ECO 202 CH.9 Homework
Those who are voluntarily unemployed are ____________.
willing to work, but not at the prevailing wage.
The graph on the right shows a labor market in equilibrium. The equilibrium wage is $10 per hour. At this wage, there are people who are not working, which is represented by the segment of the labor supply curve above the equilibrium wage. Why are these people not working in this market?
These people are only willing to work for wages above the market-clearing wage.
The labor supply curve shows that the quantity of labor supplied will decrease as__________ This results in a labor supply curve that is ______ The labor supply curve is derived from the concept that ____________.
wages decrease upward-sloping. as wages increase, the opportunity cost of leisure increases, leading people to work more hours.
Aidan, Bianca, Caitlyn and Dmitri want jobs as management consultants. XY Corporation is a management consulting firm in a perfectly competitive market which has advertised a job opening for the post of a management consultant paying the equilibrium salary. Who is voluntarily unemployed based on the information given below? In the scenario described above, ________ suffers from frictional unemployment.
Aidan receives a job offer from XY Corporation but rejects it as the salary offered was below his expectations. Caitlyn
For this exercise you will need to enter data from FRED for the unemployment rate (Series ID: UNRATE). The following table gives the natural rate of unemployment and the potential real GDP for June of 2021. Using data from FRED, enter the value for unemployment rate for this period (shown as 2021−06−01 in FRED). (Enter your responses exactly as they appear in FRED.) Month/Yr: Potential Real GDP: Natural Rate of Unemployment : : :Unemployment Rate UNRATE Jun/2021 19697.4 4.5 __________________ Complete the following table by computing, for June of 2021, the extent of cyclical unemployment in percentage terms. (Enter your response rounded to one decimal place and use a minus sign if necessary.) Month/Yr Cyclical Rate of Unemployment (percent) Jun/2021 ________________ Suppose it is claimed that actual real GDP deviates from potential real GDP by 2% for every percentage point of cyclical unemployment. In other words, assume that actual real GDP falls below (or rises above) potential real GDP by 2% when the rate of unemployment rises above (or falls below) the natural rate of unemployment by 1%. Given the cyclical unemployment rate recorded above, this translates into actual real GDP deviating from potential real GDP by $________billion. (Enter your response rounded to one decimal place and use a minus sign if necessary. If actual GDP is below potential GDP, enter your answer as a negative value.)
5.9 5.9-4.5= 1.4 Given the cyclical unemployment rate recorded above, this translates into actual real GDP deviating from potential real GDP by −1×(1.4×.02)×19697.4=$−551.5 billion. For June of 2021, actual real GDP falls below potential real GDP
Structural unemployment can be caused by ____________. A. minimum wage laws. B.labor unions. C.imperfect information by workers and firms. D. all of the above. E. A and B only
A and B only
Real-Time Data Analysis Exercise Click the following link to view Employment and Population data from FRED.* Then use that data to answer the following questions. LOADING... *Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. For this exercise you will need to enter data from FRED for the unemployment rate (Series ID: UNRATE). The following table gives the natural rate of unemployment for August of 2014 and 2016. Using data from FRED, enter the values for actual unemployment rate for the same two periods (shown as 2016−08−01 and 2014−08−01 in FRED). (Enter your responses exactly as they appear in FRED.) Month/Yr Natural Rate of Unemployment (percent) Unemployment Rate (percent) Aug/2014 4.7 ________________ Aug/2016 4.6 ________________ Complete the following table by computing, for each period, the extent of cyclical unemployment in percentage terms. (Enter your responses rounded to one decimal place and use a minus sign if necessary.) Month/Yr Cyclical Rate of Unemployment (percent) Aug/2014 _____________________________ Aug/2016 ______________________________ Given the change in cyclical unemployment over this two-year period, it can be concluded that the economy has ___________
Aug/2014: 6.1 Aug/2016: 4.9 2014:6.1-4.7= 1.4 2016: 4.9-4.6= 0.3 expanded.
Which of the following is an example of what economists refer to as job search? A. A person who applies for a high-paying job but does not qualify, so she begins searching for an appropriate position. B. An individual that engages in the job hunt by determining who is hiring and how much they pay. C. People that engage in the job hunt by sending out resumes. D. All of the above. What type of unemployment does job search lead to?
D Frictional unemployment.
If this market were frictionless and could adjust freely, then over time we would expect ____________.
a decrease in the wage rate, since there are more people looking for jobs at that wage than firms want to higher.
