Chapter 15/Unemployment and Its Natural Rate  405

Cha
pter15
Une
mploymentandI
tsNat
uralRat
e
1
. Thena tura
lr a
teofunempl oyme ntisthe
a. unempl oymentr a
tethatwoul dprevailwithzeroinfla t
ion.
b.r at
ea ssoci
ate
dwi ththehighe s
tpos s
ibleleve
lofGDP .
c. diffe rencebetweenthelong-runa nds hort
-rununemplo ymentra
tes.
d.amountofune mployme ntthattheeconomynor ma l
lyexpe r
ienc
es.
ANSWER: d. a
mountofune mploymentt hattheeconomynor mallyexper
ience
s.
TYPE:
M DI FFICULTY:1SECTI ON: 15.0

2
. Cyclic
alune mpl oyme ntref
ersto
a.t herela
ti onbet weentheprobabili
tyofunempl
oyme ntandawor ke
r’schangingl
eve
lofe
xpe
rie
nce
.
b.how of tenawor ke
risli
kelytobee mploye
dduringherlif
eti
me
c. year-
to-ye arfluc tuati
onsofunempl oymenta
roundi t
snaturalrat
e.
d.l ong-
termt r
e ndsinune mployme nt
.
ANSWER: c. ye ar-to-
yearfluc tuati
onsofunemplo
yme ntaroundi t
snaturalr
a t
e.
TYPE:
M DI FFICULTY:1SECTI ON: 15.0

3
. Cycl
icalunempl oymentisc los
elyassoci
atedwith
a.long-terme conomicgr owth.
b.shor t
-runupsa nddownsoft heeconomy.
c. fluc tuati
onsinthena t
uralrat
eofune mployme
nt.
d.seasonalfluc tua
tionsi nspending.
ANSWER: b
. short-
runupsa nddownsoft hee
conomy.
TYPE:
M DIFFICULTY:1SECTI ON: 15.0

4
. Thenaturalrateofunemployme nt
a.isac onst
a nt.
b.isthede si
rablerat
eofunempl oyment
.
c.cannotbea lt
ere
db yeconomicpoli
cy.
d.Noneoft heabovea r
ecorrect
.
ANSWER:d. Noneoft heabovearecorr
ect
.
TYPE:
M DIFFICULTY:1SECTI ON: 15.0

5
. Whi c
hoft hefollowi ngiscorrect
?
a. Somede gre eofune mpl oyme ntisine
vitabl
e.
b.Ot herthingst hes amea nincreaseinthenumbe rofpeopl
ewhoa reunemployeddec
reas
esr
ealGDP
.
c. Cycli
calune mpl oyme ntisinvers
e l
yrela
tedtoshort
-runeconomi
cfluc tua
tions.
d.Al lofthea bovea recorrect
.
ANSWER: d. Alloft heabovear ec orr
ect.
TYPE:
M DI FFI
CULTY:1SECTI ON: 15.0

6
. Dataonune mploymenti
sre
por t
ed
a. we e
kly.
b.mont hl
y.
c. quarter
ly.
d.ye arl
y.
ANSWER: b. monthl
y.
TYPE:
M DI FFICULTY:1SECTI
ON: 15.
1

7
. TheBLSpr oducesda t
aon
a. unempl oyment .
b.t ypesofe mployme nt.
c.le ngthofthea vera
gewor kweek.
d.Al l
ofthea bovea r
ecorre
c t
.
ANSWER: d. Al
loft heabovearecorr
ect
.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
1
406  Chapter 15/Unemployment and Its Natural Rate

8
. Whi c
hoft hef ol
lowingisincor r
ect?
a. Theunempl oyme ntr
a t
eisc omput edusingthenumbe rofunemploymentins
uranc
ec l
aimsfil ed.
b.Eac ha dultincl
ude di
nt heune mpl oyments t
ati
sti
csi
sc l
ass
ifie dasemploye
d,unemployed,ornotint
helabor
f
or c
e.
c. Unempl oyme ntnumber sinc l
udepe opleagedsixt
eenandol de
r.
d.TheBur eauofLa borS t
ati
s ti
csgathersdataonune mpl
oyme ntandemployment.
ANSWER: a. Theunempl oyme ntrateiscomput e
dus i
ngthenumbe rofunemploymentins
uranceclai
msfil ed.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
1

9
. Unemployme ntda t
aiscoll
ecte
d
a.from unempl oymentinsuranc
ecla
ims .
b.throughar egularsurve
yofabout60,000households.
c.throughar egularsurve
yofabout200,000fir ms .
d.Une mployme ntdataiscoll
ect
edusingalloft
hea bove
.
ANSWER:b . throughar egularsur
veyofabout60,
000hous ehol
ds.
TYPE:
M DIFFICULTY:1SECTI ON: 15.
1

10. Whic
hl isti
ncludesallthec a
tegori
esint
owhi chtheBLSdivide
stheadul
tpopul
ati
on?
a.empl oyedorune mpl oyed
b.disc
our agedworke rs,employed,orunemployed
c.empl oyed,unempl oyed,ornotinthelaborfor
c e
d.discouragedworke rs,employed,ornotinthelaborf
orc
e
ANSWER:c. e mployed,une mployed,ornotinthelaborf
orc
e
TYPE:
M DIFFICULTY:1SECTI ON: 15.
1

11. Thelaborforceequalst
he
a. numberofpe oplewhoa reemployed.
b.numberofpe oplewhoa reunemployed.
c. numberofpe opleemployedplusthenumbe rofpe
opleunemploye
d.
d.adul tpopula
tion.
ANSWER: c. numberofpe opl
ee mploye
dpl ust
henumbe rofpe
opleunempl
oye
d.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
1

12. Whooft hef ol

lowingwouldbec ount eda sunempl oye
da cc
ordi
ngt
ooffic
ials
tat
ist
ics
?
a. Shast
a,whoi swaitingforhe rne wjobt ostart
b.Ma ry
,whowor kedonly3 5hour slastwee k
c. Karen,whone ithe
rhasaj obnori slookingforone
d.Noneoft heabovewoul dbec ounteda sune mployed.
ANSWER: a. Shast
a,whoi swai ti
ngf orhe rnewj obtostar
t
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M DI FFI
CULTY:1SECTI ON: 15.1

