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39) In 2008, as the economy moved into a recession,
A) cyclical unemployment increased.
B) structural unemployment decreased.
C) natural unemployment decreased.
D) frictional unemployment was not afected.
E) the number of marginally attached workers decreased.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
40) During a recession, cyclical unemployment ________ and real GDP ________.
A) increases; increases
B) increases; decreases
C) decreases; decreases
D) decreases; increases
E) does not change; decreases
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
41) An economic recession produces
A) an increase in cyclical unemployment.
B) an increase in structural unemployment.
C) an increase in natural unemployment.
D) a decrease in cyclical unemployment.
E) a decrease in natural unemployment.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
71
42) Cyclical unemployment
A) is always a constant amount of unemployment.
B) is higher during an expansion.
C) decreases during a recession.
D) luctuates over the business cycle.
E) luctuates but not in response to the business cycle.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
Consider the following people:
• Chris quits his job as an automobile mechanic to pursue his college education full-time.
• Darrelo was laid of from her technical support job because of a strike by production
workers and is currently looking for a new job.
• Rita graduated from college and is currently looking for a job.
• Armondo quit his old job and will begin his new job in four days.
• Thorton was ired from his job as a steel worker because of massive imports of steel and
he is looking for a new job.
• Jung was laid of from his job as an appraiser because the irm's business declined
because of a general downturn in the economy and he is currently looking for a new job as
an appraiser.
43) According to the scenario above, in which of the following groups are all the people
frictionally unemployed?
A) Rita and Darrelo
B) Chris, Rita, and Thorton
C) Rita and Jung
D) Darrelo and Jung
E) Jung
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
72
44) According to the scenario above, in which of the following groups are all the people
cyclically unemployed?
A) Jung
B) Darrelo
C) Jung and Rita
D) Jung and Thorton
E) Thorton
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
45) According to the scenario above, in which of the following groups are all the people
structurally unemployed?
A) Thorton
B) Jung
C) Thorton and Darrelo
D) Darrelo and Thorton
E) Rita, Armondo, and Chris
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
46) During a recession, the average duration of unemployment tends to
A) increase.
B) decrease.
C) remain constant.
D) be unpredictable.
E) be about the same as during an expansion.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
73
47) During a recession, the duration of unemployment ________ and the unemployment rate
is ________ the natural rate of unemployment.
A) lengthens; greater than
B) lengthens; less than
C) shortens; greater than
D) shortens; equal to
E) does not change; equal to
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
48) The average duration of unemployment
A) decreases during recessions and increases during expansions.
B) increases during recessions and decreases during expansions.
C) does not vary with the business cycle.
D) decreases all the time.
E) increases all the time.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
49) Which is true regarding cyclical unemployment?
i) Cyclical unemployment is positive at business cycle peaks.
ii) Cyclical unemployment is negative at business cycle troughs.
iii) Cyclical unemployment is zero at full employment.
A) iii only
B) i, ii and iii
C) i and iii
D) i only
E) i and ii
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
74
50) At full employment there is no
A) unemployment.
B) cyclical unemployment.
C) avoidable unemployment.
D) frictional unemployment.
E) structural unemployment.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
51) Full employment occurs when
A) the unemployment rate is zero.
B) the cyclical unemployment rate is zero.
C) the frictional unemployment rate is zero.
D) the sum of frictional and structural unemployment is zero.
E) the structural unemployment rate is zero.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
52) Full employment occurs when
A) structural unemployment is zero.
B) cyclical unemployment is zero.
C) frictional unemployment is zero.
D) structural and frictional unemployment are zero.
E) the unemployment rate equals zero.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
75
53) When the economy is at full employment,
A) 100 percent of the labor force is employed.
B) there is no structural or cyclical unemployment.
C) there is no cyclical unemployment.
D) there is only frictional unemployment.
E) the natural unemployment rate equals zero.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
54) Full employment means that
A) the unemployment rate is below 6 percent.
B) there is no cyclical unemployment.
