Questions and Answers
Frictional unemployment exists because of all of the following except:
In general, expansions are characterized by:
falling unemployment
A worker classified as frictionally unemployed is one who is:
voluntarily looking for work, somewhere a job exists that demands his or her skills.
Eliminating the business cycle would eliminate ______ unemployment.
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What type of unemployment did workers in the slide rule industry experience during the 1970s due to the popularity of handheld calculators?
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The goal of unemployment policy is to eliminate frictional unemployment.
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Sam is experiencing unemployment due to the steel plant closure. What type of unemployment is this?
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If the actual unemployment rate is 7% and the cyclical unemployment rate is 2%, what is the natural rate of unemployment?
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Full employment, as defined by economists, is:
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Unemployment rates differ little by education, age, or ethnic group.
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Firms pay efficiency wages because:
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Young females have a higher unemployment rate than young males.
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Efficiency wages are wages that are:
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The natural rate of employment is achieved when:
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The natural rate of unemployment is:
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An example of cyclical unemployment is a(n):
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The type of unemployment that is on the rise during a recession is known as:
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Study Notes
Types of Unemployment
- Frictional unemployment occurs when individuals are temporarily unemployed while transitioning to new jobs, but not due to a lack of skills.
- Structural unemployment arises when there is a mismatch between workers' skills and job opportunities, often due to technological changes or industry shifts.
- Cyclical unemployment is linked to the economic cycle, typically increasing during recessions and decreasing during expansions.
Characteristics of Economic Expansions
- Expansions are typically marked by falling unemployment rates as businesses grow and hire more workers.
Definitions and Key Concepts
- Full employment is defined as the natural rate of unemployment, which includes frictional and structural unemployment but excludes cyclical unemployment.
- The natural rate of unemployment is about 5%, calculated as the actual unemployment rate minus cyclical unemployment.
- Efficiency wages are set above market equilibrium to enhance worker productivity and reduce turnover rates.
Unemployment Trends and Demographics
- Education level, age, and ethnicity significantly impact unemployment rates, contradicting the notion that these factors have little effect.
- Young females historically have a lower unemployment rate compared to young males, contrary to some beliefs.
Unemployment Policies
- The aim of unemployment policies is not to eliminate frictional unemployment, as it is a normal part of a dynamic job market.
- Firms employ strategies like paying efficiency wages to retain top talent and mitigate worker loss.
Recession Impact
- During the 2008 recession, cyclical unemployment surged as businesses laid off workers, particularly in sectors like manufacturing (e.g., automobile industry).
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Description
Test your knowledge with this self quiz on micro-economics concepts. This quiz covers key terms such as frictional unemployment and economic expansions. Perfect for students looking to reinforce their understanding of fundamental economic principles.
