Macroeconomics Chapter 11

Economist Jospeh Schumpeter

"Creative Destruction" was a term coined by?

8.6% Unemployed/ Unemployed + Employed * 100

If 14.6 million people are unemployed, 155.5 million people are employed, and 7.9 million people are institutionalized, what is the unemployment rate?

6.1%

If 9.4 million people are unemployed and 145.5 million people are employed, what is the unemployment rate?

An adult, non-institutionalized civilian with a job

In order to be counted as employed, a person must be?

Not actively looking for work

Individuals without a job are not counted as unemployed if they are?

Race, religion, sex, sexual orientation, national origin, age, or handicap status

Public law also imposes certain restrictions; employers, for example, are forbidden from hiring or firing on the basis of?

Frictional Unemployment

Short-term unemployment caused by the ordinary difficulties of matching employee to employer is known as?

Labor Force

Something is considered in the ___________ ___________ when they are actively employed or when they are looking for work.

Recessions

Structural changes often happen during?

Structural

____________ unemployment is the persistent, long-term unemployment caused by long-lasting shocks or permanent features of an economy that make it more difficult for some workers to find jobs.

Frictional

____________ unemployment is the short-term unemployment caused by the ordinary difficulties of matching employee to employer.

Employed

____________ workers are adults who are actively working.

Discouraged

____________ workers have given up looking for work but who would still like a job if one were offered.

Unemployed

_____________ workers are adults who do not have a job but who are looking for work.

Benefits

What encourages nonwork?

Fewer workers are producing goods and services

Higher unemployment means that?

Faster growth in real GDP decreases unemployment.

How does faster growth in real GDP affect unemployment?

Underemployment Rate

A Bureau of Labor Statistics measure that includes part-time workers who would rather have a full-time position and people who would like to work but have given up looking for a job, this is known as?

65 percent

According to data from the Bureau of Labor Statistics, approximately what percentage of unemployed workers in 2005 found work in less than 14 weeks?

Unemployed

Adults who do not have a job but who are looking for work are known as?

Unions

An association of workers that bargains collectively with employers over wages, benefits, and working conditions is known as?

Encourage not working.

Benefits paid to non-workers: - discourage work. - encourage not working. - discourage not working. - encourage work.

Between 40 percent and 50 percent of all students.

Between 1970 and 2005, female participation in professional degree programs shot up to:

The labor force participation rate, the number of full-time jobs, and average wages

Economists also look at other measures of labor underutilization and indicators of how well the labor market is performing, such as?

1. Frictional 2. Structural 3. Cyclical

Economists distinguish three types of unemployment which are?

Lower tax receipts

Falling labor force participation means?

Decrease in Unemployment

Faster growth is correlated with?

Minimum Wages

Higher ___________ ___________ lead to unemployed workers by including more people to enter the labor force chasing the high wages and decreasing the amount of labor that businesses are willing and able to hire.

Discouraged Workers

Jobless individuals who have given up looking for work but who would still like to find a job are known as?

High tech areas like software engineering and the biosciences

Jobs are growing rapidly in what areas?

Increases in Unemployment

Lower growth is correlated with?

Labor Force

Many individuals neither have a job nor are looking for work-these individuals are not part of the?

Lawyers, Doctors, and other professions previously considered immune to automation

Many people fear that artificial intelligence will lead to unemployment for?

Baby Boomers

People born during the high-birth-rate years of 1946-1964 are known as?

Structural Unemployment

Persistent, long-term unemployment caused by long-lasting shocks or permanent features of an economy that make it more difficult for some workers to find jobs is known as?

Active Labor Market Policies

Policies that focus on getting unemployed workers back to work, such as job-search assistance, job-retraining programs, and work tests, this is known as?

Labor Regulations

Structural unemployment has been a more serious problem in Europe than in the United States because of?

Persistent, long-term unemployment caused by long-lasting shocks or permanent features of an economy that make it more difficult for some workers to find jobs.

