Question 1

Suppose the working-age population in a country is 250 million, the labor force is 160 million, and 10 million people are unemployed. What is the unemployment rate? Use the formula $$	ext{Unemployment Rate} = \frac{	ext{Number of Unemployed}}{	ext{Labor Force}} 	imes 100.$$

Accepted Answer

$$10\%$$

Question 2

Which of the following best describes structural unemployment?

Accepted Answer

Unemployment that arises from a persistent mismatch between the skills or attributes of workers and the requirements of jobs.

Question 3

A ski instructor who is unemployed during the summer is best categorized as experiencing which type of unemployment?

Accepted Answer

Frictional unemployment

Question 4

If the labor force participation rate is calculated as $$	ext{Labor Force Participation Rate} = \frac{	ext{Labor Force}}{	ext{Working-Age Population}} 	imes 100$$, what is the rate if the labor force is 170 million and the working-age population is 220 million?

Accepted Answer

$$68.2\%$$

Question 5

Which of the following is a problem with the official unemployment rate as measured by the BLS?

Accepted Answer

It does not distinguish between full-time and part-time employment.

Question 6

During a recession, which type of unemployment increases the most?

Accepted Answer

Cyclical unemployment

Question 7

If a country’s natural rate of unemployment is 4.5%, and the actual unemployment rate is 7%, what is the cyclical unemployment rate?

Accepted Answer

$$2.5\%$$

Question 8

Which of the following government policies is most likely to reduce structural unemployment?

Accepted Answer

Providing retraining programs for displaced workers

Question 9

Why might the establishment (payroll) survey understate the level of employment?

Accepted Answer

It does not include self-employed workers.

Question 10

Which of the following is an example of an efficiency wage?

Accepted Answer

A firm pays workers above the market wage to increase productivity.

Question 11

Suppose the employment-population ratio is calculated as $$	ext{Employment-Population Ratio} = \frac{	ext{Employed}}{	ext{Working-Age Population}} 	imes 100. If $$there are 150 million employed people and the working-age population is 200 million, what is the ratio?

Accepted Answer

$$75\%$$

Question 12

Which of the following would NOT be counted as unemployed in the official BLS statistics?

Accepted Answer

A discouraged worker who has stopped looking for work.

Question 13

If the minimum wage is increased by 10%, studies suggest teenage employment will:

Accepted Answer

Decrease by about 2%

Question 14

Which of the following best explains why the unemployment rate may overstate the true level of joblessness?

Accepted Answer

Some people falsely claim to be looking for work.

Question 15

Which of the following is most likely to be classified as frictionally unemployed?

Accepted Answer

A recent college graduate searching for their first job.

Question 16

Which of the following statements about labor unions in the United States is correct?

Accepted Answer

Labor unions have a limited effect on unemployment because few private sector workers are unionized.

Question 17

During the Covid-19 pandemic, why was it difficult to measure the true unemployment rate?

Accepted Answer

It was unclear whether people not working were unemployed or employed but absent from work.

Question 18

Which of the following would be included in the broader BLS U-6 measure of unemployment but NOT in the official U-3 measure?

Accepted Answer

People who are employed part-time for economic reasons.

Question 19

If a new technology makes a worker’s skills obsolete, which type of unemployment is most likely to increase?

Accepted Answer

Structural unemployment

Question 20

Which of the following is a likely effect of more generous unemployment insurance?

Accepted Answer

Higher unemployment rates

Unemployment and Inflation: Measurement and Types in Macroeconomics

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