Deck 14: Unemployment and Inflation

Question 1

If a part-time worker becomes a full-time worker,the

A) official unemployment rate will fall.
B) official unemployment rate will not change.
C) economy will move closer toward full employment.
D) economy will move closer toward the natural rate of unemployment.

Answer 1

B

Question 2

Which of the following will not lower the official measure of the unemployment rate?

A) Older workers taking early retirement.
B) People losing their full-time jobs and instead are given part-time jobs.
C) An increase in the number of 'discouraged workers'.
D) An economic boom.

Answer 2

B

Question 3

How is the 'labour force participation rate' defined?

A) As the working-age population in the labour force
B) As the working-age population that is unemployed
C) As the labour force that is employed
D) As the working-age population that is employed

Answer 3

A

Question 4

The 'unemployment rate' is the percentage of the

A) labour force receiving unemployment benefits.
B) population that is unemployed.
C) working-age population that is unemployed.
D) labour force that is unemployed.

Question 5

The 'labour force' is the

A) number of people employed minus the number of people unemployed.
B) number of people employed plus the number of people unemployed.
C) ratio of the number of people employed to the number of people unemployed.
D) ratio of the number of people employed to the working-age population.

Question 6

How is the unemployment rate calculated?

A) By dividing the number of unemployed people by the number of working individuals, and multiplying by 100.
B) By dividing the number of unemployed people by the sum of the number of working people plus unemployed people, and multiplying by 100.
C) By dividing the number of unemployed people by the number in the working-age population, and multiplying by 100.
D) By dividing the number of unemployed people by the number of people in the labour force, and dividing by 100.

Question 7

The 'unemployment rate' is measured as the

A) number of unemployed people divided by the number of employed people, multiplied by 100.
B) number of unemployed people divided by the labour force, multiplied by 100.
C) number of unemployed people divided by the total population, multiplied by 100.
D) labour force minus the number of unemployed, multiplied by 100.

Question 8

The 'labour force' is the sum of

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

Question 9

If people who have been looking for work give up actively looking for work,ceteris paribus,the

A) unemployment rate increases.
B) labour force participation rate increases.
C) unemployment rate decreases.
D) working-age population decreases.

Question 10

What is one of the questions asked when the Australian Bureau of Statistics conducts surveys to estimate the rate of unemployment?

A) Is the person currently available to start work?
B) Has the person looked for work during the past year?
C) Does the person have any skills?
D) Has the person worked for 10 hours or more in the past week?

Question 11

How are 'discouraged workers' classified by the Australian Bureau of Statistics (ABS)?

A) Not in the labour force
B) Unemployed
C) Part of the labour force
D) Employed

Question 12

Refer to the following table. $$\begin{array} { | l | r | } \hline \text { Status } & \text { Persons } \\\hline \text { Employed } & 8000 \\\hline \text { Unemployed } & 600 \\\hline \text { Not in the labour } & \\\text { force } & 4000 \\\hline\end{array}$$ All of the following mathematical calculations are correct.The unemployment rate is approximately

A) (600/8 000) × 100 = 7.25%.
B) (600/7 500) × 100 = 8.00%.
C) (600/8 600) × 100 = 7.05%.
D) (600/4 000) × 100 = 15.00%.

Question 13

Around 1 800 people who were unemployed last month start new jobs this month.As a result of this increase in the number of employed workers,which of the following occurred (ceteris paribus)?

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

Question 14

Which of the following is true of 'discouraged workers'?

A) They are not considered part of the unemployed because they are not qualified to work.
B) They are considered part of the unemployed because they are not working.
C) They are considered part of the unemployed because they are still in the labour force.
D) They are not considered part of the unemployed because they are not actively seeking work.

Question 15

During an economic boom,many employees are asked to work more overtime hours each week.As a result of this,

A) the unemployment rate increases.
B) the unemployment rate decreases.
C) the labour force participation rate increases.
D) neither the unemployment rate nor the labour force participation rate changes.

Question 16

For purposes of unemployment,how is a full-time student who is not working categorised?

