Macroeconomics Chapter 28

Identify each person in the table as structurally, frictionally, or cyclically unemployed: A recent recession has reduced the number of visitors to a local theme park. The park has had to lay off many of its employees, including Eileen.

Cyclical

Identify each person in the table as structurally, frictionally, or cyclically unemployed: Automobile demand has fallen during a recent recession, and Janet has been laid off from her job on the assembly line.

Cyclical

What kind of unemployment rises during recessions and falls during expansions.

Cyclical

__________________ unemployment is the form of unemployment associated with business cycles.

Cyclical

Labor Force Participation Rate =

100 x (Number in Labor Force / Adult Population)

Unemployment Rate =

100 x (Number of Unemployed Workers / Labor Force)

U-4 =

100 x [(Unemployed + Discouraged) / (Labor Force + Discouraged)]

Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $7.50. Which of the following statements are true? A. If the minimum wage is set at $10.50, the market will not reach equilibrium. B. Binding minimum wages cause frictional unemployment. C. In the absence of price controls, a shortage puts upward pressure on wages until they rise to the equilibrium. D. In this labor market, a minimum wage of $7.50 is binding.

A. If the minimum wage is set at $10.50, the market will not reach equilibrium. C. In the absence of price controls, a shortage puts upward pressure on wages until they rise to the equilibrium.

Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? A. Improving a widely used job-search website so that it matches workers to job vacancies more effectively B. Increasing the benefits offered to unemployed workers through the government's unemployment insurance program C. Taxing the price of placing a resume or posting a job opening on a job-search website

A. Improving a widely used job-search website so that it matches workers to job vacancies more effectively

Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? A. Taxing the price of placing a resume or posting a job opening on a job-search website B. Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks C. Increasing the benefits offered to unemployed workers through the government's unemployment insurance program

B. Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks

Why might some firms voluntarily pay workers a wage above the market equilibrium, even in the presence of surplus labor? A. Paying higher wages increases worker turnover. B. Paying higher wages encourages workers to be more productive. C. Higher wages cause workers to shirk more of their responsibilities. D. Paying higher wages tends to reduce the average experience level of a firm's workers.

B. Paying higher wages encourages workers to be more productive.

Which of the following statements correctly describe discouraged workers? A. They are dissatisfied with their current jobs and are considering quitting. B. They have given up on looking for a job. C. They are counted as part of the labor force by the Bureau of Labor Statistics. D. They are employed workers who want to earn higher wages.

B. They have given up on looking for a job.

Identify the following person as employed, unemployed, not in the labor force, or not in the adult population: Antonio is a 23-year-old professional tennis player. When he's not competing, he works as a coach at a local tennis club.

Employed

Identify each person in the table as structurally, frictionally, or cyclically unemployed: Becky just moved with her husband to Portland, Oregon. She's looking for a job as a paralegal.

Frictional

Identify each person in the table as structurally, frictionally, or cyclically unemployed: Deborah is a physician who has decided to relocate to California to be closer to her family. She is currently interviewing with several prestigious hospitals in the San Francisco Bay Area.

Frictional

_____________________ unemployment occurs because job seekers and employers need time to find one another.

Frictional

Natural rate of unemployment =

Frictional Unemployment + Structural Unemployment

Identify the following person as employed, unemployed, not in the labor force, or not in the adult population: Frances is a 12-year-old student at West Valley Middle School. She babysits her younger sister and does other chores, so her parents give her an allowance of $30 per week.

Not in the adult population

Identify the following person as employed, unemployed, not in the labor force, or not in the adult population: Dmitri is a 77-year-old retired professor. He enjoys volunteering at the local public library.

Not in the labor force

Identify the following person as employed, unemployed, not in the labor force, or not in the adult population: Jake is a 17-year-old who just graduated from high school. He is taking it easy this summer, relaxing by the pool with his friends and family, and volunteering part-time at the local nursing home.

Not in the labor force

Identify each person in the table as structurally, frictionally, or cyclically unemployed: Alex left his job as a plumber when his wife took a position in another region. The quantity of plumbing services demanded is considerably lower in the new region, in part because of high union-negotiated wages. He would like to work at the high union wage but remains unemployed due to a lack of plumbing jobs.

Structural

Identify each person in the table as structurally, frictionally, or cyclically unemployed: Carlos recently lost his job as a waiter at a local restaurant. A recent increase in the minimum wage keeps local employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. He continues to look for a job, but he's considering going back to school for vocational training.

Structural

______________________ unemployment arises from a mismatch between the jobs available in some labor markets and the skills of workers.

Structural

Identify the following person as employed, unemployed, not in the labor force, or not in the adult population: Caroline is a 40-year-old autoworker who was just laid off by her employer. She is trying to find any kind of job to help make ends meet.

Unemployed

Identify the following person as employed, unemployed, not in the labor force, or not in the adult population: Latasha is a 26-year-old who lost her job as a copy editor for a local newspaper. She has spent the past few weeks out of work and interviewing for other editing jobs. She is thinking about going back to grad school if her job search doesn't succeed after a few more weeks.

Unemployed

A minimum wage is _________________ if it is set above the equilibrium wage

binding

Suppose the world price of steel falls substantially. The demand for labor among steel-producing firms in Pennsylvania will __________________. The demand for labor among automobile-producing firms in Michigan, for which steel is an input, will __________________. The temporary unemployment resulting from such sectoral shifts in the economy is best described as __________________ unemployment.

decrease; increase; frictional

If the Bureau of Labor Statistics were to include discouraged workers in the official unemployment rate, the reported unemployment rate would (increase/decrease).

increase

Suppose the world price of cotton rises substantially. The demand for labor among cotton-producing firms in Texas will _________________. The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will ___________________. The temporary unemployment resulting from such sectoral shifts in the economy is best described as ____________________ unemployment.

increase; decrease; frictional

If there is no cyclical unemployment, the economy is at _________________________________________________________________________________.

its natural rate of unemployment

In the absence of price controls, a ___________________ puts downward pressure on wages until they fall to the equilibrium.

surplus