122) “Discouraged workers”
A) would be considered as unemployed.
B) would not be considered as unemployed.
C) would be considered as part of the labor force.
D) would only be considered as underemployed.
123) The definition of a job loser is an individual
A) who quits his job voluntarily.
B) whose employment was terminated involuntarily due to a downturn in the economy.
C) who competed for a promotion at his company and did not get it.
D) who is underemployed.
124) The definition of a job leaver is an individual
A) who terminates his job voluntarily in order to work for a family business.
B) whose employment was terminated involuntarily.
C) who competed for a promotion at his company and did not get it.
D) who is underemployed.
125) Since 1950, it can be observed that the female participation rate in our labor force has
A) increased.
B) decreased.
C) stayed constant.
D) moved erratically up and down.
126) An individual who has stopped looking for a job because he is convinced that he cannot
find a job is referred to as
A) a contingent worker.
B) a productive worker.
C) a discouraged worker.
D) an unemployed worker.
127) Annie had a job as a human resource manager of a restaurant chain that went out of
business due to a downturn in the economy. She looked for work for six months and gave up
because she was convinced that she could not find a suitable job to fit her skill set. In this
instance she would be counted as a
A) job leaver.
B) reentrant.
C) discouraged worker.
D) labor force participant.
128) With regard to employment status, the adult population is divided into what three groups?
How is it determined whether someone is in the labor force or not?
129) What are the four criteria used by the Bureau of Labor Statistics to determine whether an
individual is unemployed or not?
130) Who are discouraged workers, and how do they affect labor force participation and
unemployment rates?
131) Distinguish between a stock and a flow. How do these concepts relate to unemployment?
132) If the duration of unemployment increases, what happens to the unemployment rate, other
things being equal? Why?
133) What is unemployment and what is the unemployment rate? What are the costs of
unemployment?
7.2 The Major Types of Unemployment
1) Frictional unemployment will always exist since
A) some workers will always want to make a job transition.
B) the capitalist system promotes unemployment.
C) mismatches in skills will always exist.
D) the U.S. economy will continue to shrink.
2) Suppose that Lee quits a job with the AAA Corporation in order to look for more rewarding
employment. Lee would be
A) counted as still being employed.
B) included in the economy’s “hidden employment.”
C) counted as frictionally unemployed.
D) counted as cyclically unemployed.
3) If a person loses her job because her abilities and skills are a poor match with current
requirements of employers, this person is considered
A) structurally unemployed.
B) frictionally unemployed.
C) a discouraged worker.
D) seasonally unemployed.
4) If a person is fired for poor performance but possesses skills required to obtain another job
after some searching, this person is considered
A) seasonally unemployed.
B) frictionally unemployed.
C) structurally unemployed.
D) a discouraged worker.
5) Dee’s assembly line job has been replaced by robots, and Dee lacks abilities and skills
required to attain other jobs. She is considered
A) structurally unemployed.
B) frictionally unemployed.
C) seasonally unemployed.
D) a discouraged worker.
6) Collin has lost his job with a telemarketing company, which has moved its operation to India.
Collin is considered
A) structurally unemployed.
B) frictionally unemployed.
C) seasonally unemployed.
D) a discouraged worker.
7) Many economists would argue that some frictional unemployment
A) creates massive economic disruptions and should be eliminated as quickly as feasible.
B) should be eliminated whatever the cost.
C) no longer exists because increased unemployment benefits have generally solved this
problem.
D) cannot and probably should not be eliminated.
8) Frictional unemployment would increase when
A) migrant workers are unemployed after harvest season.
B) the number of individuals who quit one job to find another increases.
C) discouraged workers drop out of the work force.
D) workers are replaced by machines in production.
9) A recent accounting graduate from a major business school is searching for a place to begin
his career as an accountant. This individual is
A) structurally unemployed.
B) seasonally unemployed.
C) cyclically unemployed.
D) frictionally unemployed.
10) When an individual is frictionally unemployed, the unemployment arises from
A) a short-term elimination of jobs because of a slowdown in business activity.
B) imperfect labor market information which requires individuals to search for appropriate
employment.
C) the permanent elimination of jobs because of a change in the structure of the economy.
D) a reduction in the overall demand for labor’s skills.
11) Which one of the following individuals would be classified as structurally unemployed?
A) Joe was laid off by by his construction company because there was a reduction in the number
of houses built in the winter.
B) Gail lost her job with the state because there was a reduction in the state budget.