A) Not in the labour force
B) A discouraged worker
C) Employed
D) Unemployed

Question 17

Jill lost her job six months ago and she's been actively looking for a new job ever since.How would the Australian Bureau of Statistics classify Jill?

A) A discouraged worker
B) Out of the labour force
C) Unemployed
D) None of these options are correct.

Question 18

How is a 'retired person' classified?

A) As unemployed
B) As under-employed
C) As not in the labour force
D) As part-time employed

Question 19

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

A) An increase in the number of people in the labour force
B) An increase in the unemployment rate
C) A decrease in the unemployment rate
D) An increase in the working-age population

Question 20

The ________ is the total number of people aged 15 years and over,and the ________ is the number of people either employed or unemployed.

A) labour force participation rate; labour force
B) working-age population; labour force
C) labour force; working-age population
D) working-age population; labour force participation rate

Question 21

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

A) less than six months.
B) over two years.
C) between six and nine months.
D) over one year.

Question 22

Which of the following is true about the Australian labour force participation rate?

A) The labour force participation rate of adult men fell between 1978 and 2016.
B) The labour force participation rate of adult women fell between 1978 and 2016.
C) The labour force participation rate of adult men has increased from 1978 to 2016.
D) The labour force participation rate of adult women rose in the 1980s and fell again during the 1990s.

Question 23

Over the past 30 years,the labour force participation rates of women have fallen as they leave the labour force to have children,while the labour force participation rates of men have risen.

Question 24

In Australia in early 2016,approximately how many people were not in the labour force but were of working age?

A) 6.9 million
B) 12 million
C) 0.6 million
D) 11.4 million

Question 25

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

A) Many full-time workers really want to be part-time workers.
B) People who collect unemployment benefits report themselves to be searching for a job.
C) Discouraged workers are not counted as unemployed.
D) Discouraged workers are counted as unemployed.

Question 26

The unemployment rate is calculated by adding up the number of people receiving unemployment benefit payments from the government.

Question 27

If the number employed is 11 million,the number unemployed is 0.6 million,and the working-age population is 16 million,then the labour force participation rate is -.

A) 65.0%
B) 72.5%
C) 68.75%
D) 71.4%

Question 28

How is 'long-term unemployment' defined?

A) As those in the labour force who have been unemployed continuously for 6 months or more
B) As those in the labour force who have been unemployed continuously for 2 years or more
C) As those in the labour force who have been unemployed continuously for 12 months or more
D) As people who are no longer in the workforce as they are discouraged workers

Question 29

In Australia,between 1978 and 2016,the net number of

A) part-time jobs and full-time jobs fell.
B) part-time jobs grew, while full-time jobs fell.
C) full-time jobs grew, while part-time jobs fell.
D) part-time jobs and full-time jobs grew.

Question 30

In Australia,between 2006 and 2016,

A) the fastest job growth was experienced in the full-time job category.
B) the fastest job growth was experienced in the part-time job category.
C) total net jobs growth fell.
D) the unemployment rate rose.

Question 31

Which of the following is not an incentive for people to provide inaccurate employment information to the Australian Bureau of Statistics (ABS)?

A) People are embarrassed about being in low paid jobs.
B) Some people are employed in illegal activities.
C) People want to avoid paying taxes on earnings.
D) People think they might lose unemployment benefits if they declare that they have been working.

Question 32

If the number employed is 12 million,the working-age population is 16 million,and the number unemployed is 0.7 million,then the unemployment rate is -.

A) 5.51%
B) 5.17%
C) 3.75%
D) 12%

Question 33

Which of the following groups of educational attainment in Australia has the highest level of long-term unemployment?

A) Those whose highest education level is completion of Year 10 schooling
B) Those whose highest education level is completion of Year 12 schooling
C) Those whose highest education level is completion of a TAFE certificate
D) Those whose highest education level is completion of a university degree

Question 34

In Australia in 2016,approximately how many people were in the labour force?

A) 6.3 million
B) 12 million
C) 18.3 million
D) 19.6 million

Question 35

The unemployment rate is the number of unemployed divided by the working-age population.

