Homework 5: Unemployment and Inflation

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Which of the following is the correct formula for calculating the unemployment rate?

(Number of unemployed)/(Labor force) x 100

Which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment rate?

(Number of unemployed)/(Number in labor force) x 100

When the economy is at full employment,

All of the above

The price index which is used to measure changes in the cost of living is the

Consumer Price Index (CPI)

_____ is unemployment caused by a recession.

Cyclical unemployment

Since 1948, which of the following best describes the trend in the labor force participation rate?

It is decreasing for men and increasing for women.

_____ is the percentage of the working-age population in the labor force.

The labor force participation rate

How would it affect the unemployment rate if the Bureau of Labor Statistics counted as unemployed both (1) discouraged workers and (2) people who work part-time but would prefer to work full-time?

The unemployment rate would increase.

Which of the following is not one of the conditions someone needs to meet to be counted as unemployed?

They had worked only one hour per week during the previous four weeks.

The unemployment rate is calculated as follows:

Unemployment Rate = (Number of Unemployed)/(Labor Force) x 100

Suppose that the inflation rate turns out to be much higher than most people expected. In that case,

a borrower will gain from the situation while a lender will lose.

Suppose that you are available to go to work but have not looked for a job for at least the last four weeks because you believe that there aren't any jobs available. You would be counted as

a discouraged worker

Which index is used to measure the average prices paid by a typical family? An average of the prices of the goods and services purchased by a typical family is the:

consumer price index (CPI)

Workers who lose their jobs because of a recession are experiencing

cyclical unemployment

As output (GDP) is increasing, the amount of cyclical unemployment would _____.

decrease

The short-term unemployment that arises from the process of matching workers with jobs is called

frictional unemployment

The real interest rate

is equal to the nominal interest rate minus the inflation rate

The unemployment rate

shows the percentage of the labor force that is considered unemployed.

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called

structural unemployment

When the economy is at full employment, unemployment is equal to

the natural rate of unemployment

The difference between the nominal interest rate and the real interest rate is

the nominal interest rate is the stated interest rate whereas the real interest rate is the nominal interest rate minus the inflation rate.

If the economy is experiencing deflation,

the nominal interest rate will be lower than the real interest rate.

The natural rate of unemployment is

the sum of structural unemployment and frictional unemployment


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