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ECN 204 Chapter 9: Chapter 9 - Unemployment & Its Natural Rate

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amethystgoat54
23 Apr 2012
School
Ryerson University
Department
Economics
Course
ECN 204
Professor
Eric Kam

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Document Summary

Based on regular survey of 50,000 households = labour force survey. Based on adult population (15 yrs or older) The labour force is the total # of workers, including the employed and unemployed. Unemployment rate (u-rate): % of the labour force that is unemployed. U-rate = 100 x # of unemployment/labour force. Labour force participation rate: % of the adult population that is in the labour force labour force population = 100 x labour force/adult population. It is difficult to distinguish between a person who is unemployed and a person who is not in the labour force. Discouraged searchers, people who would like to work but have given up looking for jobs after an unsuccessful search, don"t show up in unemployment statistics. Other people may claim to be unemployed in order to receive financial assistance, even though they aren"t looking for work.

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Related Questions

1. For April 2015, the Bureau of Labor Statistics (BLS) estimates that the number of employed workers in the US was 148,523,000. The total number of workers who were not employed but were actively seeking work or waiting to be recalled from the layoff was 8,549,000. The total number of workers who were not employed and were neither looking for work nor waiting to be recalled from the layoff was 93,194,000.

a. Calculate the number of workers in the labor force and the adult working population.

b. Calculate the labor force participation rate and the unemployment rate.

c. Figure 2.1 in the lecture slides gives the same data, but for April 2013. Calculate the percentage change in the number of unemployed workers, the percentage change in the number of workers in the labor force, and the percentage change in the adult working population between April 2013 and April 2015.

d. Has the labor market improved between April 2013 and April 2015? Has it clearly improved, or is there a chance that it has not actually improved? Justify your answer. (Hint: Compare the labor force participation rate and the unemployment rate for April 2013 and April 2015).

Severe unemployment is socially catastrophic. Mark all items below that can occur due to unemployment.

Ā  Increased Spending
Ā  Increased work hours for other family members
Ā  Increased Savings
Ā  Uninterrupted schooling
Ā  Increased Stress
Ā  Postponed medical care
Ā  Utilities cut off

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Question 51 pts

What years was the unemployment rate equal to or great than 10%?

Ā  1929-1933, 1937-1938, 1981-1982, 2007-2009
Ā  1928-1932, 1936-1937, 1980-1981, 2008-2010
Ā  1929-1933, 1936-1937, 1980-1981, 2007-2009
Ā  1928-1930, 1937-1938, 1981-1982, 2008-2010

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Question 61 pts

The unemployment rate is understated due to:

Ā  None of the above.
Ā  Part-time workers being counted as unemployed
Ā  Discouraged workers not counted in the labor force
Ā  Underemployed workers being counted an unemployed

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Question 71 pts

True or False. The Labor force participation rate is the percentage of adults in an economy who are either employed or who are unemployed and looking for a job.

Ā  True
Ā  False

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Question 81 pts

True or False. The Bureau of Labor Statistics reports the percentage of labor force unemployed utilizing the current population survey.

Ā  True
Ā  False

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Question 91 pts

Mark all that apply. Over time the unemployment rate.....

Ā  does not fluctuate over time
Ā  an upward or downward trend in unemployment rates is apparent
Ā  never falls all the way to zero
Ā  the timing of rises and falls in unemployment do not match the timing of upswings and downswings in the overall economy

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Question 101 pts

According to the graphs presented by the author in this chapter, which group had the highest unemployment rate in 2010?

Ā  Hispanic
Ā  Black
Ā  Asian
Ā  Whites

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Question 111 pts

According to the information presented by the author in this chapter, which group had the highest unemployment rate in 2015?

Ā  New entrants
Ā  Re-entrants
Ā  Job Losers: non-temporary
Ā  Job Leavers
Ā  Job Losers: temporary

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Question 121 pts

According to the information presented by the author in this chapter, which group had the highest unemployment rate in 2015?

Ā  5 to 14 weeks
Ā  Over 27 weeks
Ā  15-26 weeks
Ā  Under 5 weeks

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Question 131 pts

True or False. An international comparison of unemployment rates across countries can be easily accomplished.

Ā  True
Ā  False

Flag this Question

Question 141 pts

Mark all that apply. Wages are sticky downward due to:

Ā  Implicit contract
Ā  Insider-outsider model
Ā  Efficiency Wage Theory
Ā  Adverse selection of wage cuts argument

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Question 151 pts

Match the word to the correct definition.

