Question 1

Which of the following is true of the natural unemployment rate?

Accepted Answer

A)  It is equal to zero when the economy is not in a recession. 
B)  It has been fixed at 4% during the post-World War II period. 
C)  It is higher if structural or frictional unemployment is higher. 
D)  It can change dramatically within a matter of months. 
A)  It is equal to zero when the economy is not in a recession. 
B)  It has been fixed at 4% during the post-World War II period. 
C)  It is higher if structural or frictional unemployment is higher. 
D)  It can change dramatically within a matter of months. C

Question 2

Structural unemployment is:

Accepted Answer

A)  caused by the ordinary difficulties of matching employee to employer. 
B)  caused by long-lasting shocks or changes in permanent features of an economy. 
C)  unemployment correlated with the business cycle. 
D)  natural unemployment. 
A)  caused by the ordinary difficulties of matching employee to employer. 
B)  caused by long-lasting shocks or changes in permanent features of an economy. 
C)  unemployment correlated with the business cycle. 
D)  natural unemployment. B

Question 3

The labor force participation rate responds to:

Accepted Answer

A)  incentives to work. 
B)  real GDP growth. 
C)  job opportunities. 
D)  business cycles. 
A)  incentives to work. 
B)  real GDP growth. 
C)  job opportunities. 
D)  business cycles. A

Question 4

Frictional unemployment is:

Accepted Answer

A)  short-term unemployment due to the normal difficulties of matching employers and employees. 
B)  persistent and long-term unemployment caused by shocks that make it more difficult for workers to find jobs. 
C)  long-term employment caused by a mismatch between the skills workers possess and the skills that the market is looking to hire. 
D)  unemployment due to fluctuations in the business cycle. 
A)  short-term unemployment due to the normal difficulties of matching employers and employees. 
B)  persistent and long-term unemployment caused by shocks that make it more difficult for workers to find jobs. 
C)  long-term employment caused by a mismatch between the skills workers possess and the skills that the market is looking to hire. 
D)  unemployment due to fluctuations in the business cycle.

Question 5

The persistent,long-term unemployment caused by long-lasting shocks or permanent features of an economy is called:

Accepted Answer

A)  frictional unemployment. 
B)  structural unemployment. 
C)  cyclical unemployment. 
D)  seasonal unemployment. 
A)  frictional unemployment. 
B)  structural unemployment. 
C)  cyclical unemployment. 
D)  seasonal unemployment.

Question 6

If the wage demands of workers are high relative to the prices of products,:

Accepted Answer

A)  cyclical unemployment will be higher. 
B)  cyclical unemployment will be lower. 
C)  frictional unemployment will be lower. 
D)  structural unemployment will be higher. 
A)  cyclical unemployment will be higher. 
B)  cyclical unemployment will be lower. 
C)  frictional unemployment will be lower. 
D)  structural unemployment will be higher.

Question 7

A nation that has experienced long-term unemployment for over 50 years has only frictional unemployment.

Accepted Answer

A) True 
 B)False

Question 8

The employment-at-will doctrine allows a firm in the United States to fire a worker whenever it pleases and for whatever (nondiscriminatory)reason it pleases.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a case of structural unemployment?

Accepted Answer

A)  Aaron is leaving his job to take a higher-paying position. 
B)  Amanda has been searching over a year for a position working as a travel agent. 
C)  Ashley took an early retirement package. 
D)  Alfred is searching for a position in which his expertise in criminal forensics can be used. 
A)  Aaron is leaving his job to take a higher-paying position. 
B)  Amanda has been searching over a year for a position working as a travel agent. 
C)  Ashley took an early retirement package. 
D)  Alfred is searching for a position in which his expertise in criminal forensics can be used.

Question 10

Which type of unemployment is an outcome of economist Joseph Schumpeter's "creative destruction" process within an industry?

Accepted Answer

A)  cyclical unemployment 
B)  structural unemployment 
C)  seasonal unemployment 
D)  frictional unemployment 
A)  cyclical unemployment 
B)  structural unemployment 
C)  seasonal unemployment 
D)  frictional unemployment

Question 11

Employment-at-will tends to raise the unemployment rate.