13. Whi c
hoft hef
ollowingwoul dbec ounteda sunemploye
dac
cor
dingt
ooffic
ials
tat
ist
ics
?
a. Brian,afull
-timestudentwhoi snotl ooki
ngforwork
b.Ka te, whoisonte mporarylayoff
c. He a
t h,whohasr eti
redandi snotlookingforwork
d.Al loft heabovewoul dbec ountedasune mploye
d.
ANSWER: b. Ka
te,whoi sontempor arylayoff
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

14. Whowoul dnotbeincl

ude dinthelaborfor ce
?
a.Jay,whoisontemporarylayoff
b.Mi ke,
whoha sret
ire
dandi snotlookingf orwork
c.Jane,whodoesnotha veajob,buthasappl i
edforse
ver
alint
hel
astwe
ek
d.Noneoft heaboveareinc
lude dinthel aborfor
ce.
ANSWER:b. Mike,whoha sre
tiredandi snotl ooki
ngforwork
TYPE:
M DIFFICULTY:1SECTI ON: 15.
1
 Chapter 15/Unemployment and Its Natural Rate  407

15. Whowoul dbeincludedinthelaborforce?

a. Holl
y,anunpaidhomemake r
b.Tiffany ,af
ull
- t
imestudentnotlookingf orwork
c. Cody,whodoesnotha veajob,butislookingforwork
d.Noneoft heaboveareincl
ude dinthel aborforc
e.
ANSWER: c
. Cody,whodoe snotha veajob, butisl
ooki
ngforwor
k
TYPE:
M DIFFICULTY:1SECTI ON: 15.1

16. Whowoul dbeincl

udedint helaborforce
?
a. Kar en,whowor ksmostoft hewe ekinasteelfa
ctory
b.Be th, whoiswaiti
ngforhe rnewj obatthebankt ost
art
c. Da ve,whodoesnotha veajob,buti sl
ookingforwor k
d.Al l oftheabovearei
ncludedi nthelaborfor
c e
.
ANSWER: d. Al
loftheabovearei ncl
ude dinthelaborfor
ce.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

17. Whowoul dbeincludedinthelaborfor

c e
?
a. Derr
ick,whoi swa i
ti
ngforhisne wjobtostart
b.Brett
,whoha sbecomedi s
couragedlookingforajobandha
squi
tlooki
ngf
ora
whi
le
c. Home r,anunpa i
dhomemake r
d.Noneoft heabovewoul dbeinclude
di nthelaborforc
e.
ANSWER: a
. Derr
ick,whoi swaiti
ngforhisnewj obtostar
t
TYPE:
M DIFFICULTY:1SECTI ON: 15.
1

18. Sal
lyisonat e
mporarylayofff rom thefac
torywhe
res
hemake
spl
ast
ict
abl
ewar
e.I
fSal
lypar
tic
ipa
tesi
ntheBLS
sur
vey ,s
hewi llbec
lass
ifie da s
a. unempl oyedandinthelaborf orce
.
b.unempl oyedandoutoft hel a
borforce.
c.e mployedandi nthelaborf orce
.
d.empl o ye
da ndoutofthel aborforce.
ANSWER: a. une mpl
oyedandi nthelaborforce
.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
1

19. Whi chofthefoll

owingcorrec
tlyrankscate
gorie
sfrom s
mal
les
ttol
arge
sta
ccor
dingt
ore
centU.
S.val
ues
?
a. unempl oye
d,employed,notinlaborforce
b.unempl oye
d,notinlaborforce
,employed
c. notinlaborforc
e,employed,unemployed
d.noti nlaborforc
e,unemployed,employed
ANSWER: b. unemployed,notinlaborfor
ce,employed
TYPE:
M DI FFI
CULTY:1SECTI ON: 15.1

20. A personwhoi scounte dasune mployedbytheBLSi

s
a.a lsointhelaborfor ce.
b.mus tbelookingf orwor koront emporar
ylayoff.
c. bea ge16orove r.
d.Al lofthea bovea recorrec
t.
ANSWER: d. Alloft hea bovearecorrect
.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

21. A c
olleges t
udentwhoisnotwor kingorlookingforajobisc
ount
eda
s
a. neit
he remploye
dnorpar tofthelaborfor
c e
.
b.unempl oye
dandi nthelaborforce.
c. unempl oye
d,butnotinthel a
borforce.
d.empl o yedandinthelaborforce
.
ANSWER: a. neit
heremployednorpar tofthelaborfor
ce.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
1
408  Chapter 15/Unemployment and Its Natural Rate

22. Latoya,ahome makerwhowor ksa savol

unte
era
tthel
ocalRe
dCr
ossa
ndi
scur
rent
lynotl
ooki
ngf
oraj
ob,
is
countedas
a.e mpl oyedandi nthel aborforce.
b.unempl o ye
dandi nt helaborf orc
e.
c. unempl o ye
dandnoti nthel aborfor
ce.
d.noti nt helaborfor
ce.
ANSWER: d. notinthelaborf or
c e.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

23. TheBLSde fine stheune mploymentr at

easthepe
rcent
ageof
a.thoseune mployedrelat
ivetothepe r
cent
ageemplo
yed.
b.laborfor
c ethati
sunempl oyed.
c.adultpopula t
iontha
tisune mployed.
d.laborfor
c ewithoutf
ullti
mee mployme nt.
ANSWER:b. laborforcet
hatisune mployed.
TYPE:
M DIFFICULTY:1SECTI ON: 15.
1

24. Theunempl oymentr a

teiscomput edasthenumberofunempl
oye
d
a. dividedbythelaborfor
c eti
me s100.
b.di videdbythenumberofpe opleemploye
dtimes100.
c. dividedbytheadultpopul a
tiontimes100
.
d.t i
me sthepart
ici
pationrateti
me s100.
ANSWER: a. di
videdbyt helaborforceti
mes100.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

25. Whi c
hoft hefol
lowingde finitionsiscor
r e
ct?
a. Laborforce=numbe rofe mployed.
b.La borforce=populati
on–numbe rofunemploye
d.
c. Unempl oymentRate=( numbe rofunempl oye
d [numberofempl oye
d+numberofune
mpl oye
d]) 100.
d.Une mploymentRate=( numbe rofunempl oye
d adultpopul
ati
on) 100.
ANSWER: c. Unemployme ntRa t
e=( numbe rofunemploye
d [numbe rofempl
oye
d+numbe rofunemployed]
100.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

