Q: Suppose the working-age population is 260 million, the labor force is 167 million, and the number of unemployed is 6 million. What is the unemployment rate? Use the formula $$\text{Unemployment Rate} = \frac{\text{Number of Unemployed}}{\text{Labor Force}} \times 100.$$

$$\frac{6}{167} \times 100 = 3.6\%$$

Q: If the labor force participation rate is 62.3% and the working-age population is 260 million, what is the size of the labor force? Use the formula $$\text{Labor Force} = \text{Participation Rate} \times \text{Working-Age Population}.$$

$$0.623 \times 260 = 161.98$$ million

Question 1

Which of the following best describes a discouraged worker according to the U.S. Bureau of Labor Statistics (BLS)?

Accepted Answer

Someone who is not working and has not looked for a job in the past four weeks because they believe no jobs are available for them.

Question 2

Suppose the working-age population is 260 million, the labor force is 167 million, and the number of unemployed is 6 million. What is the unemployment rate? Use the formula $$	ext{Unemployment Rate} = \frac{	ext{Number of Unemployed}}{	ext{Labor Force}} 	imes 100.$$

Accepted Answer

$$\frac{6}{167} 	imes 100 = 3.6\%$$

Question 3

Which type of unemployment is most likely to increase during a recession?

Accepted Answer

Cyclical unemployment

Question 4

A skilled glass blower becomes unemployed when a new machine does her job faster. What type of unemployment is this?

Accepted Answer

Structural unemployment

Question 5

If the labor force participation rate is 62.3% and the working-age population is 260 million, what is the size of the labor force? Use the formula $$	ext{Labor Force} = 	ext{Participation Rate} 	imes 	ext{Working-Age Population}.$$

Accepted Answer

$$0.623 	imes 260 = 161.98$$ million

Question 6

Which of the following is included in the official unemployment rate (BLS U-3)?

Accepted Answer

People without jobs who have actively looked for work in the past four weeks

Question 7

A literary editor leaves her job in New York to look for a new job in San Francisco. What type of unemployment is this?

Accepted Answer

Frictional unemployment

Question 8

Which of the following best describes the natural rate of unemployment?

Accepted Answer

The sum of frictional and structural unemployment when cyclical unemployment is zero

Question 9

If the unemployment rate is 5% and the inflation rate is 3%, what is the value of the misery index? Use the formula $$	ext{Misery Index} = 	ext{Unemployment Rate} + 	ext{Inflation Rate}.$$

Accepted Answer

$$5\% + 3\% = 8\%$$

Question 10

Which of the following scenarios is an example of cyclical unemployment?

Accepted Answer

A cashier is laid off due to slumping sales during a recession.

Question 11

Which policy is most effective at reducing cyclical unemployment?

Accepted Answer

Expansionary fiscal or monetary policy to stimulate aggregate demand

Question 12

Which of the following is NOT counted as part of the labor force?

Accepted Answer

A retiree who is not seeking work

Question 13

Why might the official unemployment rate (U-3) understate the true level of unemployment?

Accepted Answer

It does not include discouraged workers or underemployed workers.

Question 14

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

Accepted Answer

It helps maintain consumer spending during recessions.

Question 15

A high school graduate lacks the skills necessary for a particular job. What type of unemployment is this?

Accepted Answer

Structural unemployment

Question 16

If the labor force is 167 million and the working-age population is 260 million, what is the labor force participation rate? Use the formula $$	ext{Labor Force Participation Rate} = \frac{	ext{Labor Force}}{	ext{Working-Age Population}} 	imes 100.$$

Accepted Answer

$$\frac{167}{260} 	imes 100 = 64.2\%$$

Question 17

Which of the following statements about trends in U.S. labor force participation is correct?

Accepted Answer

The participation rate for adult men has declined since 1948, while the rate for adult women increased until recently.

Question 18

Which of the following would be considered frictional unemployment?

Accepted Answer

A recent college graduate searching for their first job

Question 19

Which of the following is a reason why structural unemployment can persist for long periods?

Accepted Answer

It is caused by mismatches between workers' skills and job requirements.

Unemployment: Concepts, Measurement, and Trends

Study Guide - Practice Questions

Study Guide - Flashcards