TOP: Unemployment KEY: Bloom’s: Comprehension
86. Whom does the Bureau of Labor Statistics include in the “discouraged workers” group?
a.
All those between 16 and 65 who are neither disabled nor in an institution and are also
neither employed nor seeking employment.
b.
Civilian labor force members who have chosen early retirement because they dislike their
work or think the pay is too low.
c.
Members of the noninstitutional population who say they want to be employed but aren’t
searching for a job.
d.
Members of the civilian labor force who are looking for a job but cannot find one.
e.
Anyone in the population who is not working.
87. The primary cause of frictional unemployment is:
a.
discouraged workers who give up looking for work.
b.
fluctuations in aggregate demand.
c.
the lack of training and marketable qualifications in job seekers.
d.
inaccurate information about job opportunities.
88. Unemployment that is of a short duration to allow time to find a new job is:
a.
structural unemployment.
c.
frictional unemployment.
b.
cyclical unemployment.
d.
durational unemployment.
89. A person who voluntarily quits his/her job in New York and expects to get a similar job in Los
Angeles is an example of:
a.
structural unemployment.
c.
durational unemployment.
b.
cyclical unemployment.
d.
frictional unemployment.
90. Frictional unemployment refers to:
a.
people who are out of work and have no job skills.
b.
short periods of unemployment needed to match jobs and job seekers.
c.
people who spend relatively long periods out of work.
d.
unemployment related to the ups and downs of the business cycle.
91. An example of frictional unemployment is a(n):
a.
textile worker permanently laid off due to jobs lost to imports.
b.
engineer permanently laid off due to advances in technology.
c.
fast-food restaurant worker who quits work and attends college.
d.
computer programmer who leaves one job and accepts a new job.
92. Which of the following people would be classified as fictionally unemployed?
a.
Computer programmers who lost their jobs because of a recession.
b.
Construction workers who are on temporary layoff.
c.
Elementary school teachers who do not have summer jobs.
d.
Textile workers who lost their jobs because of new foreign competition.
93. Frictional unemployment refers to:
a.
unemployment related to the ups and downs of the business cycle.
b.
workers who are between jobs.
c.
people who spend relatively long periods out of work.
d.
people who are out of work and have no job skills.
94. If Sam Jackson voluntarily quits one job, possesses marketable skills, and expects to find a new job in
a few weeks, then Mr. Jackson is considered:
a.
frictionally unemployed.
b.
cyclically unemployed.
c.
seasonally unemployed.
d.
structurally unemployed.
e.
unwise to quit his job without already having another one.
95. Workers who may be between jobs are considered:
a.
frictionally unemployed.
b.
structurally unemployed.
c.
cyclically unemployed.
d.
unemployable.
e.
discouraged workers.
96. Unemployment caused by people voluntarily quitting work in order to seek more attractive
employment is called:
a.
the natural rate of unemployment.
b.
full employment.
c.
cyclical unemployment.
d.
frictional unemployment.
e.
structural unemployment.
97. Sharon was being treated unfairly by her boss, so she stormed off the job and two days later found
another position. For two days, Sharon experienced:
a.
cyclical unemployment.
b.
structural unemployment.
c.
seasonal unemployment.
d.
frictional unemployment.
e.
being out of the labor force.
98. Althea, a brilliant new Ph.D. in economics, has turned down many job offers because she hopes
eventually to teach at one of the top 10 universities in her field. The type of unemployment she is
experiencing is:
a.
frictional.
b.
structural.
c.
seasonal.
d.
cyclical.
e.
underemployment.
99. A general mismatch between the skills of unemployed workers and the skills needed by employers
with job openings results in:
a.
frictional unemployment.
c.
cyclical unemployment.
b.
structural unemployment.
d.
a higher labor force participation rate.
100. When individuals are unemployed because they lack the qualifications to fill available jobs, this is
called:
a.
frictional unemployment.
c.
cyclical unemployment.
b.
natural unemployment.
d.
structural unemployment.
101. Bob is unemployed because his skills have become obsolete due to technological advances. This is
____ unemployment.
a.
frictional
c.
cyclical
b.
structural
d.
abnormal
102. When people become unemployed because of a higher minimum wage, this type of unemployment is
called:
a.
frictional.
c.
cyclical.
b.
structural.
d.
abnormal.
103. Structural unemployment is unemployment caused by:
a.
temporary changes in jobs.
b.
discrimination.
c.
the time required to match employers and workers.
d.
a mismatch between worker skills and employer requirements.
104. An example of structural unemployment is a(n):
a.
textile worker who quits one job and waits for the new job to begin.
b.
engineer permanently laid off due to advances in technology.
c.
computer programmer who becomes rich and leaves the labor force.
d.