26. Thelabor-
forcepart
ici
pa t
ionrateme asurestheperc
entageoft
he
a.totaladultpopulat
iont ha
tisint helaborfor
ce.
b.totaladultpopulat
iont ha
tise mployed.
c.laborforcethati
sempl oyed.
d.laborforcethati
seitherempl oyedorune mployed.
ANSWER:a . t
otaladul
tpopul ati
ont hatisinthel
aborforce
.
TYPE:
M DI FFI
CULTY:2SECTI ON: 15.1

27. Thelabor-forc
epar ti
ci
pa ti
onr at
eisdefine das
a.(Empl o
ye d Adul tPopula t
ion) 1
00.
b.(Empl o
ye d LaborFor ce) 100.
c.(La borFor c
e Adul tPopulati
on) 100.
d.(Adul tPopul a
tion LaborFor c
e) 100.
ANSWER:c . (
LaborFor ce Adul tPopul
a t
ion) 100.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

28. A f
ew ye arsa go,basedonc onc eptssimil
artothos
eusedt oest
ima t
eU. S.
empl oymentfigures
,theCanadia
na dult
non-i
ns t
itutionali
zedpopul at i
onwa s24mill
ion,t
helaborforc
ewas1 6mill
ion,andthenumberofpeopl
eempl oye
d
was14mi ll
ion. Accordingtot hesenumbe rs
,theCanadianlabor-
forceparti
cipat
ionra
teandunemploymentrat
e
werea bout
a.6 7pe rcenta nd8 .3per
cent .
b.6 7pe rcenta nd1 2.5per
ce nt.
c.5 8pe rcenta nd8 .3per
cent .
d.58pe rcentand1 2.5per
ce nt.
ANSWER: b. 67pe rc
e ntand1 2.5pe rc
ent.
TYPE:
M DI FFICULTY:2SECTI ON: 15.1
 Chapter 15/Unemployment and Its Natural Rate  409

29. TheBLSr ecentl

yreporte
dt hattherewe r
e48.6mill
ionpeopl
eovera
ge25whohada
tleas
tabac
helor
’sdegr
ee.Of
thi
snumber ,38.
0mi l
li
onwer eint helaborf
orceand36.9mil
lionwe
ree
mploye
d.Whatwast
helabor
-for
ce
part
icipa
tionrat
ea ndtheune mployme ntra
teforthisgr
oup?
a.a bout97pe r
centanda bout2.9percent
b.a bout97pe r
centanda bout2.3percent
c.a bout78pe r
centanda bout2.9percent
d.about78per centanda bout2.3percent
ANSWER: c. about78percentanda bout2.9perce
nt
TYPE:
M DI FFI
CULTY:2SECTI ON: 15.1

30. In2000inJapan,bas edonc onceptssimi

lartothoseusedtocomputeU.S.employme ntst
ati
st
ics
,theunempl
oyment
rat
ewasa bout4 .8perce
nt,thelaborforc
epa rt
ici
pati
onr a
tewasabout62pe r
cent,
a ndtheadultpopul
ati
onwas
about108mi ll
ion.How manype oplewe r
ee mployedandhow manywe r
eune mployed?
a.a bout63.8mi ll
ionand3 .2milli
on.
b.a bout63.8mi ll
ionand5 .2milli
on.
c.a bout67mi ll
ionand3 .2mi l
lion.
d.about67mi ll
ionand5 .2mi l
lion.
ANSWER: a. about6 3.
8mi l
li
ona nd3 .2mil
lion.
TYPE:
M DI FFI
CULTY:3SECTI ON: 15.1

31. In2000intheUni tedKingdom, t

hea dultpopula
tionwasabout46
.5mil
li
on,t
helaborf
orcepar
tici
pati
onr
atewas
63.
5pe rc
ent,andt heunemployme ntrat
ewas5 .
8pe rc
ent
.Wha twast
henumberofpeopleemployedandt
henumber
ofpeopleune mployed?
a.a bout29.5millionand2.7mill
ion.
b.a bout29.5millionand1.7mill
ion.
c.a bout27.8millionand2.7mill
ion.
d.about27. 8millionand1.7mill
ion.
ANSWER: d. about27.8mill
ionand1 .7mill
ion.
TYPE:
M DI FFI
CULTY:3SECTI ON: 15.
1

3
2. Rickloseshisjoba ndi mmedi ate
lybe gi
nslookingforanother.Cet
eri
spa
rib
us,
theune
mpl
oyme
ntr
ate
a.incr
eases,andt helabor-f
orc eparti
ci
pa t
ionratedecre
ases.
b.incr
eases,andt helabor-f
orc eparti
ci
pa t
ionrateisunaffe ct
ed.
c.isunaffe c
ted, andthelabor -
forcepart
ici
pa t
ionrat
eincreas
es .
d.decreas
es ,
andt hel abor-
forcepartic
ipati
onr a
teisunaffe cted.
ANSWER:b. increas
e s,andthel abor-
forceparti
ci
pa t
ionrat
eisunaffe ct
ed.
TYPE:
M DIFFICULTY:2SECTI ON: 15.1

33. Mattloseshisjobandde ci
destositarounda thomef orafew months.Ce
ter
ispa
rib
us,
theune
mpl
oyme
ntr
ate
a.inc r
ea s
es,andthelabor-
forc
epar t
ici
pati
onr atei
suna ffe cted.
b.inc r
ea s
es,andthelabor-
forc
epar t
ici
pati
onr atei
nc r
eases.
c. decreases
,andthelabor-f
orcepartic
ipa
tionr a
teincreases
.
d.de creases
,andthelabor-f
orcepartic
ipa
tionr a
tede c
reases.
ANSWER: d. decreas
es,
andt helabor-f
orcepartic
ipat
ionr at
ede c
reases
.
TYPE:
M DI FFICULTY:2SECTI ON: 15.1

34. Annaha sjustfini shedschoolands ta

rte
dl ookingforaj ob,buthasnotye
tfoundone
.Asar
esul
t,t
heune
mpl
oyme
nt
rat
e
a.i ncr
eases
, andthelabor-
forceparti
cipat
ionr at
eisuna ffe cted.
b.i ncr
eases
, andthelabor-
forceparti
cipat
ionr at
eincreases.
c.i sunaffe cted,andthelabor-
forcepart
icipati
onr a
teinc re
ases.
d.i ncr
eases
,a ndthelabor-
forceparti
cipa
tionr at
ede c
reases.
ANSWER: b. i
nc reas
es,andthelabor-
forcepartic
ipati
onr at
ei ncre
ases.
TYPE:
M DI FFICULTY:2SECTI ON: 15.1
410  Chapter 15/Unemployment and Its Natural Rate

