Macro economics practice set 5

A survey reveals that on a small island 1,000 people have jobs, 250 people are looking for jobs, and 450 people are neither working nor looking for work. The unemployment rate on the island is: A) 20% B) 25% C)45% D) 15.6% .

a

An example of a factor that causes the natural rate of unemployment to rise is: A) a population boom that increases the number or young workers joining the labor force. B) the loss of labor union membership across industries. C) because of the loss of retirement funds, more people in the baby boom generation continue to work past the typical retirement age. D) the use of new technology in the workplace that increases labor productivity.

a

People who are counted as unemployed by the government are: A) people without a job who are actively seeking a job. B) discouraged workers. C) workers who are underemployed. D) people without a job who are actively seeking a job, discouraged workers, and workers who are underemployed.

a

Structural changes in an economy as well as changes in consumer tastes are reasons for: A) job creation and job destruction. B) job searches. C) unemployment during recessions. D) unemployment during expansions.

a

A high unemployment rate implies a high level of GDP. A) True B) False

b

A survey reveals that on a small island initially 100 people have jobs, 25 people are looking for jobs, and 45 people are neither working nor looking for work. Suppose that 15 of the 45 people who weren't looking for work now begin looking for work. There are now 40 people looking for work and 100 people working. What happens to the unemployment rate? A) It falls to 20%. B) It rises to 28.6%. C) It rises to 50%. D) Nothing happens to the unemployment rate, because these people weren't working before and they aren't working now.

b

Discouraged workers is another term for the unemployed. A) True B) False

b

If the actual unemployment rate is 7% and the cyclical unemployment rate is 2%, then the natural rate of unemployment is: A) 2%. B) 5%. C) 7%. D) 9%.

b

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 unemployment rate this month, all other things unchanged? A) It will rise, because 2 million people are not in the labor force this month and are not counted as unemployed. B) It will fall, because 2 million people are not in the labor force this month and are not counted as unemployed. C) It will be unaffected, because the same number of people is unemployed. D) Not enough information is provided to determine what happens to the unemployment rate.

b

To be classified as unemployed, a worker must: A. be working less than full time (40 hours a week). B. not have a job and must be actively looking for work. C. not be looking for a job and must not have a job. D. be a discouraged worker.

b

Unemployment rates tend to: A) be the same across geographic areas. B) vary depending upon age groups and ethnicities. C) increase when an expansion in the economy occurs. D) stay the same only when there is cyclical unemployment.

b

If more women enter or reenter the labor force, the natural rate of unemployment is expected to: A) decrease. B) remain unchanged. C) increase. D) decrease if they are well educated.

c

Ron quit his job in retail management and moved to Florida with his wife, a physician who opened a new practice there. He was not successful in his job search for the next four months. Ron's unemployment is known as: A) structural unemployment. B) cyclical unemployment. C) frictional unemployment. D) seasonal unemployment.

c

Suppose there are 70 million people in the labor force, of whom 60 million are employed. The unemployment rate is: A) 7%. B) 10%. C) 14.28%. D) impossible to calculate.

c

The percentage of the labor force that is unemployed is the: A) labor force participation rate. B) employment ratio. C) unemployment rate. D) natural employment rate.

c