Chapter 21

Male unemployment rates used to always be significantly lower than female unemployment rates. Which statement best describes the recent relationship between male and female unemployment rates?

The two rates have been very close.

On the supply side of the labor market, public policies to assist the unemployed can affect ____________.

the natural rate of unemployment

unemployment rate

the percentage of adults who are in the labor force and thus seeking jobs, but who do not have jobs

The most significant real economic cost of high unemployment to the macro economy is:

the potential goods and services that might have been produced but weren't.

efficiency wage theory

the theory that the productivity of workers, either individually or as a group, will increase if they are paid more

Hidden unemployment includes discouraged workers and ____________.

the underemployed

natural rate of unemployment

the unemployment rate that would exist in a growing and healthy economy from the combination of economic, social, and political factors that exist at a given time

Tightening pollution controls produces the greatest marginal benefit when _____.

there is little environmental regulation in place

labor force participation rate

this is the percentage of adults in an economy who are either employed or who are unemployed and looking for a job

insider-outsider model

those already working for the firm are "insiders" who know the procedures; the other workers are "outsiders" who are recent or prospective hires

out of the labor force

those who are not working and not looking for work—whether they want employment or not; also termed "not in the labor force"

discouraged workers

those who have stopped looking for employment due to the lack of suitable positions available

The unemployment rate measures:

unemployed workers as a percentage of the labor force.

cyclical unemployment

unemployment closely tied to the business cycle, like higher unemployment during a recession

Frictional unemployment is:

unemployment that is due to normal turnover in the labor market.

frictional unemployment

unemployment that occurs as workers move between jobs

structural unemployment

unemployment that occurs because individuals lack skills valued by employers

When the demand for labor rises, ____________, all else being held constant.

wages increase

The U.S. unemployment rate moves up and down as the economy moves in and out of recessions. But over time, the unemployment rate seems to return to a range of ____________ (the NRU).

. 4%-5%

Erika hates her current job and is looking for another job. Erika:

. is considered employed.

Mark chooses to retire rather than to work. Mark:

. is not in the labor force.

Over time, the unemployment rate seems to return to a range of ____________.

4% to 6%

The natural rate of unemployment in the U.S. economy in the early 2000s was about ____________.

4.5% to 5.5%

What is the unemployment rate if there are 4,500 people unemployed and 100,000 workers in the labor force?

4.50%

If the number of employed persons in a country equals 55 million, the number of unemployed persons equals 11 million, and the number of persons over age 16 in the population equals 70 million, the unemployment rate equals:

17%

During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force.

25%

Which is the best example of a real-world market that is close to perfect competition?

A market with many sellers and little product differentiation (such as fruits, vegetables, and other agricultural goods).

Suppose in a given economy the crime rate declines. Which statement describes how this would affect the relationship between GDP and the degree of change in the broad standard of living?

GDP would understate the standard of living.

Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?

It would fall.

relative wage coordination argument

across-the-board wage cuts are hard for an economy to implement, and workers fight against them

implicit contract

an unwritten agreement in the labor market that the employer will try to keep wages from falling when the economy is weak or the business is having trouble, and the employee will not expect huge salary increases when the economy or the business is strong

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________.

business cycle

GDP can be compared across countries once it is adjusted for ____________ and population.

currency

The type of unemployment that occurs because of a recession is called:

cyclical unemployment.

When wages are sticky or inflexible and unlikely to fall, ____________ unemployment can result.

either short-run or long-run

The federal government can address cyclical unemployment through ____________, which would stimulate the overall economy.

expansionary fiscal policy

Unemployment rates in France tend to be ____________ compared with unemployment rates in the United States.

higher

adverse selection of wage cuts argument

if employers reduce wages for all workers, the best will leave

underemployed

individuals who are employed in a job that is below their skills

A downward-sloping demand curve means that the quantity demanded of a good and the price of that good are ________.

inversely related

Jackie has been out of work for two months but she is not looking for a job because she has plenty of savings to live off of. Jackie:

is not in the labor force.

Karen chooses to go to university full-time rather than to work. Karen:

is not in the labor force.

Bill worked at a manufacturing factory that just closed; Bill has been applying to other local manufacturing factories & machine shops. Bill:

is unemployed & actively seeking work.

In a perfectly competitive market, firm entry shifts the ______ to the ______.

market supply curve, right

The unemployment rate announced by the U.S. Bureau of Labor Statistics is based on the Current Population Survey (CPS), which has been carried out ________ since 1940.

monthly

Cyclical unemployment is likely to be highest during a(n) ____________.

recession