MacroEconomics Ch.22
The BLS reported that in February 2020, the labor force was 164.5 million, employment was 158.8 million, and the working-age population was 259.6 million. The BLS also reported that 16.7 percent of all employment in February 2020 was part time and that 4.3 million people worked part time for economic reasons. How many people worked part time for noneconomic reasons?
(0.167 * 158.8) = 22.2
The BLS reported that in December 2015, the labor force was 157.8 million, employment was 149.9 million, and the working-age population was 252.0 million. The BLS also reported that 18.3 percent of all employment in December 2015 was part time and that 6.0 million people worked part time for economic reasons. How many people worked part time for noneconomic reasons?
(0.183 * 149.9) = 21.4
marginally attached worker
A marginally attached worker is a person who does not have a job, is available and willing to work, has not made specific efforts to find a job within the previous four weeks, but has looked for work sometime in the recent past.
Recovery won't improve unemployment Despite some optimism about the seeds of recovery, the Congressional Budget Office (CBO) sees joblessness rising. The CBO sees unemployment peaking at 10.4% next year from an average of 9.3% this year, before it falls to 9.1% in 2011. Source: Fortune, August 25, 2009 Why does unemployment continue to rise as an expansion begins?
As an expansion begins, previously marginally attached workers look for jobs, exceeding the number of people hired.
Why does unemployment continue to rise as an expansion begins?
As an expansion begins, previously marginally attached workers look for jobs, exceeding the number of people hired.
Blue in red states Unemployment is 4.9 percentlong dash—less than half of the Great Recession peaklong dash—but Bernie Sanders got a big cheer when he dismissed the official unemployment rate as not reflecting those who are involuntarily working part-time, or those who have become so discouraged they have given up looking for employment. Source: U.S. News & World Report, February 12, 2016 By how much did the broadest measure of unemployment change from its 2008-2009 "Great Recession" peak?
At the beginning of 2016, the broadest measure of unemployment was at approximately _______ of its peak. 60 percent
Blue in red states Unemployment is 4.9 percentlong dash—less than half of the Great Recession peaklong dash—but Bernie Sanders got a big cheer when he dismissed the official unemployment rate as not reflecting those who are involuntarily working part-time, or those who have become so discouraged they have given up looking for employment. Source: U.S. News & World Report, February 12, 2016 Which of the alternative measures of unemployment does Bernie Sanders think is more relevant than the official unemployment rate and what was its level at the start of 2016?
Bernie Sanders thinks the _______ measure of unemployment is more relevant than the official unemployment rate. U-6; At the start of 2016, this measurement was _______. 10 percent
Who in the following statements is a discouraged worker?
Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.
Who in the following statements is a full-time worker and who is a part-time worker
Dan works at Subway for 8 hours each day from Monday through Friday. Mary works at Starbucks' for 4 hours each day on weekends.
At the beginning of 2016, the broadest measure of unemployment was at approximately _______ of its peak.
During the 2008-2009 recession, U-6 peaked at about 17 percent. At the start of 2016, U-6 was 10 percent.
A BLS labor market survey interviewer recorded the facts about the 10 people on the four households shown in the table. Calculate the unemployment rate and the labor force participation rate for these ten people. How do the rates compare to the rates in the United States?
For these 10 people, the unemployment rate is 16.6 percent and the labor force participation rate is 60 percent. The unemployment rate in this community is _______ the unemployment rate in the United States in 2016. The labor force participation rate in this community is _______ the labor force participation rate in the United States in 2016.: greater than; less than
Full employment
Full employment is when there is no cyclical unemployment or, equivalently, when all the unemployment is frictional or structural.
The small but serious threat of a U.S. recession The unemployment rate is 4.9 percent, its level in 2008 before the recession. While it is unlikely that the United States will slip into recession this year, below-trend real GDP growth cannot be ruled out and some Wall Street economists say there is a 20 percent chance of recesion in 2016. Source: The Financial Times, February 5, 2016 Using the information in the news clip along with the graph, how would you describe the state of the U.S. economy through 2014 and 2015 and at the beginning of 2016?
In 2014 and 2015, the unemployment rate was _______ and the output gap was _______.: falling; gradually shrinking At the beginning of 2016, the unemployment rate was _______.: close to the natural unemployment rate and the economy was close to full employment
Which of the following statements illustrates structural unemployment?
Outsourcing resulted in many job losses in the mid 2000s.
Potential GDP
Potential GDP is the value of real GDP when all the economy's factors of production - labor, capital, land, and entrepreneurial ability - are fully employed.
Which of the following statements illustrates frictional unemployment?
