Economics Chapter 22: Unemployment and Growth
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Questions and Answers

What does productivity growth specifically measure?

  • The growth rate of per-capita income
  • The growth rate of output per worker (correct)
  • The overall growth rate of the labor force
  • The growth rate of total economic output

    • Which statement about capital per worker is true based on the data provided?

  • Capital per worker showed significant growth until around 1980 (correct)
  • Capital per worker has continually increased since 1952
  • Capital per worker has decreased steadily since 1952
  • There was no change in capital per worker post-1980

    • Which term describes the growth rate of output for the entire economy?

  • Output growth (correct)
  • Productivity growth
  • Per-capita output growth
  • Multiplier effect

    • During which decades did productivity experience much faster growth?

    <p>1950s and 1960s</p> Signup and view all the answers

    What equation best describes the relationship between labor force components?

    <p>Labor force = employed + unemployed</p> Signup and view all the answers

    In 2010, what was the average duration of unemployment in weeks?

    <p>39.4</p> Signup and view all the answers

    Which year had the highest recorded average duration of unemployment in the table?

    <p>2011</p> Signup and view all the answers

    What was the labor force participation rate of women in 1955?

    <p>36%</p> Signup and view all the answers

    What was the approximate percentage decline in men's labor force participation from 1955 to 1996?

    <p>15%</p> Signup and view all the answers

    In which year was the average duration of unemployment 20.0 weeks?

    <p>1983</p> Signup and view all the answers

    How did the duration of unemployment in 2001 compare to 2004?

    <p>2004 had a longer duration.</p> Signup and view all the answers

    What effect does contracting out household cleaning services have on GDP according to the content?

    <p>GDP increases due to higher wages paid to the worker.</p> Signup and view all the answers

    What trend was observed in women's labor force participation between 1955 and 1996?

    <p>It increased significantly.</p> Signup and view all the answers

    What was the Consumer Price Index (CPI) in 1980?

    <p>82.4</p> Signup and view all the answers

    Which year saw the highest percentage change in CPI from the provided data?

    <p>1979</p> Signup and view all the answers

    What was the percentage change in CPI for the year 2011?

    <p>3.1</p> Signup and view all the answers

    In which year did the CPI first exceed 200?

    <p>2005</p> Signup and view all the answers

    Between which years did the CPI experience a decline?

    <p>2009 and 2010</p> Signup and view all the answers

    What was the CPI for the year 1965?

    <p>31.5</p> Signup and view all the answers

    Which of the following years had a CPI value of 236.7?

    <p>2014</p> Signup and view all the answers

    What was the percentage change in CPI from 2006 to 2007?

    <p>2.8</p> Signup and view all the answers

    What percentage of lost market hours is attributed to nonmarket work such as cleaning and child care?

    <p>35%</p> Signup and view all the answers

    Which demographic group had the highest unemployment rate in November 1982?

    <p>Both sexes 16–19</p> Signup and view all the answers

    What is the discouraged-worker effect?

    <p>A decline in unemployment measurement due to discouraged job seekers.</p> Signup and view all the answers

    What percentage of lost market hours is spent on job search?

    <p>2%–6%</p> Signup and view all the answers

    Which of the following statements is likely true during a boom time regarding the unemployed?

    <p>More time is dedicated to job searching.</p> Signup and view all the answers

    Which age group showed the largest decrease in unemployment rates from 1982 to 2015?

    <p>Both sexes 16–19</p> Signup and view all the answers

    What typically happens to those classified as discouraged workers?

    <p>They stop looking and drop out of the labor force.</p> Signup and view all the answers

    In March 2015, which group had the lowest unemployment rate?

    <p>Women 20+</p> Signup and view all the answers

    What does the Consumer Price Index (CPI) represent?

    <p>A calculation of average prices paid by urban consumers for a market basket of goods.</p> Signup and view all the answers

    Which of the following categories typically receives the largest portion of consumer spending according to the CPI market basket?

    <p>Transportation</p> Signup and view all the answers

    What organization is responsible for calculating the Consumer Price Index?

    <p>The Bureau of Labor Statistics</p> Signup and view all the answers

    Producer Price Index (PPI) measurement primarily focuses on which aspect?

    <p>Prices received by producers at different stages of production.</p> Signup and view all the answers

    What was the percentage change in CPI from 1950 to 1951?

    <p>7.9%</p> Signup and view all the answers

    What is frictional unemployment primarily associated with?

    <p>Short-run job/skill-matching problems</p> Signup and view all the answers

    Based on the CPI table, which year showed the highest percentage change in CPI?

    <p>1974</p> Signup and view all the answers

    Which of the following is NOT included in the typical CPI market basket?