35. Tar
aha sjustfini sheds c
hool ,buts heisgoingtoroam aroundt hecountr
ya whil
ebe
for
eshes
tar
tsl
ooki
ngf
orwor
k.
Asar esult
,theune mpl oyme ntr ate
a.inc r
eases,andt helabor-forcepar ti
cipat
ionratei
ncreases.
b. isuna ffe c
ted,andt helabor -f
orcepartici
pati
onrateisunaffe c
ted
c. increases,andthel abor-
for cepar t
ici
pati
onr a
tedecreases
.
d. increases
,a ndthel abor-
f orcepar t
ici
pati
onr a
teisunaffe c
ted.
ANSWER: b. isunaffe cted,andt helabor-
forcepart
ici
pationrat
ei sunaffe c
ted
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

36. Between2001and2002, thecount ryofAqui loniar eport

eda nincreaseint henumbe rofpeopl
ewhoweree
mployed.
Ita
lsoreport
eda nincre
as eint heune mployme ntr ate
.Whi choft hefoll
owi ngwoul dbeste
xpl
aint
het
worepor
ts?
a. Therewasani ncr
easei nthes i
z eofthelaborf orcebetween2 001a nd20 02.
b.The rewasade crea
sei nthes izeofthelaborf orcebetwe en2001a nd2 002.
c. Therewasani ncr
easei nthes i
z eoftheadultpopul a
tionbetwee n2 001a nd2002.
d.Thet wor eport
sarecont r
adi ct
orya ndca n’
tber ec
oncile
d.
ANSWER: a. The rewasani ncreaseint hesizeofthel aborforcebetwee n2 001and2 002.
TYPE:
M DIFFICULTY:3SECTI ON: 15.1

3
7. Presi
dentBigegoisrunningf orre-
e l
ecti
ona gai
nstSena t
orPande r.Bigegopr oc
laimst hatmor epeopl
eare
workingnow thanwhenhet ookoffic e.Pandersaysthattheune mpl oyme ntrateishighe rnow t
hanwhenBi
gego
tookoffic e
.Youc oncl
udet hat
a. oneofthem mus tbelying.
b.bot hofthemc ouldbete l
li
ngt hetruthifthelaborfor
c eparti
cipationr a
teandt helaborf orcebot
hfel
l.
c. bothofthemc ouldbete l
li
ngt hetruthifthelaborfor
c egrews lo
we rthane mployme nt.
d.bot hofthemc ouldbet el
li
ngt hetruthifthelaborfor
c egrewf as
tert hanempl oyme nt.
ANSWER: d. bothofthemc ouldbet el
li
ngt hetruthifthelaborforcegr ewf ast
erthane mpl oyme nt
.
TYPE:
M DI FFI
CULTY:3SECTI ON: 15.
1

38. Whi c
hgr ouphasthehighe
s tl
abor
-forcepar
tic
ipa
tionra
te?
a. blackfe
males
b.whi tefemale
s
c. whitema l
es
d.Ther earenosigni
fic antdiffe r
encesi
npartici
pat
ionra
tesa
cros
sthes
egr
oups
.
ANSWER: c. whit
emales
TYPE:
M DI FFICULTY:2SECTION: 15.
1

39. Amongt ee
na gers
,whichgrouphast
hehighes
tunempl
oymentrat
e?
a. whit
ema les
b.blackfemales
c. bl
ackmale s
d.Therea r
enos igni
fic a
ntdifferenc
esinunempl
oymentra
tesacr
osst
hes
egr
oups
.
ANSWER: c
. blackma l
es
TYPE:
M DIFFICULTY:1SECTI ON:

40. Whichoft hefol

lowingisc or
rectforpeopleages20a ndove r
?
a. Me nhavelowe rr
atesoflabor-f
orceparti
cipati
ona nds i
milarunemploymentrate
scompar edtowome n.
b.Me nhavelowe rr
atesoflabor-f
orceparti
cipati
ona ndhighe rr
ate
sofune mploymentthandowome n.
c. Wome nha velowerrat
e soflabor-
forc
epar ti
cipat
ionandhi gherrat
esofunemployme ntcomparedtothos
eof
me n.
d.Wome nha velowerrat
e soflabor-
forc
epar ti
ci
pa t
ionands imil
arune mploymentrat
esc ompare
dtothoseofmen.
ANSWER: d. Womenha velowerr a
tesoflabor
-forceparti
cipati
onands i
mi l
arunemployme ntrat
escomparedtot
hose
ofme n.
TYPE:
M DI FFI
CULTY:1SECTI ON: 15.1

41. Whi c
hoft hefoll
owingisc or
rec
tforpeopleages20a ndover
?
a. Blackshavehigherrat
esoflabor-
forc
epartici
pati
onandlowe runempl
oyme ntra
testhanthoseofwhit
es.
b.Bl ackshavehigherrat
esoflabor-
forc
epartici
pati
onandhi gherune
mployme ntr
atesthanthoseofwhi
tes.
c. Blackshavesimilarr
atesofl
abor-f
orceparti
cipa
tionandlowerunemploymentrate
stha nt
hoseofwhites
.
d.Bl ackshavesimilarr
atesofl
abor-f
orceparti
cipa
tionandhigherunemploymentrat
esthanthoseofwhit
es.
ANSWER: d. Blac
ksha vesimil
arrat
esoflabor-
forcepart
ici
pat
ionandhigherunemployme ntra
testhant
hoseof
whites.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
1
 Chapter 15/Unemployment and Its Natural Rate  411

42. Whic hofthefol

lowingiscorrec
t?
a. Adultshavehigherlabor-
forceparti
cipat
ionrat
esandhigherune
mpl oymentr
atestha
ndot eena ge
rs.
b.Adul tshavehigherlabor-
forceparti
cipat
ionrat
esandlowerunemploymentrat
esthandoteena ger
s.
c. Adultshavelowerlabor-f
orceparti
cipat
ionrate
sandlowerunemploymentrat
esthandot e
ena gers
.
d.Adul tshavelowerlabor-f
orceparti
cipat
ionrate
sandhigherunemploymentrat
esthandoteena ger
s.
ANSWER: b. Adultshavehigherlabor-
forcepart
ici
pati
onrat
esandlowerunemployme ntr
ate
sthandot ee
nage
rs.
TYPE:
M DI FFI
CULTY:1SECTI ON: 15.1

