Chapter 15- Unemployment

Which of the following statements correctly describe discouraged workers? (If none of the choices apply, leave all of the checkboxes blank.) Check all that apply.

- They have not looked for a job in 4 weeks (or longer), but they would like a job and are available for work. - They have given up on looking for a job.

Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS: Labor Force Participation Rate =

100 x Number in Labor Force/Adult Population

Gilberto is a 20-year-old American Studies major at the University of Tennessee. It's summer now, and he is working as a lifeguard in Mobile, Alabama.

Employed

Shen is a 43-year-old autoworker who was laid off from his job 6 months ago. He is frustrated with his inability to find a new full-time position. Last week, he took a part-time job but was given only 3 hours of work.

Employed

Yakov is a 75-year-old professor. He teaches only one or two courses a year, but he's still pursuing an active research agenda.

Employed

Dmitri is a 17-year-old who just graduated from high school. He is taking it easy this summer, relaxing by the pool with his friends and family, and volunteering part-time at the local nursing home.

Not in the Labor Force

The following table shows data on frictional, cyclical, structural, and total unemployment for an economy. Unemployment Type Rate (Percent) Frictional: 3.8 Cyclical: 0.0 Structural: 1.1 Total unemployment: 4.9 True or False: This economy is currently at its natural rate of unemployment.

True- Total unemployment is the sum of frictional, structural, and cyclical unemployment. If there is no cyclical unemployment, the economy is at its natural rate of unemployment, equal to the sum of frictional and structural unemployment. In this case, because cyclical unemployment is 0.0%, the economy is at its natural rate of unemployment.

Ana is a 40-year-old autoworker who was just laid off by her employer. She is trying to find any kind of job to help make ends meet.

Unemployed

If the Bureau of Labor Statistics were to include discouraged workers in the official unemployment rate, the reported unemployment rate would

increase

Excluding discouraged workers from the official unemployment rate may cause the official rate to ___________ the true extent of underemployment.

understate

Why might some firms voluntarily pay workers a wage above the market equilibrium, even in the presence of surplus labor? Check all that apply.

- Higher wages attract a more competent pool of workers. - Paying higher wages enhances workers to adopt healthier lifestyles, enhancing their productivity. - Paying higher wages encourages workers to be more productive. - Paying higher wages can reduce a firm's training costs.

Complete the right half of the following equation to reflect the unemployment rate reported by the BLS. Unemployment Rate =

100 x Number of Unemployed Workers/Labor Force

Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $9.00. Which of the following statements are true? Check all that apply. - In the absence of price controls, a shortage puts upward pressure on wages until they rise to the equilibrium. - Binding minimum wages cause frictional unemployment. - In this labor market, a minimum wage of $9.00 is binding. - If the minimum wage is set at $12.50, the market will not reach equilibrium.

- In the absence of price controls, a shortage puts upward pressure on wages until they rise to the equilibrium. - If the minimum wage is set at $12.50, the market will not reach equilibrium.

Suppose the world price of steel falls substantially. The demand for labor among steel-producing firms in Pennsylvania will _____. The demand for labor among automobile-producing firms in Michigan, for which steel is an input, will _____. The temporary unemployment resulting from such sectoral shifts in the economy is best described as _____ unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.

Decrease, Increase, Frictional - Establishing government-run employment agencies to connect unemployed workers to job vacancies

Suppose the world price of cotton falls substantially. The demand for labor among cotton-producing firms in Texas will _______. The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will ______. The temporary unemployment resulting from such sectoral shifts in the economy is best described as _______ unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.

Decrease, Increase, Frictional - Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks - Improving a widely used job-search website so that it matches workers to job vacancies more effectively

True or False: This economy is not currently at its natural rate of unemployment.

False

Teresa just graduated from college and is looking for a full-time position with an investment banking firm. Automobile demand has fallen during a recent recession, and Beth has been laid off from her job on the assembly line. Sam recently lost his job as a waiter at a local restaurant. A recent increase in the minimum wage keeps local employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. He continues to look for a job, but he's considering going back to school for vocational training.

Frictional Cyclical Structural

Suppose the world price of steel rises substantially. The demand for labor among steel-producing firms in Pennsylvania will_____. The demand for labor among automobile-producing firms in Michigan, for which steel is an input, will _____. The temporary unemployment resulting from such sectoral shifts in the economy is best described as _____ unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.

Increase, Decrease, Frictional - Establishing government-run employment agencies to connect unemployed workers to job vacancies - Improving a widely used job-search website so that it matches workers to job vacancies more effectively - Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks

Caroline is a 11-year-old student at Southside Middle School. She babysits her younger sister and does other chores, so her parents give her an allowance of $25 per week.

Not in the Adult Population

Antonio is a 43-year-old accountant who has been out of work for almost a year. He became so discouraged that he gave up on his job search a couple of months ago.

Not in the Labor Force

Dina is a 11-year-old student at East Valley Middle School. She babysits her younger brother and does other chores, so her parents give her an allowance of $25 per week.

Not in the adult population.

Charles is a 75-year-old retired professor. He enjoys volunteering at the local public library.

Not in the labor force

Nick recently lost his job as a dishwasher. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. Alyssa is a real estate agent. House sales in her area have declined because the region has been going through a recession. She has no clients and is currently looking for a new full-time job. Rosa just moved with her husband to Portland, Oregon. She's looking for a job as a paralegal.

Structural Frictional Cyclical

Frances is a 26-year-old who lost her job as a copy editor for a local newspaper. She has spent the past few weeks out of work and interviewing for other editing jobs. She is thinking about going back to grad school if her job search doesn't succeed after a few more weeks.

Unemployed

Juanita is a 31-year-old science teacher who taught at West Valley Middle School last year. Due to budget cuts, she was laid off at the end of the school year. It's the summer now, and after a few weeks of vacation with her family, she is looking for a part-time job as a tutor.

Unemployed

Valerie is a 29-year-old professional basketball player. She finished her last season as a player 3 weeks ago and is currently interviewing for a coaching position.

Unemployed