C) Tommy lost his job at a Macy department store, which had lost considerable business to
online shopping services.
D) Fay lost her job in early January when the Christmas store where she worked was closed.
12) The fact that a number of lifeguards lose their jobs at the end of each summer would be
counted as
A) cyclical unemployment.
B) frictional unemployment.
C) seasonal unemployment.
D) structural unemployment.
13) A lifeguard who is out of work in the winter is
A) frictionally unemployed.
B) structurally unemployed.
C) cyclically unemployed.
D) seasonally unemployed.
14) An example of a frictionally unemployed individual is
A) Charles, who has lost his job as an auto worker because of increased imports.
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.
D) Cynthia, who has few skills and is no longer looking for work.
15) Cyclical unemployment occurs when
A) individuals enter the labor market and make the rounds of potential employers.
B) individuals with skills no longer valued in the domestic labor market cannot find
employment.
C) individuals give up the search for employment.
D) a downturn in economic activity decreases employment.
16) An example of a cyclically unemployed individual is
A) Charles, who lost his job as a real estate salesperson when the housing market declined.
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 lost his job in an oil production company after a surge in global oil supply led to
falling oil prices.
17) If an outdoor vendor loses her job when winter weather comes, this individual is
A) seasonally unemployed.
B) cyclically unemployed.
C) structurally unemployed.
D) chronically unemployed.
18) Structural unemployment results when
A) a reduction in consumer income reduces demand for products.
B) individuals enter the labor market in June following graduation.
C) workers face layoffs following a decrease in economic activity.
D) the introduction of a product substitute leads to a large decline in the market demand for a
product so that workers specializing in the production of that product find themselves out of
work.
19) Which of the following explains why frictional unemployment exists?
A) Some workers have skills that have become obsolete.
B) There are individuals who work part-time but prefer to work full-time.
C) There are costs associated with searching for jobs.
D) Policy makers have been unable to prevent recessions.
20) Unemployment that is caused by business recessions is called
A) frictional unemployment.
B) cyclical unemployment.
C) seasonal unemployment.
D) structural unemployment.
21) A person quits her job in order to spend time looking for a better paying job. This is an
example of
A) frictional unemployment.
B) cyclical unemployment.
C) seasonal unemployment.
D) structural unemployment.
22) Environmental regulation reduces the demand for West Virginia coal and the unemployment
rate in West Virginia increases. This is an example of
A) frictional unemployment.
B) cyclical unemployment.
C) structural unemployment.
D) regulatory unemployment.
23) Unemployment due to the fact that workers have difficulty in the search for appropriate job
offers is
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) seasonal unemployment.
24) Unemployment that results from a mismatch of workers’ abilities and skills with current
requirements of employers is
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) seasonal unemployment.
25) Unemployment that results from business recessions that occur when aggregate demand is
insufficient to create full employment is
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) seasonal unemployment.
26) Unemployment that results from the seasonal pattern of work in specific industries is
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) seasonal unemployment.
27) Frictional unemployment always exists because
A) some workers quit their jobs without having another job already lined up.
B) the government has never instituted full employment policies.
C) workers are lazy and refuse to accept certain jobs.
D) recessions are necessary sometimes to keep the economy healthy.
28) Frictional unemployment is
A) related to job search difficulties for potential workers.
B) a result of a poor match of worker’s abilities and skills with current requirements of
employers.
C) a result of business recessions that occur when aggregate demand is insufficient to create full
employment.
D) a result of the seasonal pattern of work in specific industries.
29) A worker who has quit her job to obtain a higher paying job would be included in which
unemployment category?
A) frictional unemployment
B) cyclical unemployment
C) structural unemployment
D) seasonal unemployment
30) To prevent frictional unemployment, we would have to
A) make sure that market demand for goods is stable over time.
B) eliminate the business cycle.
C) prevent people from leaving their jobs before finding another job.
D) make sure everyone went to college.
31) Structural unemployment is
A) due to the fact that workers must search for appropriate job offers.
B) a result of a poor match of worker’s abilities and skills with current requirements of
employers.
C) a result of business recessions that occur when aggregate demand is insufficient to create full
employment.
D) a result of the seasonal pattern of work in specific industries.
32) Cyclical unemployment is
A) related to job search difficulties for potential workers.
B) a result of a poor match of worker’s abilities and skills with current requirements of
employers.
C) a result of business recessions that occur when aggregate demand is insufficient to create full
employment.
