Macro Chapter 6

Suppose people decide to buy fewer GE stoves. If General Electric reduces the number of its employees to reduce its costs but no other stove company does so, which type of unemployment results?

frictional

Which type of unemployment is a permanent and healthy phenomenon in a dynamic economy?

frictional

The labor force participation rate is the

labor force divided by the working-age population, then multiplied by 100.

Part-time workers are defined as people who are working

less than 35 hours per week

Discouraged Worker

marginally attached worker who has not made specific efforts to find a job within the previous 4 weeks because previous unsuccessful attempts were discouraging

Part time for economic reasons

people who work 1 to 34 hours a week but are looking for full-time work

As the unemployment rate increases

real GDP decreases

During a recession,

real GDP is less than potential GDP.

After the passage of the North American Free Trade Agreement, which made it less expensive to import goods from Mexico, workers in some industries found their factories being relocated to Mexico to take advantage of lower labor costs. These workers experienced what type of unemployment?

structural

Cyclical Unemployment

the fluctuating unemployment over the business cycle- higher than normal unemployment at a business cycle trough and lower than normal unemployment at a business peak

The upward trend in the U.S. labor force participation rate the past 50 years is explained by

the increase in the female labor force participation rate.

As technology advancements have led to more white collar jobs

the labor force participation rate for women has increased over the last 50 years

Labor Force

the number of people employed plus the number unemployed

Unemployment rate

the percentage of the people in the labor force who are unemployed (People Employed/Labor Force) x100

Labor Force Participation Rate

the percentage of the working-age population who are members of the labor force (Labor Force/Working-age population) x100

A main reason for the low unemployment rate from 1995 through most of the 2000s was because of

the rapid development of the Internet industry and other new technologies

When cyclical unemployment is zero

the unemployment rate equals the natural unemployment rate

The natural unemployment rate is

the unemployment rate that is not associated with the business cycle

In 2012, real GDP in the United States was below potential GDP. This fact definitely means that

the unemployment rate was above the natural unemployment rate

Potential GDP

the value of real GDP when the economy is at full employment

Potential GDP is reached when

there is no cyclical unemployment.

Part-time workers

those who usually work less than 35 hours a week

Full-time workers

those who work 35+ hours a week

Working-age population

total number of people aged 16 years, and over who are not in jail, hospital, or some other form of institutional care or in the armed forces

Frictional Unemployment

unemployment that arises from people entering and leaving the labor force, from quitting jobs to finding better ones and from ongoing creation and destruction of jobs

From 1981 to 2011, the unemployment rate in the United States

was generally lower than the unemployment rate in the Eurozone.

Discouraged workers

would increase unemployment rate if they were added to the number of unemployed workers.

From 1948 to 2011, the average unemployment rate in the United States was approximately

5.8 percent.

The table above shows data reported by the Office for National Statistics for the United Kingdom in September 2000. In September 2000, the labor force participation rate is

63.1 percent.

The type of unemployment that arises from a decrease in real GDP is called

cyclical unemployment.

During an expansion, the unemployment rate generally

falls

Cyclical unemployment

fluctuates over the business cycle

Output Gap

Real GDP-potential GDP expressed as a percentage

Across developed and newly industrialized economies, since 1989 the United States has generally had

a higher unemployment rate than Japan and Hong Kong and a lower unemployment rate than the Eurozone countries

Marginally Attached Worker

a person who does not have a job, is available and willing to work, has not made specific efforts to find a job within the past 4 weeks, but has looked for work in the recent past

A marginally attached worker is

a worker who does not have a job and is available and wants one but has not made any efforts to find a job within the previous four weeks

The working-age population consists of all the people in the population

aged 16 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces

U-4, U-5 and U-6 are

all broader measures of the unemployment rate

In 1994, the Bureau of Labor Statistics started to report

alternative measures of the unemployment rate that include narrower measures of the labor market and alternative measures of the unemployment rate that include broader measures of the labor market are correct answers

Natural Unemployment Rate

arises from frictions and structural change when there is no cyclical unemployment - as a percentage of the labor force

Structural Unemployment

arises when changes in technology of international competition change the skills needed to perform jobs or change the locations of jobs

When the unemployment rate is ________ the natural unemployment rate, real GDP is ________ potential GDP

below; above

U-4, U-5, U-6

broader measures of the unemployment rate

Cyclical unemployment includes people who become unemployed from

changes in the business cycle.

During the Great Depression of the 1930s when the unemployment rate was exceptionally high due to the Great Depression, the government had employment programs, such as the Civilian Conservation Corps, which built campsites and planted trees. These programs were aimed at reducing which type of unemployment?

cyclical

Between 1960 and 2010, the labor force participation rate for men

decreased in most years

Full Employment

defined as a situation in which the unemployment rate equals the natural unemployment rate

Part-time workers for noneconomic reasons are people who

do not want to work full time.

An unpaid worker in a family business is classified as

employed if the person worked at least 15 hours in the previous week.

The purpose of the Current Population Survey is to determine the

employment status of the population

The ongoing normal creation and destruction of jobs creates

frictional unemployment

Unemployment benefits in western Europe are more generous than in the United States. As a result, ________ in the United States

frictional unemployment is lower

Rosina Gonzales quit her job in Pennsylvania and moved to California to be close to her family. She is currently looking for work, so she would be considered

frictionally unemployed

The unemployment rates during the last 10 years in the Eurozone was

generally higher than the U.S. unemployment rate.

Since 2008, the U.S. labor force participation rate for men has ________ and for women has ________.

gone down; gone down

The working-age population of people over the age of 16 can be divided into two groups, people

in the labor force and people who are not in the labor force.

The natural unemployment rate

includes only frictional and structural unemployment.

Since 1960, the labor force participation rate in the United States has

increased for women and decreased for men.

In the United States, the percentage of part-time workers who would like full-time work

increases in recessions and decreases in expansions

During a recession, cyclical unemployment ________ and real GDP ________

increases; decreases

Discouraged workers and marginally attached workers are

not part of the labor force.

Producing an amount of GDP equal to potential GDP is most consistent with the economy producing

on the production possibilities frontier.

When the unemployment rate equals the natural unemployment rate, most likely the economy is producing

on the production possibilities frontier.

If an entire industry relocates to a foreign country, the relocation leads to a higher rate of ________ unemployment

structural

If the Federal government expands its support of education and retraining of workers who have been unemployed for a relatively long length of time, which type of unemployment would the education and retraining most likely be targeted?

structural

After 15 years with Ford Motor Corporation, one summer Cameron loses his job. His boss explained that his position has been downsized after the technological advances in automobile production. Cameron is best considered

structurally unemployed

Juan recently lost his job as a travel agent, which he has had for 20 years, because the demand for his services has fallen over time as more and more people book their vacations online. Unfortunately, Juan has not been able to find a new job because he lacks the skills needed to get hired in other industries where job growth is occurring. Juan is considered to be

structurally unemployed.

In part, the increase in the labor force participation rate in the United States over the last 50 years can be attributed to

technological change in the home increasing the time available for paid employment