Deck 7: Unemployment, inflation, and Long-Run Growth

Question 1

The number of people classified as employed is 260,000 and the number of people classified as unemployed is 30,000.The size of the labor force

A)equals 230,000.
B)equals 260,000.
C)equals 290,000.
D)equals 320,000.

Answer 1

C

Question 2

Jake retired from the police force.He started working an hour or two a day at a paid job in city's courthouse.Jake is

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

Answer 2

A

Question 3

Refer to the information provided in Table 7.2 below to answer the questions that follow.
Table 7.2
Refer to Table 7.2.The labor force

A)equals 130 million.
B)equals 150 million.
C)equals 170 million
D)cannot be determined from this information.

Answer 3

B

Question 4

Bob is unemployed if he

A)is temporarily laid off.
B)is not looking for a job.
C)has looked for a job for two months and then quit looking.
D)A and C are correct

Question 5

If the number of people classified as unemployed is 20,000 and the number of people classified as employed is 400,000,what is the unemployment rate?

A)2.0%
B)4.8%
C)5.0%
D)9.2%

Question 6

If the number of people classified as unemployed is 20,000 and the number of people classified as employed is 620,000,what is the unemployment rate?

A)1.6%
B)3.1%
C)10.6%
D)6.32%

Question 7

Refer to the information provided in Table 7.2 below to answer the questions that follow.
Table 7.2
Refer to Table 7.2.The total number of people employed is

A)180 million.
B)153 million.
C)135 million.
D)117 million.

Question 8

Refer to the information provided in Table 7.1 below to answer the questions that follow.
Table 7.1
Refer to Table 7.1.The labor force equals

A)14,000 people.
B)17,000 people.
C)18,000 people.
D)21,000 people.

Question 9

If the unemployment rate is 6.2% and the number of people employed is 200,000,the total number of people unemployed is approximately

A)10,970 people
B)12,400 people.
C)13,220 people.
D)cannot be determined from this information

Question 10

If the number of people employed is 150,000 and the labor force is 170,000,the unemployment rate is

A)2.5%.
B)6.25%.
C)6.55%.
D)11.76%.

Question 11

The unemployment rate is

A)unemployed/population × 100.
B)(employed - unemployed)/labor force × 100.
C)(labor force - employed)/labor force × 100.
D)(employed - labor force)/employed × 100.

Question 12

The number of people classified as employed is 350,000 and the number of people in the labor force is 500,000.The total number of people classified as unemployed is

A)150,000.
B)350,000.
C)425,000.
D)500,000.

Question 13

Refer to the information provided in Table 7.1 below to answer the questions that follow.
Table 7.1
Refer to Table 7.1.The unemployment rate is

A)14.3%.
B)16.7%.
C)17.6%.
D)25.0%.

Question 14

Refer to the information provided in Table 7.2 below to answer the questions that follow.
Table 7.2
Refer to Table 7.2.The total number of people unemployed is

A)13 million.
B)15 million.
C)17 million.
D)20 million.

Question 15

Refer to the information provided in Table 7.1 below to answer the questions that follow.
Table 7.1
Refer to Table 7.1.The labor-force participation rate is

A)66.7%.
B)75.0%.
C)77.8%.
D)80.9%.

Question 16

Diane lost her job and immediately started looking for another job.As a result the

A)unemployment rate increases.
B)labor force increases.
C)labor force decreases.
D)unemployment rate remains constant.

Question 17

Refer to the information provided in Table 7.1 below to answer the questions that follow.
Table 7.1
Refer to Table 7.1.The employment rate is

A)85.7%.
B)83.3%.
C)82.4%.
D)75.0%.

Question 18

The number of people unemployed equals

A)the number of people employed minus the labor force.
B)the labor force plus the number of people employed.
C)the labor force minus the number of people employed.
D)the number of people employed divided by the labor force.