43. Thel
abor-
forcepart
ici
pat
ionr
ateoft
heU.
S.adul
tpopul
ati
on(
age
s16a
ndove
r)i
sabout
a.47percent.
b.55percent.
c.67percent.
d.75percent.
ANSWER:c. 67perc
ent.
TYPE:
M DIFFI
CULTY:1SECTI ON:15.1

44. Int
heUnitedSt at
esinr ec
entyears,f
orpeopl
eage2
0andove
r,t
heune
mpl
oyme
ntr
ateofbl
ackshasbe
en
a.lesst
hant hatofwhi t
es.
b.aboutthes ameast hatofwhites.
c.about50pe rcenthigherthanthatofwhit
es.
d.aboutdoubl ethatofwhites.
ANSWER:d. aboutdoubl ethatofwhites
.
TYPE:
M DIFFI
CULTY:2SECTI ON: 15.
1

45. Int
heUni te
dSt a t
esinrecentyears,theunemploymentrat
eamongte
ena
ger
shasbe
en
a.lesst
hant ha tofpeopleages20andove r.
b.aboutthes ameast hatofpe oplea ges20andover
.
c.abouttwi c
et hatofpeoplea ges2 0andover.
d.mor ethant hreeti
me sthatofpe opleages20andover
.
ANSWER:d. mor ethanthreeti
me st hatofpeopl
eages20andove
r.
TYPE:
M DIFFICULTY:2SECTI ON: 15.
1

46. A r
oughe s
timateofthenat
ura
lrat
eofune
mpl
oyme
nti
s
a.1 .
5percent.
b.3pe r
cent.
c.5 .
5percent.
d.7pe r
cent.
ANSWER: c
. 5
.5perc
ent.
TYPE:
M DIFFICULTY:2SECTI ON:15.
1

47. Sinc
eWor l
dWarI I
,thelabor-
forcepart
icipati
onrate
a. hasincreas
e dforbothme na ndwome n.
b.inc r
easedforwome na ndde cr
ease
df orme n.
c. hasde c
reasedforbothme nandwome n.
d.de crease
df orwome nandi ncrease
df orme n.
ANSWER: b. increas
edforwome nandde cre a
sedformen.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

48. Jus
taf t
erWor l
dWarII,thelabor-f
orc
eparti
cipa
tionr
ateofwome
nwas
a.a bout1/3a ndcur
rentlyisabout1/2
.
b.a bout1/3a ndcur
rentlyisabout3/5
.
c.a bout1/2a ndcur
rentlyisabout3/5
.
d.about3/5a ndcur
rentlyisabout1/2
.
ANSWER: b. about1
/3a ndc urrent
lyi
sabout3/5.
TYPE:
M DI FFICULTY:2SECTI ON: 15.1

49. Jus
taf t
erWor l
dWarI I
,thelabor-
forceparti
cipa
tionr
ateofme
nwas
a.a bout90andc urr
entl
yi sabout75.
b.a bout75andc urr
entl
yi sabout65.
c.a bout90andc urr
entl
yi sabout65.
d.about75a ndcurr
entl
yi sabout75.
ANSWER: a. about90andc urr
entl
yisa bout75.
TYPE:
M DI FFICULTY:2SECTI ON: 15.
1
412  Chapter 15/Unemployment and Its Natural Rate

50. Thede creaseinl abor-for

c eparticipa t
ionratesamongU. S.me nsinceWor l
dWa rIIcanbeattr
ibut
e dto
a.l ongers chooling,ani ncreasei ns t
ay-at
-homedads , ande arl
ierreti
rementandl ongerl
ives
.
b.l ongerl i
ves,lawst hatpreve ntma ndatoryreti
reme nt,anda nincreaseinstay-
at-
homedads .
c. bette
rune mpl oyme ntinsura nce ,l
awst hatpreventmanda t
oryr e
tirement,andlawsthatpreventage
discr
imi nationi nhiri
ng.
d.e asie
rj obs earches,bette
rt r
ai ning, a
ndl awsthatpr eventmanda toryreti
rementanda gediscr
iminati
oni
nhi
ri
ng.
ANSWER: a. l onge rschooling,ani ncr easeinstay-a
t-homedads ,ande ar
lierre
tir
eme ntandlongerli
ves.
TYPE:
M DI FFICULTYSECTI ON 2 8.1

51. Sinc
e1 950,thelaborforceparti
cipat
ionrat
eofwome nhas
a.inc r
ea s
ed.Thi scanbea t
tri
butedtolongerli
ves.
b.inc r
ea s
ed.Thi scanbea t
tri
butedpa r
tl
yt oadvancesinbirt
hcontr
ol.
c. decreased.Thisc a
nbea tt
ribute
dpar t
lytolongerschooli
ng.
d.de creased.Thiscanbea tt
ribute
dpar t
lytoincre
asesintheminimum wage.
ANSWER: b. increase
d. Thiscanbea t
tri
butedpartl
ytoa dvancesi
nbirt
hcont
rol
.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

52. Ifa
nune mplo yedpersonquitslooki ngforwor k,cet
eri
spari
bus
,theune
mpl
oyme
ntr
ate
a. dec r
eases,andtheparti
cipationr ateincre
ases
b.de c r
eases,andtheparti
cipationr atedecreases
c.s t
a ysthes ame,andthepar t
icipationr a
tede c
reases
d.andt helaborforcepart
ici
pa tionr at
es t
aythes ame.
ANSWER: b. de cre
ases,andthepar t
icipat
ionratede c
rease
s
TYPE:
M DI FFICULTY:2SECTI ON: 15.1

53. Rec
ententr
antsint
ot hela
borf
orceacc
ountfora
bout
a.1/5ofthosewhoa r
eunemploye
d.
b.1/4ofthosewhoa r
eunemploye
d.
c.1/3ofthosewhoa r
eunemploye
d.
d.1/2ofthosewhoa r
eunemploye
d.
ANSWER:c. 1/3ofthosewhoareunemploye
d.
TYPE:
M DIFFI
CULTY:2SECTI ON:15.
1