D) a result of the seasonal pattern of work in specific industries.
33) Cyclical unemployment is caused by
A) technological change.
B) changes in an economy’s overall condition.
C) a dynamic economy in which people want to switch jobs sometimes.
D) predictable shifts in production associated with different seasons.
34) Seasonal unemployment is
A) due to the fact that workers must search for appropriate job offers.
B) a result of a poor match of worker’s abilities and skills with current requirements of
employers.
C) a result of business recessions that occur when aggregate demand is insufficient to create full
employment.
D) a result of the seasonal pattern of work in specific industries.
35) The seasonally adjusted unemployment rate
A) reports only seasonal unemployment.
B) removes the seasonal variation from the unemployment rate.
C) is impossible to compute since no one knows what the seasonal component equals.
D) is another name for structural unemployment.
36) Which of the following statements is TRUE about the seasonally adjusted unemployment
rate?
A) The seasonally adjusted unemployment rate is the sum of the frictional unemployment rate,
structural unemployment rate, and cyclical unemployment rate.
B) The seasonally adjusted unemployment rate shows how the unemployment rate fluctuates
with the various seasons.
C) The seasonally adjusted unemployment rate is the same as the natural rate of unemployment.
D) The seasonally adjusted unemployment rate is the rate computed for Fall, Spring, Summer
and Winter.
37) A person graduates from college, then starts to look for a job. This is an example of
A) cyclical unemployment.
B) frictional unemployment.
C) seasonal unemployment.
D) structural unemployment.
38) When the automobile replaced the horse as the primary means of transportation, the
unemployment rate of blacksmiths increased. This was an example of
A) cyclical unemployment.
B) frictional unemployment.
C) seasonal unemployment.
D) structural unemployment.
39) A cutback in the space program due to a slow economy causes an increase in unemployment
among aeronautical engineers. This is an example of
A) cyclical unemployment.
B) frictional unemployment.
C) seasonal unemployment.
D) structural unemployment.
40) A recession causes a decrease in the demand for housing, resulting in substantial layoffs in
the construction industry. This is an example of
A) cyclical unemployment.
B) frictional unemployment.
C) seasonal unemployment.
D) structural unemployment.
41) The United States experienced a deep recession between 2007 and 2009. Which type of
unemployment would most likely increase during that period of recession?
A) cyclical unemployment
B) frictional unemployment
C) seasonal unemployment
D) structural unemployment
42) Reductions in employment in the U.S. auto industry caused by the increased adoption of new
technologies to produce cars more efficiently is an example of
A) cyclical unemployment.
B) frictional unemployment.
C) seasonal unemployment.
D) structural unemployment.
43) A person who is employed in the construction industry may frequently experience
A) frictional unemployment.
B) structural unemployment.
C) seasonal unemployment.
D) technological unemployment.
44) Tiffany just graduated from college, is unemployed, and looking for her first real job. This is
an example of
A) frictional unemployment.
B) structural unemployment.
C) seasonal unemployment.
D) cyclical unemployment.
45) Lois worked for Champion Auto Retailer and was laid off when car sales fell during a
recession with falling incomes. This is an example of
A) frictional unemployment.
B) structural unemployment.
C) seasonal unemployment.
D) cyclical unemployment.
46) Suppose that unemployment increases because the government requires employers to
provide more funds for their employees’ retirement programs. The increase in unemployment is
most likely a result of an increase in
A) frictional unemployment.
B) structural unemployment.
C) the natural rate of unemployment.
D) cyclical unemployment.
47) Mr. Garcia lost his job at a steel mill due to competition from cheaper imported steel. He
would be classified as
A) frictionally unemployed.
B) not in the labor force.
C) cyclically unemployed.
D) structurally unemployed.
48) After completing college, Ahmed spent three months looking for a job. During this period he
would be classified as
A) frictionally unemployed.
B) not in the labor force.
C) cyclically unemployed.
D) structurally unemployed.
49) Unemployed U.S. residents who are, in effect, merely searching for work between jobs, are
defined as
A) frictionally unemployed.
B) structurally unemployed.
C) cyclically unemployed.
D) seasonally unemployed.
50) Fred recently lost his job as a teller at the bank. The bank explained that they were replacing
Frank and others with ATM machines. Fred falls into a category of unemployment known as
A) frictional unemployment.
B) structural unemployment.
C) cyclical unemployment.
D) seasonal unemployment.