seasonally unemployeD.Frictionally unemployed workers do not usually stay unemployed because they have skills that are needed by employers,but it takes some time to find the best match for the worker and the employer.

Question 74

Suppose there are 4 million people in an economy that are classified as unemployed.After a more thorough investigation,it becomes obvious that 200,000 of these people are actually phantom unemployed.As a result of this discovery,the unemployment rate will

A)Decrease.
B)Increase.
C)Remain unchanged until the unemployed find a job.
D)Increase initially but decrease when the phantom unemployed receive unemployment benefits.

Question 75

The type of unemployment that increases most when teenagers look for temporary summer jobs is

A)Frictional unemployment.
B)Structural unemployment.
C)Seasonal unemployment.
D)Cyclical unemployment.

Question 76

After being fired from a job,some people find that it may take several months to find a new job in the same type of work.This is an example of which of the following types of unemployment?

A)Structural unemployment.
B)Frictional unemployment.
C)Cyclical unemployment.
D)Seasonal unemployment.

Question 77

After the harvest,some farmhands lose their jobs.They are considered to be

A)Cyclically unemployed.
B)Structurally unemployed.
C)Frictionally unemployed.
D)Seasonally unemployeD.Seasonal unemployment occurs when the appropriate production season changes and work is no longer needed until the following year.

Question 78

The official unemployment statistics may exaggerate the significance of unemployment by including the

A)Underemployed.
B)Phantom unemployed.
C)Discouraged worker.
D)High school dropout.

Question 79

Which of the following types of unemployment would best characterize a snow ski instructor's unemployment during the summer months?

A)Structural unemployment.
B)Frictional unemployment.
C)Seasonal unemployment.
D)Cyclical unemployment.

Question 80

When migrant workers seek employment after the crops have been picked,the unemployment rate goes up.This situation is an example of

A)Frictional unemployment.
B)Seasonal unemployment.
C)Structural unemployment.
D)Cyclical unemployment.