27) Because of a bank merger, Ms. Davis lost her position as Vice President and had to seek
work with other banks. Ms. Davis has the skills necessary to find a new job, thus she is best
considered as
A) frictionally unemployed.
B) cyclically unemployed.
C) structurally unemployed.
D) naturally unemployed.
28) Bill loses his job as a loan officer when the bank he works for is bought up by a larger
financial institution. Bill has the skills necessary to find a new job, so as Bill searches for work
he is best considered an example of
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) a discouraged worker.
29) The best example of a frictionally unemployed individual is
A) Charles who has lost his job as an autoworker because of increased imports and can’t find a
good job that utilizes his skills.
B) Mary who quit her job to find work closer to her home.
C) Sam who lost his job as a real estate salesperson when the housing market went soft because
of a recession.
D) Sandy who has few skills and is no longer looking for work.
30) Structural unemployment is
A) associated with the normal changing of jobs in a dynamic economy.
B) associated with the general downturns in the economy.
C) associated with the general decline of specific industries.
D) almost always short-term in nature.
31) Structural unemployment is the result of
A) technological change or foreign competition.
B) normal labor market turnover.
C) a slowdown in the rate of economic expansion.
D) irresponsible workers with poor work habits.
32) Structural unemployment is
A) associated with the changing of jobs in a dynamic economy.
B) associated with general downturns in the economy.
C) associated with changes in technology that change required job skills.
D) very short-term unemployment.
33) Suppose that over a period of years the country of Quasiland switched from being an
agriculturally-based economy to a technologically-based economy. As a result, many people lost
jobs because they lacked the correct skills. As they search for new jobs, these people are part of
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) discouraged workers.
34) An individual is structurally unemployed if
A) there is a recession and the individual is laid off.
B) the individual wants to work just during certain months of the year.
C) the individual quits a job in order to search for a better one.
D) the individual lacks marketable job skills because technology has changed.
35) Which statement CORRRECTLY describes “structural unemployment”?
A) Structural unemployment occurs mainly during recessions.
B) Structural unemployment is also called “frictional unemployment.”
C) Structural unemployment occurs even when the economy is at the natural unemployment rate.
D) The amount of structural unemployment depends on normal labor turnover.
36) Unemployment caused by changes in technology is called ________ unemployment.
A) structural
B) frictional
C) techno
D) cyclical
37) Structural unemployment
A) falls during the expansion phase of the business cycle.
B) falls as the pace of technological progress increases.
C) generally lasts longer than frictional unemployment.
D) falls when the government provides more generous unemployment compensation benefits.
38) Suppose that the number of jobs in the fishing industry decreases but the number of jobs in
the travel industry increases. Initially, ________.
A) the economy remains at full employment
B) structural unemployment increases
C) there is a shortage of workers in both sectors
D) cyclical unemployment increases
39) When the automobile replaced horse-drawn carriages as the principal means of
transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all
their workers, thereby increasing
A) frictional unemployment.
B) structural unemployment.
C) frictional and cyclical unemployment.
D) cyclical unemployment.
40) The nation’s structural unemployment will increase when
A) bad economic policies send the economy into a recession.
B) there is influx into the labor market of new college graduates.
C) there is an increase in post-Christmas layoffs of workers.
D) an increase in textile imports displaces older textile workers who do not have the skills
necessary to find new jobs.
41) A major characteristic of structural unemployment that differentiates it from frictional
unemployment is that structural unemployment
A) exists only during a recession.
B) exists in an expansion whereas there is no frictional unemployment in an expansion.
C) is a short-term problem.
D) usually lasts longer than frictional unemployment.
42) When the economy switches production toward services and away from manufacturing and
workers in the manufacturing industry are permanently laid off
A) frictional unemployment decreases.
B) structural unemployment increases.
C) cyclical unemployment increases.
D) frictional and cyclical unemployment increase.
43) Suppose the country of Tiny Town decided to open its borders to free trade. As a result, a
number of its workers lost their jobs to international competition and can’t find new jobs because
their skills don’t match what is required for job openings. The workers who lost their jobs and
searched for new ones are best be considered part of
A) frictional unemployment.