Cyclical

[ Choose ] unemployment that occurs as workers move between jobs unemployment that occurs because individuals lack skills valued by employers or the Geographic distribution of jobs changes unemployment closely tied to the business cycle, like higher unemployment during a recession

Frictional

[ Choose ] unemployment that occurs as workers move between jobs unemployment that occurs because individuals lack skills valued by employers or the Geographic distribution of jobs changes unemployment closely tied to the business cycle, like higher unemployment during a recession

Structural

[ Choose ] unemployment that occurs as workers move between jobs unemployment that occurs because individuals lack skills valued by employers or the Geographic distribution of jobs changes unemployment closely tied to the business cycle, like higher unemployment during a recession

Flag this Question

Question 161 pts

A financial analyst who quits his/her job in Chicago and is pursuing similar work in Arizona. What type of unemployment occurred?

Ā  Structural
Ā  Cyclical
Ā  Frictional

Flag this Question

Question 171 pts

True or False. With productivity low, average levels of unemployment will tend to be somewhat higher on average.

Ā  True
Ā  False

Flag this Question

Question 181 pts

True or False. Unemployment benefits in the United States are only federally controlled.

Ā  True
Ā  False

Flag this Question

Question 191 pts

True or False. The natural rate of unemployment will never be zero due to cyclical and frictional unemployment.

Ā  True
Ā  False

Flag this Question

Question 201 pts

True or False. Public policies to assist the unemployed as it relates to the supply side of the labor market affect how eager people are to find work

Ā  True
Ā  False

Part 1:
Define each one as either employed, unemployed, not in the labor force, not in the adult population.

1) Felix is a 25-year-old professional tennis player. When he's not competing, he works as a coach at a local tennis club.
2) Janis is a 12-year-old student in Middle School. She babysitter younger brother and does other chores, for which her parents give her an allowance of $30 per week.
3) Rajiv is a 30-year-old who lost his job as a copyeditor for a local newspaper. He has spent the past few weeks out of work interviewing for other editing jobs. If his job search doesn'tsucceed after a few more weeks, he is thinking about going back to grad school.
4) Meagan is an 18-year-old who just graduated from high school. She is taking it easy this summer, relaxing by the pool with her friends, and volunteering part-time at a nursery.

Part 2:
The table below contains U.S. employment information from February 2008.
Civil Non-Institutional Population (16 years andolder)=232,809,00
Employed=145,993,000
Unemployed=7,318,000
Discouraged=396,000

The BLS has several measures of joblessness in addition to the official unemployment rate. One alternative in the U-4 measure of labor underutilized, which is calculated at the following:
U-4=(unemployed+discouraged)/(Labor force+discouraged)*100

Official Unemployment Rate=?
The U-4 measure of Labor underutilized=?

Part 3(connected to part 2):
The official unemployment rate and the U-4 measure of laborunderutilized are 2 different measures of joblessness in the economy. If the BLS were to include discouraged workers in the official unemployment rate, the reported unemployment rate would(increase/decrease).

Part 4:
Frictional Unemployment: 1.0%
Cyclical Unemployment: 0.8%
Structural Unemployment: 4.1%
Total Unemployment: 5.9%
Using the table above: True or False. The economy is currently at its natural rate of unemployment?

Part 5:
Define as either Structural, Frictional, or CyclicalUnemployment

1) Automobile demand as fallen during a recent recession, and Haley has been laid off from her job on the assembly line (I think it's cyclical but I'm not too sure)
2) Jack recently lost his job as a waiter at a local restaurant. A recent increase in minimum wage keeps local employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. He continues to look for a job but reconsidering going back to school for vocational rate. (I think it's structural but not sure)

Part 6:
Suppose the world price of steel falls substantially. The demand for labor among steel production firms in Pennsylvania(increase/decrease). The labor demand among automobile producing firms in Michigan, for which steel is an input, will(increase/decrease). The unemployment resulting from such sectional shift in the economy is best described as(cyclical/structural/frictional/seasonal) unemployment.

I think it's decrease, decrease, and cyclical but not too sure.

Part 7:
Which of the following policies would reduce the natural rate of unemployment in the economy. More than one can apply.

1) An improvement to a widely used job-search website that allows it to match works to job vacancies more effectively.
2) Establishing government-run employment agencies to connect unemployed workers to job vacancies.
3) Offering recipients of unemployment insurance a cash bonus if they find a new job within a specified number of weeks