All of these.
105. Unemployment that is caused by a mismatch of the demand for workers with certain skills and the
skills of unemployed workers is:
a.
frictional unemployment.
c.
cyclical unemployment.
b.
structural unemployment.
d.
mismatch unemployment.
106. Sam is a musician who is out of work because electronic equipment replaced live musicians. This is an
example of:
a.
frictional unemployment.
c.
structural unemployment.
b.
cyclical unemployment.
d.
involuntary unemployment.
107. Louise is unemployed due to a decrease in the demand for workers with a knowledge of a certain word
processing language. This is an example of:
a.
cyclical unemployment.
c.
involuntary unemployment.
b.
frictional unemployment.
d.
structural unemployment.
108. Consider a broom factory that permanently closes because of foreign competition. If the broom
factory’s workers cannot find new jobs because their skills are no longer marketable, then they are
classified as:
a.
seasonally unemployed.
c.
structurally unemployed.
b.
frictionally unemployed.
d.
cyclically unemployed.
109. A mismatch of the skills of unemployed workers and the skills required for existing jobs is defined as:
a.
involuntary unemployment.
c.
structural unemployment.
b.
cyclical unemployment.
d.
frictional unemployment.
110. Unemployment that occurs from fundamental technological changes in the production, or from the
substitution of new goods for customary ones, is known as:
a.
underemployment.
b.
seasonal unemployment.
c.
frictional unemployment.
d.
structural unemployment.
e.
cyclical unemployment.
111. Unemployment that results from fundamental technological changes in production, or from the
substitution of new goods for customary ones, is:
a.
the natural rate of unemployment.
b.
full employment.
c.
cyclical unemployment.
d.
frictional unemployment.
e.
structural unemployment.
112. Juanita earned a B.S. in engineering and went to work for a large defense contractor in a small town in
California. When the government cut spending, Juanita and 99 others were laid off. The only other
business in the town is growing grapes to be made into raisins, but the growers refuse to hire laid-off
engineers, knowing they will leave at the first opportunity. The unemployment Juanita is experiencing
is:
a.
cyclical.
b.
structural.
c.
permanent.
d.
frictional.
e.
voluntary.
113. Structural unemployment is frequently caused by:
a.
technological changes that make certain job skills obsolete.
b.
temporary layoffs in industries such as construction.
c.
the impact of recessions on employment.
d.
none of these.
114. Susan Greenberg, who works in a typewriter factory, becomes unemployed because people start
buying personal computers instead of typewriters. Susan can best be described as:
a.
frictionally unemployed.
b.
structurally unemployed.
c.
cyclically unemployed.
d.
not part of the labor force.
e.
a discouraged worker.
115. Structural unemployment refers to unemployment resulting from:
a.
technological change.
b.
being in the wrong geographical location
c.
taking the time to find the best job.
d.
seasonal decreases in demand for labor.
e.
a recession in the economy.
116. Jamal (now age 54) lost his job. He has very specialized skills that are no longer in demand. Jamal’s
unemployment is best classified as:
a.
cyclical.
b.
structural.
c.
seasonal.
d.
frictional.
e.
voluntary.
117. Which type of unemployment is most closely connected with the saying “you can’t teach an old dog
new tricks”?
a.
Cyclical.
b.
Frictional.
c.
Structural.
d.
Voluntary.
e.
Seasonal.
118. Which type of unemployment is experienced by a person who is laid off at an office because word
processing equipment and software reduce the need for typists?
a.
Seasonal.
b.
Cyclical.
c.
Voluntary.
d.
Structural.
e.
Frictional.
119. The type of unemployment that occurs because of a recession is called:
a.
frictional unemployment.
c.
natural unemployment.
b.
seasonal unemployment.
d.
cyclical unemployment.
120. Cyclical unemployment is primarily caused by:
a.
a large proportion of youthful workers in the labor force.
b.
fluctuations in aggregate demand.
c.
a lack of training on the part of job seekers.
d.
the failure of job seekers to search adequately for the available jobs.
121. Cyclical unemployment is caused by:
a.
shifts in the job skills required in the economy.
b.
seasonal layoffs.
c.
declines in real GDP.
d.
cyclical changes in the job skills among workers.
122. Eric lost his job because a recession caused his employer’s sales to fall. This is an example of:
a.
involuntary unemployment.
c.
structural unemployment.
b.
frictional unemployment.
d.
cyclical unemployment.
123. Sally lost her job when her company went out of business because of a recession. This is an example
of:
a.
frictional unemployment.
c.
cyclical unemployment.
b.
structural unemployment.
d.
technological unemployment.
