ECON 202 Quiz 5 (Test 1)

Full employment exists when

there is only frictional and structural unemployment, there is no cyclical unemployment, and the economy is at the natural unemployment rate.

Suppose the price level this year is 150 and the price level last year was 125. The inflation rate between last year and this year was

20 percent.

In an economy, 23 million people are employed and 2 million are unemployed, but 5 million part-time workers would prefer full-time work. What is the unemployment rate?

8 percent

The labor force is defined as

workers with jobs and unemployed workers.

Based on the following data for the country of Tiny Town, the unemployment rate equals Population = 100 Labor force = 80 Number of employed persons = 70 Number of discouraged workers = 5

10/80 × 100.

A person quits her job in order to spend time looking for a better-paying job. This type of unemployment is an example of

an example of frictional unemployment.

During an economic expansion, real GDP ________ and unemployment ________.

increases; decreases

frictional unemployment

is a normal occurrence in a growing economy.

Price indexes can overstate inflation because they

omit some quality improvements.

Full employment occurs

only if the unemployment rate is equal to the natural unemployment rate.

Cyclical unemployment is the result of

the business cycle

When cyclical unemployment is zero

the unemployment rate equals the natural unemployment rate.

If the economy enters an expansion

cyclical unemployment decreases.

When the economy is operating at full employment, the natural unemployment rate consists of only

frictional and structural unemployment.

When the economy switches production toward services and away from manufacturing and workers in the manufacturing industry are permanently laid off Correct!

structural unemployment increases.