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.
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 earthquake 400
Number of adults who were waiting to be recalled to a job from which they had been laid off
200
Number of adults who do not have a job, are available for work, and have tried to find a1,400
job within the
past four weeks
Number of adults who do not have a job, are available for work, but have not tried to find 780
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 peopl
employed was 62.630 million. According to these numbers, the Japanese labor-force participation rate an
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 percen
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

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

12. Consumers decide to buy more computers and fewer typewriters. As a result, computer companies expan
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.
 13. 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.

14. 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.

15. 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.

16. 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.

17. 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.

EXERCISES AND PROBLEMS

Exercise 1: Fill the blanks with NO MORE THAN 3 WORDS
1. The natural rate of unemployment is the normal rate of unemployment around which the … actual
unemployment rate…………………………… fluctuates.
 2. …Clicycle unemployment …………….. is the deviation of unemployment from its natural rate
and is associated with business cycles
3. Structural unemployment occurs when the …quantity………………… supplied exceeds the
quantity demanded.
4. Causes of structural unemployment are unions, minimum-wage laws and ……………..
5. Frictional unemployment is …short-term…………….. for most workers.
6. Someone is considered unemployed if they are not working, looking for a work during past 4
weeks, or waiting to be called back to laid-off, or start a new job and …available to work
……………..
7. If a country has a working-age population of 200 million, 135 million people with jobs, and 15
million people unemployed and seeking employment, the labor force participation rate is …75%
………..
8. With the same information as in question 7, the unemployment rate is …10%………….
Exercise 2: Find the mistakes in the underlined parts of the follow statements and correct them:
9. A construction worker who has a part-time job and would prefer to have a
A B
full-time job. This is an example of frictional unemployment. (under-unemployment)
C D
10. A teacher who stays (leaves) one school district to search for a job at a school closer
A B C
to her home. This is an example of frictional unemployment.
D
The following questions refer to the following graph:
11. In the graph above, when the wage is at m1 there is a shortage (surplus) of labor,
A B C
which causes unemployment.
D
12. The unemployment is greater at the quantity of labor (wage) of m2 than m1.
A B C D
13. A short-order cook who loses his job when a new restaurant opens is likely
A
to find another job fairly quickly, perhaps even at the new restaurant, and
B C
thus he will probably have only a long (short) spell of unemployment.
D

14. When an auto company goes bankrupt and lays off its workers, who
A
immediately start looking for new jobs, this increases the labor force and the
 B
number of people unemployed, decreases the number of people employed,

and keeps the adult population unchanged. Unemployment rate decreases (increases)
C
and the employment population decreases.
D
15. If more people enter the labor market for architects, then the wage rate will
A
Increases (decreases) and the employment level will increase
B C D

Problem 1
Answer the questions below based on the following information about an economy. All figures are in milions:
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?