Deck 10: Unemployment and Its Natural Rate

Question 1

Cyclical unemployment refers to

A) the portion of unemployment created by job search.
B) short-run fluctuations around the natural rate of unemployment.
C) changes in unemployment due to changes in the natural rate of unemployment.
D) the portion of unemployment created by wages set above the equilibrium level.

Answer 1

B

Question 2

The designation "natural" implies that the natural rate of unemployment

A) is desirable.
B) is constant over time.
C) is impervious to economic policy.
D) does not go away on its own even in the long run.

Answer 2

D

Question 3

The amount of unemployment that an economy normally experiences is called the

A) average rate of unemployment.
B) natural rate of unemployment.
C) cyclical rate of unemployment.
D) typical rate of unemployment.

Answer 3

B

Question 4

The deviation of unemployment from its natural rate is called

A) the economic rate of unemployment.
B) cyclical unemployment.
C) frictional unemployment.
D) structural unemployment.

Question 5

The natural rate of unemployment
I) is the economy's desirable level of unemployment.
Ii) cannot be affected by economic policy.
Iii) is typically constant over time.

A) i) and ii) only
B) iii) only
C) i), ii), and iii)
D) None of the above is correct.

Question 6

To maintain their standard of living, most people rely on

A) government assistance.
B) their labor earnings.
C) their personal savings.
D) All of the above are correct.

Question 7

To maintain their standard of living, most people rely on

A) government assistance.
B) their personal savings.
C) their labor earnings.
D) rental income.

Question 8

The natural rate of unemployment

A) arises from a single problem that has a single solution.
B) is easy for policymakers to reduce.
C) Both a and b are correct.
D) None of the above is correct.

Question 9

Cyclical unemployment is closely associated with

A) long-term economic growth.
B) short-run ups and downs of the economy.
C) fluctuations in the natural rate of unemployment.
D) changes in the minimum wage.

Question 10

The natural rate of unemployment is the

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

Question 11

An economy's natural rate of unemployment is the

A) economy's long­run target level of unemployment.
B) amount of unemployment that the economy normally experiences.
C) lowest rate of unemployment the economy can achieve.
D) All of the above are correct.

Question 12

Which of the following is correct?

A) The amount of unemployment that a country typically experiences is a determinant of that country's standard of living, and some degree of unemployment is inevitable in a complex economy.
B) The amount of unemployment that a country typically experiences is a determinant of that country's standard of living, and a complex economy can achieve zero unemployment.
C) The amount of unemployment that a country typically experiences is not a determinant of that country's standard of living, and a complex economy can achieve zero unemployment.
D) The amount of unemployment that a country typically experiences is not a determinant of that country's standard of living, and some degree of unemployment is inevitable in a complex economy.

Question 13

Cyclical unemployment

A) has a different explanation than does the natural rate of unemployment.
B) refers to the year­to­year fluctuation in unemployment around an economy's natural rate of unemployment.
C) is closely associated with short-run ups and downs of economic activity.
D) All of the above are correct.

Question 14

In the long run the unemployment rate equals

A) zero.
B) the cyclical rate of unemployment.
C) the natural rate of unemployment.
D) the sum of the cyclical and natural rate of unemployment.

Question 15

Measuring unemployment is the job of the

A) Congressional Budget Office.
B) Department of Commerce.
C) Council of Economic Advisers.
D) Bureau of Labor Statistics.

Question 16

The Bureau of Labor Statistics produces data on

A) unemployment.
B) types of employment.
C) length of the average workweek.
D) All of the above are correct.

Question 17

The Bureau of Labor Statistics is part of the U.S. Department of

A) the Treasury.
B) Commerce.
C) Labor.
D) the Interior.

Question 18

Cyclical unemployment refers to

A) the relationship 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 19

The natural rate of unemployment
I) is the economy's desirable level of unemployment.
Ii) arises from a single problem that has a single solution.
Iii) is the amount of unemployment that does not go away on its own.

A) i) and ii) only
B) iii) only
C) i), ii), and iii)
D) None of the above is correct.

Question 20

The amount of unemployment varies

A) little over time and across countries.
B) little over time but substantially across countries.
C) substantially over time but little across countries.
D) substantially over time and across countries.

Question 21

The Bureau of Labor Statistics produces data on unemployment

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

Question 22

Who in the adult population is counted as "employed" in U.S. labor statistics?

A) people who are temporarily absent from their job and people who work without pay in a family member's business
B) people who are temporarily absent from their job but not people who work without pay in a family member's business
C) people who work without pay in a family member's business but not people who are temporarily absent from their job
D) neither people who are temporarily absent from their job nor people who work without pay in a family member's business

Question 23

The Bureau of Labor Statistics produces data on unemployment and other aspects of the labor market from a regular survey of about

A) 600 households.
B) 6,000 households.
C) 60,000 households.
D) 6,000,000 households.

