ECO 1102 Chapter Notes - Chapter 9: Market Power, Efficiency Wage, Labour Force Survey

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16 Jan 2017

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Chapter 9 - unemployment and its natural rate. When a country keeps its workers as fully employed as possible, it achieves a higher level of gdp. The natural rate of unemployment refers to the amount of unemployment that the economy normally experiences. Cyclical unemployment refers to the year-to-year fluctuations in unemployment around its natural rate. Its related with short-run ups and down of economic activity. In canada, data is collected by statistics canada with labour force survey: each adults must be employed, unemployed, or not in the labour force, someone not in the labour force can be full-time students, homemaker, or retiree. One all the information is collected, statistics canada define labour force: labour force - it"s the total (cid:374)u(cid:373)(cid:271)er of workers, i(cid:374)(cid:272)ludi(cid:374)g (cid:271)oth the e(cid:373)ployed a(cid:374)d the u(cid:374)e(cid:373)ployed. Labour force = number of employed + number of unemployed. Then the unemployment rate is defined: unemployment rate - the percentage of the labour force that is employed.

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

chocolatecattle949

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

Increased Spending

Increased work hours for other family members

Increased Savings

Uninterrupted schooling

Increased Stress

Postponed medical care

Utilities cut off

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Question 51 pts

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

1929-1933, 1937-1938, 1981-1982, 2007-2009

1928-1932, 1936-1937, 1980-1981, 2008-2010

1929-1933, 1936-1937, 1980-1981, 2007-2009

1928-1930, 1937-1938, 1981-1982, 2008-2010

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Question 61 pts

The unemployment rate is understated due to:

None of the above.

Part-time workers being counted as unemployed

Discouraged workers not counted in the labor force

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.

True

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.

True

False

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Question 91 pts

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

does not fluctuate over time

an upward or downward trend in unemployment rates is apparent

never falls all the way to zero

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?

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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?

New entrants

Re-entrants

Job Losers: non-temporary

Job Leavers

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?

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Question 131 pts

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

True

False

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Question 141 pts

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

Implicit contract

Insider-outsider model

Efficiency Wage Theory

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

Structural

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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?

Structural

Cyclical

Frictional

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Question 171 pts

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

True

False

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Question 181 pts

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

True

False

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Question 191 pts

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

True

False

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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

True

False

crimsoncrab890

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

plumdog25

ECO 1102 Chapter Notes - Chapter 9: Market Power, Efficiency Wage, Labour Force Survey

ECO 1102 Full Course Notes

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