Accepted Answer

A) True 
 B)False

Question 12

Both structural and frictional unemployment occur in the absence of cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 13

An increase in unemployment benefits tends to:

Accepted Answer

A)  lower the incentive to search for a job and raise structural unemployment. 
B)  lower the incentive to search for a job and lower structural unemployment. 
C)  raise the incentive to search for a job and raise structural unemployment. 
D)  raise the incentive to search for a job and lower structural unemployment. 
A)  lower the incentive to search for a job and raise structural unemployment. 
B)  lower the incentive to search for a job and lower structural unemployment. 
C)  raise the incentive to search for a job and raise structural unemployment. 
D)  raise the incentive to search for a job and lower structural unemployment.

Question 14

Which of the following is the best example of frictional unemployment?

Accepted Answer

A)  John,a coal miner,was laid off because of a lack of demand for workers in his industry.He is looking into new opportunities in computer programming,but they require him to gain some new skills. 
B)  Heather recently graduated with her doctorate in economics.She is searching for a job that matches her skills. 
C)  Peter,a highly skilled construction worker,lost his job when the recession began.He is looking for work,but demand in the construction industry is still low. 
D)  Allison,a recent high school graduate with high aspirations,is seeking a job as the CEO of a Fortune 500 company. 
A)  John,a coal miner,was laid off because of a lack of demand for workers in his industry.He is looking into new opportunities in computer programming,but they require him to gain some new skills. 
B)  Heather recently graduated with her doctorate in economics.She is searching for a job that matches her skills. 
C)  Peter,a highly skilled construction worker,lost his job when the recession began.He is looking for work,but demand in the construction industry is still low. 
D)  Allison,a recent high school graduate with high aspirations,is seeking a job as the CEO of a Fortune 500 company.

Question 15

The natural unemployment rate is likely to be lower when the economy is growing more rapidly.

Accepted Answer

A) True 
 B)False

Question 16

Countries in Western Europe have:

Accepted Answer

A)  higher minimum wages than the United States. 
B)  higher median wages than the United States. 
C)  higher unemployment rates than the United States. 
D)  higher minimum wages,higher median wages,and higher unemployment than the United States. 
A)  higher minimum wages than the United States. 
B)  higher median wages than the United States. 
C)  higher unemployment rates than the United States. 
D)  higher minimum wages,higher median wages,and higher unemployment than the United States.

Question 17

High rates of long-term unemployment correlate with high costs of hiring and firing.

Accepted Answer

A) True 
 B)False

Question 18

Legal and cultural issues contribute significantly to what category of unemployment?

Accepted Answer

A)  structural 
B)  cyclical 
C)  short-term 
D)  frictional 
A)  structural 
B)  cyclical 
C)  short-term 
D)  frictional

Question 19

Identify the effects of employment protection laws.

Accepted Answer

(1)Create valuable insurance for workers

Question 20

If Congress passes legislation making it more difficult for firms to fire workers,how will this legislation affect the nation's level of unemployment? (An example might be a law requiring severance pay for fired workers. )Explain.

Accepted Answer

Laws making it more difficult for firms

Exam 11: Unemployment and Labor Force Participation

Which of the following is true of the natural unemployment rate?

Structural unemployment is:

The labor force participation rate responds to:

Frictional unemployment is:

The persistent,long-term unemployment caused by long-lasting shocks or permanent features of an economy is called:

If the wage demands of workers are high relative to the prices of products,:

A nation that has experienced long-term unemployment for over 50 years has only frictional unemployment.

The employment-at-will doctrine allows a firm in the United States to fire a worker whenever it pleases and for whatever (nondiscriminatory)reason it pleases.

Which of the following is a case of structural unemployment?

Which type of unemployment is an outcome of economist Joseph Schumpeter's "creative destruction" process within an industry?

Employment-at-will tends to raise the unemployment rate.

Both structural and frictional unemployment occur in the absence of cyclical unemployment.

An increase in unemployment benefits tends to:

Which of the following is the best example of frictional unemployment?

The natural unemployment rate is likely to be lower when the economy is growing more rapidly.

Countries in Western Europe have:

High rates of long-term unemployment correlate with high costs of hiring and firing.

Legal and cultural issues contribute significantly to what category of unemployment?

Identify the effects of employment protection laws.

If Congress passes legislation making it more difficult for firms to fire workers,how will this legislation affect the nation's level of unemployment? (An example might be a law requiring severance pay for fired workers. )Explain.

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Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

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Stock Markets and Personal Finance

Inflation and the Quantity Theory of Money

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