Unemployment Concepts and Types
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Unemployment Concepts and Types

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Questions and Answers

What occurs when the economy is at full employment?

  • The natural rate of unemployment prevails
  • The unemployment rate is greater than zero
  • All remaining unemployment is either frictional or structural
  • All of the above (correct)

    • Why might a college student apply for graduate school during a recession?

    The probability of finding a job is higher during economic expansion and lower during recession.

    President Obama was referring to the slow job growth in the economy in 2011.

    True

    What is the natural rate of unemployment composed of?

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

    When the economy is at full employment, unemployment is equal to?

    <p>The natural rate of unemployment.</p> Signup and view all the answers

    Economists define full employment as having an unemployment rate equal to zero.

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

    How is the labor force participation rate calculated?

    <p>Labor force/Working age population x100.</p> Signup and view all the answers

    People are said to be frictionally unemployed when they are between jobs and searching for new jobs.

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

    In the journal article, what did the author find regarding job applications with white names?

    <p>Job applications with white names tend to send 10 resumes to get one callback, whereas applications with African-American names need to send 15 resumes.</p> Signup and view all the answers

    Which of the following is an example of structural unemployment?

    <p>Due to technological change, typewriter workers lose jobs and must retrain to find jobs in other industries.</p> Signup and view all the answers

    What is the best classification of Sally J's unemployment status after losing her job as an underwater welder?

    <p>Structurally unemployed.</p> Signup and view all the answers

    What classification applies to Rusty, who remained unemployed after losing his job at a delivery truck mechanic during a recession?

    <p>Cyclically unemployed.</p> Signup and view all the answers

    What are the three types of unemployment?

    <p>Frictional, Structural, and Cyclical unemployment.</p> Signup and view all the answers

    What does the employment population ratio measure?

    <p>Percentage of the working age population that is employed.</p> Signup and view all the answers

    When an unemployed person drops out of the labor force, what happens to the unemployment rate?

    <p>The unemployment rate understates the true degree of joblessness in the economy.</p> Signup and view all the answers

    When an unemployed person drops out of the labor force, it affects the employment-population ratio.

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

    What is a person called who is in between jobs but actively engaged in a job search?

    <p>Frictionally unemployed.</p> Signup and view all the answers

    Experts in hand-drawn animation who remain unemployed due to the film industry's switch to computer-generated animation are considered to be?

    <p>Structurally unemployed.</p> Signup and view all the answers

    What are employees considered when a company reduces production and employment during a recession?

    <p>Cyclically unemployed.</p> Signup and view all the answers

    Why might the unemployment rate not fall when the number of people employed increases?

    <p>The unemployment rate remained the same because both the number of employed and unemployed increased proportionally.</p> Signup and view all the answers

    How does the BLS calculate the unemployment rate?

    <p>Number of employed/Number in labor force x 100.</p> Signup and view all the answers

    What relevant issue is ignored if Bob Wesley advocates for eliminating structural unemployment for a healthy economy?

    <p>Structural unemployment will exist in an economy that is innovative.</p> Signup and view all the answers

    During a recession, a person would prefer to work in an industry that produces?

    <p>An inferior good because the demand for inferior goods should increase with decreases in income during a recession.</p> Signup and view all the answers

    During an economic expansion, a person would prefer to work in an industry that produces?

    <p>A normal good because the demand for normal goods should increase with increases in income during economic expansion.</p> Signup and view all the answers

    Black teenagers have lower unemployment rates than white teenagers.

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

    How does the US economy create and destroy millions of jobs each year?

    <p>Some businesses are expanding, while others are contracting. In the market system, new firms are constantly entering and exiting various industries.</p> Signup and view all the answers

    Which of the following is an example of cyclical unemployment?

    <p>In an academic downturn, a manufacturing plant reduces production and temporarily lays off workers.</p> Signup and view all the answers

    What is the best classification status for John Q, who spends the day searching for a job?

    <p>Frictionally unemployed.</p> Signup and view all the answers

    In 2009, the ratio of women's earnings to men's was unequivocal evidence of gender discrimination.

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

    While studies find evidence of gender discrimination, the gender wage gap is also explained in part by women's lower level of work experience, relative to men's.

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

    Study Notes

    Unemployment Concepts

    • The economy at full employment is characterized by a natural rate of unemployment, with residual unemployment being frictional or structural.
    • Full employment does not mean a zero unemployment rate; only cyclical unemployment is zero during this phase.
    • Frictional unemployment occurs when individuals are temporarily between jobs and actively seeking new employment.

    Types of Unemployment

    • Types of unemployment include Frictional, Structural, and Cyclical.
    • Structural unemployment results from changes in industry needs, such as technological advancements leading to job obsolescence.
    • Cyclical unemployment is tied to economic downturns, where workers are laid off due to reduced production.

    Measuring Employment

    • Labor force participation rate is determined by the formula: (Labor force / Working age population) x 100.
    • The employment-population ratio reflects the percentage of the working age population that is employed.
    • The unemployment rate is calculated using the formula: (Number of employed / Number in labor force) x 100.

    Job Market Dynamics

    • Macro conditions influence job market decisions; graduates may seek further education during recessions due to lower job availability.
    • Despite creating jobs, slow job growth can still signal economic challenges, as noted in historical contexts like 2011.

    Labor Market Disparities

    • Studies show discrimination in the hiring process; job applications with traditionally white names receive more callbacks compared to those with African-American names.
    • Gender wage gap exists, attributed in part to disparities in work experience, alongside other factors like discrimination.

    Economic Behavior During Recessions and Expansions

    • Individuals prefer to work in industries producing inferior goods during recessions, while normal goods are favored during economic expansions.
    • Job creation and destruction are constant in the economy, driven by business dynamics such as expansion and contraction.

    Special Cases of Unemployment

    • Situations like someone attending school after job loss classify the individual as structurally unemployed if the previous job becomes obsolete.
    • An unemployed person dropping out of the labor force can understate true joblessness but does not affect employment-population ratios.

    Employment Status Examples

    • Frictional unemployment applies to someone actively searching for jobs, while cyclical unemployment applies during layoffs due to economic downturns.
    • Bob Wesley's argument against structural unemployment overlooks its role in fostering innovation within the economy.

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    Description

    Explore the intricate concepts of unemployment, including frictional, structural, and cyclical types. Understand how full employment is characterized and learn about key measures used in assessing employment. This quiz will help solidify your knowledge of unemployment in the economy.

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