Which of the following is not true regarding the natural rate of unemployment?
The natural rate of unemployment is 0 percent when the U.S. economy is not in a recession.
Which of the following best explains why the labor supply curve slopes upward? Which of the following does not cause the labor supply curve to shift?
When wages increase, the opportunity cost of not working increases, leading people to seek more work hours. Shifts in the labor demand curve that cause a change in the wage rate. A change in the wage rate does not lead to a shift in the labor supply curve; instead, it causes a movement along the curve. Factors that cause the labor supply curve to shift include: 1. Changing social norms and their impact on people's willingness to take a job 2. Changes in population 3. Changing opportunity cost of time
In a recent study for the National Bureau of Economic Research (NBER), four researchers looked at the effect of generous unemployment benefits on the local unemployment rate. They compared the unemployment situation in adjoining counties, which happened to lie in two different states that had different laws regarding the amount and duration of unemployment benefits. (Re-read the section on "A Natural Experiment of History" in Chapter 8 of the text to understand how the NBER research is based on a "natural experiment.") The authors of the NBER study found that the unemployment rate "rises dramatically in the border counties belonging to the states that expanded unemployment benefit duration" during the Great Recession. Why might this be so? Based on Hagedorn, Karahan, et al., "Unemployment Benefits and Unemployment in the Great Recession: The Role of Macro Effects." NBER working paper 19499, October 2013.
With the longer duration of unemployment benefits, firms needed to keep wages high to attract people to work. This caused downward wage rigidity, leading to persistent higher unemployment.
Unemployment statistics are measured and released by the Bureau of Labor Statistics (BLS), a division of the U.S. Department of Labor. The BLS officially classifies a person as being employed ____________. Potential workers are classified as being unemployed when ____________. The equation for the unemployment rate is defined as ____________.
if that person holds either a part-time or full-time paid job. they do not have a paid job, have looked for work in the previous 4 weeks, and are available for work. 100%*(unemployed/labor force)
The value of the marginal product of labor is the ____________. Anthony owns a landscaping business that has 4 employees. His company is able to earn revenue of $600 per day. He knows that if he hires another worker, he would have to pay that worker $50 per day and the company would earn revenue of $680 per day if the new worker is hired. Determine the value of the marginal product of labor of the employee that Anthony is considering hiring.
market value of a worker's additional output for a firm. $80 Since the value of a worker's marginal product is the additional revenue that a worker will generate for the firm, and the firm's profits would change from $600 to $680 if the new worker is hired, we know that the value of the marginal product of labor must equal $80.
Given your graph, the total amount of unemployment that would result from the decline in demand for Starbucks products along with having a fixed wage at $9 can be found by ______________. Suppose the wage is flexible. Now, the impact from the decline in demand for Starbucks products would lead to ____________.
subtracting the quantity of labor at point B from the quantity of labor at point A. a decrease in employment but not by as much as under the fixed-wage rate system.
Sometimes new technology in production reduces the time that a worker takes to complete a task. Technological innovations can also completely replace a factory worker. Does this mean that technological progress will lead to large-scale unemployment?
No, some sectors may experience unemployment as a result of the innovations but overall productivity and incomes will increase, leading to more employment opportunities.
