Economics Today, 19e (Miller)
Chapter 7 The Macroeconomy: Unemployment, Inflation, and Deflation
7.1 Unemployment
1) Which of the following is TRUE of unemployment?
A) It is defined as the number of people actively looking for work who do not have jobs.
B) The result is that the economy operates inside its production possibilities curve.
C) There are psychological consequences associated with unemployment.
D) All of the above.
2) Which of the following is TRUE about the labor force?
A) It includes those over 16 ages old and are employed.
B) It includes those over 16 ages old and are unemployed.
C) Both A and B are correct.
D) None of the above is correct.
3) A country’s labor force is equal to
A) the population between the ages of 16 and 65.
B) the number of employed people.
C) the total number of employed and unemployed people.
D) the total number of employed people, unemployed people, and discouraged workers.
4) Which of the following people would be considered unemployed?
A) Homer, who lost his job at the power plant and is not looking for work
B) Lenny, who is working part time at a fast food restaurant
C) Abe, who is retired
D) Edna, who lost her job as a teacher and is currently searching for a new job
5) The term “unemployment” is best described as the total number of
A) people not working.
B) people who have been laid off and have stopped looking for work.
C) adults who work fewer hours than they wish to work.
D) adults who are looking for work but have not found a job.
6) According to the text, during which time period did the United States have the highest
unemployment rates?
A) 1930s
B) 1950s
C) 1980s
D) 2000s
7) Individuals who have stopped looking for work because they are convinced that they will not
find a job are considered
A) structurally unemployed.
B) discouraged workers.
C) part of the labor force.
D) underemployed.
8) Which federal agency publishes the United States’ unemployment figures?
A) Health and Human Services
B) The Bureau of Labor Statistics
C) the Federal Reserve
D) the Senate Committee on Labor Relations
9) In the history of the United States, unemployment reached its highest rate
A) in the Panic of 1893.
B) in the 1930s.
C) in the period between World War II and the Korean War.
D) in the Great Recession of the late 2000s.
10) When did the United States register its lowest unemployment rate?
A) in the 1920s
B) the decade following 2007
C) the Great Depression in the 1930s
D) at the end of World War II
11) The population of individuals at least 16 years of age can be broken into 3 groups. They are
A) the unemployed, discouraged workers, and retirees.
B) those employed full-time, those employed only part-time, and the unemployed.
C) those working in the for-profit sector, those working in the nonprofit sector, and individuals
who are unemployed.
D) none of the above.
12) The rate of unemployment is calculated as the number of
A) unemployed workers divided by the number of employed workers.
B) people in the civilian labor force divided by the number of unemployed.
C) unemployed divided by the number of people in the civilian labor force.
D) employed workers divided by the number of unemployed workers.
13) According to the Bureau of Labor Statistics, if you voluntarily leave your job to search for
another job, then you
A) are classified as unemployed.
B) are eligible for unemployment compensation.
C) may not re-enter the labor force for six months.
D) are classified as a job loser.
14) Official unemployment rates may underestimate the true rate of unemployment because the
official rate
A) includes those workers who only work part time.
B) may include some individuals who are not actually in the labor force.
C) does not include individuals receiving any type of unemployment compensation.
D) fails to include discouraged workers.
15) The official unemployment rate may understate the true rate of unemployment because of
A) workers who hold two jobs.
B) increases in worker productivity.
C) changes in wage rates.
D) discouraged workers who no longer are actively seeking work and are excluded from the
statistics.
16) Historically, the United States has experienced
A) continuous decreases in the unemployment rate since World War II.
B) periods of both increases and decreases in the unemployment rate since World War II.
C) continuous increases in the unemployment rate since World War II.
D) no changes in the unemployment rate since World War II.
17) If the U.S. economy enters a recession, the
A) economy experiences full employment.
B) unemployment rate tends to increase.
C) labor force tends to increase.
D) entire population will be partially unemployed.
18) The total civilian labor force is comprised of
A) the unemployed and the employed.
B) only the employed.
C) all individuals over 16 years of age, whether or not they work or are seeking work.
D) only full-time employed individuals between the ages of 18 and 55.
19) The labor force includes individuals who are:
I. Employed
II. Unemployed
III. Discouraged workers
A) I only
B) Both I and II
C) Both I and III
D) All I, II and III
20) Which of the following best fits the definition of unemployed?