Question 24

Esmerelda worked part­time for her mother's business without pay. Tabitha was absent from work because she had strep throat. Who is counted as "employed" by the Bureau of Labor Statistics?

A) Esmerelda but not Tabitha
B) Tabitha but not Esmerelda
C) both Esmerelda and Tabitha
D) neither Esmerelda nor Tabitha

Question 25

Who of the following is not included in the Bureau of Labor Statistics' "employed" category?

A) those who worked in their own business
B) those who worked as unpaid workers in a family member's business
C) those waiting to be recalled to a job from which they had been laid off
D) those who were temporarily absent from work because of vacation.

Question 26

Amy is working part-time. Tavaris is on temporary layoff. Who is included in the Bureau of Labor Statistics' "employed" category?

A) only Amy
B) only Tavaris
C) both Amy and Tavaris
D) neither Amy nor Tavaris

Question 27

For the Bureau of Labor Statistics to place someone in the "unemployed" category, that person must

A) have worked no more than 10 hours during the past week..
B) have tried to find employment during the previous year.
C) not have been laid off.
D) None of the above is correct.

Question 28

The Bureau of Labor Statistics places people in the "employed" category if they

A) are without a job, but are available for work and have tried to find a job during the previous four weeks.
B) work without pay in a family member's business.
C) are waiting to be recalled to a job from which they had been laid off.
D) All of the above are correct.

Question 29

Which of the following is not one of the categories into which the Bureau of Labor Statistics places each adult of each surveyed household?

A) employed
B) unemployed
C) underemployed
D) not in the labor force

Question 30

Unemployment data is collected

A) through a monthly survey of about 20,000 firms.
B) through a monthly survey of about 60,000 households.
C) from unemployment insurance claims.
D) All of the above are correct.

Question 31

Unemployment numbers reported by the Bureau of Labor Statistics are reported based on a

A) monthly survey of about 60,000 households.
B) monthly survey of about 6,000 households.
C) weekly survey of about 60,000 households.
D) weekly survey of about 6,000 households.

Question 32

Olga owns her own business. Sven is an unpaid worker in his family's business. Who is included in the Bureau of Labor Statistics' "employed" category?

A) only Olga
B) only Sven
C) both Olga and Sven
D) neither Olga nor Sven

Question 33

The Bureau of Labor Statistics places people in the "employed" category if they

A) are temporarily absent from their jobs.
B) are self-employed.
C) work without pay in a family member's business.
D) All of the above are correct.

Question 34

Which of the following is correct?

A) The Bureau of Labor Statistics uses data collected from those applying for unemployment insurance to compute the unemployment rate.
B) The labor force includes all adults who are able to work.
C) Unpaid homemakers are counted as "employed" by the Bureau of Labor Statistics.
D) People working part time are counted as "employed" by the Bureau of Labor Statistics.

Question 35

To be counted as "employed" in the U.S. labor force statistics, a person

A) must be working for pay and be working full time.
B) must be working for pay but does not have to be working full time.
C) does not have to be working for pay if they are working for a family business but must be employed full time.
D) does not have to be working for pay if they are working for a family business and does not have to be working full time

Question 36

Unemployment data are collected

A) from unemployment insurance claims.
B) through a regular survey of about 60,000 households.
C) through a regular survey of about 200,000 firms.
D) All of the above are correct.

Question 37

For the Bureau of Labor Statistics to place someone in the "unemployed" category, that person must

A) be available for work.
B) have tried to find employment during the previous week.
C) have previously been employed.
D) All of the above are correct.

Question 38

The Bureau of Labor Statistics produces data on unemployment and other aspects of the labor market from a regular survey of households called the

A) Census.
B) Labor Survey.
C) Survey of Economic Indicators.
D) Current Population Survey.

Question 39

The Bureau of Labor Statistics counts a member of a surveyed household as an adult if that person is at least

A) 14 years old.
B) 16 years old.
C) 18 years old.
D) 21 years old.

Question 40

Who of the following are included in the Bureau of Labor Statistics' "employed" category?

A) certain unpaid workers
B) part-time workers
C) workers on vacation
D) All of the above are correct.

Question 41

Duane owns his own real estate company. The Bureau of Labor Statistics counts Duane as

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

Question 42

Josh is a full-time college student who is not working or looking for a job. The Bureau of Labor Statistics counts Josh as

A) unemployed and in the labor force.
B) unemployed but not in the labor force.
C) in the labor force but not unemployed.
D) neither in the labor force nor unemployed.

Question 43

A person who is counted as "unemployed" by the Bureau of Labor Statistics

A) is also in the labor force.
B) must have recently looked for work or be on temporary layoff.
C) must be at least 16 years old.
D) All of the above are correct.

