Econ Chapter 8

structural unemployment

more people are seeking jobs in a particular labor market than there are jobs available at the current wage rate, even when the economy is at the peak of the business cycle

Employment is:

the total number of people actively working.

unemployment rate

=Number of unemployed workers/labor force

The labor force is equal to the:

CorrectB. sum of employment and unemployment.

An example of structural unemployment is a(n):

CorrectD. geologist who is permanently laid off from an oil company because of an increase in wages won by labor unions.

A survey reveals that on a small island 40 people have jobs, 10 people are looking for jobs, and 30 people are neither working nor looking for work. The unemployment rate on the island is:

CorrectC. 20%.

Unexpected Inflation:

Benefits borrowers and hurts lenders

The rate of unemployment that exists when the economy is at full employment is:

CorrectC. the natural rate of unemployment.

Total Population = 200 million Population Aged 16 and older = 150 millon Employed = 97 million (Table: Labor Force Data) If the labor force participation rate in this economy is 70 percent, the unemployment rate is:

CorrectD. 7.6%.

Total Population = 200 million Population Aged 16 and older = 150 millon Employed = 97 million (Table: Labor Force Data) Using the data from the accompanying table, suppose the labor force participation rate is 70%. The labor force is equal to:

CorrectA. 105 million.

Total Population = 200 million Population Aged 16 and older = 150 millon Employed = 97 million (Table: Labor Force Data) Using the data from the accompanying table, suppose the labor force participation rate is 70%. The number of unemployed adults is:

CorrectA. 8 million.

All of the following are costs of inflation except:

CorrectA. efficiency wage costs.

The unemployment rate is the ratio of all of the people:

CorrectA. unemployed to those in the labor force.

Costs of inflation are:

Shoe Leather Costs, Menu Costs, Unit of Account Costs

shoe leather costs

are the increased costs of transactions caused by inflation

unit of account costs

arise from the way inflation makes money a less reliable unit of measurment

natural rate of unemployment

frictional plus structural unemployment

Labor force

equal to the sum of employment and unemployment

Cyclical UNemployment

is the deviation of the actual rate of unemployment from the natural rate due to downturns in the business cycle

menu cost

is the real cost of changing a listing price

Labor force Participation Rate

percentage of population aged 16 or older that is in the labor force

Frictional unemployment

unemployment due to the time workers spend in the job search