Question 19

For you to be considered out of the labor force,you can be

A)a full-time student.
B)a full-time retiree.
C)a full-time volunteer.
D)any of the above

Question 20

Cheryl graduated from college a month ago and is now without work.She accepted a job that will start next month.Today,Cheryl is

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

Question 21

The Humphrey-Hawkins Act formally established a specific unemployment target for the economy of

A)2%.
B)4%.
C)6%.
D)8%.

Question 22

If the unemployment rate is 6.2% and the number of people employed is 200,000,the labor force is approximately

A)210,970 people.
B)212,400 people
C)213,220 people.
D)cannot be determined from this information

Question 23

When an economics professor quits his/her job at a university and starts looking for a better job in another university,he/she is

A)frictionally unemployed.
B)structurally unemployed.
C)cyclically unemployed.
D)naturally unemployed.

Question 24

If the number of unemployed equals 240,000 and the number of employed equals 300,000,the labor-force participation rate

A)is 80%.
B)is 55.6%.
C)is 24%.
D)cannot be determined from this information.

Question 25

Mike has just graduated from college and is now looking for a job,but has not yet found one.This causes the unemployment rate to ________ and the labor-force participation rate to ________.

A)increase;decrease
B)stay the same;stay the same
C)increase;increase
D)increase;stay the same

Question 26

The labor force participation rate is the

A)total number of people who are participating in the labor force.
B)ratio of the number of employed people to the number of unemployed people.
C)ratio of the labor force to the total population 16 years old or older.
D)the number of people in the labor force minus the number of people who are unemployed.

Question 27

If the number of unemployed equals 30,000,the number of employed equals 60,000,and the number not in the labor force is 10,000,the labor-force participation rate

A)is 90%.
B)is 88.9%.
C)is 67%.
D)cannot be determined from this information.

Question 28

In June there are 30,000 people classified as unemployed and the size of the labor force is 600,000.The only change between June and July is that 10,000 of the unemployed give up looking for work.Which of the following is true?

A)In June the unemployment rate was 6% and in July the unemployment rate was 3.8%.
B)The unemployment rate in both June and July was 5%.
C)In June the unemployment rate was 5% and in July the unemployment rate was 3.39%.
D)In June the unemployment rate was 3.8% and in July the unemployment rate was 6%.

Question 29

During recessions,the number of discouraged workers ________ and this ________ the unemployment rate.

A)falls;reduces
B)decreases;increases
C)increases;reduces
D)increases;increases

Question 30

In the United States in 2012,the highest unemployment rate was for ________ and the lowest was for ________.

A)African-American teenagers;white men
B)white teenagers;white women
C)African-American teenagers;white women
D)African-American women;white men

Question 31

Discouraged workers are

A)considered cyclically unemployed.
B)considered structurally unemployed.
C)considered frictionally unemployed.
D)not considered as part of the labor force.

Question 32

In normal times the number of discouraged workers is approximately ________ of the labor force.

A)0.5%
B)1%
C)3%
D)4%

Question 33

If the labor force is 320,000 and the total population 16 years of age or older is 400,000,the labor-force participation rate is

A)72%.
B)76%.
C)80%.
D)88%.

Question 34

Which of the following statements is TRUE?

A)The unemployment rate does not tell us anything about the duration of unemployment.
B)The duration of unemployment decreases during recessions.
C)The duration of unemployment increases during economic expansions.
D)The median duration of unemployment is usually greater than the average duration.

Question 35

Which of the following groups over the age of 19 had the lowest unemployment rate in the United States in 2010?

A)white males
B)African American males
C)white females
D)African American females

Question 36

If the labor-force participation rate is 82% and the total population 16 years of age or older is 1 million people,the labor force is

A)910,000 people.
B)820,000 people.
C)740,000 people.
D)180,000 people.

Question 37

Classifying discouraged workers as unemployed would

A)increase the unemployment rate.
B)decrease the unemployment rate.
C)not change the unemployment rate.
D)have an indeterminate impact on the unemployment rate.

Question 38

Increasing the efficiency of various employment agencies to find better matches for those looking for jobs will

A)reduce the natural rate of unemployment.
B)reduce structural unemployment.
C)reduce cyclical unemployment.
D)not affect frictional unemployment.

