Question 1

Which of the following is true?

Accepted Answer

A) The natural rate of unemployment is present when the economy is operating at full employment. 
B) The natural rate of unemployment is equal to the number of persons unemployed divided by the number of persons in the labor force. 
C) The natural rate of unemployment is primarily the result of the ups and downs of the business cycle. 
D) Public policy cannot influence the natural rate of unemployment.

Question 2

Matt loses his job and decides to sit on the beach rather than looking for work the next few months.Other things the same,the unemployment rate

Accepted Answer

A) increases,and the labor-force participation rate is unaffected. 
B) increases,and the labor-force participation rate decreases. 
C) decreases,and the labor-force participation rate increases. 
D) decreases,and the labor-force participation rate decreases.

Question 3

Answer the following questions:
a.What are the three types of unemployment,and which two compose the natural rate?
b.Give an example of a person who would be counted in each type.
c.Would an economy with 2 percent actual unemployment be in a recession? Why or why not?

Accepted Answer

The answer of Answer the following questions:
a.What are the three...

Question 4

Jacqueline,a brilliant new Ph.D.in economics,has turned down many job offers because she hopes eventually to teach at one of the top ten universities in her field.The type of unemployment she is experiencing is

Accepted Answer

A) frictional 
B) structural 
C) seasonal 
D) cyclical 
E) underemployment

Question 5

An individual who is employed part time but is looking for a full-time job is classified as

Accepted Answer

A) frictionally unemployed. 
B) cyclically unemployed. 
C) structurally unemployed. 
D) employed.

Question 6

The economy's potential output is

Accepted Answer

A) the maximum output that could be achieved temporarily during a time of economic boom. 
B) the minimum output that could be achieved during a recession. 
C) present when 100 percent of the labor force is employed. 
D) the maximum sustainable output of the economy given its resources.

Question 7

A person who argues that inflation "robs us of the purchasing power of our paychecks" should also consider that inflation

Accepted Answer

A) increases the value of the dollar,making paychecks worth more. 
B) will increase the size of paychecks as well as the prices of goods. 
C) does not affect the value of the dollar,either in paychecks or in prices. 
D) only affects the prices of things that we buy,not the prices of things that we sell.

Question 8

Frictional unemployment is the result of

Accepted Answer

A) not enough jobs for everyone to be employed. 
B) unemployed workers' skills not matching those needed for the available jobs. 
C) a decline in the demand for labor,such as during a recession. 
D) imperfect information and temporary periods of unemployment while workers are changing jobs.

Question 9

If unemployment in the United States was approximately 5 percent,most economists would believe that the economy was

Accepted Answer

A) experiencing abnormally high unemployment. 
B) at or near full employment. 
C) experiencing an abnormally high labor force participation rate. 
D) in the midst of a strong economic boom.

Question 10

The population (age 16 and over)of Pageland is 50 million;4 million are unemployed,and 36 million hold jobs.What are the rates of unemployment and labor force participation of Pageland?

Accepted Answer

A) Unemployment is 10 percent,and labor force participation is 80 percent. 
B) Unemployment is 10 percent,and labor force participation is 75 percent. 
C) Unemployment is 11 percent,and labor force participation is 80 percent. 
D) Unemployment is 11 percent,and labor force participation is 90 percent.

Question 11

Which of the following will most likely occur during the expansionary phase of a business cycle?

Accepted Answer

A) Real GDP rises and unemployment falls. 
B) Real GDP declines and inflation rises. 
C) Interest rates rise and the number of business failures rise. 
D) Inflation rises and employment falls.

Question 12

Which of the following would be officially classified as unemployed?

Accepted Answer

A) a school administrator who has been working as a substitute teacher one day per week while looking for a full-time job in administration 
B) a mathematician who returned to graduate school after failing to find a job the last four months 
C) a 60-year-old former steel worker who would like to work but has given up actively seeking employment 
D) a laid-off construction worker waiting to return to a previous job

Question 13

Which of the following will most likely increase the natural rate of unemployment?

Accepted Answer

A) a decrease in the minimum wage 
B) an increase in unemployment benefits 
C) an increase in the number of people who stop looking for a job 
D) an increase in the proportion of prime-age workers as a share of the labor force

Question 14

As of 2011,which of the following groups had the highest unemployment?

Accepted Answer

A) males,aged 16 through 19 
B) females,aged 20 through 24 
C) males,aged 25 and over 
D) females,aged 25 and over

Question 15

Use the data below to answer the following question(s).
Table 8-3
 
-Refer to Table 8-3.What is the labor force participation rate of the economy?

Accepted Answer

A) 25 percent 
B) 60 percent 
C) 75 percent 
D) 80 percent

Question 16

The population (age 16 and over)of Italia is 100 million;5 million are unemployed,and 40 million hold jobs.The labor force participation rate in Italia is

Accepted Answer

A) 10 percent. 
B) 45 percent. 
C) 50 percent. 
D) 90 percent.

Question 17

The type of unemployment that occurs because of a recession is called

Accepted Answer

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

Question 18

The concept of full employment

Accepted Answer

A) is based on the premise that an economy with an efficient labor market will experience no unemployment. 
B) reflects the "shopping" of employees looking for employment and of employers seeking to hire workers. 
C) indicates that full employment is present when the actual rate of unemployment is below the natural rate. 
D) reflects the impact of an economic contraction.

Question 19

The primary cause of frictional unemployment is

Accepted Answer

A) discouraged workers who give up looking for work. 
B) fluctuations in aggregate demand. 
C) the lack of training and marketable qualifications in job seekers. 
D) inaccurate and costly information about job opportunities.

Question 20

Cyclical unemployment is primarily caused by

Accepted Answer

A) a large proportion of youthful workers in the labor force. 
B) fluctuations in aggregate demand. 
C) a lack of training on the part of job seekers. 
D) the failure of job seekers to search adequately for the available jobs.

Exam 8: Economic Fluctuations, unemployment, and Inflation