Question

Multiple-Choice Questions

1. The unemployment rate is calculated as:

1. the percentage of the labor force that is unemployed.
2. the percentage of the population that is unemployed.
3. all people without jobs, as a percentage of the labor force.
4. all people without jobs, as a percentage of the population.

1. The labor force participation rate is calculated as:

1. the percentage of the population age 16 or older that is unemployed.
2. the percentage of the population age 16 or older that is in the labor force.
3. the percentage of the population age 16 or older that is unemployed.
4. the percentage of the labor force age 16 or older that is employed.

1. The unemployment rate understates the true problem of unemployment because of:

1. the limited hours for some part-time workers.
2. the plight of discouraged workers.
3. the plight of people who have given up looking for a job.
4. all of the above.

1. Unemployment rates are above the national average for:

1. Hispanics.
2. Blacks.
3. Teens.
4. all of the above.

1. A young woman experiences a short delay in finding a better job after she quits an unsatisfactory job. This type of unemployment is:

a. frictional.

b. structural.

c. cyclical.

d. none of the above.

1. A middle-aged autoworker is laid off from his job after improved technology (robotics) reduces the need for workers. This type of unemployment is:

a. frictional.

b. structural.

c. cyclical.

d. none of the above.

1. Which of the following would not be used to reduce structural unemployment?

1. retraining assistance
2. relocation assistance
3. policies to expand GDP
4. policies to expand education

1. Full employment means:

a. no cyclical unemployment.

b. no frictional unemployment.

c. no structural unemployment.

d. all of the above.

1. What is the effect of a minimum wage in a low skill labor market?

1. a higher wage.
2. a higher quantity of labor supplied.
3. a lower quantity of labor demanded.
4. all of the above.

True-and False Questions

1. The problem of unemployment for the macro economy is the reduction in output that results.

2. Frictional unemployment is assumed to be fairly normal and temporary.

3. Because of its short duration, structural unemployment is assumed not to be very serious.

4. Cyclical unemployment results from a drop in economy activity in our economy as a whole.

5. Full employment means there is no unemployment.

6. Since 1964, the U.S. labor force participation rate has decreased.

7. According to the official definition of unemployment, unemployed people include those who have given up seeking employment.

Answer 1

1. Unemployment rate = (Unemployment level/Size of labor force) * 100

All people without jobs need not be considered unemployed. According to the Bureau of Labor Statistics, only those who do not have jobs and are actively looking for jobs are considered to be unemployed.

Ans: the percentage of the labor force that is unemployed

Q2. Labor force = Employment level + Unemployment level

Labor force participation rate = (Labor force/Total adult civilian population) * 100

Labor force participation rate is the labor force calculated as a percentage of total adult civilian population i.e., 16 years and older.

Ans: the percentage of the population age 16 or older that is in the labor force

Q3. BLS classifies unemployed as those people who do not have a job and are actively seeking one. The discouraged workers who have given up on looking for jobs are not considered to be unemployed and are not a part of labor force.

Similarly, BLS classifies part-time workers as employed even though such people wish to work more hours.

Therefore, considering part-timers and discouraged workers in the economy, the unemployment rate calculated by BLS is actually an understatement of the true level of unemployment in the economy.

Ans: all of the above

Q4. Traditionally, the unemployment rates for specific groups such as Hispanics, Blacks and Teens have ben higher than the national average in the United States.

Ans: all of the above