54. Spe
llsofunemploymentendabout
a.1/5oft het
imewi t
hthepersonleavi
ngt
helaborfor
ce.
b.1/4oft het
imewi t
hthepersonleavi
ngt
helaborfor
ce.
c.1/3oft het
imewi t
hthepersonleavi
ngt
helaborfor
ce.
d.1/2oft het
imewi t
hthepersonleavi
ngt
helaborfor
ce.
ANSWER:d. 1/2oftheti
mewitht hepers
onl
eavingthelaborf
orc
e.
TYPE:
M DIFFICULTY:2SECTI ON:
15. 1

55. Rec
ente ntr
antsintothelaborforceacc
ountforabout
a.1/2oft hosewhoa r
eune mpl oye
d.Spell
sofunempl oymentendabout1/5oft
hetimewit
hpeopl
elea
vingthe
laborforce.
b.1/3oft hosewhoa r
eune mpl oye
d.Spell
sofunempl oymentendabout1/2oft
hetimewit
hpeopl
elea
vingthe
laborforce.
c.1/4oft hosewhoa r
eune mpl oye
d.Spell
sofunempl oymentendabout1/2oft
hetimewit
hpeopl
elea
vingthe
laborforce.
d.1/4oft hosewhoa r
eune mpl oye
d.Spell
sofunempl oymentendabout1/5oft
hetimewit
hpeopl
elea
vingthe
laborforce
ANSWER: b. 1/3ofthosewhoa reunemployed.Spel
lsofunemploymentendabout1/2oft
heti
mewithpeopl
e
le
avingthelaborforce.
TYPE:
M DI FFI
CULTY:2SECTI ON: 15.1

56. Inoneyearyoume et45peopl ewhoa reeac

hune mpl
oyedforoneweek,andfivepe
oplewhoareeac
hunempl
oye
d
fort
hewhol eye
ar.Wha tperc e
ntofthepeopleyoumeetar
eshort
-t
erm unempl
oye
d,andwhatpe
rce
ntoft
he
unemploymentyoue ncounterisl
ong-ter
m?
a.9 0perc
entand85.3pe r
ce nt
b.1 0perc
entand85.3pe r
ce nt
c.9 0perc
entand10pe rcent
d.10pe rc
entand14.7pe r
ce nt
ANSWER: a. 90perc
enta nd8 5.3per
cent
 Chapter 15/Unemployment and Its Natural Rate  413

TYPE:
M DI
FFI
CULTY:2SECTI
ON:
15.
1

57. Somepe opl ewhoa reemployedorwhoa renotmaki ngs er

iouseffor ttofinde mpl oyme ntwi llre
portthems e
lve
sas
unempl oyed. Somepe oplewhowa nttofindwor kwi llbecounteda soutoft hel a borforce.
a. Botht hefir standthesecondf acttendtoma ket hereport
e dune mpl oyme ntra telowe rthant heactual
unempl o ymentr at
e.
b.Bot ht hefir standthesecondf acttendtoma ket hereport
e dune mpl oyme ntra tehighe rthant heactual
unempl o ymentr at
e.
c. Thefir s tfa
cttendstoma ket her eportedune mployme ntratehi ghe rthant heac tualune mpl oymentr at
e.The
secondf ac tt
endstoma ket here portedunempl oyme ntrat
el owe rtha nt hea ctualr ate.
d.Thefir s tfac
ttendstomaket her eportedune mployme ntratelowe rtha nthea ctualune mpl oymentr at
e.The
secondf ac tt
endstoma ket here portedunempl oyme ntrat
ehi ghe rthant heac tualr ate
.
ANSWER: c. Thefir stf
actte
ndst oma kethereportedune mployme ntr atehi ghert hant hea ctualune mploymentrat
e.
Thes econdfactt
endst omaket her
e port
edune mployme ntr at
el owe rtha nt hea ctualrate
.
TYPE:
M DI FFICULTY:2SECTI ON: 15.1

58. Supposethatsomepeopl ere

por tthe
ms elvesa sune mpl oyedwhe n,infact,t
heya r
eworki
ngintheunder
ground
economy.Ift
hesepersonswe recounteda se mploye d,
a. boththeunemployme ntrateandlabor -f
orcepar tici
pati
onr at
ewoul dbehigher.
b.bot htheunemployme ntrateandlabor -f
orcepar tici
pati
onr at
ewoul dbelower.
c.t heunemploymentr at
ewoul dbehi ghe randt hel abor-
forcepart
icipat
ionratewoul
dbehigher
.
d.t heunemploymentr at
ewoul dbel owe randt hel abor-f
orceparti
cipati
onr at
ewouldbeunaffecte
d.
ANSWER: d. t
heunempl oymentr at
ewoul dbel owe randt helabor-
forcepartic
ipati
onra
tewoul
dbeunaffe cted.
TYPE:
M DI FFI
CULTY:2SECTI ON: 15.1

59. Supposethatsomepe oplearec ounte

da sune mployedwhe n,tomai ntainune mployme ntcompe
nsati
on,theys
earc
h
forworkonlyatplac
e swhe r
et heyareunlikelytobehi red.Iftheseindividualswer ec
ountedasoutofthela
borfor
ce
inst
eadofasune mployed,
a. boththeunemployme ntratea ndlabor
-forceparti
cipationr at
ewoul dbehi ghe r
.
b.bot htheunemployme ntratea ndlabor
-forceparti
cipationr at
ewoul dbel ower.
c.t heunemploymentr at
ewoul dbelowera ndthel a
bor -f
orcepar t
icipat
ionr at
ewoul dbehighe
r.
d.t heunemploymentr at
ewoul dbehighera ndthepar tic
ipationratewoul dbel ower.
ANSWER: b. bot
htheune mployme ntrat
eandl abor-
forcepar ti
cipati
onr at
ewoul dbel owe r
.
TYPE:
M DI FFI
CULTY:3SECTI ON: 15.1

60. Somepe oplearec ountedasoutoft helaborf orcebe causet heyha vemadenos eri
ousorrecentefforttol
ookfor
work.Howe ver
,s omeoft he s
epe oplema ywa ntt owor keve nthought heyaretoodisc
ouragedtoma keaser
ious
effor tt
olookf orwor k.Ifthesepersonswe rec ount edasune mployedinsteadofoutofthelaborfor
ce,
a. boththeunempl oymentr ateandlabor-f
orc epar ti
cipa
tionr atewoul dbehigher.
b.t heunemployme ntratewoul dbehi gherandt helabor-forcepartic
ipati
onr a
tewouldbel ower.
c.t heunemployme ntratewoul dbelowe randt hel a
bor-forcepar t
ici
pati
onr at
ewouldbehi gher.
d.Noneoft heabovea r
ec orr
e ct
.
ANSWER: a. bot
ht heune mpl oyme ntrat
ea ndl abor -
forcepar ti
ci
pa ti
onratewouldbehi gher
.
TYPE:
M DI FFI
CULTY:2SECTI ON: 15.
1

