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41 terms

Econ 2105 - Chpt. 10

STUDY
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The Bureau of Labor Statistics places people in the "employed" category if they:

are temporarily absent from their jobs.
are self-employed.

work without pay in a family member's business.
All of the above are correct.
For the Bureau of Labor Statistics to place someone in the "unemployed" category, that person must:

have worked 10 or fewer hours during the previous week.
have tried to find employment during the previous year.
not have been laid off.
None of the above is correct.
Who is included in the labor force by the Bureau of Labor Statistics?

Azibo, a homemaker not looking for other work
Kwamie, a full-time student not looking for work
Geroy, who does not have a job, but is looking for work
Geroy, who does not have a job, but is looking for work
Ipo did not work last week because flooding forced an evacuation of her workplace. The Bureau of Labor Statistics counts Ipo as
employed and in the labor force.
Zeeman is a college student who is not working or looking for a job. The Bureau of Labor Statistics counts Zeeman as
neither in the labor force nor unemployed.
In 2004, based on concepts similar to those used to estimate U.S. employment figures, the Canadian adult non-institutionalized population was 25.022 million, the labor force was 16.956 million, and the number of people employed was 15.864 million. According to these numbers, the Canadian labor-force participation rate and unemployment rate were about
67.8% and 6.4%.
Suppose that the adult population is 4 million, the number of unemployed is 0.25 million, and the labor-force participation rate is 75%. What is the unemployment rate?
8.3%
Suppose some country had an adult population of about 50 million, a labor-force participation rate of 60 percent, and an unemployment rate of 5 percent. How many people were unemployed?
1.5 million
Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. However, some of these individuals may want to work even though they are too discouraged to make a serious effort to look for work. If these individuals were counted as unemployed instead of out of the labor force, then
both the unemployment rate and labor-force participation rate would be higher.
An economy's natural rate of unemployment is:

the economy's long-run target level of unemployment.
the amount of unemployment that the economy normally experiences.
the lowest rate of unemployment the economy can achieve.
All of the above are correct.
Cyclical unemployment:

has a different explanation than does the natural rate of unemployment.
refers to the year-to-year fluctuation in unemployment around an economy's natural rate of unemployment.
is closely associated with short-run ups and downs of economic activity.
the amount of unemployment that the economy normally experiences.
When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a
surplus of labor and a shortage of jobs.
Wages in excess of their equilibrium level help explain
both structural unemployment and the natural rate of unemployment.
In Belgium, Norway, and Sweden, the percentage of workers who belong to unions is
greater than it is in the United States.
If minimum-wage laws, unions, efficiency wages, and all other factors that could prevent wages from reaching equilibrium were eliminated, then there would be no
structural unemployment
Suppose that efficiency wages become more common in the economy. Economists would predict that this would
decrease the quantity demanded and increase the quantity supplied of labor, thereby increasing the natural rate of unemployment.
Sectoral changes
it may be in the best interest of firms to offer wages that are above the equilibrium level
The theory of efficiency wages explains why
it may be in the best interest of firms to offer wages that are above the equilibrium level.
Efficiency-wage theory suggests that paying
high wages might be profitable because they raise the efficiency of a firm's workers.
Quinn, the CEO of a corporation operating in a relatively poor country where wages are low, decides to raise the wages of her workers even though she faces an excess supply of labor. Her decision
might increase profits if it means that the wage is high enough for her workers to eat a nutritious diet that makes them more productive.
Labor Force Statistics
Produced by Bureau of Labor Statistics (BLS), in the U.S. Dept. of Labor Based on regular survey of 60,000 households Based on "adult population" (16 yrs or older)
Employed
paid employees, self-employed, and unpaid workers in a family business
Unemployed
people not working who have looked for work during previous 4 weeks
Not in the labor force
everyone else
the Labor Force
the total # of workers, including the employed and unemployed.
Unemployment Rate
Unemployed/Labor Force, the percentage of the work force that is unemployed at any given date
Labor Force Participation Rate
Labor Force/Population, the percentage of the adult population that is in the labor force
Discouraged Workers
people who are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them
The Unemplyment Rate has Issues in which
It excludes the discouraged workers, does not distinguish between Full Time & Part Time work or people who work Part time cause Full time is unavailable, and Some people misreport their status in the survey
Natural Rate of Unemployment
normal rate of unemployment around which the unemployment rate fluctuates
Cyclical Unemployment
the deviation of unemployment from its natural rate
Frictional Unemployment
unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills
Structural Unemployment
occurs when there are fewer jobs than workers
Job Search
the process by which workers find appropriate jobs given their tastes and skills
Sectoral Shift
a change in the composition of demand among industries or regions
Unemployment Insurance (UI)
gov't programs that partially protect workers' incomes when they become unemployed. increases frictional unemployment. benefits end when a worker takes a job.
Reason Wages are above equilibrium
Minimum Wage Laws, Unions, Efficiency Wages,
Minimum Wage Laws
May exceed the eq'm wage for the least skilled or experienced workers, causing structural unemployment. But this group is a small part of the labor force, so the min. wage can't explain most unemployment.
Unions
An association of workers, formed to bargain for better working conditions and higher wages.
Efficiency Wages
wages that employers set above the equilibrium wage rate as an incentive for better employee performance,
Four reasons for Efficiency Wages
Worker Health, Worker Turnover, Worker Quality, Worker Health