Click the following link to view Current Population Survey (Household Survey) data from FRED.* Then use that data to answer the following questions. LOADING... *Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. Using data from FRED, enter the values from June, 2021 for the four variables listed below (shown in FRED as 2021−06−01). (Enter your responses exactly as they appear in FRED.) Title Series ID Value (thousands of persons) Not in Labor Force, Searched for Work and Available LNU05026642 _____________ Unemployed UNEMPLOY ___________________ Employment Level - Part-Time for Economic Reasons, All Industries LNS12032194 ______________________ Employed / CE16OV ______________ 2. Using data recorded above, the official unemployment rate for June, 2021 was _______. (Enter your response rounded to one decimal place.) It has been argued that the official unemployment rate understates the degree of joblessness because of the narrow definiton used to define those who are unemployed. 3. A broader measure, which includes as unemployed those who work part-time for economic reasons and those who were available for work but not actively searching, is also computed by the BLS. Using date from above, this broader rate of unemployment for June, 2021 was _______ (Enter your response rounded to one decimal place.) 4. The gap between the official rate and the broader rate changes over the course of the business cycle. More specifically, during expansions the gap is likely to ______________
1. Not in Labor Force, Searched for Work and Available 1856 Unemployed : 9484 Employment Level - Part-Time for Economic Reasons: 4627 Employed: 151602 2.The official unemployment rate (Urate in the formula below) is the percent of the civilian labor force that is unemployed. The civilian labor force is the sum of those who are employed and unemployed. Urate=(Unemployed/Unemployed+Employed)×100 = (9484/9484+151602)*100 = 5.9% 3. BUrate=(9484+4627+1856)/(9484+4627+1856+146975)×100 =(15967/162942)×100=9.8% 4. narrow
Real-Time Data Analysis Exercise Click the following link to view Current Population Survey data from FRED.* Then use that data to answer the following questions. LOADING... *Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. For this exercise you will need to enter data from FRED for civilian employment, unemployment, and people not in the labor force. Using the data from FRED, enter the values for June of 2021 (shown as 2021−06−01 in FRED) for the following series. (Enter your responses exactly as they appear in FRED.) Title Series ID Value (thousands) Civilian Employment CE16OV ______________________ Unemployment UNEMPLOY _______________________ Not in Labor Force LNS15000000 ________________________ Using the values recorded above, the working-age population (in thousands) for June of 2021 is _________ The employment-population ratio for the economy is equal to ________ percent. (Enter your response rounded to one decimal place.) All else constant, the onset of an expansion would be expected to _______ this ratio. All else constant, the onset of a recession would be expected to ________ this ratio.
1. 151602 2. 9484 3. 100253 4. The working-age population is the sum of civilian employment, unemployment and those not in the labor force: 151602+9484+100253= 261339 The employment-population ratio is given by: (Civilian Employment/ Working—Age Population)×100 5. For June, 2021 the employment-population ratio is equal to: (151602/261,339)×100=58.0 percent 6. Increase 7. decrease
Real-Time Data Analysis Exercise Click the following link to view unemployment level data from FRED.* Then use that data to answer the following questions. LOADING... *Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. Using the data from FRED, enter the values for June of 2021 (shown as 2021−06−01 in FRED) for the following series. (Enter your responses exactly as they appear in FRED.) Title Series ID Value (thousands) Unemployment Level - Men LNS13000001 ________________ Unemployment Level - Women LNS13000002 ________________ Use the values recorded above with the information in the following table to compute the unemployment rate for men and women for June of 2021. (Enter your responses rounded to one decimal place.) Civilian Labor Force Level (thousands) Unemployment Rate (percent) Men: 85,320 _______6.0_____ Women: 75,766 ________5.7_______ Suppose that a deep and prolonged recession induces some job seekers to discontinue their job search efforts due to the belief that no jobs are available for them. These individuals are known as _______ workers, and an increase in their numbers, all else constant, will cause the unemployment rates computed above to __________
1. 5144 2. 4340 The unemployment rate measures the percentage of the labor force that is unemployed: (Unemployment level/civilian labor force level)*100%= unemployment rate The unemployment rate measures the percentage of the labor force that is unemployed. For men in June, 2021 it is given by: (5144/85320)×100=6.0% 3 For women in June, 2021 it is given by: (4340/75766)*100=5.7% 4 5. discouraged 6. decrease
Real-time data analysis exercise Click the following link to view unemployment data from FRED*. Then use that data to answer the following questions. LOADING... *Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. The data in the table below shows employment data for June 01, 2021. Using the link above, correctly identify the title for each series listed in the table below. Title Series ID Value ___________________________ UNEMPLOY 9,484 ___________________________ CLF16OV 161,086 ___________________________ LNS12032195 3,430 Using FRED, the series above are reported _______, and the values are in ___________ Use the data in the table above to calculate two different unemployment rates. (Enter your responses rounded to two decimal places.) The civilian unemployment rate is____________ The civilian unemployment rate including persons who are underemployed (part-time for economic reasons) is ___________
1. Unemployed 2. Civilian Labour force 3. Employment level-part-time for economic reasons 4. monthly 5. thousands of persons. Use the following formula to compute the unemployment rate: Unemployment rate (%)=(Number of people unemployedNumber of people in the civilian labor force) ×100 In the second unemployment calculation, we are considering part-time workers for economic reasons to be unemployed, so add them to the number of unemployed. 6. The civilian unemployment rate is: (9,484/161,086)×100=5.89%. 7. The civilian unemployment rate including persons who are underemployed (part-time for economic reasons) is: [(9,484+3,430)/161,086]×100=8.02%.