C) the unemployment rate is zero.
D) the frictional unemployment rate is equal to the structural unemployment rate.
E) there is no frictional unemployment.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
55) When the economy is at full employment, the
A) natural unemployment rate is equal to 0 percent.
B) natural unemployment rate equals the unemployment rate.
C) natural unemployment rate is equal to 10 percent.
D) unemployment rate is equal to 0 percent.
E) frictional unemployment rate is equal to 0 percent.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
76
56) Full employment occurs when the
A) unemployment rate equals the natural unemployment rate.
B) structural unemployment rate equals the frictional unemployment rate.
C) natural unemployment rate equals the frictional unemployment rate.
D) cyclical unemployment rate equals the natural unemployment rate.
E) structural unemployment rate equals zero.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
57) Full employment is the level of unemployment that occurs
A) when everyone looking for a job has a job.
B) when cyclical unemployment is zero.
C) when frictional and structural unemployment are zero.
D) when frictional, structural, and cyclical unemployment are zero.
E) None of the above answers is correct.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
58) Full employment means that
A) 100 percent of the labor force have jobs.
B) only those who are willing, able and looking for work are unemployed.
C) the cyclical unemployment rate is zero.
D) the natural unemployment rate is zero.
E) the frictional unemployment rate is zero.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
77
59) At full employment there still exists some unemployment because
A) some portion of our population will always be too lazy to work.
B) there are always people too old or young to be in the labor force.
C) the U.S. economy is constantly creating and destroying jobs.
D) it is unnatural to have all people work 40 hours per week.
E) real GDP can never exceed potential GDP.
Skill: Level 3: Using models
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
60) In 2012, real GDP in the United States was below potential GDP. This fact deinitely
means that
A) the unemployment rate was near 10 percent.
B) the unemployment rate was above the natural unemployment rate.
C) the economy was in an expansion.
D) cyclical unemployment had been decreasing.
E) frictional unemployment was negative.
Skill: Level 3: Using models
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
61) The natural unemployment rate is the unemployment rate that exists when there is no
A) structural unemployment.
B) frictional unemployment.
C) cyclical unemployment.
D) cyclical or structural unemployment.
E) unnecessary unemployment.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
78
62) Natural unemployment equals the sum of
A) cyclical and frictional unemployment.
B) cyclical, business, and structural unemployment.
C) frictional and structural unemployment.
D) business and cyclical unemployment.
E) cyclical and structural unemployment.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
63) The natural unemployment rate
A) includes only frictional and structural unemployment.
B) is equal to zero when there are no economic luctuations.
C) is easy to measure.
D) is very stable in value across time.
E) includes some frictional, structural, and cyclical unemployment.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
64) The natural unemployment rate is
A) another name for the average annual rate of unemployment.
B) another name for the cyclical unemployment rate.
C) the sum of cyclical and frictional unemployment rates.
D) the unemployment rate that is not associated with the business cycle.
E) the sum of cyclical, structural, and frictional unemployment rates.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
79
65) When cyclical unemployment is zero,
A) frictional unemployment is zero.
B) cyclical and frictional unemployment are zero.
C) structural unemployment is zero.
D) the unemployment rate equals the natural unemployment rate.
E) the natural unemployment rate is zero.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
66) The natural unemployment rate occurs
A) at the full employment level of unemployment.
B) when the structural unemployment rate equals zero.
C) when the frictional unemployment rate equals zero.
D) when the sum of frictional and structural unemployment equals zero.
E) when the unemployment rate equals zero.
Skill: Level 1: Deinition
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
67) If the unemployment rate is less than the natural unemployment rate, then
A) there is no frictional unemployment.
B) cyclical unemployment is greater than zero.
C) real GDP is less than potential GDP.
D) real GDP is greater than potential GDP.
E) frictional unemployment is negative.
Skill: Level 2: Using deinitions
Section: Checkpoint 6.3
Status: Old
AACSB: Relective thinking
80
