AP Econ - Module 12

What is the labor market classification of each of the following individuals? Be as specific as possible, and explain your answer. a. Julie has a graduate degree in mechanical engineering. She works full-time mowing lawns. b. Jeff was laid off from his previous job. He would very much like to work at any job, but, after looking for work for a year, has stopped looking for work. c. Ian is working 25 hours per week at a bookstore, and has no desire to work full time. d. Raj has decided to take a year off from work to stay home with his daughter.

2. a. Employed (underemployed); she is not working up to her full potential. b. Not in the labor force (discouraged). Once a worker stops actively seeking work, he or she falls out of the labor force. c. Employed (part-time); individuals are classified as employed if they work full or part time. d. Not in the labor force; he is not actively seeking employment.

3. How many people are unemployed? a. 10,000 b. 20,000 c. 30,000 d. 100,000 e. 110,000

a. 10,000

In which of the following cases would the worker be counted as unemployed? Explain. a. Rosa, an older worker, has been laid off and gave up looking for work months ago.

a. Not counted as unemployed because not actively looking for work, but counted in broader measures of labor underutilization as a discouraged worker.

1. To be considered unemployed, a person must I. not be working. II. be actively seeking a job. III. be available for work. a. I only b. II only c. III only d. II and III e. I, II, and III

e. I, II, and III

e. Natasha, a graduate student, went back to school because jobs were scarce.

e. Not unemployed, but considered "marginally attached." Counted in broader measures of labor underutilization.

5. The unemployment problem in an economy may be understated by the unemployment rate due to a. people lying about seeking a job. b. discouraged workers. c. job candidates with one offer but waiting for more. d. overemployed workers. e. none of the above.

b. discouraged workers.

c. Grace, an investment banker, has been laid off and is currently searching for another position.

c. Unemployed: not working, actively looking for work. d. Not unemployed, but underemployed: working part-time for economic reasons. Counted in broader measures of labor underutilization. e. Not unemployed, but considered "marginally attached." Counted in broader measures of labor underutilization.

Suppose that employment websites enable job -seekers to find suitable jobs more quickly. What effect will this have on the unemployment rate over time? Also, suppose that these websites encourage job -seekers who had given up their searches to begin looking again. What effect will this have on the unemployment rate?

1. The advent of websites that enable job-seekers to find jobs more quickly will reduce the unemployment rate over time. However, websites that induce discouraged workers to begin actively looking for work again will lead to an increase in the unemployment rate over time.

3. Which of the following are consistent with the observed relationship between growth in real GDP and changes in the unemployment rate? Which are not? a. A rise in the unemployment rate accompanies a fall in real GDP. b. An exceptionally strong business recovery is associated with a greater percentage of the labor force being employed. c. Negative real GDP growth is associated with a fall in the unemployment rate.

3. Items (a) and (b) are consistent with the observed relationship between growth in GDP and changes in the unemployment rate. Item (c) is not.

Use the data provided below to calculate each of the following. Show how you calculate each. a. the size of the labor force b. the labor force participation rate c. the unemployment rate Population age 16 and older = 12 million Employment = 5 million Unemployment = 1 million

Answer (6 points) 1 point: 6 million 1 point: employment + unemployment = 5 million + 1 million = 6 million 1 point: 50% 1 point: (labor force/population) × 100 = ((5 million + 1 million)/12 million) × 100 = (6 million/12 million) × 100 = 50% 1 point: 17% 1 point: (unemployment/labor force) × 100 = (1 million/(5 million +1 million)) × 100 = (1 million/6 million) × 100 = 17%

Population age 16 and older = 200,000 Labor Force = 100,000 Number of people working part time = 20,000 Number of people working full time = 70,000 2. What is the labor force participation rate? a. 70% b. 50% c. 20% d. 10% e. 5%

b. 50%

b. Anthony, a schoolteacher, is not working during his three-month summer break.

b. Not counted as unemployed—considered employed because the teacher has a job.

4. What is the unemployment rate? a. 70% b. 50% c. 20% d. 10% e. 5%

d. 10%

d. Sergio, a classically trained musician, can only find work playing for local parties.

d. Not unemployed, but underemployed: working part-time for economic reasons. Counted in broader measures of labor underutilization.