ECON 1102 Study Guide - Final Guide: Comparative Advantage, Frictional Unemployment, Structural Unemployment

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15 Oct 2018

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Chapter 19: what macroeconomics is all about: the labour force includes people who are unemployed and people who are employed. It is expressed as a percentage amount per year per dollar borrowed: the real interest rate is the nominal interest rate minus the inflation rate. If more output is to be produced, either more workers must be used in production, or existing workers must produce more. The first change means a rise in employment; the second means a rise in output per person employed, which is a rise in productivity. In the short run, changes in productivity tend to be very small; most short-run changes in output are accomplished by changes in employment. Hence there are more opportunities to find a job and new workers (some previously discouraged) begin searching for jobs: unemployment denotes the number of adult workers who are not employed but who are actively searching for a job.

Related Questions

Consider a hypothetical economy in which the labour force consists of 100 people. Of those, 85 people are employed full time and 15 people are unemployed. The government of this economy follows the same conventions as the BLS in computing its employment figures. The unemployment rate is simply the number of unemployed people divided by the number of people in the labour force. Initially, then, the unemployment rate is (15/100) x 100% = 15.0%

Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. The following table offers two different possible scenarios resulting from the recession. Calculate the unemployment rate associated with each scenario

2. Firms reduce work hours by 25%. The number of underemployed workers rises as firms respond to the reduction in the demand for their products by reducing the hours of each employed person from 40 to 30 hours per week.

3. Firms reduce employment by 25%. The number of unemployed workers rises as firms respond to the reduction in the demand for their products by laying off 21 previously employed workers.

4. The unemployment rate in scenario 3 ____ the true extent of underemployment in the economy because the BLS counts part-time workers as employed.

A. Overstates

B. Understates

5. Consider a hypothetical economy in which potential output is $400 billion and the natural rate of unemployment is 6%. The current employment rate is 7.4%. Since the unemployment rate is greater than the natural rate of unemployment, the economy's actual GDP will be ____ potential GDP.

A. Less than

B. Greater than

C. Equal to

6. The burden of an increase in the economy-wide unemployment rate can differ widely across regions and different groups of people. For example, in the United States, the jobless rate among minorities has tended to be ___ than the jobless rate among whites.

A. Lower

B. Higher

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1) The working-age population includes

A) those in jails and hospitals.

B) youngsters between the ages of 14 and 16 if they are working at least part time.

C) employed and unemployed people over the age of 16.

D) only employed people over the age of 16.

E) people over the age of 16 who are in the Army.

2) The labor force includes people who

i. are less than 16 years of age.

ii. are in institutions.

iii. are actively seeking a job but do not have a job.

A) i only

B) i and iii

C) i and ii

D) iii only

E) i , ii, and iii

3) Assume the U.S. population is 275 million. If 210 million people are of working age, 135 million are employed, and 6 million are unemployed, what is the size of the labor force?

A) 275 million

B) 141 million

C) 135 million

D) 210 million

E) 204 million

4) The unemployment rate is the number of people unemployed divided by the

A) population, then multiplied by 100.

B) labor force participation rate, then multiplied by the population.

C) labor force, then multiplied by 100.

D) number of people employed, then multiplied by 100.

E) working-age population, then multiplied by 100.

5) Suppose the population is 220 million people, the labor force is 150 million people, the number of people employed is 130 million, and the working-age population is 175 million people. What is the unemployment rate?

A) 9.0 percent

B) 13.3 percent

C) 11.4 percent

D) 15.4 percent

E) 20 percent

6) Suppose the working-age population is 220 million, the labor force is 150 million, and the unemployment rate is 10 percent. The number of unemployed people is

A) 15 million.

B) 22 million.

C) 37 million.

D) 7 million.

E) 70 million.

7) The labor force participation rate is the

A) labor force divided by the working-age population, then multiplied by 100.

B) number of people employed divided by the labor force, then multiplied by 100.

C) labor force divided by the population, then multiplied by 100.

D) discouraged workers divided by the labor force, then multiplied by 100.

E) number of people employed divided by the population, then multiplied by 100.

8) If the number of employed people is 150 million, the number of unemployed people is 50 million, and the working-age population equals 285 million people, the labor force participation rate is

A) 70.2 percent.

B) 81 percent.

C) 17.5 percent.

D) 25 percent.

E) 52.6 percent.

9) A discouraged worker is

A) a person who is not happy with his or her job.

B) someone who works part time but wants full-time work.

C) someone who is asked to work overtime everyday.

D) someone who does not have a job but has given up looking.

E) another name for an unemployed worker.

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