QUESTION 1

1. The natural rate of unemployment is the sum of __________ unemployment and ___________ unemployment.

a. frictional; structural

b. cyclical; structural

c. frictional; cyclical

d. seasonal; cyclical

QUESTION 2

1. Newer automobiles use many computerized components. "Old style" auto mechanics who lose their jobs because they do not know how to fix the computerized components are an example of

a. frictional unemployment.

b. structural unemployment.

c. cyclical unemployment.

d. normal unemployment.

QUESTION 3

1. If we compare the unemployment rates across age, race and gender, we find that

a. females have higher unemployment rates than males.

b. the rate of white unemployment is lower than that for blacks.

c. adult workers have lower unemployment rates than teenagers.

d. all of the above.

QUESTION 4

1. As the baby boom generation entered the labor force, the natural rate of unemployment increased, probably because

a. the labor force was larger.

b. frictional unemployment increased.

c. structural unemployment increased.

d. cyclical unemployment increased.

QUESTION 5

1. Which of the following does NOT cause unemployment to increase during a recession?

a. The labor force shrinks.

b. Firms hire fewer workers.

c. The duration of unemployment increases.

d. none of the above.

QUESTION 6

1. When the unemployment rate is above the natural rate of unemployment, the government response is likely to be to

a. increase job training programs to retrain unemployed workers.

b. implement policies, like tax cuts, to stimulate the economy.

c. increase job placement activities.

d. any of the above.

QUESTION 7

1. Which of the following people should be included in the labor force?

a. someone who doesn't have a job and isn't looking for one

b. someone who is unemployed and is looking for a job

c. someone who is 15 years old

d. none of the above

QUESTION 8

1. The total labor force is comprised of

a. the unemployed and the employed.

b. only the employed.

c. all individuals age 16 or over.

d. only full-time employed individuals between the ages of 18 and 55.

QUESTION 9

1. Which of the following cases is an example of structural unemployment?

a. An accountant quits her job to become an investment banker.

b. An auto worker is fired for poor job performance.

c. A wheat farmer, whose income has plummeted because of a new trade agreement, quits farming and starts looking for a new job.

d. A consultant is laid off because poor economic conditions have depressed the market for consultants.

QUESTION 10

1. In 1993 the adult population in the United States was about 195 million people. Of these, approximately 121 million were employed and 9 million were unemployed. Thus, the labor force was ______ million people and the unemployment rate was about ______ percent.

a. 195, 4.6

b. 121, 7.4

c. 130, 6.9

d. 204, 4.4

QUESTION 11

1. Critics argue that the Bureau of Labor Statistics' measurement of the unemployment rate understates the actual amount of unemployment because it

a. does not include children under 18.

b. does not factor in part-time employees who would rather have full-time employment.

c. unfairly includes employees who may have been laid off only days prior to the survey.

d. calculates the rate in a way that exaggerates the effect of discouraged workers.

QUESTION 12

1. Which government agency is responsible for measuring unemployment?

a. The Bureau of the Census.

b. The Bureau of Labor Statistics.

c. The Council of Economic Advisors.

d. all of the above.

QUESTION 13

1. If the total population in the U.S. is 275 million, the adult population is 215 million, the number employed is 140 million, and the number of unemployed is 10 million, then the labor force participation rate is ________.

a. 69.7%

b. 54.5%

c. 65.1%

d. 50.9%

QUESTION 14

1. The unemployment rate is defined as

a. the reciprocal of the labor force participation rate.

b. the raw number of workers who want a job but do not have one.

c. the number of unemployed workers divided by the total adult population.

d. the percentage of the labor force that is not employed.

QUESTION 15

1. When there is full employment (or when the economy is at the natural rate of unemployment),

a. unemployment is zero.

b. frictional unemployment still exists, but there is no structural or cyclical unemployment.

c. unemployment is still positive.

d. inflation is zero.

QUESTION 16

1. When output _________, unemployment is expected to ________.

a. rises; rise.

b. rises; fall.

c. falls; remain constant.

d. remains constant; fall.

QUESTION 17

1. Which of the following factors best supports the relationship illustrated by the Phillips curve?
2. When unemployment falls, competition for workers causes wages to rise, and the higher wages are passed along to consumers in the form of higher prices.When the economy stays at the NAIRU, inflationary pressures are minimal, leading to a stable inflation rate.When unemployment rises, the overall economy can contract, which in turn can lead to a rising inflation rate.Lower unemployment leads to increased total income, which increases both consumer spending and GDP.

QUESTION 18

1. Welfare reform in the late 1990s required that recipients seek jobs. Most states implemented training programs for the individuals who entered the labor force off of the welfare roles. This policy is useful for combating _____________ unemployment.

a. frictional

b. structural

c. cyclical

d. all three types of

QUESTION 19

1. The government is most likely to intervene when ________ unemployment rises sharply.

a. structural

b. frictional

c. seasonal

d. cyclical

QUESTION 20

1. The lowest rate of unemployment that does not create inflationary pressure is called the

a. NERU: Non-Expansionary Rate of Unemployment.

b. MUR: Minimal Unemployment Rate.

c. NAIRU: Non-Accelerating Inflation Rate of Unemployment.

d. NRU: Natural Rate of Unemployment