Question 39

When 100 people who were previously looking for jobs stop looking for jobs,the

A)unemployment rate increases.
B)size of the labor force decreases.
C)labor-force participation rate does not change.
D)unemployment rate does not change.

Question 40

When an individual quits his/her job and decides to stay at home for a while,the labor-force participation rate

A)decreases.
B)increases.
C)stays the same.
D)may increase or decrease,depending on the length of time he/she stays at home.

Question 41

An individual who cannot find a job because his or her job skills have become obsolete is an example of

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

Question 42

A textile firm closes a plant in Massachusetts and transfers production to a plant in South Carolina,where the firm can take advantage of cheaper labor.The plant supervisor at the Massachusetts plant is given the opportunity to move to South Carolina to become the plant supervisor at that plant.He turns down this opportunity because of family obligations.While he is searching for a new job he would be classified as

A)structurally unemployed.
B)cyclically unemployed.
C)frictionally unemployed.
D)not in the labor force because he turned down the opportunity to relocate.

Question 43

Estimates for the natural rate of unemployment in the United States range from

A)4% to 6%.
B)2% to 10%.
C)1% to 5%.
D)3% to 8%.

Question 44

The sum of frictional and structural unemployment is thought of as the

A)natural rate of unemployment.
B)normal rate of unemployment.
C)cyclical rate of unemployment.
D)seasonal rate of unemployment.

Question 45

Related to the Economics in Practice on p.445: In the U.S.from 1955 to 1996,the labor force participation rate ________ for men and ________ for women.

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

Question 46

The demand for refrigerators falls when the economy enters a downturn.If a refrigerator manufacturer lays off workers during an economic downturn,this would be an example of

A)frictional unemployment.
B)natural unemployment.
C)structural unemployment.
D)cyclical unemployment.

Question 47

If the labor market becomes more efficient so that the unemployed are more quickly matched with jobs,then

A)the natural rate of unemployment will increase.
B)the natural rate of unemployment will decrease.
C)the natural rate of unemployment will not change.
D)the natural rate of unemployment could either increase or decrease.

Question 48

When an individual is not working and is not looking for a job because he/she lacks any marketable job skills,he/she is

A)structurally unemployed.
B)frictionally unemployed.
C)cyclically unemployed.
D)none of the above

Question 49

Related to the Economics in Practice on p.445: If more women enter the labor force and the number of available jobs remains unchanged,the unemployment rate will,ceteris paribus,

A)increase.
B)decrease.
C)remain unchanged.
D)equal the natural rate of unemployment.

Question 50

The increase in unemployment that occurs during recessions and depressions is called

A)frictional unemployment.
B)structural unemployment.
C)cyclical unemployment.
D)normal unemployment.

Question 51

Cyclical unemployment is the

A)portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries.
B)unemployment that occurs during recessions and depressions.
C)portion of unemployment that is due to the normal working of the labor market.
D)unemployment that results when people become discouraged about their chances of finding a job so they stop looking for work.

Question 52

During the early 1990s,companies started downsizing.One of the results of this downsizing was the permanent reduction in the number of middle management positions.This change in the way businesses operate would have

A)increased the natural rate of unemployment.
B)decreased the natural rate of unemployment.
C)not affected the natural rate of unemployment.
D)could have either increased or decreased the natural rate of unemployment.

Question 53

A man is fired from his job because he was late for work too many times.While he is searching for another job he would be classified as

A)not in the labor force because his employer had a legitimate reason for firing him.
B)structurally unemployed.
C)cyclically unemployed.
D)frictionally unemployed.

Question 54

The natural rate of unemployment is generally thought of as the

A)ratio of the frictional unemployment rate to the cyclical unemployment rate.
B)sum of structural unemployment and cyclical unemployment.
C)sum of frictional unemployment and cyclical unemployment.
D)sum of frictional unemployment and structural unemployment.

