Chapter 8- Unemployment and Inflation

Who reports the official U.S. unemployment rate?
unemployment collection offices
the U.S. Treasury Department
the U.S. Federal Reserve
the U.S. Bureau of Labor Statistics
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Who reports the official U.S. unemployment rate?
unemployment collection offices
the U.S. Treasury Department
the U.S. Federal Reserve
the U.S. Bureau of Labor Statistics
the U.S. Bureau of Labor Statistics
How frequently is the survey that determines unemployment released?
quarterly
monthly
yearly
weekly
monthly
Which of the factors would decrease the rate of frictional unemployment?

an increase in the number of jobs available due to an increase in GDP

increased short-term unemployment benefits

improvements in technology that make skills which were once valued by employers obsolete

the advent of the Internet, which makes finding available jobs easier
the advent of the Internet, which makes finding available jobs easier
When the economy is doing well, a significant share of unemployment is frictional.

TRUE
FALSE
TRUE
Which of the choices is most directly related to cyclical unemployment?

an increase in the number of new college graduates looking for work

an increased use of the Internet for job searches

recessions

the age distribution of the country
Recessions
Determine if the people in the example have benefited - i.e., are winners - or have been harmed - i.e., are losers - by unexpected inflation.

a. The United States federal government, which had almost $15 trillion in debt in 2011

b. Karen, a retired school teacher who relies upon her fixed pension to pay for her expenses

c. Third National, a bank that loaned many people money for home purchases

d. Joy, who borrowed $40,000 to pay for her college education

e. Herb, who keeps his savings in an old coffee can
a. winner
b. loser
c. loser
d. winner
e. loser
The natural rate of unemployment equals

frictional unemployment plus structural unemployment.

frictional unemployment plus minimally attractive workers.

frictional unemployment plus cyclical unemployment.

structural unemployment minus cyclical unemployment.

cyclical unemployment plus structural unemployment.
frictional unemployment plus structural unemployment.
Identify whether the actions or scenarios would likely increase or decrease the natural rate of unemployment.

i. Increasing the minimum wage

ii. Reducing workers' collective bargaining rights

iii. Extra financial benefits for the unemployed

iv. A large number of young people entering the labor force

v. More funding for government worker training programs

vi. An increase in union membership

vii. An increase in information about job opportunities
i. increase
ii. decrease
iii. increase
iv. increase
v. decrease
vi. increase
vii. decrease
Identify what type of unemployment each of the individuals faces.

James is an architect who has been laid off owing to a slump in the demand for property. He feels he will have to wait until the economy picks up before he can get a new job.
James is facing cyclical unemployment
Identify what type of unemployment each of the individuals faces.

