A
1. The unemployment rate measures:
A. the number of people unemployed divided by the number of people employed.
B. unemployed workers as a percentage of the labor force.
C. unemployed workers as a percentage of the population age over-sixteen.
D. unemployed workers as a percentage of the population.
B
During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force.
A. 25%
B. 45%
C. 65%
D. 85%
A- 25%
3. Reginald looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered:
A. out of the labor force.
B. unemployed.
C. employed in the underground economy.
D. underemployed.
A. out of the labor force.
4. The U.S. unemployment rate moves up and down as the economy moves in and out of recessions. But over time, the unemployment rate seems to return to a range of ____________.
A. 2%-4%
B. 4%-6%
C. 6%-8%
D. 8%-10%
B. 4%-6%
5. If the unemployment rate is 8 percent, then this means:
A. 8 percent of the population is unemployed.
B. 8 percent of the population age over sixteen is unemployed.
C. 8 percent of the labor force is unemployed.
D. the number of unemployed persons equals 8 percent of the employed persons.
C. 8 percent of the labor force is unemployed.
7. During the deep recessions of the early 1980s and of 2007-2009, unemployment reached roughly __________.
A. 10%
B. 20%
C. 30%
D. 40%
A. 10%
9. Frictional unemployment is:
A. unemployment that is due to the friction of competing ideological systems.
B. unemployment caused by lack of training and education.
C. unemployment caused by automation in the workplace.
D. unemployment that is due to normal turnover in the labor market.
D. unemployment that is due to normal turnover in the labor market.
10. If a nation's labor force receives a significant influx of young workers:
A. the natural rate of unemployment is likely to increase.
B. the natural rate of unemployment is likely to decrease.
C. the natural rate of unemployment is unlikely to change
D. frictional unemployment will likely decrease to zero.
A. the natural rate of unemployment is likely to increase.
11. The type of unemployment that occurs because of a recession is called:
A. cyclical unemployment.
B. the natural rate of unemployment.
C. seasonal unemployment.
D. frictional unemployment.
A. cyclical unemployment.
12. The definition of market equilibrium states that at the _______________, the quantity of labor demanded by employers will equal the quantity supplied.
A. efficiency wage
B. equilibrium wage
C. sticky wage
D. natural rate of unemployment
B. equilibrium wage
6. If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals:
A. 32%.
B. 25%.
C. 20%.
D. 8%.
B. 25%.
8. A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be:
A. frictionally unemployed.
B. underemployed.
C. cyclically unemployed.
D. structurally unemployed.
A. frictionally unemployed.
16. Karen chooses to go to university fulltime rather than to work. Karen:
A. is not part of the labor force.
B. is part of the labor force and what economists call a discouraged worker.
C. is part of the labor force, but not actively seeking work.
D. is considered employed.
A. is not part of the labor force.
17. In November 2010 the labor force in Siouxtown, was 14,800. There were 14,483 persons employed. The local unemployment rate:
A. was 1.2%.
B. was 2.1%.
C. was 5.6%.
D. was 7.1%.
B. was 2.1%.
18. The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals:
A. 20.2 %.
B. 16.8%.
C. 14.4%.
D. 11%.
C. 14.4%.
20. Freelife, New Hampshire has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is:
A. 5.3%.
B. 5.6%.
C. 6.0%.
D. 7.1%
A. 5.3%.
22. Gomer loses his job as a road construction worker and cannot find another position with equivalent pay and benefits. As a result, he is still checking the want ads and reporting to the unemployment office on a weekly basis. He is considered to be:
A. laid off.
B. underemployed.
C. out of the labor force.
D. unemployed.
B. underemployed.
23. Which of the following statements is incorrect?
A. Employment insurance compensation encourages longer job searches, which may lead to a better match between jobs and employees.
B. Employment insurance compensation increases the opportunity cost of being unemployed.
C. The typical employment insurance compensation is roughly one third of one's latest salary for up to 26 weeks.
D. Demand and supply curves for labor are constantly shifting.
B. Employment insurance compensation increases the opportunity cost of being unemployed.
25. Craigburg has a working age population of 20 million. Of those, 11 million are employed and 1 million are unemployed. The unemployment rate is ________ and the participation rate is __________.
A. 5%; 55%.
B. 8.3%; 60%.
C. 8.3%; 55%.
D. 5%; 60%.
B. 8.3%; 60%.
32. The unemployment rate may overestimate the true extent of unemployment if:
A. many part-time employees would like to work fulltime, but are unable to get the additional work.
B. many people who claim to be unemployed actually work in the underground economy.
C. people falsely claim that they are actively seeking work in order to receive unemployment benefits.
D. either B) or C) occurs.
D. either B) or C) occurs.
21. If the unemployment rate is 6 percent and the number of persons unemployed is 6 million, then the number of people employed is equal to:
A. 100 million.
B. 94 million.
C. 106 million.
D. 6 million.
B. 94 million.
29. The _________________ argument points out that if an employer reacts to poor business conditions by reducing pay for all workers, then the best workers, with the best employment alternatives at other firms, are the most likely to leave and the least-attractive workers, with fewer employment alternatives, are more likely to stay.
A. efficiency wage theory
B. adverse selection of wage cuts
C. equilibrium wage theory
D. employer wage theory
B. adverse selection of wage cuts
2. Within the context of employment practices, define "implicit contracts" and explain its real significance to both employer and employee.
Explanation: Implicit contract: the employer will try to keep wages from falling when the economy is weak or the business is having trouble, and the employee will not expect huge salary increases when the economy or the business is strong. This wage-setting behavior acts like a form of insurance: the employee has some protection against wage declines in bad times, but pays for that protection with lower wages in good times. Clearly, this sort of implicit contract means that firms will be hesitant to cut wages, lest workers feel betrayed and work less hard or even leave the firm.
4. Define the "adverse selection of wage cuts argument" and discuss the practical consequences for business owners.
Explanation: The adverse selection of wage cuts argument points out that if an employer reacts to poor business conditions by reducing wages for all workers, then best workers, with the best employment alternatives at other firms, are the most likely to leave and the least-attractive workers, with fewer employment alternatives, are more likely to stay. Consequently, firms are more likely to choose which workers should depart, through layoffs and firings, rather than trimming wages across the board.
5. Frictional unemployment and the natural rate of unemployment also seem to depend on the age distribution of the population. Describe why this is so.
Explanation: Unemployment rates are typically lower for people between about 25–54 years of age than they are for those who are either younger or older. “Prime-age workers,” as those in the 25–54 age bracket are sometimes called, are typically at a place in their lives when they want very much to have a job and income arriving at all times. But some proportion of those who are under 30 may still be trying out jobs and life options and some proportion of those over 55 are eying retirement. In both cases, the relatively young or old tend to worry less about unemployment than those in-between, and their periods of frictional unemployment may be longer as a result. Thus, a society with a relatively high proportion of relatively young or old workers will tend to have a higher unemployment rate than a society with a higher proportion of its workers in middle age.