Robin is quitting his current job to find another that has better prospects
Who in the following statements is a part-time worker for economic reasons?
Sherrie is a graduate who started working at Safeway pharmacy for 4 hours each day, three days a week, as they do not currently have a full-time opening.
Here are four statements about the types of unemployment. Which of these statements is correct? 1. An autoworker who loses his job because of a slowdown in the economy example of cyclical unemployment. This type of unemployment increases in recessions and decreases in expansion. 2. An unemployed graduate searching for a first job is an example of frictional unemployment. This type of unemployment arises from normal labor turnover 3. An autoworker who loses his job in a recession is an example of structural unemployment. This type of unemployment arises when changes in technology or international competition change the skills needed to perform jobs. 4. An unemployed textile worker in South Carolina who loses her job because of competition from China is an example of frictional unemployment. This type of unemployment arises when changes in technology international competition change the skills needed to perform jobs
Statements 1 and 2 are true; the others are false.
The Great Depression was a period of high _____, low _____, and extreme economic hardship that lasted from _____ to _____.
The Great Depression was a period of high _____, low _____, and extreme economic hardship that lasted from _____ to _____.
Great Depression
The Great Depression was a period of high unemployment, low incomes, and extreme economic hardship that lasted from 1929 to 1939. OK
labor force
The labor force is the number of people employed plus the number unemployed.
The trend in the labor force participation rate of all working-age people is _______.
The labor force participation rate for all working-age people shows an upward trend until 2000 and a downward trend after 2000.
labor force participation rate
The labor force participation rate is the percentage of the working-age population who are members of the labor force.
natural unemployment rate
The natural unemployment rate is the unemployment rate when the economy is at full employment.
Explain the relationship between the percentage of employed workers who have part-time jobs and the business cycle.
The percentage of the employed people who have part-time jobs increases in _______ because _______.: a recession; firms cut work hours
Recovery won't improve unemployment Despite some optimism about the seeds of recovery, the Congressional Budget Office (CBO) sees joblessness rising. The CBO sees unemployment peaking at 10.4% next year from an average of 9.3% this year, before it falls to 9.1% in 2011. Source: Fortune, August 25, 2009 Before the recession began, the U.S. unemployment rate was about 6 percent. As a recession begins, firms quickly make layoffs. Is this rise in unemployment mostly a rise in frictional, structural, or cyclical unemployment?
The resulting rise in unemployment is mostly a rise in ______ unemployment because _______. cyclical; it is related to the state of the economy
Unemployment falls to 4.9 percent, lowest in 8 years U.S. unemployment of 4.9 percent is full employment. Only 151,000 jobs were created in January, down from 262,000 in December. With falling oil prices, 7,000 energy jobs were lost in January but 29,000 manufacturing jobs were added. Source: CNN Money, February 5, 2016 How would you expect a shrinking energy sector and an expanding manufacturing sector to influence the actual and natural unemployment rate?
The shrinking energy sector _______ the unemployment rate and the expanding manufacturing sector _______ the unemployment rate. increases; decreases Other things remaining the same, the natural unemployment rate _______. is not expected to change because the events described are normal labor turnover
Unemployment falls to 4.9 percent, lowest in 8 years U.S. unemployment of 4.9 percent is full employment. Only 151,000 jobs were created in January, down from 262,000 in December. With falling oil prices, 7,000 energy jobs were lost in January but 29,000 manufacturing jobs were added. Source: CNN Money, February 5, 2016 Using the information provided in the news clip, which types of unemployment were present in the U.S. economy in January 2016?
The unemployment that is present in the U.S. economy in January in 2016 is _______. frictional and structural because the economy is at full employment
working-age population
The working-age population is the total number of people aged 16 years and over who are not in jail, hospital, or some other form of institutional care or in the U.S. Armed Forces.
U--6
U-5 plus those employed part time for economic reasons.
The graph shows the unemployment rate in the United States from 1960 to 2016.Who in the following statements is a part-time worker for economic reasons? The average unemployment rate was lowest during the 1960s and it resulted from ______.
Vietnam war defence spending and consumer spending encouraged by expanded social programs
In which year, 2000 or 2016, was real GDP below potential GDP? How can you tell from the graph to the right? Consider 2000 and 2016.
We can tell that real GDP was below potential GDP in _______ because _______. 2016; in 2016 the output gap is negative
Describe the relationship between the unemployment rate and the natural unemployment rate as the output gap flutuates between being positive and being negative.