Question 44

Which of the following is a requirement for the Bureau of Labor Statistics to place someone in the "unemployed" category?

A) The person must have worked no more than 10 hours during the past week.
B) The person must have tried to find employment during the previous four weeks.
C) The person may not have been laid off.
D) All of the above are correct.

Question 45

Who of the following would necessarily be included in the Bureau of Labor Statistics' "unemployed" category?

A) Huey, who did not work during the previous four weeks
B) Dewey, who tried to find new employment during the previous four weeks
C) Louie, who was an unpaid worker during the previous four weeks
D) None of the above is correct.

Question 46

Which of the following includes everyone in the adult population that the Bureau of Labor Statistics counts as "unemployed"?

A) anyone who is not employed
B) anyone who is not employed, is available for work, and has looked for work in the past four weeks
C) anyone who is not employed, is available for work, has looked for work in the past four weeks, and anyone who is waiting to be recalled from a job from which they have been laid off
D) anyone who is not employed, is available for work, has looked for work in the past four weeks, anyone who is waiting to be recalled from a job from which they have been laid off, and anyone who is employed part time and has searched for full time employment in the past 4 weeks

Question 47

Jai Li just lost her job, and she has not yet started looking for a new one. The Bureau of Labor Statistics counts Jai Li as

A) unemployed and in the labor force.
B) unemployed but not in the labor force.
C) in the labor force but not unemployed.
D) neither in the labor force nor unemployed.

Question 48

Sheila is on a temporary layoff from her automobile factory job but has not looked for work in the last four weeks. The Bureau of Labor Statistics counts Sheila as

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

Question 49

Eric was laid off two months ago. He has not searched for other work because he is expecting to be recalled to work. The Bureau of Labor Statistics counts Eric as

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

Question 50

Who of the following is counted as "unemployed" by the Bureau of Labor Statistics?

A) someone working without pay for a family member's business
B) someone who is absent from their job due to illness
C) someone on temporary layoff
D) All of the above are correct.

Question 51

Anna recently graduated from college with a degree in electrical engineering, but she has not yet started working. To be counted as "unemployed" she

A) does not have to have looked for work.
B) must have looked for work no more than a week ago.
C) must have looked for work no more than four weeks ago.
D) must have looked for work no more than twelve weeks ago.

Question 52

Christopher is an unpaid, stay-at-home father who works as a volunteer at the local Habitat for Humanity chapter. Currently, Christopher is not looking for a paid job. The Bureau of Labor Statistics counts Christopher as

A) unemployed and in the labor force.
B) unemployed but not in the labor force.
C) in the labor force but not unemployed.
D) neither in the labor force nor unemployed.

Question 53

Gwen is an unpaid worker in her family's restaurant. The Bureau of Labor Statistics counts Gwen as

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

Question 54

Jamarcus works part-time as a pizza delivery person in a college town. The Bureau of Labor Statistics counts Jamarcus as

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

Question 55

Who of the following would be included in the Bureau of Labor Statistics' "unemployed" category?

A) Miguel, who is on temporary layoff
B) Reta, who worked only 15 hours last week
C) Marisa, who neither has a job nor is looking for one
D) None of the above is correct.

Question 56

Who of the following would be included in the Bureau of Labor Statistics' "unemployed" category?

A) Juan Carlos, a full-time student who is not looking for work
B) Kevin, who is on temporary layoff
C) Andrea, who has retired and is not looking for work
D) All of the above are correct.

Question 57

Who among the following would be counted as "unemployed"?

A) Shasta, who is waiting to be recalled to a job from which she has been laid off.
B) Karen, who neither has a job nor is looking for one.
C) Mary, who worked only 35 hours last week.
D) None of the above is correct.

Question 58

Maury did not work last week because fire forced an evacuation of his workplace. The Bureau of Labor Statistics counts Maury as

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

Question 59

Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work during the last two months. Who does the Bureau of Labor Statistics count as "unemployed"?

A) Tatiana but not Ivan
B) Ivan but not Tatiana
C) both Ivan and Tatiana
D) neither Ivan nor Tatiana

Question 60

Karena was laid off, but she is expecting to be recalled. She has not looked for work since being laid off. Nathan is not employed, nor was he laid off. Who is counted as "unemployed" in the U.S. labor force statistics?

A) 1) Karena and 2) Nathan, even if Nathan has not looked for work during the previous four weeks
B) 1) Karena and 2) Nathan, if Nathan has looked for work during the previous four weeks
C) 1) not Karena but 2) Nathan, even if Nathan has not looked for work during the previous four weeks
D) 1) not Karena but 2) Nathan, if Nathan has looked for work during the previous four weeks

Question 61

The labor-force participation rate tells us the fraction of the population that

A) is able to participate in the labor market.
B) has ever been employed.
C) has chosen to participate in the labor market.
D) has chosen not to participate in the labor market.

