MACRO ECON 202 HW 3 (myeconlab)
How does the U.S. economy create and destroy millions of jobs each year? (Mark all that apply.)
- In the market system, new firms are constantly entering and exiting various industries. - Some businesses are expanding, while others are contracting.
The BLS uses the establishment survey to collect information on employment in the economy. Indicate one drawback of the establishment survey compared to the current population survey and indicate one advantage.
- It is based on company payroll and not on unverifiable answers. - It does not include information about self-employed people.
When the economy is at full employment,
All of the above. - the natural rate of unemployment prevails - the unemployment rate is greater than zero - all remaining unemployment is either frictional or structural
The "normal" underlying level of unemployment in the economy is
All of the above. - the natural rate of unemployment. - the full-employment rate of unemployment. - the sum of structural unemployment and frictional unemployment.
____ is unemployment caused by a recession.
Cyclical unemployment
Suppose that the economy enters into a recession and that, as a result, Rusty Z. Wrench loses his job as a delivery truck mechanic and remains unemployed. When the economy recovers, Rusty's previous employer rehires him. What is the best classification for his time as an unemployed truck mechanic?
Cyclically unemployed
According to Costco's CEO, Jim Sinegal: "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." Sources: Alan B. Goldberg and Bill Ritter, "Costco CEO Finds Pro-Worker Means Profitability," ABCnews.com, Aug. 2, 2006; Lori Montgomery, "Maverick CEO Joins Push to Increase Minimum Wage," Washington Post, Jan. 30, 2007. What is Costco's CEO referring to?
Efficiency wages
Suppose John Q. Worker is currently unemployed. Each day, John Q. Worker spends the entire day searching available job openings for an appropriate position given his set of skills, abilities, and interests. If someone asks John Q. what he does for work, he tells them that he is currently "in-between jobs." Which of the following best classifies John Q.'s unemployment status?
Frictionally unemployed
Which one of the following accurately describes the relationship between frictional unemployment and job search?
People are said to be frictionally unemployed when they are between jobs and searching for new jobs.
What effect do labor unions have on the unemployment rate?
Since few non-government workers are unionized, there is no significant effect on the unemployment rate.
Justin Weaver reads a newspaper article in which an analyst points out that the country's 7 percent unemployment figure is actually its full-employment rate of unemployment. Justin is puzzled as to why this would be considered the full-employment rate of unemployment, when 7 out of 100 people in the labor force do not have jobs. Which of the following, if true, would best explain this to Justin?
Structural unemployment in the country is at 3 percent while frictional unemployment is at 4 percent.
Bob Wesley believes that structural unemployment should be eliminated in order for an economy to be healthy. In making this argument, which of the following relevant issues is he ignoring?
Structural unemployment will exist in an economy that is innovative.
Relative to the household survey, which of the following is a strength of the establishment survey?
The establishment survey is determined by actual payrolls, rather than by the unverified answers of the household survey.
Which one of the following depicts an accurate description of the household survey and the establishment survey?
The household survey interviews households and collects data that is used to measure the unemployment rate whereas the establishment survey interviews businesses and measures total employment in the economy.
How do unemployment insurance payments in the United States and social insurance programs in other countries increase the unemployment rate?
They decrease the opportunity cost of job search.
Consider the effect of each of the following on the unemployment rate: a. The minimum wage law b. The effect of labor unions on overall unemployment is __ since only a __ percentage of the labor force outside the government is unionized. c. An efficiency wage
a. has only a small effect on the unemployment rate since only a small part of the labor force earns the minimum wage. b. small, small c. increases the unemployment rate since firms pay a higher-than-market wage that increases the quantity of labor supplied.
Workers who lose their jobs because of a recession are experiencing
cyclical unemployment.
When a company reduces production and employment during economic recessions, those employees who lose their jobs are generally considered to be
cyclically unemployed
As output (GDP) is increasing, the amount of cyclical unemployment would ___.
decrease
When the economy is at full employment, which types of unemployment remain?
frictional and structural
The short-term unemployment that arises from the process of matching workers with jobs is called
frictional unemployment.
A person who is in between jobs but actively engaged in a job search is considered to be
frictionally unemployed
Government unemployment insurance tends to
increase the unemployment rate by lowering the opportunity cost of job search.
The payment of government unemployment insurance reduces the severity of recessions by
preventing a huge drop in income and spending for the unemployed.
The type of unemployment most likely to result in hardship for the people who are unemployed is
structural because this type of unemployment requires retraining to acquire new job skills.
Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called
structural unemployment.
Experts in hand-drawn animation who remain unemployed due to the film industry's switch to computer-generated animation are considered to be
structurally unemployed
A headline on an article in the New York Times was "Unemployed in Europe Stymied by Lack of Technology Skills." Source: Liz Alderman, "Unemployed in Europe Stymied by Lack of Technology Skills," New York Times, January 3, 2014. The unemployed workers referred to in the headline are likely to be
structurally unemployed because there is a mismatch between the skills of workers and the requirements of jobs.
Why do economists believe that setting a goal of zero percent unemployment is not feasible or desirable? Creating a goal of zero percent unemployment for an economy is not feasible nor is it desirable because
the economy needs some short-term unemployment in order to allow for better matching of jobs with workers that possess the proper skill sets.
Many economists prefer
the establishment survey because it is determined by actual payroll records rather than unverified answers.
When the economy is at full employment, unemployment is equal to
the natural rate of unemployment.
The unemployment rate in the United States typically has been lower than the unemployment rates in Canada and countries in Western Europe because
the opportunity cost of job search is lower in Canada and countries of Western Europe and unemployed workers in those countries search longer for jobs.
The natural rate of unemployment is
the sum of structural unemployment and frictional unemployment.
In 1914, Henry Ford increased the wage he paid workers in his car factory in Dearborn, Michigan to $5 per day. This wage was more than twice as much as other car manufacturers were paying. Ford was quoted as saying: "The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made." Giving workers a raise can result in overall lower costs for a firm if
workers are motivated by higher wages to work harder.
The three types of unemployment are
frictional, structural, and cyclical unemployment.
