Question

102) If there is an increase in the number of discouraged workers in a country, ________.

102) A) the unemployment rate will decrease

B) the labor force participation rate will increase

C) the labor force participation rate will decrease

D) the unemployment rate will increase

103) Which of the following statements is true?

103) A) The unemployment rate in a country always remains constant.

B) As an economy experiences growth in GDP, the rate of unemployment is expected to decrease.

C) As an economy experiences growth in GDP, the rate of unemployment is expected to increase.

D) The unemployment rate in a country is not correlated with the level of economic activity in the country.

104) Which of the following statements is true of unemployment?

104) A) In periods of contraction, the unemployment rate in an economy decreases.

B) The rate of unemployment is positive in any well-functioning economy.

C) In periods of expansion, the unemployment rate in an economy increases

. D) The unemployment rate in most of the developed nations in the world is zero percent. 15

105) Which of the following statements is true?

105) A) In the United States, the unemployment rate among bachelor degree holders is more than the unemployment rate among high school diploma holders.

B) More educated workers have a lower opportunity cost of time than less educated workers.

C) Unemployment rate is higher among groups with lower educational attainment.

D) The unemployment rate in a country normally increases when the country's economy expands.

106) Which of the following statements is true?

106) A) All else equal, a worker who earned a higher income earlier but is now unemployed will have a lower opportunity cost of time than someone who had a lower income but is now unemployed.

B) All else equal, a worker who earned a higher income earlier but is now unemployed will have the same opportunity cost of time than someone who had a lower income but is now unemployed.

C) All else equal, the incentive to look for a job is higher for an individual with a lower opportunity cost of time.

D) All else equal, the incentive to look for a job is lower for an individual with a lower opportunity cost of time.

107) Which of the following is a valid shortcoming of the use of foreign aid to eradicate poverty?

107) A) It can lead to polarization of the world economy.

B) It is difficult to transfer aid to poor countries.

C) It mostly leads to the transfer of resources among rich countries.

D) It may not lead to a sizeable increase in physical capital in poorer countries.

108) Which of the following statements is true of foreign aid?

108) A) Foreign aid is directly responsible for reducing corruption in developing nations.

B) In practice, much of foreign aid does not get invested in new technology or education.

C) Foreign aid is regressive to development.

D) Foreign aid is provided only by financial institutions such as the World Bank.

109) Which of the following statements is true of foreign aid?

109) A) The concept of foreign aid was introduced in the 21st century.

B) Foreign aid is always efficient in eradicating poverty.

C) Foreign aid is only provided to sub-Saharan regions.

D) In some instances foreign aid can be beneficial to dictators.

110) Which of the followings statements correctly identifies an advantage of using foreign aid to eradicate poverty?

110) A) Its flow is transparent and can be questioned by all individuals in the receiving country.

B) It directly increases the efficiency of production in poorer countries.

C) It is extremely efficient in countries where institutions are extractive.

D) It leads to a redistribution of income around the world.

111) Private property rights mean that:

111) A) individuals cannot be excluded from the consumption of goods and services regardless of whether they pay for them.

B) the government does not own any resource used in production in an economy.

C) individuals can own businesses and assets, and their ownership is secure.

D) individuals have a right to elect their representatives in the government.

Answer 1

102)

The formula for unemployment rate is:

Unemployment Rate = Number of Unemployed Persons / Labor Force.

The formula for labor force participation rate is:

The labor force participation rate = labor force/ total working-age population.

Since discouraged workers are not actively searching for a job, they are considered nonparticipants in the labor market. But they are counted in working age population.

Hence if there is an increase in the number of discouraged workers in a country, total working-age population increase while labor force remains unchanged. Thus labor force participation rate decreases.

Correct Ans - C

103)

As an economy experiences growth in GDP, the rate of unemployment is expected to decrease.

This is derived through Okun's law which states that a one-point increase in the cyclical unemployment rate is associated with two percentage points of negative growth in real GDP.

Correct Ans - B

104)

Cyclical unemployment: During expansion, real GDP increases, so unemployment decreases. During contraction, real GDP decreases so unemployment rate increases.

The rate of unemployment is positive in any well-functioning economy due to structural and frictional unemployment keeping natural rate of unemployment to around 4%.

Correct Ans - B

105)

Unemployment rate is higher among groups with lower educational attainment.

Correct Ans - C