Macro Tut 3 - Unemployment

Multiple Choice
Identify the choice that best completes the statement or answers the question.

1. The Bureau of Labor Statistics counts a member of a surveyed household as an adult if that person
is at least
a. 14 years old.
b. 16 years old.
c. 18 years old.
d. 21 years old.
2. Who of the following would be included in the Bureau of Labor Statistics’ “unemployed” category?
a. Tuuli, who is waiting for her new job to start
b. Jyri, who worked only 15 hours last week
c. Panu, who neither has a job nor is looking for one
d. None of the above is correct.
3. The sum of which of the following must be equal to the adult population?
a. employed, unemployed
b. employed, unemployed, labor force
c. employed, unemployed, not in the labor force
d. employed, unemployed, labor force, not in the labor force

Table 28-1

Labor Data for Wrexington

Year 2004 2005 2006

Adult population 2000 3000 3200
Number of employed 1400 1300 1600
Number of unemployed 200 600 200

4. Refer to Table 28-1. The number of adults not in the labor force of Wrexington in 2006 was
a. 200.
b. 1400.
c. 1600.
d. 3000.
5. Refer to Table 28-1. The number of adults not in the labor force of Wrexington
a. increased from 2004 to 2005 and increased from 2005 to 2006.
b. increased from 2004 to 2005 and decreased from 2005 to 2006.
c. decreased from 2004 to 2005 and increased from 2005 to 2006.
d. decreased from 2004 to 2005 and decreased from 2005 to 2006.

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Table 28-2

2009 Labor Data for Wrexington

Number of adults 20,000

Number of adults who are paid employees 8,000
Number of adults who work in their own businesses 1,600
Number of adults who are unpaid workers in a family member’s business 1,000
Number of adults who were temporarily absent from their jobs because of an 400
earthquake
Number of adults who were waiting to be recalled to a job from which they had been 200
laid off
Number of adults who do not have a job, are available for work, and have tried to find a 1,400
job within the past four weeks
Number of adults who do not have a job, are available for work, but have not tried to 780
find a job within the past four weeks
Number of adults who are full-time students 3,000
Number of adults who are homemakers or retirees 3,620

6. Refer to Table 28-2. What was Wrexington’s labor-force participation rate in 2009?
a. 55 percent
b. 63 percent
c. 66.9 percent
d. 87.3 percent
7. In 2004, based on concepts similar to those used to estimate U.S. employment figures, the Japanese
adult non-institutionalized population was 109.684 million, the labor force was 65.760 million, and the
number of people employed was 62.630 million. According to these numbers, the Japanese
labor-force participation rate and unemployment rate were about
a. 57.1% and 2.9%.
b. 57.1% and 4.8%.
c. 60% and 2.9%.
d. 60% and 4.8%.

8. Suppose some country had an adult population of about 46 million, a labor-force participation rate
of 75 percent, and an unemployment rate of 8 percent. How many people were unemployed?
a. 2.54 million
b. 2.76 million
c. 3.68 million
d. 8 million

Table 28-3: 2003 Labor Data for Adults (age 16 and older) in Meditor

Males not in labor force 45 million

Females not in labor force 35 million
Males unemployed 5 million
Females unemployed 5 million
Males employed 85 million
Females employed 65 million
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9. Refer to Table 28-3. What is the adult male labor force in Meditor?
a. 50 million
b. 85 million
c. 90 million
d. 130 million

10. Refer to Table 28-3. What is the adult female population in Meditor?
a. 40 million
b. 70 million
c. 100 million
d. 105 million

11. Recent entrants into the labor force account for about
a. 1/5 of those who are unemployed.
b. 1/4 of those who are unemployed.
c. 1/3 of those who are unemployed.
d. 1/2 of those who are unemployed.

12. If you were told that someone you knew nothing else about had just become unemployed, your
best guess would be
a. that they would be unemployed for a long time, and that most of the unemployed they’ve
joined have been unemployed for a long time.
b. that they would be unemployed for a long time, even though most of the unemployed
they’ve joined have been unemployed for a short time.
c. that they would be unemployed for a short time, even though most of the unemployed
they’ve joined have been unemployed for a long time.
d. that they will be unemployed for a short time, and that most of the unemployed they’ve
joined have been unemployed for a short time.

13. Which of the following is not correct?

a. Most people who become unemployed will soon find jobs.
b. In an ideal labor market, wages would adjust to ensure that all workers are always fully
employed.
c. The unemployment rate occasionally falls to zero.
d. There are always some workers without jobs, even when the overall economy is doing
well.

14. Unemployment that results because it takes time for workers to search for the jobs that best suit
their tastes and skills is called
a. the natural rate of unemployment.
b. cyclical unemployment.
c. structural unemployment.
d. frictional unemployment.

15. Consumers decide to buy more computers and fewer typewriters. As a result, computer
companies expand production while typewriter companies lay-off workers. This is an example of
a. frictional unemployment created by efficiency wages.
b. frictional unemployment created by sectoral shifts.
c. structural unemployment created by efficiency wages.
d. structural unemployment created by sectoral shifts.

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 16. Which of the following does not help reduce frictional unemployment?
a. government-run employment agencies
b. public training programs
c. unemployment insurance
d. All of the above help reduce frictional unemployment.

17. Minimum-wage laws can keep wages

a. above equilibrium and cause a surplus of labor.
b. above equilibrium and cause a shortage of labor.
c. below equilibrium and cause a surplus of labor.
d. below equilibrium and cause a shortage of labor.

18. Which of the following is not correct?

a. A union is a worker association that bargains with employers over wages, benefits, and
working conditions.
b. Unions play a much larger role in the U.S. labor market now than they did in the past.
c. Unions play a large role in many European countries.
d. A union is a type of cartel.
19. Unions
a. do not affect the natural rate of unemployment.
b. lower the wages of unionized workers.
c. raise the profits of unionized firms.
d. lower the wages of nonunionized workers.

20. Which of the following is not a reason that paying efficiency wages may increase a firm's profit?
a. Efficiency wages increase worker health and therefore increase worker productivity.
b. Efficiency wages decrease worker turnover and therefore decrease hiring and training
costs.
c. Efficiency wages decrease worker shirking and therefore increase worker productivity.
d. Efficiency wages decrease a country's natural rate of unemployment and therefore increase
its standard of living.

PROBLEMS

Problem 1
Answer the questions below based on the following information about an economy. All figures are in mil-
ions:
Total population: 77.6
Adult population: 40
Employed: 37.6
The percentage of total population in the labor force: 49.6%
1. Calculate the labor force, the unemployment rate and the labor force participation in the economy
2. If the natural rate of unemployment is 1%, what is the cyclical unemployment rate in this economy?
Problem 2:
Following the recession of 2001, there was a month in which employment and unemployment rate both rose.
Assuming the computations were correct, how is it possible for both to have increased?

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