124. Cyclical unemployment is caused by:
a.
shifts in the structure of the economy.
b.
seasonal layoffs.
c.
declines in actual output below its full-employment level.
d.
the absence of job skills among the unemployed.
125. An example of cyclical unemployment is a(n):
a.
textile worker permanently laid off due to job lost to imports.
b.
autoworker who is temporarily laid off due to a decline in demand for cars.
c.
engineer permanently laid off due to advances in technology.
d.
computer programmer who leaves one job and accepts a new job.
126. Unemployment caused by a recession is called:
a.
structural unemployment.
c.
involuntary unemployment.
b.
frictional unemployment.
d.
cyclical unemployment
127. Cyclical unemployment:
a.
causes unemployment statistics to be understated.
b.
causes unemployment statistics to be overstated.
c.
occurs because of recessions.
d.
occurs because of technological innovations in production.
e.
only occurs with a zero inflation rate.
128. It is difficult for cyclically unemployed individuals to find jobs because:
a.
they do not meet the qualifications required for the available jobs.
b.
the economy is in a recession.
c.
they quit their last job and employers view them with suspicion.
d.
they have not looked long enough to find a job.
129. A decrease in aggregate demand and the subsequent cutbacks in production lead to:
a.
frictional unemployment.
b.
cyclical unemployment.
c.
cost-push unemployment.
d.
structural unemployment.
e.
transitory unemployment.
130. The increase in unemployment associated with a recession is called:
a.
structural unemployment.
b.
frictional unemployment.
c.
discouraged unemployment.
d.
cyclical unemployment.
e.
temporary unemployment.
131. In an economic expansion, people used their charge cards to purchase many goods. Now the economy
is in a recession and people must use much of their reduced incomes to pay back debts. If employees
manufacturing the goods people used to buy are laid off, they will suffer from:
a.
cyclical unemployment.
b.
structural unemployment.
c.
permanent unemployment.
d.
frictional unemployment.
e.
underemployment.
132. Cyclical unemployment refers to unemployment resulting from:
a.
a mismatch of skills.
b.
being in the wrong geographical location.
c.
the time and monetary cost of finding the best job.
d.
a recession.
133. When full employment is present in the United States:
a.
the rate of unemployment will fall to zero.
b.
the actual rate of unemployment will be less than the natural rate of unemployment.
c.
approximately 95 percent of the adult population will be employed.
d.
approximately 95 percent of the labor force will be employed.
134. Full employment is the rate of employment that results when:
a.
all the labor resources of the economy are employed full time.
b.
cyclical unemployment has reached its maximum.
c.
everybody who wants a job can find one.
d.
only frictional and structural unemployment are present.
135. Full employment means which of the following is zero?
a.
structural unemployment
c.
frictional unemployment
b.
cyclical unemployment
d.
aggregate unemployment
136. When an economy is operating at its full employment rate of output:
a.
the rate of unemployment will be zero.
b.
output will exceed the economy’s maximum sustainable rate.
c.
the actual rate of unemployment will equal the natural rate.
d.
the economy’s potential rate of output will exceed actual GDP.
137. The combination of frictional and structural unemployment is the:
a.
cyclical rate of unemployment.
c.
civilian rate of unemployment.
b.
transitional rate of unemployment.
d.
natural rate of unemployment.
138. The natural rate of unemployment occurs if there is no:
a.
unemployment.
c.
structural unemployment.
b.
frictional unemployment.
d.
cyclical unemployment.
139. Full employment is the situation in which the economy operates at an unemployment rate equal to the
sum of:
a.
structural and frictional unemployment.
b.
cyclical and frictional unemployment.
c.
structural and cyclical unemployment.
d.
structural, frictional, and cyclical unemployment.
140. The economy’s natural rate of unemployment consists of:
a.
structural plus frictional unemployment.
b.
cyclical plus frictional unemployment.
c.
structural plus cyclical unemployment.
d.
structural, frictional, and cyclical unemployment.
141. Full employment occurs when the rate of unemployment consists of:
a.
structural plus frictional unemployment.
b.
cyclical plus frictional unemployment.
c.
structural, frictional, and cyclical unemployment.
d.
none of these.
142. The economy is fully employed when there is no:
a.
seasonal unemployment.
c.
structural unemployment.
b.
frictional unemployment.
d.
cyclical unemployment.
143. Which of the following statements is true?
a.
The four phases of the business cycle, in order, are: peak, recovery, trough, recession.
b.
When unemployment is rising then real GDP is rising.
c.
The economic problem typically associated with a recovery is rising unemployment.
d.
Full employment exists in an economy when the unemployment rate equals the sum of
frictional, and structural unemployment rates.