61. Dis
couragedworkers
a.arenotcountedeit
heraspa rtoftheadultpopulationoraspartofthelaborfor
ce.
b.arecountedaspartoftheadul tpopula
tion,butnotaspa r
tofthelaborforce
.
c.arecountedaspartoftheadul tpopula
tion,anda sunemployed.
d.Nonet heabovearecorre
ct.
ANSWER:b. arecount
eda spartoft headul
tpopul a
tion,butnotaspartofthelaborfor
ce.
TYPE:
M DIFFI
CULTY:1SECTI ON: 15.1

62. Cons i
dertwope oplewhoar ecur re
nt l
youtofwor k.Debi
snotcur
rentl
ylooki
ngforworkbutwoul dli
keajob.
Althoughs hei snotcurrent
lysearchingf orwor k,shehasdonesoatsometimeinthere
centpas
t.Tedisnotlooki
ng
forwork,be causehedoe sn’
tthinkt herea r
ejobst hathewouldqual
if
yforavai
labl
e.TheBLSconsider
s
a. bothDe ba ndTedtobedi scouragedwor kers.
b.onl yTedt obeadi s
couragedwor ker.
c. onlyDe bt obeadi scour
agedwor ke r
.
d.Ne i
therDe bnorTedt obedi sc
our agedwor kers.
ANSWER: b. onlyTedtobeadi s
c ouragedwor ke
r.
TYPE:
M DI FFICULTY:2SECTI ON:28.1
414  Chapter 15/Unemployment and Its Natural Rate

63. Considertwope opl

ewhoar ecur rentlyoutofwor k. Ti
mi snotlookingforworkbe c
aus
etherehavebeenmanyjob
cutswhe rehel i
vesandhedoe sn’tthinkitli
kelythathewi l
lfindwor k.Bevisnotcur
rentl
ylooki
ngforwork,buts
he
wouldl i
keaj ob.Whi l
esheha sn’tlooke dforworkf ors ometime,shehaslooke
df orwor
ki nthepas
t.TheBLS
consi
ders
a. bothTi m andBe vtobema rgina llyatt
achedwor kers.
b.ne it
he rTim norBe vtobemar ginallyatt
achedwor kers
.
c. onlyTi mt obeamar ginall
ya ttachedwor ker.
d.onl yBe vtobeamar ginal
lya t
t a
c hedwor ker
.
ANSWER: a. bot hTim andBe vtobemar gi
nallyatt
ache dwor ker
s.
TYPE:
M DI FFICULTY:2SECTI ON: 15.1

64. Ma r
ginallya tt
achedwor kersarepe oplewho
a.a relookingf orabetterjobthant heycur
rentl
yha ve.
b.a renotwor kingandar enotlookingforwork, butwouldworkifa
ske
d.
c.a rewor kingpa rt
-ti
mewhi letheygotoschoolorge ttr
aini
ngf
orabett
erjob.
d.ar eonlyaf ew ye
arsfrom retire
me nt.
ANSWER: b. arenotwor ki
ngandar enotlookingforwor k,
butwouldwor
ki faske
d.
TYPE:M DI FFICULTY:3SECTI ON: 15.1
Usethefoll
owi ngt abletoanswert hefoll
owingfiveque sti
ons.

Ca
tegor
y NumberofPeopl
e
(inmi
lli
ons)
CivilianLa borForce 100
Personsune mployed1 5we eksorlonge
r 1.6
Jobl osersandpe rsonswhoha vecomplet
ed 3.1
tempor aryjobs(exc l
udesj obleavers
)
Totalune mpl oyed 6
.2
Totalune mpl oyedpl usdiscour a
gedworkers 7
.0
Totalune mpl oyedpl usallma rginal
lya
ttac
hed 8.
1
wor ke r
s
Totalune mpl oyedpl usallma rginal
lya
ttac
hed 9
.2
wor ke r
splust ot
ale mploye dpar t
-t
imeforeconomi
c
reasons

65. Whatist
heU- 1measur
eoflaborunde
rut
il
iza
tion?
a.1.
6pe r
cent
b.3.
1pe r
cent
c.4.
7pe r
cent
d.6.
2pe r
cent
ANSWER:a. 1.
6per
cent
TYPE:
M DIFFI
CULTY:3SECTI ON:15.1

66. Whatist
heU- 3measur
eoflaborunde
rut
il
iza
tion?
a.4.
7pe r
cent
b.6.
2pe r
cent
c.7.
0pe r
cent
d.8.
1pe r
cent
ANSWER:b. 6.
2per
cent
TYPE:
M DIFFI
CULTY:3SECTI ON:15.1

67. Whatist
heU- 4measur
eoflaborunde
rut
il
iza
tion?
a.6.
2pe r
cent
b.6.
9pe r
cent
c.7.
0pe r
cent
d.8.
1pe r
cent
ANSWER:b. 6.
9per
cent
TYPE:
M DIFFI
CULTY:3SECTI ON:15.1
 Chapter 15/Unemployment and Its Natural Rate  415

68. Whatist
heU- 5meas
ureoflaborunde
rut
il
iza
tion?
a.7.
0pe r
cent
b.7.
95pe r
c ent
c.8.
1pe r
cent
d.9.
2pe r
cent
ANSWER:b. 7.95pe
rcent
TYPE:
M DIFFI
CULTY:3SECTI ON:15.1

69. Whatist
heU- 6measur
eoflaborunde
rut
il
iza
tion?
a.7.
95pe r
cent
b.8.
1pe r
cent
c.9.
0pe r
cent
d.9.
2pe r
cent
ANSWER:c. 9.
0per
cent
TYPE:
M DIFFI
CULTY:3SECTI ON:15.1

70. Theunempl o yme ntrat

ereporte
dbyt heBLSisli
ke l
ytobe
a.s ome whathi gherthantheactualunemployme ntrat
e.
b.s ome whatl o
we rthantheactualune mpl
oyme ntrate
.
c. prett
yc l
os etothea c
tualunempl oymentrat
e.
d.I tcouldbehi gherorlowerthant heact
ualunempl oymentrat
e.Wecan’tbec
ert
ain.
ANSWER: d. Itcouldbehi gherorlowe rt
hanthea c
tualunemploymentr
ate.Wecan’
tbec e
rtai
n.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

