Homework Chapter 8

During the deep recessions of the early 1980s and of 2007-2009, unemployment reached roughly __________. A. 10% B. 20% C. 30% D. 40%

A. 10%

During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force. A. 25% B. 45% C. 65% D. 85%

A. 25%

Freelife, New Hampshire has a labor force of 78,567 persons and employment of 74,382. The unemployment rate for the city is: A. 5.3%. B. 5.6%. C. 6.0%. D. 7.1%

A. 5.3%.

______________________ argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. A. Efficiency wage theory B. Equilibrium wage theory C. Employee wage theory D. Employer wage theory

A. Efficiency wage theory

The type of unemployment that occurs because of a recession is called: A. cyclical unemployment. B. the natural rate of unemployment. C. seasonal unemployment. D. frictional unemployment.

A. cyclical unemployment.

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as: A. cyclically unemployed. B. underemployed. C. frictionally unemployed. D. naturally unemployed.

A. cyclically unemployed.

The extent of _______________________ will depend on how easy it is for workers to learn about alternative jobs, which may reflect the ease of communications about job prospects in the economy. A. frictional unemployment B. cyclical unemployment C. seasonal unemployment D. cyclical employment

A. frictional unemployment

A welder who quits his job and moves from Pittsburgh to Madison to try to get a better welding job is said to be: A. frictionally unemployed. B. underemployed. C. cyclically unemployed. D. structurally unemployed.

A. frictionally unemployed.

Karen chooses to go to university fulltime rather than to work. Karen: A. is not part of the labor force. B. is part of the labor force and what economists call a discouraged worker. C. is part of the labor force, but not actively seeking work. D. is considered employed.

A. is not part of the labor force.

The unemployment rate may underestimate the true extent of unemployment if: A. many part-time employees would like to work fulltime, but are unable to get the additional work. B. employees increase the number of hours they work overtime. C. there are a large number of people working in the underground economy. D. people are pretending to look for work so that they can continue receiving unemployment benefits.

A. many part-time employees would like to work fulltime, but are unable to get the additional work.

A university student who is enrolled in school fulltime and not seeking employment is considered: A. out of the labor force. B. unemployable, and not counted in official statistics. C. employed in leisure. D. underemployed.

A. out of the labor force.

Reginald looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered: A. out of the labor force. B. unemployed. C. employed in the underground economy. D. underemployed.

A. out of the labor force.

If a nation's labor force receives a significant influx of young workers: A. the natural rate of unemployment is likely to increase. B. the natural rate of unemployment is likely to decrease. C. the natural rate of unemployment is unlikely to change D. frictional unemployment will likely decrease to zero.

A. the natural rate of unemployment is likely to increase.

The most significant real economic cost of high unemployment is: A. the potential goods and services that might have been produced but weren't. B. the money cost of retraining persons to obtain new jobs. C. the lost tax revenue that might have been paid by persons if they had worked. D. the money cost of unemployment insurance payments to the unemployed.

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

Insofar as government public policy is concerned, the best way to battle unemployment would be __________________. A. to minimize recessions B. to maximize unemployment payments C. to maximize unemployment insurance duration D. to minimize labor unions

A. to minimize recessions

Women composed __________ of the paid workforce in 1900 and 50% of the paid workforce in 2010. A. 2% B. 18% C. 33% D. 60%

B. 18%

If the number of employed persons in a country equals 24 million, the number of unemployed persons equals 8 million, and the number of persons over age 16 in the population equals 40 million, the unemployment rate equals: A. 32%. B. 25%. C. 20%. D. 8%.

B. 25%.

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 ____________. A. 2%-4% B. 4%-6% C. 6%-8% D. 8%-10%

B. 4%-6%

Craigburg has a working age population of 20 million. Of those, 11 million are employed and 1 million are unemployed. The unemployment rate is ________ and the participation rate is __________. A. 5%; 55%. B. 8.3%; 60%. C. 8.3%; 55%. D. 5%; 60%.

B. 8.3%; 60%.

If the unemployment rate is 6 percent and the number of persons unemployed is 6 million, then the number of people employed is equal to: A. 100 million. B. 94 million. C. 106 million. D. 6 million.

B. 94 million.

Which of the following statements is incorrect? A. Employment insurance compensation encourages longer job searches, which may lead to a better match between jobs and employees. B. Employment insurance compensation increases the opportunity cost of being unemployed. C. The typical employment insurance compensation is roughly one third of one's latest salary for up to 26 weeks. D. Demand and supply curves for labor are constantly shifting.