B) structural unemployment
C) cyclical unemployment.
D) discouraged workers.
44) In the 1990s, video recordings were made primarily on tapes. However, in the 2000s DVDs
became increasingly popular, leading to a sharp decline in video tapes. As a result, many people
who manufactured tapes lost their jobs and didn’t have the skills necessary to work making
DVDs. This occurrence is best consider an example of
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) underemployment.
45) How would you best describe a manufacturing employee who has been fired because he was
replaced by a robot (new technology) and does not have the skills necessary to help operate the
robot?
A) job leaver
B) entrant/reentrant
C) cyclically unemployed
D) structurally unemployed
46) Which of the following individuals is the best example of a structurally unemployed worker?
A) a recent college graduate who has entered the labor force
B) an individual who has been laid off from his job because of a business cycle recession
C) an automobile worker who has lost her job because of an increase in automobile imports and
does not have the skills currently needed by businesses
D) an individual who quits one job in the hope of finding a better job
47) Ms. Krupsky has shorthand and typing skills and still finds herself unemployed. In today’s
economy, Ms. Krupsky is an example of what type of unemployment?
A) cyclical unemployment
B) frictional unemployment
C) structural unemployment
D) None of the above answers is correct.
48) Andrew just lost his job as a corkscrew operator since his company has found a machine to
perform his work tasks. Andrew did not have the skills needed to operate the machine. Andrew
has searched for a new job for 6 months and continues to search. Therefore, Andrew is
considered to be
A) frictionally unemployed.
B) a discouraged worker.
C) cyclically unemployed.
D) structurally unemployed.
49) Nicholas does not possess marketable job skills; therefore, he is
A) frictionally unemployed.
B) structurally unemployed.
C) cyclically unemployed.
D) seasonally unemployed.
Person A
This person has just graduated from high school and is
working at a part-time job but wants a full-time job.
Person B
At the age of 45, this person was laid off from the
automobile industry when new equipment was installed
and the person did not have the skills necessary to use the
equipment. This person now is searching to find a new job.
Person C
As a result of this person’s spouse being transferred to a job
in a new city, this person is looking for a new job.
Person D
This person just graduated from college and is looking for
an engineering job. In the meantime, this person is working
full-time waiting tables.
50) The above table shows answers given by people interviewed in the Current Population
Survey. Which people are structurally unemployed?
A) A, B, C, and D
B) A, B, and C
C) B and C.
D) A, B, and D
51) The above table shows answers given by people interviewed in the Current Population
Survey. Which person is cyclically unemployed?
A) A
B) B
C) C
D) none of the people
52) Cyclical unemployment
A) is due mainly to job leavers.
B) may increase or decrease during an expansion.
C) occurs when technology improvements change job requirements.
D) fluctuates over the business cycle.
53) Which type of unemployment increases during a recession?
A) cyclical unemployment
B) frictional unemployment
C) structural unemployment
D) the natural unemployment rate
54) Cyclical unemployment
A) is always present in an economy.
B) is higher during an expansion.
C) decreases during a recession.
D) fluctuates over the business cycle.
55) Cyclical unemployment is the result of
A) technological change or foreign competition.
B) normal labor market turnover.
C) the business cycle.
D) irresponsible workers with poor work habits.
56) Cyclical unemployment occurs when
A) individuals enter into the labor market making the rounds of potential employers.
B) individuals with skills no longer valued in the labor market cannot find employment.
C) individuals give up the search for employment.
D) a business cycle recession decreases employment.
57) Unemployment caused by the fluctuation of the business cycle is called ________
unemployment.
A) structural
B) recession-related
C) frictional
D) cyclical
58) Unemployment that is the result of recessions is called
A) frictional unemployment.
B) cyclical unemployment.
C) downtime unemployment.
D) structural unemployment.
59) Suppose the country of Quasiland experienced a decrease in real GDP and people were laid
off from their jobs. The people would be considered part of
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) discouraged workers.
60) The primary factor leading to cyclical unemployment is when
A) businesses often discriminate in their hiring practices on the basis of age, sex, and race.
B) the level of overall economic activity fluctuates.
C) workers quit their jobs in order to look for higher paying employment.
D) some workers do not have marketable job skills.
