Multiple Choice Questions:
1. In Littletown, the population includes 1,000 people over the age of 16; 800 are in the labor force, and 600 are employed. The unemployment rate is
a. 33 percent.
b. 25 percent.
c. 20 percent.
d. 75 percent.
e. None of the above.
2. The official unemployment rate may overstate the extent of unemployment because
a. It excludes discouraged workers.
b. It counts part-time workers as fully employed.
c. It does not count those with jobs in the underground economy as employed.
d. It includes those who claim to be looking for work as unemployed, even if they are just going through the motions in order to get government benefits.
e. Of both c and d.
3. The unemployment rate may underestimate the true extent of unemployment if
a. Employees increase the number of hours they work overtime.
b. Many people become discouraged and cease looking for work.
c. A large number of people are working in the underground economy.
d. Any of the above occur.
4. If unemployment benefits increase, leading more people to claim to be seeking work when they are not really seeking work, the measured unemployment rate will
a. Rise.
b. Fall.
c. Be unaffected.
d. Change in an indeterminate direction.
5. After looking for a job for more than eight months, Kyle became frustrated and stopped looking. Economists view Kyle as
a. Unemployed.
b. Part of the labor force, but neither employed nor unemployed.
c. A discouraged worker.
d. Cyclically unemployed.
e. Both b and c.
6. Persons who do not have jobs and who do not look for work are considered
a. Unemployed.
b. Out of the labor force.
c. Underemployed.
d. Overemployed.
e. Part of the underground economy.
7. If the unemployment rate is 6 percent and the number of persons unemployed is 6 million, the number of people employed is equal to
a. 100 million.
b. 94 million.
c. 106 million.
d. 6 million.
e. none of the above.
8. According to the Bureau of Labor Statistics, the four main categories of unemployed workers are
a. Discouraged workers, part-time workers, the cyclically unemployed, and the frictionally unemployed.
b. Discouraged workers, job losers, new entrants, and the underemployed.
c. New entrants, job losers, job leavers, and reentrants.
d. Job losers, job leavers, the structurally unemployed, and the frictionally unemployed.
9. Frictional unemployment is
a. Unemployment that is due to normal turnover in the labor market.
b. Unemployment caused by automation in the workplace.
c. Unemployment caused by lack of training and education.
d. Unemployment that is due to the friction of competing ideological systems.
e. All of the above.
10. Unemployment caused by a contraction in the economy is called
a. Frictional unemployment.
b. Cyclical unemployment.
c. Structural unemployment.
d. Seasonal unemployment.