A) retired and not working
B) working less than a full work week
C) not working but looking for a job
D) not working at a gainful pursuit, either in or out of the home
21) By definition, the labor force participation rate is
A) the percentage of institutionalized working-age individuals who are employed or seeking
employment.
B) the percentage of noninstitutionalized working-age individuals who are employed or seeking
employment.
C) the annual rate of growth in the number of people who are either employed or searching for
available jobs.
D) the annual rate of growth in the number of people who are unemployed and searching for
available government-provided unemployment benefits.
22) The rate of unemployment is found by
A) dividing the number unemployed by the number of people in the labor force.
B) dividing the number unemployed by the number employed.
C) dividing the number employed by the number of people in the labor force.
D) dividing the number employed by the number unemployed.
23) Including discouraged workers in the calculation of the unemployment rate would
A) increase the reported rate.
B) lower the reported rate.
C) not change the reported rate.
D) change the reported rate, but in an unpredictable manner.
24) Unemployment is measured as
A) all teens and adults in the civilian labor force who are not working.
B) all adults in the civilian labor force who are willing and able to work and who are actively
looking for work, but have not found a job.
C) all adults in the civilian labor force, regardless of whether or not they have been engaged in
actively seeking employment, who do not have the job they want.
D) all adults in the civilian labor force who are not working.
25) The labor force is defined as the number of
A) employed plus the number of unemployed.
B) people who are working.
C) people who are working in labor-type jobs.
D) union members who are working.
26) The U.S. Department of Labor classifies all individuals in the United States as
A) labor force participants.
B) either employed, unemployed, or not in the labor force.
C) either overemployed or underemployed.
D) potential employees.
27) A person who previously had a full-time job has been paroled from prison and has applied
for a job is considered
A) a reentrant.
B) a job loser.
C) a new entrant.
D) not in the labor force.
28) Increases in the duration of unemployment may
A) reflect a general downturn in economic activity that depresses job openings.
B) increase the number of discouraged workers.
C) increase the unemployment rate.
D) all of the above.
29) Which category of unemployed individuals makes up the greatest share of those who are
unemployed?
A) new entrants
B) reentrants
C) job losers
D) job leavers
30) Which of the following is a stock variable? The number of
A) unemployed people.
B) reentrants.
C) job losers.
D) job leavers.
31) The number of people that are laid off in a month is
A) a stock.
B) a flow.
C) both a stock and a flow.
D) neither a stock nor a flow.
32) When there is an increase in the duration of unemployment, the U.S. Congress typically
responds by
A) lowering income taxes.
B) extending unemployment benefits.
C) encouraging unemployed U.S. workers to seek employment overseas.
D) redefining “unemployed” so the unemployment rate does not look so bad.
33) The labor-force participation rate shows the percentage of
A) people not working, but who want to work.
B) people who are not actively participating in meaningful economic activity.
C) new entrants into the labor force.
D) non-institutionalized working-age people who are actually working or seeking employment.
34) The largest major change in the U.S. labor force participation rate during the last few
decades has been
A) the number of prisoners dropping out of the labor force.
B) the increase in the number of working women.
C) the decrease in the number of working women.
D) the increase in the number of illegal immigrants in the United States.
35) In the United States, the labor-force participation rate since 1960 has been
A) increasing for females.
B) declining for females.
C) declining for both males and females.
D) unchanged for both males and females.
36) If a person is laid off from a job, he is considered by the Bureau of Labor Statistics to be a
A) job loser.
B) reentrant.
C) job leaver.
D) new entrant.
37) If I voluntarily end my employment, the Bureau of Labor Statistics would consider me to be
A) a job loser.
B) a job leaver.
C) a discouraged worker.
D) a reentrant.
38) Which of the following would NOT be considered unemployed?
A) a new entrant to the labor force
B) a job leaver who is looking for a better job
C) an individual fired by her employer
D) a newly retired worker
39) The largest category of the unemployed are
A) job losers.
B) reentrants.
C) job leavers.
D) new entrants.
40) Which of the following can cause official unemployment figures to underestimate the true
unemployment rate?
A) Some people get discouraged and quit looking for a job.
B) Some people engage in illegal activities.
C) Some people work “off the books.”
D) Some people work overtime.
41) The unemployment rate will rise when
A) people get discouraged and quit looking for a job.
B) the average work week falls from 40 hours to 39 hours.
C) the duration of unemployment increases.
D) the size of the labor force increases without an increase in employment.
