Unemployment Fluctuations and the NAIRU

Which of these persons is officially unemployed?

A non-working individual who has looked for a job in the past week

How can government policies shift the aggregate demand curve to the right?

By increasing government purchases

Which of these factors can cause the natural rate of unemployment to change?

Demographic changes

Government policies can help to reduce the levels of frictional and structural unemployment, but they can also help to increase them. Which of these policies can cause an increase in the levels of frictional and structural unemployment?

Increasing the minimum wage

The "normal or natural" underlying level of unemployment in the economy is:

NAIRU

Which phase of the business cycle is characterized by increasing levels of unemployment?

Recessions

Suppose you are available for work but have not looked for a job for at least the last four weeks because you believe that no jobs are available. You are then considered to be:

a discouraged worker

Fluctuations in total spending in the economy may affect:

both employment and production in the short run

At NAIRU, __________.

cyclical unemployment is zero

The labour market may take a long time to adjust to economic growth due to:

excess capacity in production

When aggregate demand increases, unemployment will usually __________ and inflation will __________.

fall; rise

When the economy is at NAIRU, all existing unemployment can be described as:

frictional and structural

The short-term unemployment that arises from workers, in the process of changing jobs, is called:

frictional unemployment

According to real business cycle theory, shifts in aggregate demand:

have no impact on real GDP

The ratio of the labour force to the adult population is known as the:

labour force participation rate

The aggregate demand and aggregate supply model explains:

short-run fluctuations in real GDP and the price level

Keynes maintained that the economy could remain long term at levels of output below the full-employment level of output due to:

sticky wages and prices

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and job requirements is called:

structural unemployment

Which of these groups is included in the labour force?

unemployed

If the minimum wage is set above the market-determined clearing wage, the:

unemployment rate will be higher than it would be without a minimum wage

A firm that pays an efficiency wage is paying a wage that is __________ the current market wage.

higher than

Labour productivity can be increased through investments in:

human capital

Much of structural unemployment is driven by:

technological change

Increases in the minimum wage is likely to increase:

teenage unemployment

In the long run, the level of output is:

the full-employment level of output