CHAPTER 28

The amount of unemployment that an economy normally experiences

is called the
a. average rate of unemployment.
b. natural rate of unemployment.
c. cyclical rate of unemployment.
d. typical rate of unemployment.
An economy's natural rate of unemployment is
a. the economy's long-run target level of unemployment.
b. the amount of unemployment that the economy normally
experiences.
c. the lowest rate of unemployment the economy can achieve.
d. All of the above are correct.
The deviation of unemployment from its natural rate is called
a. the unnatural rate of unemployment.
b. structural unemployment.
c. frictional unemployment.
d. cyclical unemployment.
Measuring unemployment is the job of the
a. Congressional Budget Office.
b. Department of Commerce.
c. Council of Economic Advisers.
d. Bureau of Labor Statistics.
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.
Ipo did not work last week because flooding forced an evacuation of
her workplace. The Bureau of Labor Statistics counts Ipo as
a. unemployed and in the labor force.
b. unemployed and not in the labor force.
c. employed and in the labor force.
d. employed and not in the labor force.
The labor force equals the
a. number of people employed.
b. number of people unemployed.
c. number of people employed plus the number of people unemployed.
d. adult population.
The unemployment rate is computed as the number of unemployed
a. divided by the labor force, all times 100.
b. divided by the number of employed, all times 100.
c. divided by the adult population, all times 100.
d. times the labor-force participation rate, all times 100
The labor-force participation rate measures the percentage of the
a. total adult population that is in the labor force.
b. total adult population that is employed.
c. labor force that is employed.
d. labor force that is either employed or unemployed.
The labor-force participation rate is computed as
a. (Employed Adult Population) 100.
b. (Employed Labor Force) 100.
c. (Labor Force Adult Population) 100.
d. (Adult Population Labor Force) 100.
In 2004, based on concepts similar to those used to estimate U.S.
employment figures, the Swedish adult non-institutionalized
population was 6.712 million, the labor force was 4.576 million, and
the number of people employed was 4.276 million. According to these
numbers, the Swedish labor-force participation rate and the
unemployment rate were about
a. 63.7% and 4.5%.
b. 63.7% and 6.6%.
c. 68.2% and 4.5%.
d. 68.2% and 6.6%.
Discouraged workers
a. are counted as out of the labor force but should be counted as
unemployed.
b. are counted as unemployed but should be counted as out of the
labor force.
c. are correctly counted as out of the labor force.
d. are correctly counted as unemployed.
Unemployment that results because the number of jobs available in
some labor markets may be insufficient to give a job to everyone who
wants one is called
a. the natural rate of unemployment.
b. cyclical unemployment.
c. structural unemployment.
d. frictional unemployment.
People who are unemployed because of job search are best classified
as
a. cyclically unemployed.
b. structurally unemployed.
c. frictionally unemployed.
d. discouraged workers.
Unemployment insurance
a. reduces search effort and raises unemployment.
b. reduces search effort and lowers unemployment.
c. increases search effort and raises unemployment.
d. increases search effort and decreases unemployment.
When a minimum-wage law forces the wage to remain above the
level that balances supply and demand, the result is a
a. shortage of labor and a shortage of jobs.
b. shortage of labor and a surplus of jobs.
c. surplus of labor and a shortage of jobs.
d. surplus of labor and a surplus of jobs.
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.
The theory of efficiency wages explains why
a. setting wages at the equilibrium level may increase unemployment.
b. it may be in the best interest of firms to offer wages that are above
the equilibrium level.
c. the most efficient way to pay workers is to pay them according to
their skills.
d. it is efficient for firms to set wages at the equilibrium level.
Efficiency wages, minimum-wage laws, and unions all
a. keep wages below the equilibrium level, causing a shortage of labor.
b. keep wages below the equilibrium level, causing a surplus of labor.
c. keep wages above the equilibrium level, causing a shortage of labor.
d. keep wages above the equilibrium level, causing a surplus of labor.
Efficiency-wage theory suggests that paying
a. low wages might be profitable because they raise the efficiency of a
firm's workers.
b. low wages might be profitable because they lower the efficiency of a
firm's workers.
c. high wages might be profitable because they raise the efficiency of a
firm's workers.
d. high wages might be profitable because they lower the efficiency of a
firm's workers.