42) In recent years the labor force participation rate has been fairly stable
A) as has the labor force participation rate for males, females, minorities, and nonminorities.
B) although the female labor force participation rate has fallen while the male labor force
participation rate has increased.
C) although the male labor force participation rate has fallen while the female labor force
participation rate has increased.
D) although the labor force participation rate of young adults has increased while the labor force
participation rate of those in the 40-55 age classification has fallen.
43) If the duration of unemployment in a country increases from 16 weeks to 18 weeks, then
A) the unemployment rate will decrease.
B) the unemployment rate will increase.
C) the size of the labor force will increase.
D) the size of the labor force will decrease.
44) The duration of unemployment tends to
A) increase when business activity decreases.
B) increase when employment increases.
C) increase when the labor force shrinks.
D) stay consistently the same over long periods of time.
45) People who have dropped out of the labor force and who are no longer looking for a job
because they believe the job market has little to offer them are classified by the Labor
Department as
A) unemployed.
B) non-participants.
C) discouraged workers.
D) underemployed.
46) Which of the following people would be considered unemployed by the Bureau of Labor
Statistics?
I. Mrs. X works 20 hours a week but wishes to work 40 hours a week.
II. Mr. Y is laid off from his job as a welder, but expects to be rehired in 8 months.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
47) To be officially counted as unemployed, a person must be
A) at least 16 years old.
B) at least 18 years old.
C) at least 21 years old.
D) any age, so long as you are looking for work.
48) Who is considered officially unemployed?
A) Six months after failing to get a job, Abba quit looking.
B) Monica graduated from college last summer but is still unemployed despite her spirited
search.
C) Maria is working part time but she wishes to work full time.
D) Chen is going to school full time.
49) Costs of unemployment include
A) structural unemployment.
B) the output lost due to the fact that the economy is not running at full employment.
C) reduction in the labor force.
D) higher wages.
50) Jasime voluntarily quit her job and is now searching for a new position. Jasime is classified
as a
A) job loser.
B) job reentrant.
C) job leaver.
D) new entrant.
51) If there is unemployment and all businesses are operating at less than full capacity, then
A) there are too many workers, and some people ought to leave the labor force.
B) we are not experiencing a net social cost to unemployment because it is offset by the capacity
levels of the factories.
C) society is producing inside its production possibilities curve.
D) society is at the wrong point on the production possibilities curve.
52) The labor force participation rate includes
A) only those who are employed.
B) only those employed but looking for a job.
C) both employed workers and discouraged workers not seeking jobs.
D) both employed workers and those unemployed but seeking employment.
53) One major reason that economists are concerned about unemployment is that
A) unemployment always leads to frictional unemployment.
B) unemployment reduces the size of the labor force.
C) unemployment shifts the production possibilities curve outward.
D) the economy is producing less output than if there were full employment.
54) Which of the following individuals is NOT counted as unemployed?
A) Jamil, who recently quit his job and is looking for a new position
B) Jackie, who was recently fired and is now applying for another job
C) Jack, who has become discouraged about ever finding a job and has stopped looking
D) Jennifer, who just graduated from college and is now seeking employment with the company
of her dreams.
55) To be considered officially unemployed, a person must be at least 16 years old
A) and not working.
B) and not in school and not working.
C) and be a discouraged worker.
D) and not working but is actively seeking employment.
56) Over the last 100 years in the United States, unemployment reached its highest rate
A) in the 1920s.
B) in the 1930s.
C) in the 1970s.
D) in the first of 2010s.
57) The population is 1,000 million, the labor force is 700 million, and the number of
unemployed is 35 million. What is the unemployment rate?
A) 7 percent
B) 5 percent
C) 10 percent
D) 3.5 percent
58) To be officially classified as unemployed, a person must be
A) collecting unemployment benefits.
B) at least 18 and not working.
C) at least 16, not working and actively seeking employment.
D) laid off or fired.
59) The labor force is defined as
A) all individuals who are currently employed.
B) all individuals who are at least 16 years old and are currently employed.
C) all individuals who are at least 16 years old and are currently employed or unemployed.
D) all individuals who are at least 16 years old and are employed, looking for work or not
looking for work.
60) The labor force includes all of the following individuals who are 16 years or older EXCEPT
A) people who have never been in the labor force but have just found a job.
B) the employed.
C) the unemployed.
D) people who are retired and not actively seeking work.