7.Unemployment

13. If the steady-state rate of unemployment equals 0.125 and the fraction of unemployed workers who find jobs each month (the rate of job findings) is 0.56, then the fraction of employed workers who lose their jobs each month (the rate of job separations) must be:

0.08

12. If the steady-state rate of unemployment equals 0.10 and the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.02, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be:

0.18

43. Economists who have studied minimum-wage laws in the United States find that a 10 percent increase in the minimum wage increases teenage unemployment by about:

1 to 3 percent.

11. If the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.01 and the fraction of the unemployed who find a job each month is 0.09 (the rate of job findings), then the natural rate of unemployment is:

10 percent

23. In past nonrecessionary periods, a typical worker in the United States who is covered by unemployment insurance receives ______ percent of his or her former wages for ______ weeks.

50; 26

3. The natural rate of unemployment in the United States since 1950 has averaged between ______ and ______ percent.

5; 6

5. If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals ______ percent (rounded to the nearest percent).

9

41. If wage rigidity holds the real wage above the equilibrium level, an increase in the demand for labor will ______ the number unemployed.

decrease

45. The earned income tax credit:

does not raise labor costs.

18. Unemployment caused by the time it takes workers to search for a job is called ______ unemployment.

frictional

42. The minimum wage:

has its greatest impact on teenage unemployment

40. If wage rigidity holds the real wage above the equilibrium level, an increase in the supply of labor will ______ the number unemployed.

increase

26. The unemployment insurance system may be desirable because unemployment insurance:

induces workers to reject unattractive job offers.

15. One reason for unemployment is that:

it takes time to match workers and jobs

30. Public policy to increase the job finding rate include _____ and public policy to decrease the job separation rate include _____.

job training programs; 100 percent experience rated unemployment insurance

20. Sectoral shifts:

make frictional employment inevitable.

29. Government policies directed at reducing frictional unemployment include:

making unemployment insurance 100 percent experience rated

33. When there is structural unemployment, the real wage is:

rigid at a level above the market-clearing level.

10. If s is the rate of job separation, f is the rate of job finding, and both rates are constant, then the unemployment rate is approximately:

s/(s + f)

21. Economists call the changes in the composition of demand among industries and regions:

sectoral shifts

24. Unemployment insurance increases the amount of frictional unemployment by:

softening the economic hardship of unemployment.

35. The unemployment resulting from wage rigidity and job rationing is called ______ unemployment.

structural

32. The unemployment resulting when real wages are held above equilibrium is called ______ unemployment, while the unemployment that occurs as workers search for a job that best suits their skills is called ______ unemployment.

structural; frictional

4. The natural rate of unemployment is:

the average rate of unemployment around which the economy fluctuates.

22. Frictional unemployment is inevitable because:

the demand for different goods always fluctuates.

6. In a steady state:

the number of people finding jobs equals the number of people losing jobs

31. According to studies of individual unemployed workers, these workers are most likely to find a job:

within a few weeks of their unemployment insurance running out

38. Which of the following is the best example of structural unemployment?

Kirby is seeking a job as an airline pilot, but the high union wages in the industry have limited the number of jobs available

9. A policy that decreases the job separation rate _____ the natural rate of unemployment.

will decrease

19. Which of the following is an example of frictional unemployment?

Dave searches for a new job after voluntarily moving to San Diego

2. The unemployment rate in the United States since 1952 has:

never been close to zero

27. Firms currently have incentives to temporarily lay off workers because firms typically are charged for ______ of workers' unemployment benefits.

only a part

28. Most current unemployment-insurance programs are:

partially experience rated

34. Wage rigidity:

prevents labor demand and labor supply from reaching the equilibrium level.

44. Permitting a lower minimum wage for teenagers would likely:

raise unemployment among unskilled adults

14. Any policy aimed at lowering the natural rate of unemployment must either ______ the rate of job separation or ______ the rate of job finding.

reduce; increase

8. A policy that increases the job-finding rate _____ the natural rate of unemployment.

will decrease

36. When the real wage is above the level that equilibrates supply and demand:

the quantity of labor supplied exceeds the quantity demanded.

17. Frictional unemployment is unemployment caused by:

the time it takes workers to search for a job

16. All of the following are reasons for frictional unemployment except:

unemployed workers accept the first job offer that they receive.

7. In the model of the steady-state unemployment rate with a fixed labor force, the rate of job finding equals the percentage of the ______ who find a job each month, while the rate of job separation equals the percentage of the ______ who lose their job each month.

unemployed; employed

1. The macroeconomic problem that affects individuals most directly and severely is:

unemployment

25. All of the following policies were adopted by the government in an attempt to reduce the natural rate of unemployment except:

unemployment insurance

39. All of the following are causes of structural unemployment except:

unemployment insurance.

37. Workers unemployed as a result of wage rigidity are:

waiting for a job to become available.