When the output gap is positive, the unemployment rate ______ the natural unemployment rate. When the output gap is negative, the unemployment rate ______ the natural unemployment rate. is less than; is greater than
The average unemployment rate was highest during the 1980s and it resulted from ______.
a deep recession
discouraged worker
a marginally attached worker who has not made specific efforts to find a job within the past four weeks because previous unsuccessful attempts to find a job were discouraging.
frictional unemployment
arises from normal labor turnover
structural unemployment
arises when changes in technology or international competition change the skills needed to perform jobs
The natural unemployment rate is the unemployment rate when the economy is _____.
at full employment
Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during _____ and decreases during _____.
a recession; an expansion
The percentage of the employed people who have part-time jobs increases in _______ because _______.
a recession; firms cut work hours
At the beginning of 2016, the unemployment rate was _______.
close to the natural unemployment rate and the economy was close to full employment
The unemployment that is present in the U.S. economy in January in 2016 is _______.
frictional and structural because the economy is at full employment
When the output gap is positive, the unemployment rate ______ the natural unemployment rate. When the output gap is negative, the unemployment rate ______ the natural unemployment rate.
is less than; is greater than
The unemployment rate is the percentage of the people in the _____ who are unemployed.
labor force
labor force participation rate formula
labor force / adult population x 100
unemployment rate formula
number of unemployed / labor force x 100
The labor force is the number of people employed plus the _____.
number unemployed
U-3
official unemployment rate based on the standard definition of unemployment is
The working-age population is the total number of _____ aged _____ years and over who are not in jail, hospital, or some other form of institutional care or in the U.S. Armed Forces.
people; 16
The output gap is real GDP minus _____ expressed as a percentage of _____.
potential GDP; potential GDP
output gap
potential GDP; potential GDP
The trend in the labor force participation rate of women is due in part to _______. The trend in the labor force participation rate of men is due in part to _______.
the creation of more white-collar jobs with flexible work hours; some men taking early retirement
U-2
the percentage of the labor force that has been laid off and like U-1 is a measure of involuntary unemployment
U-1
the percentage of the labor force that has been unemployed for 15 weeks or more.
unemployment rate
the percentage of the people in the labor force who are unemployed.
U-4
the unemployment rate based on total unemployment plus discouraged workers.
U-5
the unemployment rate that includes U-4 plus other marginally attached workers.
cyclical unemployment
unemployment that fluctuates with the business cycle, increasing during contractions and decreasing during expansions
We can tell that real GDP was below potential GDP in _______ because _______.
2016; in 2016 the output gap is negative
The small but serious threat of a U.S. recession The unemployment rate is 4.9 percent, its level in 2008 before the recession. While it is unlikely that the United States will slip into recession this year, below-trend real GDP growth cannot be ruled out and some Wall Street economists say there is a 20 percent chance of recession in 2016. Source: The Financial Times, February 5, 2016 How would "below-trend real GDP growth" change the unemployment rate and what type of unemployment would change?
Below-trend real GDP growth _______ the unemployment rate and _______.: increases; cyclical unemployment increases
A marginally attached worker is a person who does not have a job, is _____ and _____ to work, has _____ specific efforts to find a job within the previous _____ weeks, but has looked for work sometime in the recent past.
available; willing; not made; four
Full employment is when there is no _____ unemployment or, equivalently, when all the unemployment is _____ or _____.
cyclical; frictional; structural
The resulting rise in unemployment is mostly a rise in ______ unemployment because _______.
cyclical; it is related to the state of the economy
Marla is an associate at JCPenney who wants to work 40 hours week but works 25 hours a week because sales at JC Penney are slow. Marla works part time for _______ reasons. Joe is a server at Olive Garden who wants to work 40 hours a week but works 15 hours a week because the number of patrons at Olive Garden has decreased. Joe works part time for _______ reasons.
economic; economic
In 2014 and 2015, the unemployment rate was _______ and the output gap was _______.
falling; gradually shrinking
Below-trend real GDP growth _______ the unemployment rate and _______.
increases; cyclical unemployment increases
The shrinking energy sector _______ the unemployment rate and the expanding manufacturing sector _______ the unemployment rate.
increases; decreases
Potential GDP is the value of real GDP when all the economy's factors of production - _____, _____, _____, and _____ - are fully _____.
labor; capital; land; entrepreneurial ability; employed
Michelle is a student who wants to work 20 hours a week at Cost Cutters so she can attend school. Cost Cutters schedules her for 20 hours a week. Michelle works part time for _______ reasons. Florence is semi-retired and wants to work 15 hours a week at Walgreens so she can spend time with her grandchildren. Walgreens schedules her for 15 hours a week. Florence works part time for _______ reasons.
noneconomic; noneconomic
The labor force participation rate is the percentage of the _____ who are members of the labor force.
working-age population
