macroeconomics chapter 7

All else being equal, which of the following would lead to a higher unemployment rate?

a new accounting system automates most of the billing process done by accountants actual real GDP falls below potential real GDP discouraged workers reenter the labor force because they believe they can now find a job U.S. Congress passes a new law requiring firms to pay severance to the workers they fire

Which of the following can lower the level of frictional unemployment over time?

-reducing the regulations on hiring practices in a country -an increase in the number of online job search engines

Consider each situation and determine whether the person is structurally unemployed, frictionally unemployed, or cyclically unemployed. Bob loses his job as the economy slips into a recession.

Cyclical unemployed

Consider each situation and determine whether the person is structurally unemployed, frictionally unemployed, or cyclically unemployed. Julie graduates from college and is looking for a job as an accountant. Julie had to leave her old job when she moved to a new city. She works in customer service and is looking for a new job.

Frictional unemployment

Which of the following people are cyclically unemployed? i. Sarah, whose mother told her she should keep looking for work, as there are plenty of jobs for which she is qualified. ii. James, who lost his job as a cook at a high-end restaurant during the Great Recession. iii. Anna, a financial analyst, who was laid off by Goldman Sachs because of a permanent decline in the financial industry. iv. Roberto takes advantage of a new government website that matches employees and employers. v. Peter, a 50-year-old steel worker, who is advised to retrain. vi. William loses his job as a car salesman because of the economic downturn. vii. Michelle, who just graduated from Caltech with a petroleum engineering degree.

James and William

Nial starts his own computer-repair company, and eventually has enough work to hire an assistant.

Nial starts his own computer-repair company, and eventually has enough work to hire an assistant.

Consider each situation and determine whether the person is structurally unemployed, frictionally unemployed, or cyclically unemployed. Jim got laid off from his job at an auto manufacturer as the company became more automated.

Structural unemployed

Which of the following is true when the economy is at full employment?

The cyclical rate of unemployment is zero. The unemployment rate is equal to the natural rate of unemployment.

Which of the following is false when the economy is at full employment?

The unemployment rate is equal to zero. The unemployment rate is equal to the cyclical rate of unemployment. The natural unemployment rate is equal to zero. The employment rate is 100%.

During the pandemic summer of 2020, the nation of Tinyland had an estimated 20% unemployment rate. The work-eligible population in Tinyland is 10 people, and there were 2 unemployed people in the summer. In the fall of 2020, one person who had been unemployed decided to stay home and stopped looking for a job because his industry was destroyed by the pandemic. Assuming no other changes, calculate the new unemployment rate in Tinyland.

The unemployment rate is: 11% u = [U/(U+E)] -> [1/(1+8)] -> [1/(9)] -> 11%

Which of the following can be responsible for a drop in the unemployment rate?

There is an increase in the number of discouraged workers. More people become employed.

You have been asked by the king of the small island nation of Littleston to present the labor force data listed below. Number of employed:20,000 Working-age population: 40,000 Labor force: 36,000

Using this data, calculate the number of unemployed people, the unemployment rate, and the labor force participation rate. Number of unemployed people: 36,000 - 20,000 = 16,000 (labor force - employed) Unemployment Rate: (16,000/36,000)*100 = 44% (Unemployed/Labor force*100) Labor force participation Rate: (36,000/40,000)*100 = 90% (Labor force/working age population*100)

What are examples of those are in the labor force?

a dishwasher at Denny's who wants a better job a person who got laid off from his job last week and has a job interview today the CEO of Coca-Cola

What are examples of those Not in the labor force?

a former accountant who now stays at home to watch his children a college student who isn't working and isn't looking for a job a former executive who now is retired and living in Florida

unemployment insurance

a government program that reduces the hardship of joblessness by guaranteeing that unemployed workers receive a percentage of their former income while unemployed; also known as federal jobless benefits

All else being equal, which of the following would lead to a lower unemployment rate?

an increase in the job hiring rate laid off autoworkers relocate from Michigan to Kentucky

unemployment

condition occurring when a worker who is not currently employed is searching for a job without success

Identify which form of unemployment of the following example: An unemployed banker seeking a job during a recession. The banker would be hired back once the economy began growing normally again.

cyclical unemployment

Nial takes a part-time job with a computer-repair service to gain experience until he can find a full time job.

employed part-time for economic reasons (counted as part of U-6 unemnlovment) part of the labor force

After completing the training program, Njal looks for work as a computer-repair specialist, but no one will hire him since he is an older worker and has no experience.

frictional unemployment

Identify which form of unemployment of the following example: An unemployed cashier looking for employment. A small clothing store shut down due to its customers buying clothes from a new big-box retailer.

frictional unemployment

what government program is classified under what type of unemployment? -increasing the amount of severance pay employers must pay when they fire someone -decreasing the amount of paperwork employers must complete for newly hired workers

frictional unemployment

You have been hired to determine if unemployment is running too high. First you must determine the natural rate of unemployment. You have been provided the data in the table below. Frictional unemployment: 2% Structural unemployment: 1% Cyclical unemployment: 1% Using the data above, determine the natural rate of unemployment.

natural rate = structural + frictional. 1% + 2% = 3%

After looking for work for several months, Nial cannot find work for a chainsaw operator, so he stops looking for three months.

not in the labor force

Margie, age 30, used to work 80 hours a week as a corporate lawyer. This year she quit her job to take care of her five-month-old daughter. She is currently not looking for a job. The survey conducted by the Bureau of Labor Statistics will count Margie today as

not in the labor force

Njal signs up for a six-month government program that will train him to be a computer-repair specialist.

not in the labor force

Identify which form of unemployment of the following example: The unemployment rate counts only workers who have no job at all and are actively seeking work.

structural unemployment

When Njal's company upgrades its operations, it will no longer employ chainsaw operators like Njal. Njal is not trained to do what the company needs, so he is laid off.

structural unemployment

what government program is classified under what type of unemployment? -providing subsidies to encourage people to relocate -offering job training and educational programs

structural unemployment

full-employment output

the economy's output level when the unemployment rate is equal to the natural rate; also called potential output or potential GDP

creative destruction

the introduction of new products and technologies that leads to the end of other industries and jobs

unemployment rate

the percentage of the labor force that is unemployed

labor force participation rate

the percentage of the work-eligible population that is in the labor force

natural rate of unemployment

the typical unemployment rate that occurs when the economy is growing normally

labor force

those who are already employed or actively seeking work and are part of the work-eligible population

marginally attached workers

those who are not working, have looked for a job in the past 12 months, and are willing to work, but have not sought employment in the past four weeks

underemployed workers

those who have part-time jobs but would prefer to work full-time

structural unemployment

unemployment caused by changes in the industrial makeup (structure) of the economy

frictional unemployment

unemployment caused by delays in matching available jobs and workers

cyclical unemployment

unemployment that rises during economic downturns and falls when the economy improves