Structural unemployment is: - short-term unemployment caused by the ordinary difficulties of matching employee to employer. - unemployment correlated with the business cycle. - persistent, long-term unemployment caused by long-lasting shocks or permanent features of an economy that make it more difficult for some workers to find jobs. - long-term unemployment caused by the ordinary difficulties of matching employee to employer.

68.26 percent. Unemployed + Employed/ Unemployed + Employed + Adults not in labor force * 100

Suppose an economy has 13.5 million unemployed workers, 143.7 million employed workers, and 73.1 million adults who do not participate in the labor force. The labor force participation rate for this economy is:

69.3

Suppose an economy has 8.5 million unemployed workers, 131.2 million employed workers, and _____ million adults who do not participate in the labor force. The labor force participation rate for this economy is 66.84 percent. - 69.3 - 68.9 - 69.7 - 66.8

131.2

Suppose an economy has 8.5 million unemployed workers, _____ million employed workers, and 69.3 million adults who do not participate in the labor force. The labor force participation rate for this economy is 66.84 percent. - 131.2 - 130.3 - 114.5 - 98.4

Workers who want and are available for work, and who have looked for a job sometime in the last year but not in the last month because they believe that no jobs were available for them.

The Bureau of Labor Statistics defines discouraged workers as?

Unemployment Rate

The __________ __________ is the percentage of the labor force without a job.

Labor Force

The ____________ _____________ is made up of adults who are not in school or incarcerated that are actively working or looking for a job.

Labor Demanded

The increase in wage decreases the quantity of?

Young workers, who tend to be less productive, than among older workers

The minimum wage is more likely to create unemployment among?

Employment-at-will doctrine.

The most basic U.S. employment law is the: - employment-at-will doctrine. - minimum wage. - Taft-Hartley Act. - Constitution.

Unemployment rate.

The percentage of the labor force without a job is the: - the employment rate. - underemployment rate. - unemployment rate. - labor force participation rate.

Employment At-Will Doctrine

The policy that an employee may quit and an employer may fire an employee at any time and for any reason; the most basic U.S. employment law despite many exceptions to it is known as?

Natural Unemployment Rate

The rate of structural plus frictional unemployment is known as?

Employment protection laws that reduce unemployment.

The textbook provides an example of each EXCEPT: - active labor market policies that reduce unemployment. - labor market regulations that raise unemployment. - large, long-lasting shocks that raise unemployment. - employment protection laws that reduce unemployment.

Underemployed

The unemployment rate does not include ______________ workers, who are part-time workers that would like to be full-time workers.

Median Wage

The wage such that one-half of all workers earn wages below that amount and one-half of all workers earn wages above that amount is known as?

1. A person must be an adult (16 years or older) 2. Not institutionalized (e.g. not in prison) 3. A civilian 4. That person must be looking for work

To be counted as unemployed, what four criteria have to be met?

Cyclical Unemployment

Unemployment correlated with the business cycle is known as?

Strike and to prevent the firm from hiring substitute labor

Unions demand higher wages by using their power to?

1. Job Retraining 2. Job-Search Assistance 3. Work Tests 4. Early Employment Bonuses

What are four examples of active labor market policies?

1. Unemployment Benefits 2. Minimum Wages 3. Powerful Unions 4. Employment Protection Laws

What are four examples of labor regulations?

1. Oil Shocks 2. Shift from manufacturing to Services 3. Globalization and global competition 4. Fundamental technology shocks (computers, the Internet, and-maybe-artificial intelligence)

What are four examples of large, long-lasting shocks that require the economy to restructure?

Active Labor Market Policies

What are policies that can reduce structural unemployment?

The percentage of the adult, civilian, non-institutionalized population in the labor force

What are the determinants of the labor force participation rate?

Unemployment Benefits

What are the most obvious labor regulation that can increase unemployment rates?

1. Large, long-lasting shocks that require the economy to restructure 2. Labor Regulations

What are two factors that can increase structural unemployment?

