File: Chapter 33 Jobs and Unemployment
True/False
[QUESTION]
1. Today people have 7-10 jobs over their lifetime.
2. The duration of unemployment rose significantly more during the 2008/09 recession relative
to previous recessions.
3. Jamaal lost his job when a mechanical device replaced people with his skills. If Jamaal’s skills
are non-transferable, he would be considered to be structurally unemployed.
4. Cyclical unemployment is caused by fluctuations in economic activity.
5. In today’s globalized economy, a U.S. worker’s reservation wage tends to be lower than the
reservation wage of many workers in developing countries.
6. Other things equal, the higher the reservation wage, the more likely one is to be unemployed.
7. Someone who believes in the individual responsibility framework believes that the standard
measure of unemployment underestimates the level of unemployment.
8. Someone who believes in the social responsibility framework believes that the standard
measure of unemployment underestimates the level of unemployment.
9. The program suggested by the textbook author provides a job for everyone.
10. Which of the following groups tends to have the highest unemployment rates?
A. Blacks
B. Whites
C. Asians
D. Latinos
11. Which age group tends to have the highest unemployment rates?
A. 16-19 year olds
B. 20-24 year olds
C. 25-54 year olds
D. 65 and over
12. In the U. S. potential output in the long run tends to:
A. remain constant
B. rise at a trend rate of 2.5 to 3.5 percent per year.
C. fluctuate between 4.5 and 5.5 percent per year.
D. decline at a trend rate of 7.5 to 8.5 per year.
13. Okun’s rule of thumb states that a:
A. 2 percentage point rise in the unemployment rate will tend to be associated with a 1 percent
fall in output from its trend and vice versa.
B. 2 percentage point rise in the unemployment rate will tend to be associated with a 1 percent
rise in output from its trend and vice versa.
C. 1 percentage point rise in the unemployment rate will tend to be associated with a 2 percent
fall in output from its trend and vice versa.
D. 1 percentage point rise in the unemployment rate will tend to be associated with a 2 percent
rise in output from its trend and vice versa.
14. Using Okun’s rule of thumb, if trend growth is 3 percent and the unemployment rate rises by
2 percentage points, output would be expected to have:
A. fallen by 1 percentage point.
B. risen by 1 percentage point.
C. fallen by 2 percentage points.
D. risen by 2 percentage points.
15. Using Okun’s rule of thumb, if trend growth is 2 percent and the unemployment rate rises by
0.5 percent, output would be expected to have:
A. fallen by 1 percentage point.
B. risen by 1 percentage point.
C. fallen by 2 percentage points.
D. risen by 2 percentage points.
16. Using Okun’s rule of thumb, if trend growth is 3 percent and the unemployment rate rises by
0.5 percent, output would be expected to have:
A. fallen by 1 percentage point.
B. risen by 1 percentage point.
C. fallen by 2 percentage points.
D. risen by 2 percentage points.
17. Using Okun’s rule of thumb, if trend growth is 3 percent and the unemployment rate falls by
0.5 percent, output would be expected to have:
A. fallen by 2 percentage point.
B. risen by 2 percentage point.
C. fallen by 4 percentage points.
D. risen by 4 percentage points.
18. According to Okun’s rule of thumb, if trend growth is 2 percent, an increase of the rate of
unemployment from 6 percent to 8 percent would be expected to be associated with which of the
following income changes?
A. fall by 4 percent.
B. rise by 4 percent.
C. fall by 2 percent.
D. rise by 2 percent.
19. According to Okun’s rule of thumb, if trend growth is 3 percent, a decrease of the rate of
unemployment from 5 percent to 4 percent income would be expected to:
A. fall by 4 percent.
B. rise by 5 percent.
C. fall by 2 percent.
D. rise by 2 percent.
20. According to Okun’s rule of thumb, if trend growth is 2 percent and the economy is
producing at an annual rate of $5 trillion, a decrease in the rate of unemployment from 7 percent
to 6 percent would be expected to be associated with which of the following changes in income?
A. Fall by $100 billion.
B. Rise by $100 billion.
C. Fall by $200 billion.
D. Rby $200 billion
21. According to Okun’s rule of thumb, if trend growth is 3 percent and the economy is
producing at an annual rate of $7 trillion, if the rate of unemployment rose from 6 percent to 8
percent, income would be expected to:
A. fall by $140 billion.
B. rise by $140 billion.
C. fall by $70 billion.
D. rise by $70 billion
22. Unemployment caused by recession is called:
A. frictional unemployment.
B. cyclical unemployment.
C. natural unemployment.
D. structural unemployment.
23. Cyclical unemployment results from:
A. fluctuations in economic activity.
B. structural changes in the economy.
C. changes in technology.
D. the aging of the population.
24. Which of the following types of unemployment is considered to be the most controllable
through demand-side macroeconomic policy?
A. Frictional unemployment
B. Natural unemployment
C. Cyclical unemployment
D. Structural unemployment
25. Structural unemployment is caused by:
A. a general downturn in the economy.
B. people quitting a job just long enough to look for and find another one.
C. people over 65 who don’t really want to work.
D. people losing a job when their skills become obsolete due to technological innovations.
26. Structural unemployment:
A. includes cyclical unemployment.
B. is generally greater than cyclical unemployment.
C. is generally less than cyclical unemployment.
D. cannot be reduced with demand side policies.
27. Workers at a car-manufacturing plant are let go because automated machinery has been
installed that requires fewer employees to operate. What type of unemployment describes the
workers’ situation?
A. Cyclical unemployment
B. Full unemployment
C. Structural unemployment
D. Frictional unemployment
28. News Story: Workers at a car-manufacturing plant in Flint, Michigan are laid off because the
economy is weak and GM cars are not selling well. GM isn’t sure when the plant will reopen.
What type of unemployment describes the workers’ situation?
A. Cyclical unemployment
B. Funemployment
C. Structural unemployment
D. Frictional unemployment
29. In 2001, the U.S. economy entered a recession and unemployment rose. Which one of the
following types of unemployment was most likely caused by the recession?
A. Cyclical unemployment
B. Full unemployment
C. Structural unemployment
D. Funemployment
30. Mexico can produce vine-ripened tomatoes at a lower opportunity cost than firms in the
United States. Through trade negotiations, the United States lifted quotas limiting the import of
tomatoes from Mexico. Some firms in Florida, in the face of this new competition, had to close
their farms and let go their workers. Many of the workers could not find new jobs right away.
What type of unemployment describes the workers’ situation?
A. Cyclical unemployment
B. Full unemployment
C. Sructural unemployment
D. Target unemployment
31. Technological change can result in:
A. structural unemployment.
B. natural unemployment.
C. cyclical unemployment.
D. seasonal unemployment.
32. Cyclical unemployment:
A. includes structural unemployment.
B. is generally greater than structural unemployment.
C. is generally less than structural unemployment.
D. can be reduced with demand side policies.