Economics 252

Review Questions Chapter 6 - Unemployment

(1) The labor force includes:

(a) a student who is still in school but not working or looking for work.

(b) a part-time store clerk who is looking for another job.

(c) a person who is retired and volunteers to run a charity.

(d) a person who spends the entire day taking care of young children and elderly parents at home.

(2) People are not part of the labor force when they:

(a) are working and go on vacation.

(b) are old enough to work but choose not to work.

(c) suffer from temporary illness which keeps them away from their job.

(d) work at a part-time job while desiring full-time work.

(3) The labor force participation rate is:

(a) the number of unemployed divided by the number employed.

(b) the number employed divided by the number in the labor force.

(c) the number employed divided by the total population.

(d) the number in the labor force divided by the working-age population.

(4) If the population of a country is 160,000 people, its labor force consists of 80,000 people, and 20,000 people are unemployed. The unemployment rate is:

(a) 12.5 percent.

(b) 25.0 percent.

(c) 50.0 percent.

(d) 20.0 percent.

(5) Suppose a country has 1 billion people, 60 percent of whom are of working age and in the labor force, with 30 million unemployed, and full employment occurs at a 2 percent unemployment rate. By what percentage has real output failed to reach its potential according to Okun's Law?

(a) 10 percent.

(b) 3 percent.

(c) 5 percent.

(d) 6 percent.

(6) After a fruitless two-year search for a job, a former executive gives up and decides to live off the land in the Rocky Mountains. This former executive would be:

(a) a discouraged worker.

(b) seasonally unemployed.

(c) underemployed.

(d) one of the phantom unemployed.

(7) The phantom unemployed are:

(a) actively seeking a job even though they have no intention of finding one.

(b) people who are working part-time but desire full-time work.

(c) seasonally unemployed.

(d) discouraged workers.

(8) When migrant workers seek employment after the crops have been picked, the unemployment rate goes up. This situation is an example of:

(a) frictional unemployment.

(b) seasonal unemployment.

(c) structural unemployment.

(d) cyclical unemployment.

(9) Suppose a welder in La Porte quits his job to pursue a higher paying welding job in Texas. He is:

(a) frictionally unemployed.

(b) structurally unemployed.

(c) seasonally unemployed.

(d) cyclically unemployed.

(10) Suppose an assembly line worker at Whirlpool has been laid off due to the downturn in the economy and sales of major appliances are down. This worker is:

(a) frictionally unemployed.

(b) structurally unemployed.

(c) seasonally unemployed.

(d) cyclically unemployed.

(11) Suppose an experienced coal miner in West Virginia is laid off since the mines are closing down permanently. All the mines are now shut down, and the miner has potential opportunities for employment in high tech. computer manufacturing in California, but lacks the necessary education and skills. This worker is:

(a) frictionally unemployed.

(b) structurally unemployed.

(c) seasonally unemployed.

(d) cyclically unemployed.

(12) Full employment in the U.S. economy means:

(a) frictional unemployment has been reduced to zero.

(b) the unemployment rate has been reduced to zero.

(c) the economy has reached the lowest level of unemployment compatible with price stability.

(d) seasonal unemployment has been reduced to zero.