Question

If the minimum wage is below the equilibrium wage, the quantity demanded of labor will be more than the quantity supplied since the wage rate will not be legally allowed to reach the equilibrium.

Select one:

True

False

If an unemployed person becomes discouraged and quits actively seeking work, then, ceteris paribus, the unemployment rate falls and the size of the labor force decreases.

Select one:

True

False

Question text

Suppose the total population for a particular country is 60 million, the adult population is 48 million, 2.5 million are unemployed and 34.5 million are employed. The unemployment rate for this country is more than 6.9 percent but less than 7.3 percent.

Select one:

True

False

Question text

Frictional unemployment can be the consequence of workers leaving existing jobs to find ones they like better, a sectoral shift as one industry declines while another is growing or changes in the working conditions offered by competing firms.

Select one:

True

False

Suppose the total population for a particular country is 60 million, the adult population is 48 million, 2.5 million are unemployed and 34.5 million are employed. The labor force participation rate for this country is more than 76.5 percent but less than 78.3 percent.

Select one:

True

False

Answer 1

(1) If the minimum wage is below the equilibrium wage, the quantity demanded of labor will be more than the quantity supplied since the wage rate will not be legally allowed to reach the equilibrium. (FALSE)

Reason: Minimum wage is binding if its set above the equilibrium wage. If it is set below the equilibrium wage then because of market forces wage rate will reach to equilibrium point.

(2) If an unemployed person becomes discouraged and quits actively seeking work, then, ceteris paribus, the unemployment rate falls and the size of the labor force decreases. (TRUE)

Reason: A discouraged worker is not part of labor force. If an unemployed person become discouraged then labor force decrease as well as unemployment rate falls.

(3) Suppose the total population for a particular country is 60 million, the adult population is 48 million, 2.5 million are unemployed and 34.5 million are employed. The unemployment rate for this country is more than 6.9 percent but less than 7.3 percent. (FALSE)

Reason: Labor force = unemployed + employed

Labor force = 2.5 million + 34.5 million.

Labor force = 37 million.

Unemployment rate = (unemployed / labor force) *100

Unemployment rate = (2.5 million/ 37 million) * 100 = 6.75%

(4) Frictional unemployment can be the consequence of workers leaving existing jobs to find ones they like better, a sectoral shift as one industry declines while another is growing or changes in the working conditions offered by competing firms. (TRUE)

(5) Suppose the total population for a particular country is 60 million, the adult population is 48 million, 2.5 million are unemployed and 34.5 million are employed. The labor force participation rate for this country is more than 76.5 percent but less than 78.3 percent. (TRUE)

Reason : Labor force = unemployed + employed

Labor force = 2.5 million + 34.5 million.

Labor force = 37 million.

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

Labor force participation rate = (37 million / 48 million) * 100

Labor force participation rate = 77.08%