POLS ECON 2305 Lesson 15

The economy achieves the natural rate when

there is no cyclical unemployment.

A new entrant

who has never worked a full-time job for two weeks or longer (10 to 15 percent of the unemployed)

A job leaver

who voluntarily ended employment (less than 10 to around 15 percent of the unemployed)

A reentrant

who worked a full-time job before but has been out of the labor force (20 to 30 percent of the unemployed)

unemployment rate equation

​(Unemployed/Labor Force)​×100​ labor force = employed + unemployeed

Calculate the unemployment rate with the following data: Unemployed: 10 million, US Population: 200 million, Employed: 90 million * a. 3%. b. 5%. c. 8%. d. 10%.

d. 10% (10/100)x100

2. Which of the following contribute to why wages are considered sticky? a. People get upset when wages fall, particularly if they think their employer is causing the wage cut, which negatively impacts workplace morale. b. If wages were easily cut, workers might respond by working less or disrupting their work, thus negatively affecting productivity. c. Minimum wage requirements make it difficult to lower wages quickly or often. d. All of the above.

d. All of the above.

If we include discouraged workers as unemployed when calculating the unemployment rate, the unemployment rate * a. Stays the same. b. Doubles. c. More than doubles. d. Less than doubles.

d. Less than doubles.

Which of the following gives the highest definition of unemployment? * a. U-1. b. U-3. c. U-4. d. U-6. e. Depends on the year.

d. U-6.

Since 1950, in which year was the unemployment rate 0%? a. 1953. b. 1969. c. 1994. d. a and b only. e. It's never been at 0%.

e. It's never been at 0%.

job losers are people whose

employment was involuntarily terminated or who was laid off (40 to 60 percent of the unemployed)

natural unemployment =

frictional unemployment + structural unemployment

Full employment is the

level of employment that corresponds to the situation where there is no cyclical unemployment, that is, where we are at the natural rate of unemployment.

Factors that Reduce Structural Unemployment

1. Active labor market policies (policies that focus on getting unemployed people back to work such as training and education programs)

Factors that Increase Structural Unemployment

1. Large, long-lasting shocks that require the economy to restructure 2. Labor regulations (such as unemployment benefits, minimum wage laws, OSHA regulations, employment protection laws) (see Figure 11.5 for the World Bank's labor rigidity index)

Unemployment =

A Surplus of Labor

structural Unemployment

Persistent, long-term unemployment caused by long-lasting shocks or permanent features of an economy that make it more difficult for some workers to find jobs.

Frictional Unemployment

Short-term unemployment caused by the ordinary difficulties of matching employee to employer.

The "Natural" Rate of Unemployment

This is the rate of unemployment expected to prevail once all workers and employers have fully adjusted to any changes in the economy.

Cyclical Unemployment =

Total Unemployment - Frictional Unemployment - Structural Unemployment.

Why Measure Unemployment?

We want to measure unemployment because a low unemployment rate sends a signal that the economy is doing well.

The natural rate of unemployment is defined as: a. Frictional plus structural unemployment. b. Cyclical plus frictional unemployment. c. Cyclical unemployment. d. The rate at which workers retire from the labor force.e. Structural unemployment plus the rate at which domestic jobs are replaced by outsourcing skills internationally.

a. Frictional plus structural unemployment.

Discouraged workers are unemployed individuals who say they want a job, but although they haven't looked for work in the past ________ , they have looked in the past ________. * a. 4 weeks, 15 weeks. b. 4 weeks, year. c. 15 weeks, year. d. 2 weeks, 15 weeks.

b. 4 weeks, year.

Which of the following individuals are counted as unemployed? * a. A military soldier. b. An adult who is out of work, wants a job, and applied to a job 2 weeks ago but not since then. c. An adult in prison. d. An adult who is out of work, wants a job, and applied to a job 5 weeks ago but not since then. e. a and b only. f. b and d only.

b. An adult who is out of work, wants a job, and applied to a job 2 weeks ago but not since then.

Complete the following equation: Unemployment Rate = (Unemployed/ ______________)*100 * a. Employed. b. Labor Force. c. US adult population. d. US population. e. None of the above.

b. Labor Force.

Under some conditions, the government can reduce cyclical unemployment using __________ and __________ policies. * a. humanitarian & tax b. monetary & fiscal c. domestic & foreign d. industrial & anti-trust

b. monetary & fiscal

According to the video, the average unemployment rate between 1950 and 2015 was approximately a. 0% b. 3%. c. 6%. d. 8.5% e. None of the above.

c. 6%.

The official unemployment rate definition is * a. An adult out of work who has been looking for work in the past year. b. An adult who is out of work and has been looking for work in the past 15 weeks. c. An adult who is out of work and has been looking for work in the past 4 weeks. d. An adult who is out of work and has been looking for work in the past week.

c. An adult who is out of work and has been looking for work in the past 4 weeks.

Cyclical unemployment is defined as: * a. The amount of workers who have given up looking for work but would still take a job if it paid enough. b. The natural rate of unemployment. c. Unemployment correlated with business fluctuations. d. Short-term unemployment caused by the difficulty of matching employees to open positions. e. Persistent, long-term unemployment caused by long-lasting shocks to the economy.

c. Unemployment correlated with business fluctuations.

unemployment

the number of adults who are actively looking for work but who do not have a job