Eric is an experienced project manager who lost his job at a tech start-up because the company's product failed to become popular. He is confident he can get a new job and has already rejected a number of offers.
Eric is facing frictional unemployment
Identify what type of unemployment each of the individuals faces. Craig lost his job several months ago. He is having a hard time finding a job that pays him more than unemployment insurance does.Craig is facing structural unemploymentIdentify what type of unemployment each of the individuals faces. Sarah is a recent economics graduate who is entering a difficult labor market, due to a severe recession. She is continuing to look for work but is having a hard time getting interviews.Sarah is facing cyclical unemployment.Identify what type of unemployment each of the individuals faces. Hamid has just graduated as a lawyer from an esteemed law school. He is confident of getting a job and has already refused a few lower‑paying jobs.Hamid is facing frictional unemployment.The info shows employment statistics for a fictional country. Use the information to answer the questions. Round your percentages to two decimal places. Category. Number of people Employed 4505 Unemployed 492 Not in the labor force 561 What is the total labor force? What is the labor force participation rate? What is the unemployment rate?4997 89.90 9.85Suppose 256 of the 492 unemployed people have been unemployed for so long that they stop looking for work. What is the new labor force? What is the new labor force participation rate? %What is the new unemployment rate?4741 85.30 4.98Which individual is out of the labor force? Isabella is working 3 hours per week. John is without a job, is able to work, but is not actively looking for work. Matthew is working 30 hours per week. Carol is without a job, is able to work, and is actively looking for work.John is without a job, is able to work, but is not actively looking for work.Suppose the civilian noninstitutionalized working-age population is 35.9 million in in a hypothetical economy. Of these, 4.4million are working part-time and 13.19 million are working full-time. Assume the Bureau of Labor Statistics (BLS) definitions are used for calculating unemployment data. Among those not working, the most recent job-search activity for 3.40 million happened less than two weeks ago, while 1.72million most recently looked for work between two and four weeks ago. An additional 0.86 million most recently looked for work five weeks ago, and the remaining 12.33 million who do not have jobs have not looked for work in the past six weeks. Round your answers to two decimal places. What is the size of the total labor force? How many people are unemployed? What is the labor force participation rate? What is the unemployment rate?22.71 5.12 63.25 22.54Individuals who want to work, but have given up searching for a job because of limited prospects, are known as marginally attached workers. frictionally unemployed. discouraged workers.discouraged workers.This group, consisting of individuals who would like to work but have not looked for work during the past four weeks, is included among the structurally unemployed. marginally attached workers. discouraged workers. minimally attractive workers.marginally attached workers.Individuals who are involuntarily working part‑time are considered underemployed. marginally employed. structurally unemployed. frictionally unemployed.underemployedBy excluding the groups identified in the previous questions, the U.S. Bureau of Labor Statistics calculation methods accurately reflect the true level of unemployment. overstate the true level of unemployment. understate the true level of unemployment.understate the true level of unemployment.Refer to the hypothetical data in the table to answer the three questions. Year. Nominal interest rate Real interest rate Inflation rate 2017 7%. — 5% 2018. 7%. 1%. — 2019 — 7% 7% What was the real interest rate in 2017? What was the inflation rate in 2018? What was the nominal interest rate in 2019?%2 6 14Determine whether each of the individuals is considered unemployed or not unemployed. Erik volunteers for 10 hours per week at his children's school and does no other work. He sends his resume to 10 potential employers daily.unemployedInflation can impose significant costs and adversely distort economic systems. Indicate whether the costs and distorting effects exemplify menu costs, shoe leather costs or unit of account costs. discourages people from holding moneyshoe leather costsInflation can impose significant costs and adversely distort economic systems. Indicate whether the costs and distorting effects exemplify menu costs, shoe leather costs or unit of account costs. can reduce the quality of economic decisionsunit of account costsInflation can impose significant costs and adversely distort economic systems. Indicate whether the costs and distorting effects exemplify menu costs, shoe leather costs or unit of account costs. can lead to stores listing prices in more stable currenciesmenu costsInflation can impose significant costs and adversely distort economic systems. Indicate whether the costs and distorting effects exemplify menu costs, shoe leather costs or unit of account costs. spending time converting money into something that better holds valueshoe leather costsInflation can impose significant costs and adversely distort economic systems. Indicate whether the costs and distorting effects exemplify menu costs, shoe leather costs or unit of account costs. makes money a less reliable source of measurementunit of account costsInflation can impose significant costs and adversely distort economic systems. Indicate whether the costs and distorting effects exemplify menu costs, shoe leather costs or unit of account costs. can cause distortion to the tax systemunit of account costsInflation can impose significant costs and adversely distort economic systems. Indicate whether the costs and distorting effects exemplify menu costs, shoe leather costs or unit of account costs. causes difficulty in firms and individuals financial planningunit of account costsInflation can impose significant costs and adversely distort economic systems. Indicate whether the costs and distorting effects exemplify menu costs, shoe leather costs or unit of account costs. causes costs associated with changing prices in storesmenu costsDetermine whether each of the individuals is considered unemployed or not unemployed. Laura works 20 hours in a paid position for her local animal shelter.not unemployedDetermine whether each of the individuals is considered unemployed or not unemployed. Pete had a knee replacement two weeks ago and will not be available to work at his job as a mechanic for the next three months.not unemployedDetermine whether each of the individuals is considered unemployed or not unemployed. Alex just turned 16 and started applying for jobs. He has not found a company that will hire him yet.unemployedDetermine whether each of the individuals is considered unemployed or not unemployed. James quit his job to stay at home with his children and has not worked in 15 years, nor has he looked for work.not unemployedAshley graduated last month with a major in history. She has two job offers and is deciding which one to accept. Currently she MOST likely would be classified as: structurally unemployed frictionally unemployed. employed. cyclically unemployed.frictionally unemployedTo be counted as unemployed, a person without a job must have actively looked for work in the last: two weeks. four weeks. eight weeks. four months.four weeks.In the Island of Fortune, 10 million workers are unemployed, and 140 million workers are employed. The total population is 300 million, and the population that is aged 15 and older is 200 million. The labour force participation rate for the Island of Fortune is: 47% 50% 67% 75%75%If the number of people who are employed is 80,000, and the unemployment rate is 33%, then there are about _____ unemployed people. 4,000 12,000 40,000 120,00040,000