Question 36

Which of the following describes actual trends in the Australian labour force participation rate?

A) The labour force participation rate of adult men has risen since the late 1970s.
B) The labour force participation rate of adult women has fallen since the late 1970s.
C) The labour force participation rate of adult men not in school, but too young to retire has risen since the late 1970s.
D) The labour force participation rate of adult women has risen since the late 1970s.

Question 37

In Australia in 2016,the proportion of unemployed people who were 'long-term unemployed' as measured by the Australian Bureau of Statistics (ABS)was approximately -.

A) 5.7%
B) 7.6%
C) 22%
D) 24%

Question 38

Refer to the following table. $$\begin{array} { | l | r | } \hline \text { Status } & \text { Person } \\\hline \text { Employed } & 11000 \\\hline \text { Unemployed } & 500 \\\hline \text { Population } & 22000 \\\hline\end{array}$$ All of the following mathematical calculations are correct.The unemployment rate is approximately

A) (500/11 000) × 100 = 4.55%.
B) (500/22 000) × 100 = 2.27%.
C) (500/10 400) × 100 = 4.81%.
D) (500/11 500) × 100 = 4.34%.

Question 39

Which of following age groups is most likely to have the longest duration of continuous unemployment?

A) 15-19 years
B) 20-24 years
C) 45-54 years
D) Over 55 years

Question 40

The official unemployment rate may understate the true rate of unemployment because of

A) increases in worker productivity over time.
B) discouraged workers who no longer actively look for work.
C) workers who have more than one job.
D) changes in the wage rates which may increase unemployment.

Question 41

Which of the following is not an advantage of labour market deregulation?

A) Improved work practices can lead to higher wages.
B) Wages can more readily respond to changes in the demand for and supply of labour.
C) Increased labour market flexibility may disadvantage low paid people.
D) It can encourage dispute resolution at the workplace level.

Question 42

Which of the following is not a result of rising unemployment?

A) A loss of tax revenue to the government
B) An increase in poverty
C) An increase in wages for those who remain in employment as there are fewer people employed
D) Lower incomes for people who become unemployed

Question 43

For most of the twentieth century,Australia had a system of wage determination know as

A) compulsory arbitration.
B) enterprise bargaining.
C) closed union shop.
D) open union shop.

Question 44

Why are jobs continually being created and destroyed in the economy?
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Question 45

The labour force participation rates of men in Australia have gradually increased since 1978.

Question 46

How would the unemployment rate and the labour force participation rate change if discouraged workers were counted as 'unemployed' rather than as being in the 'not-in-the-labour force' category? Show this using the formula for both measurements.
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Question 47

Explain how the rate of unemployment is measured and discuss the weaknesses of this method of measurement.
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Question 48

The Australian Bureau of Statistics counts as 'employed' those 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 labour force participation rate would change.
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Question 49

The Australian economy destroys hundreds of thousands of jobs every year,even when the economy is experiencing strong growth.

Question 50

How has the labour force participation rate changed for men and women over the past 30 years in Australia?
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Question 51

Explain why 'discouraged workers' are not measured as being 'unemployed'.
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Question 52

Suppose 200 000 people are employed,25 000 people are unemployed,the working-age population is 250 000 and 50 000 people are out of the labour force.Calculate the unemployment rate.
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Question 53

Discuss the trends in labour force participation in Australia over the past 40 years.
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Question 54

Which of the following is an economic cost of rising unemployment rates?

A) Loss of GDP
B) An inward shift in the production possibility frontier
C) A fall in the amount of unemployment benefits paid by the government
D) An increase in income levels, as people who lose their jobs move onto the unemployment benefits

Question 55

Enterprise bargaining is the negotiation of wages and working conditions

A) between trade unions and the government.
B) at the workplace level.
C) between employers and the government.
D) through the compulsory arbitration system.

Question 56

For which of the following age groups was the unemployment rate in Australia the lowest in 2016?

A) 15-19 years
B) 25-34 years
C) 35-44 years
D) 65 years and older

Question 57

Unemployment in Australia is

A) significantly higher among older people than younger people.
B) one of the main causes of poverty.
C) not the cause of an increase in poverty as unemployed people receive unemployment benefits from the government.
D) equally distributed across all age groups in society.