144. When the rate of cyclical unemployment is zero, the:
a.
natural rate of unemployment must also be zero.
b.
rate of frictional unemployment must be negative.
c.
economy must have entered a recessionary stage.
d.
Keynesian aggregate supply curve must be horizontal.
e.
economy is considered to be at full employment.
145. The economy is considered to be at full employment when:
a.
the actual rate of unemployment is less than the natural rate.
b.
the leading economic indicators are unchanged for two consecutive quarters.
c.
structural unemployment is zero.
d.
frictional plus structural unemployment is less than the natural rate.
e.
the rate of cyclical unemployment is zero.
146. Actual GDP will be below potential GDP:
a.
when the economy is at full employment.
c.
when resources are fully utilized.
b.
during an economic boom.
d.
during a recession.
147. Which of the following is true?
a.
Frictional unemployment implies a lack of available jobs.
b.
During a recession, cyclical unemployment will be low.
c.
When an economy is at full employment, actual unemployment will be less than the
natural rate of unemployment.
d.
When actual GDP equals potential GDP, the actual unemployment rate will equal the
economy’s natural rate of unemployment.
148. The GDP gap is the difference between:
a.
frictional unemployment and actual real GDP.
b.
unemployment rate and real GDP deflator.
c.
actual real GDP and full-employment real GDP .
d.
full-employment real GDP and real GDP deflator.
149. Which of the following is true?
a.
The GDP gap is the difference between actual real GDP and full-employment real GDP.
b.
We desire economic growth because it increases the nation’s standard of living.
c.
Economic growth is measured by the annual percentage increase in a nation’s real GDP.
d.
Discouraged workers are a reason critics say the unemployment rate is understated.
e.
All of these are true.
150. The GDP gap is the difference between:
a.
full-employment real GDP and real GDP chain price index.
b.
unemployment rate and real GDP chain price index.
c.
actual real GDP and full-employment real GDP.
d.
frictional unemployment and actual real GDP.
151. Of the four groups listed below, the highest unemployment rate is typically experienced by:
a.
females as a group.
b.
males as a group.
c.
teenagers.
d.
persons who completed 1-3 years of high school.
TRUE/FALSE
1. The business cycle is the periodic but recurrent fluctuations in real GDP.
2. A principal cause of the business cycle is the changes in total spending that occur in the overall
economy.
3. The four phases of a single business cycle are, in order, the trough, followed by a recovery, then a
recession, ending with a peak.
4. Recovery is the phase of the business cycle during which real GDP reaches its maximum.
5. The government’s chief forecasting gauge for business cycles is the chained real GDP indicators.
6. Business cycles vary greatly in duration and intensity.
7. Business cycles are recurring periods of economic growth and decline in an economy’s real GDP.
8. The term “recovery” refers to the maximum point of the business cycle.
9. A principal cause of the business cycle is the changes in total spending that occur in the overall
economy.
10. The government’s main statistic for forecasting business cycles is the index of coincident indicators.
11. The duration of unemployment is not a leading indicator.
12. Industrial production is not a coincident indicator.
13. The prime rate is a lagging indicator.
14. The civilian labor force includes only the employed.
15. The civilian labor force excludes anyone not actively seeking a job.
16. The unemployment rate is the percentage of the civilian labor force that is unemployed but actively
seeking work.
17. Any adult who does not have a job is counted as unemployed.
18. In the United States, the unemployment rate for blacks is roughly the same as the unemployment rate
for whites.
19. Part-time workers who want full-time work are counted as only partially employed in the official
unemployment statistic.
20. In the United States, the unemployment rate for women is roughly the same as the unemployment rate
for men.
21. The official unemployment rate can be criticized for both understating and overstating the true number
of unemployed.
22. To be counted as unemployed, a person must be looking for a job.
23. A person who has lost his or her job because it is now performed by a robot is structurally
unemployed.
24. Structural unemployment refers to short periods of unemployment needed to match jobs and job
seekers.
25. Structural unemployment is a special type of cyclical unemployment.
26. When actual real GDP output is below full-employment real GDP, the GDP measures the cost of
cyclical unemployment.
27. Cyclical unemployment is the result of the business cycle.
28. The natural rate of unemployment exists when cyclical unemployment equals zero.
29. Full employment, which is always expected to occur, consists of the frictionally and cyclically
unemployed.
30. The economic cost of unemployment is the loss of potential output which can never be realized.
ESSAY
1. What generally causes the business cycle? What are the four phases of a single business cycle? What
are the problems associated with the business cycle?
2. What is full employment? What are the different kinds of unemployment? What constitutes the natural
(normal) rate of unemployment?
3. What does the GDP gap measure?