Question

1. A year ago Parker reached his retirement and left the business to pursue other interests. He is now spending lots of time playing golf and visiting his grandchildren. For purposes of employment he is considered:
A) unemployed.
B) out of the labor force.
C) underemployed.

2. One of the criticisms about the unemployment rate is that it considers discouraged workers to be out of the labor force and

A) over-reports the actual unemployment problem.
B) under-reports the actual unemployment problem.
C) includes people who are working in the informal (underground) economy.

3. If out of 125 people in the labor force, the number of employed workers is 100 and number of unemployed workers is 25, then the unemployment rate is ________.

A) 20%
B) 30%
C) 25%

4. Political stability and property rights protection

A) guarantees low unemployment.
B) ensure income equality.
C) promote economic growth.

Answer 1

Question 1

A retired person is considered to be out of the labor force.

Parker has retired. So, for purpose of employment, he is considered out of the labor force.

Hence, the correct answer is the option (B).

Question 2

Discouraged workers are those workers who had stopped looking for jobs as they feel that there are no jobs available relative to their skill sets.

Even though discouraged workers have stopped looking for jobs but, in a sense, they are unemployed.

So,

One criticism about the unemployment rate is that it consider discouraged workers to be out of the labor force and under-reports the actual unemployment problem.

Hence, the correct answer is the option (B).

Question 3

Unemployed workers = 25

Labor force = 125

Calculate the unemployment rate -

Unemployment rate = [Unemployed workers/Labor force] * 100

Unemployment rate = [25/125] * 100 = 20%

The unemployment rate is 20%.

Hence, the correct answer is the option (A).

Question 4

political stability and property right protection promotes economic growth.

Hence, the correct answer is the option (C).