Question 58

For each of the following,indicate if the person would be classified as employed,unemployed,or not in the labour force: (i)a 65-year-old man who left his job and is now working as a volunteer for 10 hours a week; (ii)a university graduate who has not been able to find a position using her skills and is working as a wait-person for 30 hours a week; and (iii)a manufacturing worker who is out of a job and has given up searching for a job.
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Question 59

Suppose 200 000 people are employed,25 000 people are unemployed,and an additional 50 000 people are not in the labour force but are of working age.Calculate the labour force participation rate.
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Question 60

In 2016,the unemployment rate in Australia was highest for people in the age group -.

A) 15-19 years
B) 20-24 years
C) 55-59 years
D) 60-64 years

Question 61

Why might firms pay wages that are above the 'equilibrium wage' in a market?

A) To increase the productivity of their workers
B) To reduce the unemployment rate
C) To encourage workers to form trade unions
D) To reduce profit

Question 62

Discuss the likely impact of each of the following on the unemployment rate:
a.The length of time workers are eligible to receive unemployment benefit payments is reduced.
b.The government passes a law making trade unions illegal.
c.The minimum wage is raised by 50%.
d.The government funds an Internet site where companies can post job openings at no charge.
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Question 63

Outline the 'costs of unemployment'.
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Question 64

'Efficiency wages' cause unemployment because firms pay wages that are

A) below the market wage, causing labour demand to be greater than labour supply.
B) below the market wage, causing labour demand to be less than labour supply.
C) above the market wage, causing labour demand to be greater than labour supply.
D) above the market wage, causing labour demand to be less than labour supply.

Question 65

An 'efficiency wage' is

A) higher than the market wage and tends to increase productivity.
B) lower than the market wage and tends to increase productivity.
C) higher than the market wage and tends to decrease productivity.
D) lower than the market wage and tends to decrease productivity.

Question 66

During periods of rising unemployment,the government receives less tax revenue from individuals and from businesses.

Question 67

What do economists call the short-term unemployment arising from the process of matching workers with jobs?

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

Question 68

Which of the following has a tendency to raise the unemployment rate?

A) Implementing a minimum wage in an economy
B) Firms deciding to pay efficiency wages in an economy
C) The establishment of effective trade unions in an economy
D) All of these options are correct

Question 69

Which groups of people in Australia are more likely to experience higher levels of unemployment?
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Question 70

Paying efficiency wages is a way for a company to cut costs and become more efficient and are therefore lower than market wages.

Question 71

Trade union membership in Australia in 2017 comprised approximately

A) 90% of the workforce.
B) 50% of the workforce.
C) 15% of the workforce.
D) 15% of the workforce.

Question 72

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called -.

A) frictional unemployment
B) structural unemployment
C) cyclical unemployment
D) seasonal unemployment

Question 73

Why are policy makers concerned about rising unemployment rates?
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Question 74

The rate of unemployment in Australia is higher among 15-19-year-olds than 40-44 year-olds.

Question 75

Who might be disadvantaged by deregulation of the labour market?
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Question 76

Minimum wage laws cause unemployment because the legal minimum wage is set

A) below the market wage, causing labour demand to be greater than labour supply.
B) below the market wage, causing labour demand to be less than labour supply.
C) above the market wage, causing labour demand to be greater than labour supply.
D) above the market wage, causing labour demand to be less than labour supply.

Question 77

Trade unions cause unemployment because the union contract wage is set

A) below the market wage, causing a shortage of labour.
B) below the market wage, causing a surplus of labour.
C) above the market wage, causing a surplus of labour.
D) above the market wage, causing a shortage of labour.

Question 78

Why would a firm pay 'efficiency wages'?
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Question 79

Explain the changes that have occurred in the level of regulation in the Australian labour market over the past 100 years and discuss the arguments in favour of and against these changes.
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Question 80

Most economists agree that trade unions reduce the overall unemployment rate in the economy.