B. Employment insurance compensation increases the opportunity cost of being unemployed.

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? A. It would increase. B. It would fall. C. It would not change. D. It would change, but the effect cannot be predicted.

B. It would fall.

Frictional unemployment occurs when: A. there is friction between an employer and employee. B. a worker decides to quit one job to seek a different job. C. a large corporation transfers a worker to another city. D. college students go back to school at the end of the summer.

B. a worker decides to quit one job to seek a different job.

The _________________ argument points out that if an employer reacts to poor business conditions by reducing pay for all workers, then the best workers, with the best employment alternatives at other firms, are the most likely to leave and the least-attractive workers, with fewer employment alternatives, are more likely to stay. A. efficiency wage theory B. adverse selection of wage cuts C. equilibrium wage theory D. employer wage theory

B. adverse selection of wage cuts

The labor force consists of: A. discouraged workers, employed workers, plus those actively seeking work. B. all adults who are working or actively seeking work. C. all adults who are able to work. D. all adults who are working, plus those not working.

B. all adults who are working or actively seeking work.

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________. A. natural rate of unemployment B. business cycle C. supply curve D. labor supply

B. business cycle

The definition of market equilibrium states that at the _______________, the quantity of labor demanded by employers will equal the quantity supplied. A. efficiency wage B. equilibrium wage C. sticky wage D. natural rate of unemployment

B. equilibrium wage

The development of a nationwide computerized job bank listing of all job openings would be most likely to reduce: A. natural unemployment. B. frictional unemployment. C. seasonal unemployment. D. cyclical unemployment.

B. frictional unemployment.

Gomer loses his job as a road construction worker and cannot find another position with equivalent pay and benefits. As a result, he is still checking the want ads and reporting to the unemployment office on a weekly basis. He is considered to be: A. laid off. B. underemployed. C. out of the labor force. D. unemployed.

B. underemployed.

The unemployment rate measures: A. the number of people unemployed divided by the number of people employed. B. unemployed workers as a percentage of the labor force. C. unemployed workers as a percentage of the population age over-sixteen. D. unemployed workers as a percentage of the population.

B. unemployed workers as a percentage of the labor force.

In November 2010 the labor force in Siouxtown, was 14,800. There were 14,483 persons employed. The local unemployment rate: A. was 1.2%. B. was 2.1%. C. was 5.6%. D. was 7.1%.

B. was 2.1%.

Through good economic years and bad, many European economies had unemployment rates hovering near _________ since the 1970s. A. 1% B. 5% C. 10% D. 20%

C. 10%

The unemployment rate in a town in which 65,400 persons are employed and 11,000 are unemployed equals: A. 20.2 %. B. 16.8%. C. 14.4%. D. 11%.

C. 14.4%.

Each month the Census Bureau carries out the Current Population Survey (CPS) (which has been carried out every month since 1940). A total of __________ households are contacted every month. A. 600 B. 6000 C. 60,000 D. 600,000

C. 60,000

If the unemployment rate is 8 percent, then this means: A. 8 percent of the population is unemployed. B. 8 percent of the population age over sixteen is unemployed. C. 8 percent of the labor force is unemployed. D. the number of unemployed persons equals 8 percent of the employed persons.

C. 8 percent of the labor force is unemployed.

The unemployment rate may underestimate the true extent of unemployment if: A. many people have a part time as well as a full time job. B. there are a large number of people working in the underground economy. C. many people become discouraged and cease looking for work. D. employees increase the number of hours they work overtime.

C. many people become discouraged and cease looking for work.

Cyclical unemployment arises when: A. the agriculture sector completes the cycle of planting, cultivating, and harvesting the nation's food supply. B. labor unions strike for higher wages. C. the business cycle enters an expansionary phase. D. business activity in the macroeconomy declines.

D. business activity in the macroeconomy declines.

The unemployment rate may overestimate the true extent of unemployment if: A. many part-time employees would like to work fulltime, but are unable to get the additional work. B. many people who claim to be unemployed actually work in the underground economy. C. people falsely claim that they are actively seeking work in order to receive unemployment benefits. D. either B) or C) occurs.

D. either B) or C) occurs.

Frictional unemployment is: A. unemployment that is due to the friction of competing ideological systems. B. unemployment caused by lack of training and education. C. unemployment caused by automation in the workplace. D. unemployment that is due to normal turnover in the labor market.

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