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Questions and Answers
The amount of unemployment that an economy normally experiences is called the:
The amount of unemployment that an economy normally experiences is called the:
- Natural rate of unemployment (correct)
- Cyclical rate of unemployment
- Average rate of unemployment
- Typical rate of unemployment
Cyclical unemployment refers to:
Cyclical unemployment refers to:
- The portion of unemployment created by wages set above the equilibrium level
- The portion of unemployment created by job search
- Changes in unemployment due to changes in the natural rate of unemployment
- Short-run fluctuations around the natural rate of unemployment (correct)
To be counted as 'employed' in the U.S. labor force statistics, a person:
To be counted as 'employed' in the U.S. labor force statistics, a person:
- Does not have to be working for pay if they are working for a family business but must be employed full time
- Must be working for pay and be working full time
- Must be working for pay but does not have to be working full time
- Does not have to be working for pay if they are working for a family business and does not have to be working full time (correct)
Which of the following is not one of the categories into which the Bureau of Labor Statistics places each adult of each surveyed household?
Which of the following is not one of the categories into which the Bureau of Labor Statistics places each adult of each surveyed household?
Who of the following is not included in the Bureau of Labor Statistics' 'employed' category?
Who of the following is not included in the Bureau of Labor Statistics' 'employed' category?
The correct formula for calculating the unemployment rate is:
The correct formula for calculating the unemployment rate is:
Suppose that the adult population in some country is 225 million. If 40 million are unemployed and 100 million are employed, then the unemployment rate is approximately:
Suppose that the adult population in some country is 225 million. If 40 million are unemployed and 100 million are employed, then the unemployment rate is approximately:
If all workers and all jobs were the same such that all workers were equally well suited for all jobs, then there would be no:
If all workers and all jobs were the same such that all workers were equally well suited for all jobs, then there would be no:
Frictional unemployment can be the consequence of:
Frictional unemployment can be the consequence of:
Which of the following is not correct?
Which of the following is not correct?
The Bureau of Labor Statistics defines the unemployment rate as the percentage of:
The Bureau of Labor Statistics defines the unemployment rate as the percentage of:
The labor-force participation rate is computed as:
The labor-force participation rate is computed as:
A person who is not employed and claims to be trying hard to find a job but really is not trying hard to find a job is:
A person who is not employed and claims to be trying hard to find a job but really is not trying hard to find a job is:
Suppose that some people are counted as unemployed when, to maintain unemployment compensation, they search for work only at places where they are unlikely to be hired. If these individuals were counted as out of the labor force instead of as unemployed, then:
Suppose that some people are counted as unemployed when, to maintain unemployment compensation, they search for work only at places where they are unlikely to be hired. If these individuals were counted as out of the labor force instead of as unemployed, then:
The Bureau of Labor Statistics counts discouraged workers as:
The Bureau of Labor Statistics counts discouraged workers as:
Minimum-wage laws:
Minimum-wage laws:
Minimum wages create unemployment in markets where they create a:
Minimum wages create unemployment in markets where they create a:
Workers searching for jobs that best suit them is most closely associated with:
Workers searching for jobs that best suit them is most closely associated with:
Sam has no job but keeps applying to get a job with a business that is unionized. He is qualified and he finds the pay attractive, but the firm is not hiring. Sam is:
Sam has no job but keeps applying to get a job with a business that is unionized. He is qualified and he finds the pay attractive, but the firm is not hiring. Sam is:
If unions were formed in more industries, the supply of labor in other industries would:
If unions were formed in more industries, the supply of labor in other industries would:
Emeril is the owner of a restaurant. He decides to raise the wages of his workers even though he faces an excess supply of labor. His decision:
Emeril is the owner of a restaurant. He decides to raise the wages of his workers even though he faces an excess supply of labor. His decision:
The existence of money:
The existence of money:
Which of the following is a function of money?
Which of the following is a function of money?
You receive money as payment for babysitting your neighbors' children. This best illustrates which function of money?
You receive money as payment for babysitting your neighbors' children. This best illustrates which function of money?
Which of the following best illustrates the concept of a store of value?
Which of the following best illustrates the concept of a store of value?
You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money's function as a _______. The laptop's price is posted as $500. The $500 price illustrates money's function as a _____. You use the $500 to purchase the laptop. This transaction illustrates money's function as a ______.
You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money's function as a _______. The laptop's price is posted as $500. The $500 price illustrates money's function as a _____. You use the $500 to purchase the laptop. This transaction illustrates money's function as a ______.
Which of the following statements is correct?
Which of the following statements is correct?
Banks are able to create money only when:
Banks are able to create money only when:
If the reserve ratio is 10 percent, $1,400 of additional reserves can create up to:
If the reserve ratio is 10 percent, $1,400 of additional reserves can create up to:
The leverage ratio is calculated as:
The leverage ratio is calculated as:
Which of the following policies is NOT in the Fed's monetary toolbox?
Which of the following policies is NOT in the Fed's monetary toolbox?
A problem that the Fed faces when it attempts to control the money supply is that:
A problem that the Fed faces when it attempts to control the money supply is that:
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Study Notes
Unemployment Concepts
- The normal level of unemployment in an economy is termed the natural rate of unemployment.
- Cyclical unemployment relates to fluctuations around the natural rate, influenced by economic cycles.
- To count as "employed" in the U.S., a person must be working for pay, not necessarily full-time.
- The Bureau of Labor Statistics categorizes individuals as employed, unemployed, or not in the labor force; underemployed is not a recognized category.
- Individuals temporarily absent from work for reasons such as vacations are counted as employed.
- Unemployment rate is calculated as the number of unemployed divided by the labor force, multiplied by 100.
Unemployment Rate Calculation
- Given a population of 225 million, with 40 million unemployed and 100 million employed, the unemployment rate is approximated at 29%.
- Frictional unemployment occurs when workers transition between jobs or are temporarily out of work due to better job matches; it does not exist in a perfectly matched labor market.
Types of Unemployment
- Structural unemployment arises when there are more job seekers than job openings, often due to industry shifts.
- Frictional unemployment can result from job changes for better opportunities, industry declines, or changing work conditions.
Economic Impacts of Wages and Unemployment
- Minimum wage laws can cause structural unemployment by leading to a surplus of labor if wages are set above equilibrium.
- Higher minimum wages can increase labor supply while potentially reducing demand for low-skilled workers.
Labor Statistics Insights
- The Bureau of Labor Statistics designates individuals who claim to seek jobs without genuine effort as unemployed rather than out of the labor force.
- Discouraged workers are considered out of the labor force; counting them as unemployed would increase the unemployment rate.
Money and Its Functions
- The existence of money simplifies trade, enabling specialization and economic efficiency.
- Functions of money include serving as a medium of exchange, a store of value, and a unit of account.
- Saving money illustrates its function as a store of value, while listed prices illustrate its role as a unit of account.
Banking and Money Creation
- Banks create money by holding only a fraction of deposits in reserve; they require a reserve ratio below 100%.
- A reserve ratio of 10% on an additional $1,400 in reserves can yield up to $14,000 in new money through the banking system.
- The leverage ratio is determined by dividing total assets by bank capital.
Federal Reserve and Monetary Policy
- The Federal Reserve employs several policies, including buying government bonds and adjusting reserve quantities, but cannot issue a bank run as a policy.
- A significant challenge for the Fed is that it does not control how much money households choose to keep as deposits.
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