Question 55

The economy is in a recession and the housing market is in a slump.As a result of this,a real estate firm lays off half of its real estate agents.This is an example of

A)frictional unemployment.
B)structural unemployment.
C)cyclical unemployment.
D)natural unemployment.

Question 56

During the Great Depression,the unemployment rate rose to about

A)15%.
B)25%.
C)40%.
D)50%.

Question 57

When the Fed slows the rate of growth of the money supply to slow down the economy,the unemployment type that will be directly affected is the

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

Question 58

During the severe recession of the early 1980s,cyclical unemployment increased as the recession continued.This increase in cyclical unemployment would have

A)increased the natural rate of unemployment.
B)decreased the natural rate of unemployment.
C)had no effect on the natural rate of unemployment.
D)caused structural unemployment to decrease.

Question 59

An auto worker in Ohio who loses her job because the company relocated the plant to another country represents an example of

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

Question 60

Structural unemployment is the

A)portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries.
B)unemployment that occurs during recessions and depressions.
C)portion of unemployment that is due to the normal working of the labor market.
D)unemployment that results when people become discouraged about their chances of finding a job so they stop looking for work.

Question 61

If discouraged workers were counted as unemployed,the measured unemployment rate would increase.

Question 62

An increase in the overall price level is

A)inflation.
B)deflation.
C)a price index.
D)a recession.

Question 63

The decrease in the demand for mainframe computers caused manufacturers of mainframe computers to reduce prices by 20%.This is an example of

A)inflation.
B)deflation.
C)a sustained inflation.
D)the operations of supply and demand.

Question 64

If labor markets were perfectly efficient,the unemployment rate would fall to zero.

Question 65

An increase in search costs will decrease structural unemployment.

Question 66

An unemployment rate of 10% means that the average worker has been unemployed for 10% of the year.

Question 67

Refer to the information provided in Table 7.3 below to answer the questions that follow.
Table 7.3
Refer to Table 7.3.Suppose 2010 is the base year.The price index in 2010 is

A)1,000.
B)100.
C)10.
D)1.

Question 68

In which of the following conditions is the inflation rate likely to fall and the unemployment rate likely to rise?

A)hyperinflation
B)recession
C)boom
D)stagflation

Question 69

The floods of 1993 caused the price of corn to increase.This is an example of

A)inflation.
B)deflation.
C)a sustained inflation.
D)the operations of supply and demand.

Question 70

Refer to the information provided in Table 7.3 below to answer the questions that follow.
Table 7.3
Refer to Table 7.3.If 2010 is the base year,the price index in 2009 is

A)89.3.
B)96.0.
C)104.0.
D)111.9.

Question 71

Related to the Economics in Practice on p.447: Compared to students who graduate college and obtain employment during an economic expansion,students who graduate during a recession often find that starting wages are ________ and wage growth is ________.

A)lower;slower
B)lower;faster
C)higher;slower
D)higher;faster

Question 72

Inflation is an increase in

A)the price of one item.
B)the overall price level.
C)the average income level.
D)real gross national product.

Question 73

When more people who are not working start looking for jobs,the labor-force participation rate increases.

Question 74

The natural rate of unemployment in the economy is determined by the Congress and the president of the country.

Question 75

Refer to the information provided in Table 7.3 below to answer the questions that follow.
Table 7.3
Refer to Table 7.3.If 2010 is the base year,the price index in 2011 is

A)93.9.
B)94.2.
C)105.8.
D)106.1.

Question 76

Deflation is a decrease in

A)the price of one item.
B)the overall price level.
C)the average income level.
D)real gross national product.

Question 77

Anyone 16 years of age or older who is not classified as employed is classified as unemployed.

Question 78

A price index is

A)a measurement showing how the average price of a bundle of goods changes over time.
B)a measurement showing the cost of a bundle of goods at a point in time.
C)a sustained increase in the overall price level.
D)a decrease in the overall price level.

Question 79

An increase in the overall price level that continues over a significant period of time is

A)high inflation.
B)sustained recovery.
C)sustained inflation.
D)super inflation.

Question 80

The natural rate of unemployment is the unemployment rate during a period of full employment.