The unemployment rate is calculated by
Number of unemployed/Labor Force *100
Which is not one of the conditions someone needs to meet to be counted as unemployed?
They had worked only one hour per week during the previous four weeks.
What is not a problem in measuring the unemployment rate?
people on active military service are included as unemployed
When there are workers that drop out of the labor force, the official BLS measure of the unemployment rate _______ the true degree of unemployment.
Which groups tend to have above-average unemployment rates, and which groups tend to have below-average unemployment rates?
Black teenagers as a group have lower unemployment rates than white teenagers.
Labor force participation rate is calculated by
Labor force/Working-age population * 100
The employment-population ratio measures the
percentage of the working age population that is employed
When an unemployed person drops out of the labor force, the unemployment rate
understates the true degree of joblessness in the economy
When an unemployed person drops out of the labor force, it
does not affect the employment-population ratio
The household survey interviews _______ and measures the unemployment rate whereas the establishment survey interviews ______ and measures the employment rate.
Which survey do economists prefer when calculating the unemployment rate?
The establishment survey because it is determined on actual payroll records rather than unverified answers
The Ford Motor Company employed many fewer people in 2011 than it did in 1980. This decline in employment is
a combination of frictional, structural, and cyclical unemployment
The reasons behind the decline in Ford Motor Company’s employment in 2011 is because
this is the normal underlying level of unemployment in the economy
Currently, the BLS does not include homemakers in its employment and labor force totals. what would happen to the unemployment rate and the labor force participation rate is homemakers were included in these numbers?
The unemployment rate would decrease and the labor force participation rate would increase
The “share of adults with jobs” is known more formally as the employment-population ratio. The employment-ratio provides the “best summary” of the state of the job market rather than the unemployment rate, because it measures the fraction of the population that
Between December 2001 and January 2002, the total number of people employed and the unemployment rate both fell. How is this possible?
It is possible if labor force participation rates also fall
the three types of unemployment are
frictional, structural, and cyclical
Which one of the following accurately describes the relationship between frictional unemployment and job search?
People are said to be frictionally unemployed when they are between jobs and searching for new jobs.
The natural rate of unemployment is
the sum of structural unemployment ad frictional unemployment
When the economy is at full employment, unemployment is equal to
the natural rate of unemployment
Economists do not define full employment as being an unemployment rate equal to zero since
only cyclical unemployment is zero
After graduation, a college student might enter the job market during an economic expansion but apply for graduate school during a recession becase
the probability of finding a job is higher during economic expansion and lower during recession
Eliminating all frictional unemployment will not be good for the economy since
the presence of frictional unemployment increases economic effiency
Government unemployment insurance tends to
increase the unemployment rate by lowering the opportunity cost of job search
The payment of government unemployment insurance reduces the severity of recessions by
preventing a huge drop in income and spending for the unemployed
The minimum wage law has only a small effect on the unemployment rate since
only a small part of the labor force earns the minimum wage
The effect of labor unions on overall unemployment is ______ since only a _____ percentage of the labor force outside the government is unionized
A efficiency wage increases the unemployment rate since
firms pay a higher-than-market wage that increases the quantity of labor supplied
The unemployment rate in the United States is typically lower than the unemployment rates in Canada and countries in Western Europe because the opportunity cost of job search is
lower in Canada and countries of Western Europe and unemployed workers in those countries search longer for jobs
If Congress eliminated the unemployment insurance system, the level of frictional unemployment
would not change at all
If congress eliminated the unemployment insurance system, the level of real GDP will
increase as frictionally unemployed individuals will take less time to find jobs
The elimination of unemployment insurance will reduce
the workers’ incomes and their consumption spending and thus will lower economic well-being
If most U.S. workers join labor unions, then the unemployment rate will
The government set the minimum wage at $.25 per hour in 1938. The wage was higher than equilibrium wage since
minimum wages are binding price floors and are usually set above the equilibrium wage rate
The price index which is used to measure changes in the cost of living is the
Consumer Price Index
Which of the following steps has not been taken by the BLS to reduce the size of biases in the CPI?
The BLS has expanded the number of stores form which it collects the price information to reduce the coverage bias
In calculating the CPI for the year, the BLS uses the quantities in the market basket, rather than the quantities purchased during the current year. This gives rise to
The difference between a nominal variable and a real variable is that
nominal variables are calculated in current-year prices and the real variables are measured in dollars of the base year for the price index to correct the effects of inflation
If inflation is expected to increase the nominal interest rate will
If the economy is experiencing deflation, the nominal interest rate will be ______ than the real interest rate
The type of inflation that is a greater problem to society is unanticipated inflation, since it
causes greater redistribution of income between those making payments and those awaiting payments in the future
The increase in real GDP per capita is likely to be _____ than the true increase in living standards.
The most important factor in explaining increases in real GDP per capita in the long run it
increases in productivity.
The two key factors that cause labor productivity to increase over time are
the quantity of capital per hour and the level of technology
Potential real GDP is
the level of GDP attained when all firms are producing at capacity
Potential real GDP ____ over time
The financial system (either financial markets or financial intermediaries) provies savers borrowers with security to savers by
warrenting that their funds are fully insured against loss
What is not a loanable fund?
Households supply loanable funds because of the
interest income received from the borrowers
Businesses demand loanable funds ecause firms need to
borrow funds for new projects
When borrowers and lenders believe that the forevast of economic expansion is accurate, the equillirium real interest rate _________, the equilibrium quantity of loaable funds _______, and the wuantity of saving and investment _______
increases; increases; increases
When business taxes increase, the equilibrium interest rate _________ and the equilibrium quantity of loanable funds ________.
How deos the business cycle effect the inflation rate and the unemployment rate during recessions?
The unemployment rate increases and the inflation rate falls
What is the Great Moderation?
The absence of severe recessions in the United States since the end of the second world war