Questions and Answers
What does the unemployment rate measure?
Unemployed workers as a percentage of the labor force.
During the Great Depression of the 1930s, the unemployment rate reached more than _________ of the labor force.
25%
The U.S. unemployment rate seems to return to a range of ____________ (the NRU).
4%-5%
If the number of employed persons in a country equals 55 million, the number of unemployed persons equals 11 million, and the number of persons over age 16 in the population equals 70 million, what is the unemployment rate?
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What is Frictional unemployment?
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What type of unemployment occurs because of a recession?
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What is the most significant real economic cost of high unemployment to the macro economy?
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If Karen chooses to go to university full-time rather than to work, what is her employment status?
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What is Bill's employment status if he just worked at a closed factory and is now applying to local manufacturing jobs?
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What is Jackie’s employment status if she has been out of work for two months but is not looking for a job?
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Is Erika considered employed if she hates her job and is looking for another one?
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If Mark chooses to retire rather than to work, what is his employment status?
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The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________.
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What would happen to the unemployment rate if everyone who has looked for a job for more than six months stopped looking?
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Hidden unemployment includes discouraged workers and ____________.
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What is the unemployment rate if there are 4,500 people unemployed and 100,000 workers in the labor force?
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The unemployment rate announced by the U.S. Bureau of Labor Statistics is based on the Current Population Survey (CPS), which has been carried out ________ since 1940.
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GDP can be compared across countries once it is adjusted for ____________ and population.
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A downward-sloping demand curve means that the quantity demanded of a good and the price of that good are ________.
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Unemployment rates in France tend to be ____________ compared with unemployment rates in the United States.
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Which statement best describes the recent relationship between male and female unemployment rates?
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Over time, the unemployment rate seems to return to a range of ____________.
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What would happen to GDP if the crime rate declines?
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Which is the best example of a real-world market that is close to perfect competition?
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When wages are sticky or inflexible and unlikely to fall, ____________ unemployment can result.
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When the demand for labor rises, ____________, all else being held constant.
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Cyclical unemployment is likely to be highest during a(n) ____________.
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In a perfectly competitive market, firm entry shifts the ______ to the ______.
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Study Notes
Unemployment Overview
- The unemployment rate indicates the percentage of unemployed workers within the labor force.
- Historical context: During the Great Depression, unemployment peaked at over 25%.
- The natural rate of unemployment (NRU) typically ranges from 4% to 5%, reflecting economic stabilization over time.
Calculating Unemployment
- Example calculations: If 55 million are employed and 11 million are unemployed in a population of 70 million, the unemployment rate is 17%.
- If there are 4,500 unemployed individuals out of 100,000 in the labor force, the unemployment rate is 4.50%.
Types of Unemployment
- Frictional unemployment arises from normal turnover within the labor market.
- Cyclical unemployment occurs due to economic downturns or recessions, directly linked to the business cycle.
- Hidden unemployment encompasses discouraged workers and the underemployed, indicating underutilization of the labor force.
Labor Force Participation
- Individuals like Karen, who attend university full-time, are not counted in the labor force.
- Bill, who is unemployed but actively seeking work, is included in the unemployment statistics.
- Jackie, despite being out of work, is not counted in the labor force due to lack of job search activity.
Economic Implications of Unemployment
- High unemployment results in significant economic costs as potential goods and services go unproduced.
- Unemployment can lead to social and economic challenges, with implications for GDP and overall living standards.
Global Unemployment Trends
- Unemployment rates in France are generally higher than those in the United States.
- Recent trends show male and female unemployment rates have converged, with both demonstrating close rates.
Understanding Labor Market Dynamics
- GDP comparisons across countries require adjustments for currency and population factors.
- A downward-sloping demand curve reflects an inverse relationship between the price of a good and the quantity demanded.
- In perfect competition, markets exhibit many sellers with minimal product differentiation, such as in agriculture.
Wage Effects and Market Behaviors
- Sticky or inflexible wages can lead to either short-run or long-run unemployment when labor demand shifts.
- When demand for labor increases, wages typically reflect this change and also rise accordingly.
- Cyclical unemployment peaks during economic recessions, indicating a direct correlation with overall economic health.
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Description
Test your knowledge of key terms and concepts from Chapter 21 in Economics. This quiz covers the unemployment rate and its historical context, including significant events like the Great Depression. Prepare to enhance your understanding of labor market dynamics.