Question 62

The labor-force participation rate measures the percentage of the

A) total adult population that is in the labor force.
B) total adult population that is employed.
C) labor force that is employed.
D) labor force that is either employed or unemployed.

Question 63

Matilda just graduated from college. In order to devote all her efforts to college, she didn't hold a job. She is going to tour around the country on her motorcycle for a month before she starts looking for work. Other things the same, the unemployment rate

A) increases, and the labor-force participation rate decreases.
B) and the labor-force participation rate both increase.
C) increases, and the labor-force participation rate is unaffected.
D) and the labor-force participation rate are both unaffected.

Question 64

The Bureau of Labor Statistics defines the unemployment rate as the percentage of

A) those unemployed relative to those employed.
B) the labor force that is unemployed.
C) the adult population that is unemployed.
D) the adult population that is unemployed or not in the labor force.

Question 65

Who is included in the labor force by the Bureau of Labor Statistics?

A) Tina, who worked most of the week in a steel factory
B) Kelly, who is temporarily laid off but expects to be recalled
C) DJ, who does not have a job but is looking for work
D) All of the above are correct.

Question 66

Who is included in the labor force by the Bureau of Labor Statistics?

A) Dia, an unpaid homemaker not looking for other work
B) Kevin, a full-time student not looking for work
C) Sarah, who does not have a job but is looking for work
D) None of the above is correct.

Question 67

Who is not included in the labor force by the Bureau of Labor Statistics?

A) Anita, who is on temporary layoff
B) Lauren, who has retired and is not looking for work
C) Raymond, who does not have a job but has applied for several in the last week
D) None of the above is correct.

Question 68

Who would be included in the labor force?

A) Maggie, who plans to work at the newspaper next year when she turns 16 years old.
B) Lisa, who is unhappy with her current job.
C) Bart, who is a full-time student and uninterested in finding employment.
D) None of the above is correct.

Question 69

Suppose that the adult population in the country of Atlantis is 115 million. If 80 million people are employed and 5 million are unemployed, then

A) 30 million are not in the labor force.
B) 35 million are in the labor force.
C) 75 million are in the labor force.
D) 35 million are not in the labor force.

Question 70

Which of the following is the correct formula for calculating the labor force participation rate?

A)
B)
C)
D)

Question 71

The labor-force participation rate is computed as

A) Employed ÷ Adult Population) × 100.
B) Employed ÷ Labor Force) × 100.
C) Labor Force ÷ Adult Population) × 100.
D) Adult Population ÷ Labor Force) × 100.

Question 72

The labor force equals the

A) number of people employed.
B) number of people employed plus the number of people unemployed.
C) number of people employed plus the number of people unemployed plus teenagers between ages 14 and 16 who work at least 10 hours a week.
D) adult population.

Question 73

Suppose there are a large number of men who used to work or seek work who now no longer do either. Other things the same, this makes

A) the number of people unemployed rise but does not change the labor force.
B) the number of people unemployed rise but makes the labor force fall.
C) both the number of people unemployed and the labor force fall.
D) the number of people unemployed fall but does not change the labor force.

Question 74

The unemployment rate is computed as the number of unemployed

A) divided by the labor force, all times 100.
B) divided by the number of employed, all times 100.
C) divided by the adult population, all times 100.
D) times the labor-force participation rate, all times 100.

Question 75

Table 28-1
Sample Population

Refer to Table 28-1. How many in the sample are in the labor force?

A) 11
B) 10
C) 9
D) 8

Question 76

Octavia does not currently have a job, but she has applied for several jobs in the previous week. Eve is an unpaid stay-at-home mom who has not searched for work in recent years. Who does the Bureau of Labor Statistics count as "out of the labor force"?

A) Octavia but not Eve
B) Eve but not Octavia
C) both Octavia and Eve
D) neither Octavia nor Eve

Question 77

Which of the following is correct?

A) Labor force = number of employed.
B) Labor force = population - number of unemployed.
C) Unemployment Rate = number of unemployed ÷ number of employed + number of unemployed) × 100.
D) Unemployment Rate = number of unemployed ÷ adult population × 100.

Question 78

Noah is an unpaid stay-at-home father who is not currently searching for paid work. Pete is a full-time student who is not looking for a job. Who is included in the labor force by the Bureau of Labor Statistics?

A) only Noah
B) only Pete
C) both Noah and Pete
D) neither Noah nor Pete

Question 79

Satchel loses his job and immediately begins looking for another. Other things the same, the unemployment rate

A) increases, and the labor-force participation rate decreases.
B) and the labor-force participation rate both increase.
C) increases, and the labor-force participation rate is unaffected.
D) is unaffected, and the labor-force participation rate decreases.

Question 80

Table 28-1
Sample Population

Refer to Table 28-1. How many in the sample are unemployed?

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