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6.5 Essay: Labor Market Indicators
1) How does the Current Population Survey determine if a person should be counted in the
labor force?
Skill: Level 1: Deinition
Section: Checkpoint 6.1
Status: Old
AACSB: Written and oral communication
2) What is the deinition of the unemployment rate? How are part-time workers and
discouraged workers treated when calculating the unemployment rate?
Skill: Level 1: Deinition
Section: Checkpoint 6.1
Status: Old
AACSB: Written and oral communication
3) Deine the unemployment rate and labor-force participation rate. Discuss the diferences
between these two rates.
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Written and oral communication
91
4) What is a "marginally attached worker"?
Skill: Level 1: Deinition
Section: Checkpoint 6.1
Status: Old
AACSB: Written and oral communication
5) What are the reasons some people choose to be part-time workers?
Skill: Level 1: Deinition
Section: Checkpoint 6.1
Status: Old
AACSB: Written and oral communication
6) The unemployment rate is 6 percent. If the population is 300 million, and the number
unemployed is 6 million and the number employed is 94 million, what is the size of the
labor force?
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
7) Suppose the current unemployment rate is 5 percent, the labor force is 400 million
people, the labor force participation rate is 80 percent and the working-age population is
500 million people. What number of people are unemployed?
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
92
8) Suppose that the population is 275 million. Also assume that the labor force is 135
million and that 130 million people are employed. Calculate the unemployment rate.
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
9) Suppose the population is 220 million people, the labor force is 150 million people, the
number of people employed is 130 million and the working-age population is 175 million
people. What is the unemployment rate?
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
10) Suppose the working-age population is 150 million, the labor force is 125 million, and
employment is 120 million.
a. What is the unemployment rate?
b. Now suppose that 2 million students graduate from college and begin to look for jobs.
What is the new unemployment rate if none of the students have found jobs yet?
c. Suppose that all 2 million students ind jobs. What is the unemployment rate now?
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
11) Suppose there are 180 million employed people and 20 million unemployed people.
a. What is the unemployment rate?
b. Suppose that 5 million unemployed people give up their search for jobs and become
discouraged workers. What is the new unemployment rate?
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
12) Consider the following scenario. Initially the economy has 90 million people working,
93
10 million people unemployed, and 20 million people not in the labor force. Then prospects
for the economy improve. Five million people who previously were not in the labor force
now join the 10 million previously unemployed in looking for work. For now, the economy
remains with 90 million workers. What happens to the unemployment rate?
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
13) Based on the information in the above table, what is the unemployment rate?
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
14) Based on the information in the above table, what is the labor force participation rate?
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
94
6.6 Essay: Labor Market Trends and Fluctuations
1) How does the unemployment rate change in a recession and in an expansion?
Skill: Level 1: Deinition
Section: Checkpoint 6.2
Status: Old
AACSB: Relective thinking
2) Over the last 50 years, how has
a. the labor force participation rate changed?
b. the men's and women's labor force participation rates changed?
Skill: Level 2: Using deinitions
Section: Checkpoint 6.2
Status: Old
AACSB: Written and oral communication
3) Over the last 50 years, how has the women's labor force participation rate changed?
What are reasons for this change?
Skill: Level 2: Using deinitions
Section: Checkpoint 6.2
Status: Old
AACSB: Written and oral communication
95
4) Explain how the labor force participation rate, the unemployment rate, and the
percentage of the labor force employed part time change in a recession.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.2
Status: Old
AACSB: Written and oral communication
6.7 Essay: Unemployment and Full Employment
1) What are the three types of unemployment and how do they change over the business
cycle?
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
2) Deine and give an example of how a spell of frictional unemployment can begin.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
96
3) Can frictional unemployment ever be totally eliminated? Explain your answer.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
4) Explain the diference between frictional and structural unemployment.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
5) Deine and give an example of how a spell of structural unemployment can begin.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
6) Explain what type of unemployment changes with the business cycle and how it changes.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
97
7) Why is there unemployment even when the economy is at "full employment"?
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
8) Explain the relationship(s) between full employment, cyclical unemployment, the natural
unemployment rate, and potential GDP.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
9) For the past decade, the unemployment rate in Western Europe has been higher than the
unemployment rate in the United States. Based on this fact, is the natural unemployment
rate larger in Western Europe or in the United States? Why might the natural rates difer
between the two areas?
Skill: Level 3: Using models
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
98
10) Consider the following statement: "Real GDP and potential GDP are always equal." Is
this statement true or false? Explain your answer.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
11) What is the relationship over the business cycle of potential GDP and real GDP?
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
12) Explain the relationship between real GDP and potential GDP and between the
unemployment rate and the natural unemployment rate as the economy moves through a
business cycle.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Written and oral communication
99
