Module 5: Macroeconomics

A marginally attached worker is... A) a worker who does not have a job and is available and wants one but has not made any efforts to find a job within the previous four weeks. B) a worker who is unhappy at his or her job. C) counted as unemployed in the official labor market statistics. D) a person who only works part time but wants full-time work. E) a worker who is looking for a job but can't find one.

A

A newspaper headline reads "A New Wave of Workers Enters the Job Market!" This wave of young, new entrants to the labor market is likely to lead to... A) an increase in the natural unemployment rate. B) a decrease in the country's potential GDP. C) a decrease in the unemployment rate. D) a decrease in the natural unemployment rate but an increase in the actual unemployment rate. E) no effect on the unemployment rate.

A

After 15 years with Ford Motor Corporation, one summer Cameron loses his job. His boss explained that his position has been downsized after the technological advances in automobile production. Cameron is best considered... A) structurally unemployed. B) cyclically unemployed. C) avoidably unemployed. D) not in the labor force. E) frictionally unemployed.

A

An efficiency wage... A) is set above the equilibrium real wage rate to induce greater work effort. B) reduces frictional unemployment. C) is set below the equilibrium real wage rate to reduce labor costs. D) increases the demand for labor and therefore increases potential GDP. E) increases the supply of labor and therefore increases potential GDP.

A

An increase in unemployment benefits ________ and an increase in international competition that changes the location of jobs ________. A) increases frictional unemployment; increases structural unemployment B) decreases structural unemployment; decreases cyclical unemployment C) decreases cyclical unemployment; decreases cyclical unemployment D) decreases cyclical unemployment; increases cyclical unemployment E) increases structural unemployment; decreases frictional unemployment

A

As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences... A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) avoidable unemployment. E) changes in the business cycle.

A

At full employment there still exists some unemployment because... A) the U.S. economy is constantly creating and destroying jobs. B) there are always people too old or young to be in the labor force. C) it is unnatural to have all people work 40 hours per week. D) some portion of our population will always be too lazy to work. E) real GDP can never exceed potential GDP.

A

At the peak of a business cycle, the... A) unemployment rate is below the natural unemployment rate. B) cyclical unemployment rate is positive. C) unemployment rate is above the natural unemployment rate. D) natural unemployment rate is negative. E) frictional unemployment rate is zero.

A

Rick lost his job as a logistics and distribution coordinator nearly three years ago. After a long and failed search, Rick finally gives up and stops looking for a new job. Rick's decision to suspend his job search causes the unemployment rate to ________ and the labor force participation rate to ________. A) decrease; decrease B) increase; decrease C) increase; stay the same D) stay the same; decrease E) increase; increase

A

To be considered unemployed, a worker must have had... A) no employment during the week before the survey and be actively looking for a job. B) part-time employment while actively looking for a full-time job. C) no employment during the day before the survey and be actively looking for a job. D) no employment during the week before the survey and be actively looking for a job while a student. E) Both answers A and B are correct.

A

U-4, U-5 and U-6 are... A) all broader measures of the unemployment rate. B) broader measures of the labor force participation rate. C) not used by the Bureau of Labor Statistics because they include too much variability. D) narrower measures of the labor force participation rate. E) all narrower measures of the unemployment rate.

A

Unemployment benefits in western Europe are more generous than in the United States. As a result, ________ in the United States. A) frictional unemployment is lower B) cyclical unemployment is higher C) structural unemployment is higher D) avoidable unemployment is lower E) frictional unemployment is higher

A

Which of the following creates job rationing? A) The real wage rate is above the equilibrium level. B) An increase in unemployment benefits. C) Job search decreases. D) The real wage rate is below the equilibrium level. E) The real wage rate is equal to the equilibrium level.

A

Which of the following would be considered a marginally attached worker? i. Amy, who is working 20 hours per week at her father's business ii. Carl, who isn't working and has not looked for work in 3 months because he has been turned down for work when he last looked iii. Keke, who quit her job to take care of her daughter A) ii only B) i and ii C) i only D) ii and iii E) i, ii, and iii

A

The natural unemployment rate occurs... A) when the sum of frictional and structural unemployment equals zero. B) when the frictional unemployment rate equals zero. C) at the full employment level of unemployment. D) when the structural unemployment rate equals zero. E) when the unemployment rate equals zero.

C

When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing i. seasonal unemployment. ii. structural unemployment. iii. cyclical unemployment. A) i and ii B) i only C) ii only D) ii and iii E) i and iii

C

Suppose the working-age population is 500 million, the labor force is 200 million, and the unemployment rate is 15 percent. The number of unemployed people is... A) 75 million. B) 15 million. C) 30 million. D) 45 million. E) 105 million.

