Macroeconomics Chapter 8

The Bureau of Labor Statistics calls a person who is out of work would like to work, but has given up looking for work:

a discouraged worker.

Unemployment rates are usually higher in Europe than they are in the United States because:

unemployment benefits are more generous in Europe than they are in the United States.

During a recession:

unemployment increases and the growth rate of real GDP decreases.

In 2017, 10 million people did not have a job but were actively looking for employment and 85 million people had either a full-time or part-time job. The unemployment rate in 2017 was ______%.

10.5.

Unemployment rates are usually HIGHEST for:

African American teenagers.

Which example illustrates cyclical unemployment?

An autoworker is laid off because a recession has caused a decline in sales.

Which situation is likely to increase the natural rate of unemployment? a) the entrance of many new people into the labor force. b) a decrease in unemployment compensation benefits. c) a decrease in job search time due to information advances like the Internet. d) the elimination of the minimum wage

a) the entrance of many new people into the labor force.

Structural unemployment CANNOT be caused by:

fluctuations in the business cycle.

People who are changing jobs are counted in ______ unemployment.

frictional

Unit-of-account costs refer to the:

loss of the reliability of money as a relative unit of measurement.

When hyperinflation forces Pedro to change the price stickers on the books in his bookstore very frequently to keep up with the aggregate price level, economists say that Pedro has a:

menu cost

You are a college student and NOT working or looking for work. You are:

not part of the labor force.

The labor force is the total:

number of people who are employed or unemployed.

If money income remains the same while the average price level doubles:

real income will fall.

Structural unemployment consists of people who are unemployed because of:

there being more job hunters than there are jobs.

Jim has a part-time job. He would prefer to have a full-time job but has been unable to find one. Jim is classified as:

underemployed.

If deflation occurs and your income is fixed, you real income:

will go up.

The introduction of ATMs reduced the:

shoe-leather costs of inflation.

Unemployment is at its natural level if there is no:

cyclical unemployment.

The National Bureau of Economic Research announced that the U.S. economic recession that began in December of 2007 hit a trough in June of 2009. During that period, which type of unemployment increased for sure?

cyclical.

According to the Bureau of Labor Statistics, the actual unemployment rate was 8.3% in February 2012 and the natural rate of unemployment was 5.2%. Then _________ unemployment rate was ________%.

cyclical; 3.1.

Internet employment agencies have simplified the job search for the applicants. They have also led to a(n) ______ unemployment.

decrease in fricitional.

Deflation is a:

decreasing aggregate price level.

The natural rate of unemployment is:

equal to the sum of frictional and structural unemployment.

A survey reveals that, on a small island, 40 people have jobs, 10 people are not working but are looking for jobs, and 30 people are neither working nor looking for work. The unemployment rate on the island is ______%.

20.

Suppose that the nominal rate of interest is 7% and the inflation rate is 3%. The real rate of interest is _______%.

4.

If the actual unemployment rate is 7% and the cyclical unemployment rate is 2%, then the natural rate of unemployment is:

5%.

Suppose that roughly 8 million people in the United States were actively seeking jobs but had not found them this month, the same number as last month. Suppose that 2 million of the people who were unemployed last month gave up their search this month and stopped looking for work. What will happen to the official unemployment rate this month, all other things unchanged?

It will fall because 2 million people are not in the labor force this month and are not counted as unemployed.

What is and example that is a LIKELY response to inflation?

People tend to make more transactions.

A binding minimum wage in a labor market is set _______ the equilibrium wage and causes a _______ of labor.

above; surplus.

What is a TRUE statement? a) The number of people not working but who have looked for work in the past year is equal to the number of unemployed people. b) The labor force is the total number of people working plus those who are unemployed. c) The unemployment rate is the number of people unemployed expressed as a percentage of the population. d)The labor force is the same as the population.

b) The labor force is the total number of people working plus those who are unemployed.

To be counted as unemployed, one must:

be out of work and be actively looking for a job during the past four weeks.

Anna recently moved to Boston with her husband Joe, who has a new job as an economics professor at Harvard. Anna is an experienced surgeon who is interviewing with several hospitals in Boston. Anna is:

frictionally unemployed.

A recent college graduate with a major in economics attends a job fair but has not yet found a job. This graduate is counted as a ______ unemployed worker.

frictionally.

During deflation, the:

general price level falls.

An example of a structural unemployment is a(n):

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

Unanticipated inflation:

helps borrowers and hurts lenders.

Between 1921 and 1923, Germany underwent:

hyperinflation.

Generous unemployment benefits are likely to cause a(n):

increase in the unemployment rate.

Over the past year, Eli has been working very hard. His employer has taken notice and is giving Eli a 6% raise in salary. During this past year, overall prices in the economy have increased by 4%. Given this information, Eli's real wage has:

increased by 2%.

Shoe-leather costs are the:

increased cost of transactions due to inflation.

Increases in the average level pr prices are called:

inflation.

Firms pay an efficiency wage because:

it reduces the risk of losing the best workers.

A bank makes a loan for one year. The nominal annual interest rate is 7.5%. The real rate is 4%. Over the course of the year, overall prices increase by 4%. This rate of inflation hurt the _________ because the actual rate of inflation was ________ than the anticipated rate.

lender; higher

A survey reveals that, on a small island, initially 40 people have jobs, 10 people are not working but are looking for jobs, and 30 people who weren't working or looking for work now begin looking for work. There are now 20 people without jobs but looking for work and 40 people working. The unemployment rate:

rises to 33.3%.

When hyperinflation forces Emily to visit her bank very frequently to keep her cash holdings to a minimum, economists say that Emily has a:

shoe-leather cost.

Sam, who is 55 years old and has been a steelworker for 30 years, is unemployed because the steel plant in his town closed and moved to Mexico. Sam is __________ unemployed.

structurally.

Cyclical unemployment is the result of:

the business cycle.

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

the natural rate.