1. Classify the following as employed, unemployed, or not in labor force: a. person who is not working but applied for a job at Target last week b. person working part-time and searching diligently for a full-time job c. auto worker vacationing in Florida during a layoff at a General Motors plant who expects to be recalled in a couple of weeks d. 17-year-old who works 6 hours per week as a throwing newspapers e. homemaker working 70 hours a week preparing meals and performing other household services f. college student who spends between 50 and 60 hours per week attending classes and studying g. a retired Social Security recipient

2. Are the following workers more likely to experience frictional, structural, or cyclical unemployment? Explain. a. a construction worker gets laid off because of bad weather b. a manufacturing worker who loses her job at a plant in an isolated area due to outsourcing c. a stagecoach-industry worker laid off because of competition from railroads d. an expert welder with little formal education who loses his job when the company installs automatic welding machinery e. a car salesman gets loses his job because of an economic downturn

3. During a recession, which of the following will be true? a. Actual rate of unemployment will be lower than the natural rate. b. Actual GDP will be lower than potential GDP. c. Actual employment will exceed what is considered as full employment.

4. Which of the following would be most likely to shift the long-run aggregate supply curve (LRAS) to the left? a. unfavorable weather conditions that reduced the size of this year's grain harvest b. an increase in labor productivity as the result of improved computer technology and expansion in the Internet c. congress permanently raises the federal minimum wage to $22/hr

5. Assume an economy operates in long-run equilibrium. Using an AD-AS diagram, show the direction of the shift for the AD, SRAS, and/or LRAS for each of the following changes in conditions. Show the effect on the price level (P) and GDP (Y). Finally, show movement back to long run equilibrium. a. The price of crude oil rises significantly (temporary). b. Spending on national defense doubles. c. An improvement in technology raises labor productivity. d. The government passes a law doubling all manufacturing wages.