C

Cyclical unemployment includes people who become unemployed from... A) technological changes. B) changes in the business cycle. C) normal labor market turnover. D) changes in international competition. E) changes in the seasons.

B

Jane is a 25 year old, full-time student. She works part time in her school library and is paid $10 an hour. She is considered to be... A) in labor force but not working. B) employed. C) unemployed. D) not in the working-age population because she is in college. E) not in labor force.

B

The working-age population consists of all the people in the population... A) aged 16 to 65. B) aged 16 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces. C) who are employed plus the unemployed people. D) aged 16 and over. E) aged 21 and over who are not in jail, hospital, or an institution or in the U.S. Armed Forces.

B

When the unemployment rate is ________ the natural unemployment rate, real GDP is ________. A) below; increasing B) below; above potential GDP C) equal to; either equal to potential GDP or above potential GDP D) above; increasing E) above; above potential GDP

B

When the unemployment rate is greater than the natural unemployment rate, real GDP is... A) unrelated to potential GDP. B) less than potential GDP. C) greater than full employment GDP. D) equal to potential GDP. E) greater than potential GDP.

B

Which of the following is TRUE? One way to be classified as employed is by... i. working 1 hour per week at a paid job. ii. working 15 or more hours as an unpaid worker in family business. iii. making specific efforts to find a job within the last four weeks. A) ii only. B) i and ii only. C) If you are not working and turn down a job offer in the previous week, you are no longer classified i, ii, and iii. D) i only. E) iii only.

B

Which of the following persons is NOT considered a part of the labor force? A) Mary, who has a part-time job as a day care specialist B) Desire, a wealthy hedge fund manager who just took early retirement C) Lucy, who works 20 hours a week in her father's restaurant for no pay D) Lones, an unemployed mechanic looking for a new job E) Jameson, an accountant who has been temporarily laid off during the holiday season

B

After the passage of the North American Free Trade Agreement, which made it less expensive to import goods from Mexico, workers in some industries found their factories being relocated to Mexico to take advantage of lower labor costs. These workers experienced what type of unemployment? A) cyclical B) foreign C) structural D) frictional E) trade

C

During the Great Depression of the 1930s when the unemployment rate was exceptionally high due to the Great Depression, the government had employment programs, such as the Civilian Conservation Corps, which built campsites and planted trees. These programs were aimed at reducing which type of unemployment? A) avoidable B) discouraged C) cyclical D) frictional E) structural

C

France is considering implementing policies that will reduce the duration of job search. A possible option is for France to... A) require all residents between the ages of 19 and 26 to obtain a part-time or full-time job. B) help negotiate higher union benefits for employed workers. C) reduce unemployment benefits. D) increase the minimum wage. E) Both answers A and B are correct.

C

Frictional unemployment is the result of... A) a slowdown in the rate of economic expansion. B) technological change or foreign competition. C) normal labor market turnover. D) changes in the weather. E) the economy entering a strong expansion.

C

Mary has decided that the she does not like Iowa and has decided to quit her job as a medical technician and move to Arizona. Mary's unemployment as she searches for a new job is best classified as A) traveling. B) structural. C) frictional. D) cyclical. E) distance.

C

Assume the U.S. population is 300 million. If the working age population is 240 million, 150 million are employed, and 6 million are unemployed, what is the labor force? A) 240 million B) 150 million C) 300 million D) 156 million E) 144 million

D

Discouraged workers are included in the calculation of the... i. unemployment rate. ii. labor force participation rate. iii. working-age population. A) i only B) ii only C) i and ii D) iii only E) ii and iii

D

Full employment occurs when... A) the sum of frictional and structural unemployment is zero. B) the unemployment rate is zero. C) the frictional unemployment rate is zero. D) the cyclical unemployment rate is zero. E) the structural unemployment rate is zero.

D

If half of all unemployed individuals suddenly gave up looking for work, the unemployment rate would ________ and the labor force participation rate would ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease E) There is not enough information to answer this question.

D

Juan recently lost his job as a travel agent, which he has had for 20 years, because the demand for his services has fallen over time as more and more people book their vacations online. Unfortunately, Juan has not been able to find a new job because he lacks the skills needed to get hired in other industries where job growth is occurring. Juan is considered to be... A) cyclically unemployed. B) frictionally unemployed. C) a marginally attached worker. D) structurally unemployed. E) not in the labor force.

D

Potential GDP is the level of output produced when the unemployment rate is... A) less than the natural unemployment rate. B) greater than the natural unemployment rate. C) made up of only cyclical unemployment. D) equal to the natural unemployment rate. E) zero.