1. Lifecycle effects and demographics 2. Incentives

What are two factors that determine labor force participation rate?

Unemployment

What can be financially and psychologically devastating?

Cyclical Employment

What can increase or decrease dramatically over a matter of months?

Stronger Unions

What can increase structural unemployment?

Recession

What causes unemployment to increase quickly in many different industries at once?

Taxes

What discourages work?

Unemployment Rate

What doesn't measure the quality of the jobs people take or how well workers are matched to their jobs?

1. Create valuable insurance for workers with full-time jobs 2. Make labor markets less flexible and dynamic 3. Increase the duration of unemployment 4. Increase unemployment rates among young, minority, or otherwise "riskier" workers

What four effects to employment protection laws have?

1. Unemployment Benefits 2. Minimum Wages 3. Unions 4. Employment Protection Laws

What four regulations can benefit some workers but can also increase unemployment rates?

The Internet

What has probably lowered the underlying rate of frictional unemployment by making it easier for workers to search for jobs and for firms to search for workers?

Unemployment

What is a necessary consequence of economic growth?

Unemployment Insurance

What is an example of unemployment benefits?

Large, economy-wide shocks that occur relatively quickly

What is one cause of why structural unemployment occurs?

Scarcity of information

What is one of the causes of frictional unemployment?

Labor Force Participation Rate= Unemployed + Employed/Adult Population * 100 = Labor Force/Adult Population * 100

What is the equation used to calculate Labor Force Participation Rate?

Unemployment Rate= Unemployed/Unemployed + Employed * 100 = Unemployed/Labor Force * 100

What is the equation used to find unemployment rate?

Labor Force Participation Rate

What is the percentage of adults in the labor force known as?

Unemployment rate

What is the percentage of the labor force who are unemployed known as?

Unemployment Rate

What is the single best indicator of how well the labor market is working but is still an incomplete indicator?

Frictional Unemployment

What is typically a large share of total unemployment because the U.S. economy is dynamic?

High and long-lasting unemployment

What is unlikely to be caused by economic growth?

Unemployment

What means that the economy is underperforming and that labor used to produce valuable goods and services is being wasted?

Unemployment Benefits

What reduces the incentive for workers to search for and take new jobs?

1. The longer a worker remains out of the labor force, the more his or her skills atrophy. 2. Hiring managers may regard unemployment as a sign of laziness or other problems.

What two problems do unemployed workers face?

A growing economy

What type of economy is a changing economy?

Firms often lay off workers, which increases unemployment

When GDP is falling, what do firms often do?

If the labor force is 154.3 million of 238.1 million non-institutionalized civilian adults, the unemployment rate is 64.8 percent.

Which statement is FALSE? - Cultural factors can influence the labor force participation rate. - If the labor force is 154.3 million of 238.1 million non-institutionalized civilian adults, the unemployment rate is 64.8 percent. - The labor force participation rate is equal to [(unemployed + employed) ÷ adult population] × 100. - The people born during the high birthrate years from 1946 to 1964 are baby boomers.

Economists Goldin and Katz argue that the pill lowered the costs of earning a professional degree by giving women greater certainty about the consequences of sex.

Which statement is TRUE? - Countries may differ on whether they penalize those who work after retirement, but this does not impact the amount of labor force participation among those 55 to 64 years of age. - Economists Goldin and Katz argue that the pill lowered the costs of earning a professional degree by giving women greater certainty about the consequences of sex. - A natural response to rising life expectancies and better health at older ages is earlier retirement. - The choice to work cannot be influenced by taxes on workers and benefits paid to non-workers.

Institutionalized

_____ workers are those adults in jail or other similar situations.

Job Retraining Programs

___________ ___________ __________ help to match workers who have skills that are no longer demanded learn new skills that are demanded.

Positive; Normative

___________ economics is based on fact and cannot be approved or disapproved, ____________ economics is based on value judgments.

Cyclical

____________ unemployment is correlated with the business cycle.