Question

The unemployment rate statistic published by the Bureau of Labor Statistics may underestimate the magnitude of the unemployment problem in the economy because

		"all part-time workers are counted as ""employed"" even though some would prefer to work full-time (i.e. are underemployed)."
		some workers are working in jobs for which they are overqualified (also underemployed).
		"""discouraged workers,"" who are no longer looking for work, are not counted in the labor force."
		all of the above.

Underemployment includes the following:

		People employed part time who would prefer full-time work (part time for economic reasons)
		Those working in jobs below their qualifications and preferred level (e.g. a PhD pumping gas)
		Discouraged workers
		All the above
		"All, but the discouraged workers "

Which of the following is NOT a problem in using economic statistics?

		Using GDP statistics to compare income in the U.S. and Bangladesh may be inaccurate because household production (non-market) is a much higher percentage of the economy of Bangladesh.
		"Using the published CPI statistics to calculate changes in the purchasing power of your income is inaccurate because the CPI is calculated for the ""average consumer's"" spending pattern."
		"The same statistics are often interpreted differently by different politicians and reporters, which makes it difficult to understand what is really happening without understanding how the statistics were calculated."
		Government statisticians in the U.S. frequently distort the numbers. Which of the following transactions is directly measured as part of GDP ? childcare and housework services performed without pay by a homemaker. purchase of a used car. sale of an IBM bond. services of a prostitute. none of the above.

Answer 1

1. The unemployment rate statistic published by the Bureau of Labor Statistics may underestimate the magnitude of the unemployment problem in the economy because (d) all of the above.

All the sub parts are correct since all of these accrue to the problem of underemployment or unemployment. As a result, the unemployment rate may be wrongly underestimated since in a real sense all of them are either underemployed or unemployed but are counted as employed or not taken into consideration ( like discouraged workers).

2. Underemployment includes the following: (e) "All, but the discouraged workers "

Underemployment is a measure of employment and labor utilization in the economy that looks at how well the labor force is being utilized in terms of skills, experience and availability to work. Underemployment is the underuse of a worker because a job does not use the worker's skills, is part-time, or leaves the worker idle.

3. Which of the following is NOT a problem in using economic statistics?

(c)"The same statistics are often interpreted differently by different politicians and reporters, which makes it difficult to understand what is really happening without understanding how the statistics were calculated."

All other sub parts involve problems regarding accuracy or validity of statistics as a tool to analyse economics. While part (c) refers to subjectivity of presenting the calculated data.

4. Which of the following transactions is directly measured as part of GDP ?

(d)none of the above.

Childcare and housework services performed without pay by a homemaker will not be counted as it does not involve payment. Purchase of a used car will not be counted since sale/ purchase of second hand goods is not taken into account to avoid the problem of double counting. Sale of an IBM bond will not be counted since it does not involve direct production of goods or services. Services of a prostitute will not be counted since GDP does not include illicit activities like prostituion or drugs (based on the assumption that prostitution is considered illegal in the country).