Answer of Sheet on Chapter 7: Unemployment.

Q1: Match:

1- unemployed D-those actively looking for work but cannot find it

2-labor force
3- unemployment rate
4-structural unemployment
5 -frictional unemployment
6-- cyclical unemployment
A-those employed and those unemployed but looking
B-the number unemployed divided by the labor force
C-when the unemployed lack the skills needed for the
jobs available
E-unemployment due to people relocating and
between jobs
F-unemployment due to the economy slowing down

Q2: Given the following data:" number in millions"

Discouraged workers=20 , Unemployed workers= 70 , Employed workers=
180, Population (16 years and over) =300

CALCULATE:

 The Working Age Population

 Labor Force
 Unemployment Rate
 Labor Force Participation Rate
 Employment to Population Rate
 Number of Marginally attached Workers

Solution

► the working age population(16 and above) = 300 m

► labor force = employed + unemployed = 180+70= 250 m
► the unemployment rate= (no of unemployed / labor force) × 100
= (70/250 ) × 100 = %
► the labor force participation rate= (labor force / working age population) × 100
= (250 /300 ) × 100 = %
► the employment-to-population ratio
= (no of employed / working age population) × 100
= (180 /300 ) × 100 = %
► the number of marginally attached workers = no of discouraged workers =
20 m

Q3: State whether the following statements are True or False:

1. Discouraged workers are counted as unemployed TRUE
Discouraged workers : A person who is out of work, would like to work,
and is available for work, but who has given up looking, or the person have
looked for a job sometimes within the past year, is considered a discouraged
worker.
2. Frictional unemployment: is unemployment that occurs from potential
mismatches between the skills employers seek and the skills potential
workers offer. FALSE (Structure unemployment)
3. The unemployment rate is the number of people unemployed expressed as
a percentage of total population. FALSE (The unemployment rate is the
number of people unemployed expressed as a percentage of the labor
force.)
4. Cyclical Unemployment: Occurs when the quantity of labor demanded
exceeds the quantity supplied. It represents a shortage in the labor
market. FALSE (It represents a surplus in the labor market.)
5. If the number employed rises, the unemployment rate falls. TRUE
6. The unemployment rate measures the percentage of the population not
working full time. FALSE(The unemployment rate is the number of
people unemployed expressed as a percentage of the labor force.)
7. People who work part time, but desire to work full time, are considered to
be officially unemployed. FALSE Part time workers are not counted as
unemployed.
Q4: Multiple Choice Questions :

1. The kind of Unemployment that occurs because it takes time for employers
and workers to find each other is called:
a. Structural unemployment b. Frictional unemployment
c. Cyclical unemployment d. Natural unemployment

2.The kind of Unemployment that occurs from potential mismatches between

the skills employers seek and the skills potential workers offer is called:
a. Structural unemployment b. Frictional unemployment
c. Cyclical unemployment d. Natural unemployment

3. The kind of Unemployment that Occurs when the quantity of labor supplied
exceeds the quantity demanded is called:
a.Structural unemployment b.Frictional unemployment
c.Cyclical unemployment d.Natural unemployment

4.The labor force is made up of:

a. those employed.
b. those unemployed and not looking for work.
c. those unemployed and looking for work.
d. both a and c.

5.Jack lost his job six months ago, and he's been actively looking for a new job
ever since. The Australian Bureau of Statistics would classify Jack as
a. unemployed.
b. out of the labor force.
c. a discouraged worker.
d. None of these options is correct.

6. If a part-time worker becomes a full-time worker, the

a. official unemployment rate will fall.
b. official unemployment rate will not change.
c. economy will move closer toward full employment.
d. economy will move closer toward the natural rate of unemployment.

7.Kimberly voluntarily quit her job as an insurance agent to return to school

full-time to earn an MBA degree. With degree in hand she is now searching for
a position in management. Kimberly presently is:
a. cyclically unemployed c. frictionally unemployed.
b. structurally unemployed. d. not a member of the labor force.
Q5:Auto workers have been concerned that domestic auto producers are going
to introduce highly automated plants with robotic equipment. This would
cause widespread unemployment in an industry already badly hurt by
imported cars. The communities where cars are built are heavily dependent
on auto employment so if the employment in the auto industry goes down,
there is no place for these displaced workers to find jobs. Unemployment in
these areas will be severe and long term.
a. If this situation occurred, how would you classify the unemployment?
b. What solution would you suggest?

ANSWER:

a. These workers would be structurally unemployed.

b. The best choice might be to retrain the workers and then provide them with
incentives to move where there are jobs. The problem is not that there are not
enough jobs for them, but that the jobs may not be where they are or for their
current skills. Remember that labor and other resources are capable of
satisfying some of our unlimited wants. There are more "jobs" for resources
than there are resources. The difficulty is getting the resources allocated.