Chapter 9 MyEcon

A discouraged worker

Is a person available to go to work but has not looked for a job for a least four weeks because they believe that there aren't any jobs available

During a recession, a person would prefer to work in an industry that produces

an inferior good because demand for inferior goods should increase with decreases in income during a recession

The employment-population ratio measures the

percentage of the working population that is employed

The unemployment rate

shows the percentage of the labor force that is considered unemployed

These makes changes in the CPI overstate the true inflation rate?

New product bias, substitution bias, increase in the quality bias

Currently the Bureau of Labor Statistics does not include homemakers in its employment and labor force totals. What would happens to the unemployment rate and the labor force participation rate if homemakers were included in these numbers?

The unemployment rate would decrease and the labor force participation rate would increase.

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

The unemployment rate would increase

During an economic expansion, a person would prefer to work in an industry that produces

a normal good because the demand for normal goods should increase with increases in income during the economic expansion

If an economy enters a recession and an employee loses his job and remains unemployed, then the economy recovers and his employer rehires him, this is best classified as

cyclical unemployment

When an unemployed person drops out of the labor force, it

does not affect the employment population ratio

According to Costco's CEO, "Paying good wages and keeping your people working for you is good business... Imagine that you have 120,000 loyal ambassadors out there who are constantly saying good things about Costco. It has to be a significant advantage for you." This refers to:

efficiency wages

The difference between a nominal variable and a real variable is that

nominal variables are calculated in current-year prices and the real variables are measured in dollars of the base year for the price index to correct the effects of inflation

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

structural unemployment

Is the percentage of the working-age population in the labor force

the labor force participation rate

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

the natural rate of unemployment

If inflation is expected to increase:

the nominal interest rate will increase

The natural rate of unemployment is

the sum of structural unemployment and frictional unemployment

When an unemployed person drops out of the labor force, the unemployment rate

understates the true degree of joblessness in the economy

Number of unemployed/labor force *100

unemployment rate