61) If a worker is temporarily laid off because the economy is in a recession
A) frictional unemployment increases.
B) structural unemployment increases.
C) the size of the labor force rises.
D) cyclical unemployment increases.
62) A recession causes a decrease in the demand for housing, resulting in substantial layoffs in
the construction industry. The people laid off are considered
A) cyclically unemployment.
B) frictionally unemployment.
C) seasonally unemployment.
D) structurally unemployment.
63) If the economy enters an expansion
A) cyclical unemployment increases.
B) structural unemployment increases.
C) cyclical unemployment decreases.
D) structural unemployment decreases.
64) Cyclical unemployment
A) is the major part of the natural unemployment rate.
B) decreases during economic expansions.
C) rises as a result of increased international competition.
D) falls when unemployment compensation payments are increased.
65) During an economic expansion, real GDP ________ and unemployment ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
66) An observer of the economy notices that over the past 12 months the unemployment rate has
fallen from 7.0 percent to 6.5 percent. During the same time, the rate of growth in real GDP has
been positive. From this information we might conclude that
A) inflation is not occurring.
B) an expansion is occurring in the economy.
C) a recession is in progress.
D) a trough in the business cycle will soon be reached.
67) Cyclical unemployment ________.
A) decreases during an expansion
B) grows at the same rate as potential GDP
C) is zero at a business-cycle trough
D) decreases during a recession
68) Cyclical unemployment ________ during expansions and ________ during recessions.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
69) Auto and steel workers commonly experience this type of unemployment in a recession.
A) frictional unemployment
B) cyclical unemployment
C) structural unemployment
D) natural unemployment rate
70) If the economy enters a recession
A) frictional unemployment increases.
B) structural unemployment decreases.
C) cyclical unemployment increases.
D) the number of workers on layoff decreases.
71) Recessions and expansions affect most strongly which type of unemployment?
A) frictional unemployment
B) structural unemployment
C) cyclical unemployment
D) seasonal unemployment
72) Mike has just been laid off from his construction job because consumers are not purchasing
new homes because of the recession. Mike would be considered to be part of
A) structural unemployment.
B) cyclical unemployment.
C) seasonal unemployment.
D) frictional unemployment.
73) Bill is a high-school dropout who lost his job in a fast food restaurant when the economy
plunged into a recession. After 8 months, Bill is still looking for work. He is an example of
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) the natural unemployment rate.
74) The best example of a cyclically unemployed individual is
A) Charles who lost his job as a real estate salesperson when the housing market went soft
because of a recession.
B) Alice who quit her job to enter college.
C) Mary who lost her job in the textile industry following a decrease in the tariff on textiles.
D) Bob who has just graduated from college and is entering the labor market.
75) Which of the following situations best describes an individual who is cyclically
unemployed?
A) Catherine is a ski instructor who is not working because it is summer.
B) Matthew was an artillery man, but he has been unable to find work since he left the army.
C) Nicholas was laid-off when orders for General Motors cars fell during a recession.
D) Susan quit her job as a preschool teacher to try to find a better paying job.
76) Full employment occurs when
A) structural unemployment is zero.
B) cyclical unemployment is zero.
C) frictional unemployment is zero.
D) cyclical and frictional unemployment are zero.
77) Full employment occurs when
A) there is no cyclical unemployment.
B) there is no unemployment.
C) there is no frictional unemployment.
D) the unemployment rate is less than 5 percent.
78) Full employment means that
A) no one is unemployed.
B) there is no cyclical unemployment.
C) there is no cyclical or frictional unemployment.
D) there is no structural or frictional unemployment.
79) The economy is at full employment when
A) there are no unemployed workers.
B) all unemployment is frictional or structural.
C) there are fewer unemployed workers than available jobs.
D) all unemployment is cyclical.
80) 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.
81) Full employment occurs
A) only if the unemployment rate is zero.
B) only if the unemployment rate is equal to the natural unemployment rate.
C) only if unemployment is equal to structural unemployment plus cyclical unemployment.
D) None of the above answers are correct.
82) 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.
83) An economy is at full employment when ________.