D

Producing an amount of GDP equal to potential GDP is most consistent with the economy producing... A) either on or beyond the production possibilities frontier. B) within the production possibilities frontier. C) beyond the production possibilities frontier. D) on the production possibilities frontier. E) either on or within the production possibilities frontier.

D

The natural unemployment rate... A) is very stable in value across time. B) includes some frictional, structural, and cyclical unemployment. C) is equal to zero when there are no economic fluctuations. D) includes only frictional and structural unemployment. E) is easy to measure.

D

The total U.S. labor force participation rate increased over the past 50 years because... A) more men are retiring early. B) fewer women are attending college. C) many blue-collar jobs with rigid work hours have been created in the last decade. D) the female labor force participation rate increased. E) the male labor force participation rate increased.

D

The working-age population includes... A) youngsters between the ages of 14 and 16 if they are working at least part time. B) only employed people over the age of 16. C) people over the age of 16 who are in the Army. D) employed and unemployed people over the age of 16. E) those in jails and hospitals.

D

Which of the following can result in job rationing? i. minimum wage ii. union wage iii. diminishing returns A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii

D

Which of the following help explain the increase in the U.S. labor force participation rate for women? i. There was a significant fall in the number of children women were choosing to have. ii. There was an increase in the educational level of women. iii. Technological change in the home increased the time available for work outside the home. A) i only B) ii only C) i and ii D) ii and iii E) i, ii, and iii

D

After graduating from college, Yunis, age 22, started working for his parents' real estate business as an unpaid assistant. He works 25 hours a week helping manage rental units. In the Current Population Survey, Yunis is considered... A) part of the labor force and unemployed. B) part of the labor force but not part of the working-age population. C) a discouraged worker. D) not part of the labor force. E) part of the labor force and employed.

E

Bill just graduated with his degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered... A) structurally unemployed. B) employed because he is visiting firms. C) not in the labor force. D) cyclically unemployed. E) frictionally unemployed.

E

If Jose is 22-years old, is available to work but does not have a job and made no specific efforts to find a job for the previous month, Jose is classified in the Current Population Survey as... A) not in the working-age population. B) employed. C) in the labor force but not in the working-age population. D) unemployed. E) not in the labor force.

E

In 2020, real GDP in the United States was below potential GDP. This fact definitely means that... A) the economy was in an expansion. B) cyclical unemployment had been decreasing. C) the unemployment rate was near 10 percent. D) frictional unemployment was negative. E) the unemployment rate was above the natural unemployment rate.

E

Phillip is a 22-year old who has no job and is available for work, but has not actively looked for a job in the last month. The Current Population Survey identifies Phillip as ________, ________ the labor force, and ________ the working-age population. A) unemployed; part of; not part of B) not unemployed; part of; part of C) not unemployed; not part of; not part of D) unemployed; part of; part of E) not unemployed; not part of; part of

E

Structural unemployment usually lasts ________ period of time ________ unemployment. A) the same; as cyclical B) a shorter; than seasonal C) a shorter; than frictional D) a shorter; than cyclical E) a longer; than frictional

E

Suppose the population of Timmy Town is 1,000 people and the working-age population is 800. If 200 of these people are unemployed, the unemployment rate in Timmy Town is... A) 1/8 × 100. B) 2 percent. C) 1/5 × 100. D) 1/4 × 100. E) There is not enough information provided to calculate the unemployment rate.

E

The highest unemployment rate in U.S. history was about... A) 10.2 percent in 2009. B) 5.9 percent in 1972. C) 52 percent in 1939. D) 10 percent in 1982. E) 25 percent in 1933.

E

The unemployment rate at full employment is... A) equal the amount of unemployment caused by job search. B) equal to the rationed rate of unemployment. C) undefined because the economy is never at full employment. D) zero. E) the natural unemployment rate.

E

The unemployment rate generally ________ during recessions and generally ________ during expansions. A) decreases; decreases B) increases; does not change C) increases; increases D) decreases; increases E) increases; decreases

E

The unemployment that fluctuates over the business cycle is called... A) natural unemployment. B) full unemployment. C) frictional unemployment. D) structural unemployment. E) cyclical unemployment.

E

Which of the following increases frictional and/or structural unemployment? i. more young workers entering the labor force ii. more generous unemployment benefits iii. a structural slump with some industries dying A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii

E

Which type of unemployment arises when changes in technology or international competition change the skills needed to perform jobs or change the location of jobs? A) cyclical B) skill-set C) frictional D) fluctuating E) structural

E