    <p>Farming equipment</p> Signup and view all the answers

    Which category of unemployment is expected to increase during economic downturns?

    <p>Cyclical unemployment</p> Signup and view all the answers

    In which year did the CPI first exceed a value of 50 according to the table?

    <p>1975</p> Signup and view all the answers

    How is the natural rate of unemployment defined in relation to other types of unemployment?

    <p>It is the sum of frictional and structural unemployment rates.</p> Signup and view all the answers

    What social consequence was a result of the Great Depression in the 1930s?

    <p>Many individuals lost their savings due to bank failures</p> Signup and view all the answers

    What is structural unemployment primarily the result of?

    <p>Changes in the economy that affect certain industries</p> Signup and view all the answers

    How did the recession of 2008–2009 affect young college graduates?

    <p>They experienced prolonged periods of unemployment</p> Signup and view all the answers

    Which of the following best describes cyclical unemployment?

    <p>It is linked to trends in gross domestic product (GDP).</p> Signup and view all the answers

    Apart from economic factors, what can complicate the measurement of unemployment costs?

    <p>The social consequences being unevenly distributed</p> Signup and view all the answers

    Study Notes

    Chapter 22: Unemployment, Inflation, and Long-Run Growth

    • The unemployment rate and inflation are key macroeconomic variables.
    • The U.S. Bureau of Labor Statistics (BLS) releases the monthly unemployment rate and consumer price index (CPI).
    • Macroeconomics often focuses on business cycles, but long-run growth is also crucial.

    Measuring Unemployment

    • Employed: A person aged 15 or older who works for pay (for someone else or themself), 1+ hours/week, or works without pay for 15+ hours in a family enterprise, or is temporarily absent from a job with or without pay.
    • Unemployed: A person aged 15 or older who is not working, is available for work, and has actively looked for work in the past 4 weeks.
    • Not in the labor force: A person who is not looking for work, either because they don't want a job or have given up looking.
    • Labor force: The total number of employed people plus the unemployed.
    • Population: The labor force plus those not in the labor force.
    • Unemployment rate: The ratio of unemployed people to the total labor force.
    • Labor force participation rate: The ratio of the labor force to the total population (aged 16+).

    Components of the Unemployment Rate

    • Discouraged-worker effect: A decline in the measured unemployment rate due to individuals who want to work but are discouraged from job searching and drop out of the labor force.
    • BLS survey: Individuals who cite only the inability to find employment as the reason for not searching for work may be categorized as discouraged workers.

    The Costs of Unemployment

    • Unemployment costs are not evenly distributed and not easily quantifiable.
    • The Great Depression of the 1930s provides a hard example of the social consequences of unemployment.
      • A significant portion of the labor force (about 25%) was fully unemployed at the time.
      • Many people lost savings due to the stock market crash and bank failures.
      • Even those who kept jobs often worked part-time.

    The Kinds of Unemployment

    • Frictional unemployment: Job/skill matching problems that result from the normal turnover in the labor market.
    • Structural unemployment: Unemployment due to changes in the economy's structure, resulting in significant job losses in specific sectors.
    • Cyclical unemployment: Unemployment that occurs during economic recessions or depressions.
    • Natural rate of unemployment: The unemployment rate that is part of a functioning economy; it often represents the sum of frictional and structural unemployment rates.

    Inflation and Deflation

    • Consumer price index (CPI): A monthly price index calculated by the BLS using a bundle of goods (the market basket) that a typical urban consumer buys.
    • Producer Price Indexes (PPIs): Measures of prices that producers receive for products at all stages of the production process.
    • Inflation: A generalized increase in the prices of most goods and services in an economy.
      • Often, wages and input prices tend to increase simultaneously.
      • This rise in prices, doesn't necessarily lead to a reduction in purchasing power.
    • Deflation: A generalized decrease in the price of most goods and services in an economy.

    Long-Run Growth

    • Output growth: The rate at which the entire economy's output is growing.

    • Per-capita output growth: The growth rate of output per person in the economy.

    • Productivity growth: The rate at which output per worker is growing.

    • Historically, output and productivity growth was higher in the 1950s and 1960s compared to later periods. Output per worker-hour increased, but not as significantly since the 1970s.

    • Capital per worker grew until about 1980, and then remained relatively stable.

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    Principles of Economics Twelfth Edition Chapter 22 PDF

    Description

    Explore the dynamics of unemployment and inflation in this quiz based on Chapter 22 of your economics curriculum. Understand key concepts such as labor force definitions and the significance of long-run economic growth. Test your knowledge of macroeconomic variables and their impact on the economy.

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