A) the unemployment rate is zero
B) there is no frictional unemployment
C) the unemployment rate equals the natural unemployment rate
D) there is no structural unemployment
84) Suppose the natural unemployment rate equals 6 percent and the current unemployment rate
is 8 percent. We can conclude that
A) there is no structural unemployment.
B) there is no frictional unemployment.
C) there is no cyclical unemployment.
D) full employment is not occurring.
85) Full employment means
A) zero unemployment.
B) only cyclical unemployment exists.
C) only frictional and structural unemployment exists.
D) None of the above answers are correct.
86) When economists speak of full employment, they refer to the case in which the sum of
frictional and structural unemployment is
A) falling over time.
B) equal to zero.
C) equal to the actual amount of unemployment.
D) greater than the level of deficient demand unemployment.
87) When the economy is operating at full employment, the natural unemployment rate consists
of only
A) cyclical unemployment.
B) frictional and structural unemployment.
C) frictional and cyclical unemployment.
D) structural and cyclical unemployment.
88) The unemployment rate will never equal zero percent because
A) there are some people who do not want to work.
B) there will always be discouraged workers.
C) some portion of the labor force will always be between jobs.
D) cyclical unemployment will always exist.
89) The natural unemployment rate
I. occurs when only there is no cyclical unemployment present.
II. is the unemployment rate when the economy is at potential GDP.
A) I only.
B) II only
C) neither I nor II
D) I and II
90) The natural unemployment rate
A) falls with an increase in cyclical unemployment.
B) rises with an increase in structural unemployment.
C) rises with an increase in cyclical unemployment.
D) rises with a decrease in frictional unemployment.
91) The unemployment rate is at the natural unemployment rate when
A) frictional unemployment equals zero.
B) structural unemployment equals zero.
C) cyclical unemployment equals zero.
D) all types of unemployment equal zero.
92) 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.
93) 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.
94) The natural unemployment rate
A) is a constant figure of about 4 percent.
B) fluctuates with the rate of inflation.
C) is the unemployment rate that occurs when the economy is at full employment.
D) is equal to cyclical unemployment.
95) If unemployment is at the natural rate, then there
A) is no cyclical unemployment.
B) is no frictional unemployment.
C) will be cyclical and frictional unemployment but not structural unemployment.
D) will be only cyclical unemployment.
96) If unemployment equals the natural unemployment rate, then there
A) is zero unemployment.
B) is only frictional or structural unemployment.
C) are no job openings existing at the time.
D) is less than full employment.
97) The natural unemployment rate
A) occurs when the unemployment rate is 0 percent.
B) is the unemployment rate when there is no structural unemployment.
C) is the unemployment rate at full employment.
D) is the unemployment rate when there is only cyclical unemployment.
98) Full employment exists when
A) there is only frictional and structural unemployment.
B) the economy is at the natural unemployment rate.
C) there is no cyclical unemployment.
D) All of the above answers are correct.
99) When the economy moves into and out of recessions and expansions, the unemployment rate
fluctuates around the
A) natural unemployment rate.
B) structural unemployment rate.
C) cyclical unemployment.
D) frictional unemployment rate.
100) The natural unemployment rate ________.
A) is the same from year to year
B) is greater than the actual rate of unemployment
C) is the unemployment rate when there is no cyclical unemployment
D) equals zero
101) When cyclical unemployment increases and other things remain the same, ________.
A) the natural unemployment rate increases
B) the amount of frictional unemployment increases
C) the amount of structural unemployment decreases
D) the natural unemployment rate does not change
102) The relationship between the unemployment rate and the natural unemployment rate is that
the unemployment rate
A) fluctuates about the natural rate.
B) equals the natural rate.
C) is always below the natural rate.
D) is always above the natural rate.
103) Suppose the economy is experiencing frictional unemployment of 1 percent, structural
unemployment of 3 percent and cyclical unemployment of 4 percent. What is the natural
unemployment rate?
A) 3 percent
B) 4 percent
C) 5 percent
D) 7 percent
104) Suppose that the natural unemployment rate is 4.5 percent and the actual unemployment
rate is 3.5 percent. Then cyclical unemployment is
A) 1 percent.
B) -1 percent.
C) 8 percent.
D) 0 percent.