71. Thereportedune mployme ntrateshouldbevi eweda s

a. ausefulbutimper f
ectme asureofjobless
ness.
b.c l
earl
ys mall
e rt
hant hetrueune mpl oymentrate
.
c.c l
earl
ylargerthanthet rueune mployme ntrat
e.
d.be i
ngve rycloset
ot hetrueune mpl oymentrate
.
ANSWER: a. ausefulbutimpe rfec
tme asureofjobl
essness
.
TYPE:
M DIFFICULTY:1SECTI ON: 15.1

72. Whi c
hoft hef ol
lowi ngstatementsiscorr
ect?
a. Thereisnoe asywa yt ofixt heune mploymentr atea
sr eport
edbyt heBLSt omakeitamor erel
iableindicatorof
conditi
onsi nt helabormar ket
.
b.The rea r
es everaleasywa yse c
onomi s
tshaveidentifiedt ofixt hereport
edune mploymentrat
et omakei tamor e
reli
ableindicatorofcondi t
ionsinthelabormarke t
.
c. Thereisonee asywa yoffixi ngtheunemployme ntrateasr e
portedbytheBLSt omakei tamorer el
iableindicat
or
ofconditionsi nthelaborma rket.
d.Ec onomi stshavedet erminedthattheune mpl
oyme ntrat
ea srepor
tedbyt heBLSisape rf
ect
lyrel
iablei
ndi cator
ofconditionsi nthelaborma rket.
ANSWER: a. The rei snoeas ywaytofixt heunempl oyme ntrateasre
por t
edbyt heBLStomakei tamor erelia
bl e
indicatorofc ondit
ionsinthelabormarke t
.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

73. Whi c
hoft hefoll
owingisc orrect
?
a. Short-
ter
m une mployme ntisamor ese
riousprobl
emt hanlong-
ter
m unemployme
nt.
b.Mos tspel
lsofunempl oyme ntarelongterm.
c. Mos tofthecurre
ntlyune mployedha vebeenune mployedalongti
me.
d.Noneoft heabovea recorrect
.
ANSWER: c. Mos toft
hec urrentl
yune mployedha vebee
nune mployedalongti
me .
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

74. Mostspe
llsofunempl oymentare
a.long,andmos tune mpl
oyme ntobs
erveda tanygivent i
mei slongterm.
b.long,butmostune mploymentobservedatanygi ve nti
mei sshortte
rm.
c.short
, butmostune mploymentobservedatanygi ventimeislongt e
rm.
d.short
, andmos tunemploymentobservedata nygive nti
mei sshortte
rm.
ANSWER:c. s
hor
t,butmos tunemployme ntobse
r veda tanygiventimeislongt
erm.
TYPE:
M DIFFI
CULTY:2SECTI ON: 15.1
416  Chapter 15/Unemployment and Its Natural Rate

75. Ifs
ome onebe c
ameune mploye d,i
tisl i
kely
a.t hattheywi llbeunempl oyedal ongt imeandthatmos toftheune mployedtheyj oi
nhavebe enune mployeda
l
ongt i
me .
b.t hattheywi llbeunempl oyedf oralongt i
me,eventhoughmos toftheune mployedtheyjoinhavebe e
n
unempl oyedf orashorttime .
c.t hattheywi llbeunempl oyedf oras hortt
ime,eve
nt houghmos toftheunempl oyedthe
yj oinhavebeen
unempl oyedf oralongtime .
d.t hattheywi llbeunempl oyedforas hortt
ime,andthatmos toftheune mployedt he
yjoi
nha vebeenunempl o
yed
foras hortti
me .
ANSWER: c. tha
tt heywillbeune mpl oyedforashortti
me ,eve
nt houghmos toft
heune mploye dtheyjoi
nha vebeen
unempl oye
df oralongt ime .
TYPE:
M DI FFICULTY:2SECTI ON: 15.1

76. Whi c
hoft hefoll
owingisnotareas
onac
tua
lla
bormar
ket
sexpe
rie
nceune
mpl
oyme
nt?
a. unions
b.jobs earc
h
c. fle xibl
ewage s
d.mi nimum- wa gel
egi
sla
tion
ANSWER: c. fle xi
blewages
TYPE:
M DI FFICULTY1SECTI ON 2 8.
1

77. Curtisi
sas tockbroker
.Heha shads e veralj
oboffe rs,buthehasturnedthem downbecausehethi
nkshec
anfinda
fir mt hatbette
rma tcheshistastesands kil
ls.J
ohni sa na c
count
ant.Heha sl
ookedforworkfors
omet i
me,butno
acc
ount i
ngfir msa rehiri
ng.
a.J ohnandCur ti
sa r
ebothf r
ictional l
yune mpl oyed.
b.J ohnandCur ti
sa r
eboths t
ruc turallyune mpl oyed.
c. Curtisisfr
icti
onall
yune mpl oyed, andJ ohni sstructural
lyunemployed.
d.Cur tisisst
ructurall
yune mpl oyed,a ndJ ohni sfri
ctional
lyunemployed.
ANSWER: c. Cur t
isisfri
cti
onall
yune mpl oyed,a ndJ ohni sst
ruct
ural
lyune mpl
oyed.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

78. Me ri
dethislookingforwor ka sacomput erprogramme r.Althoughherprospect
saregoodsheha
sn’
tyett
akenaj
ob.
Juli
eislookingforwor kinas tee
lmi ll
,butt herea re
n’tma nyjobadsforstee
lwor ke
rsandever
yti
mes hes
howsup
foranintervie
w, t
herear emanymor epe oplethanope ni ngs.
a. Me redi
tha ndJuliearebothfrict
ionallyune mpl oye d.
b.Me redi
tha ndJulieareboths t
ructurall
yune mpl oyed.
c. Me redi
thisfric
tionall
yune mploye d,andJ ulieisstr uctur
a l
lyunemployed.
d.Me redi
thisstructurall
yune mployed,a ndJ uli
ei sfricti
ona l
lyunemployed.
ANSWER: c. Meredit
hi sfri
cti
onall
yunempl oye
da ndJ ulieisstruc
tur
all
yune mployed.
TYPE:
M DI FFICULTY:2SECTI ON: 15.1

79. Nancyisse
archingforajobt hats ui
tshe rtaste
saboutwhe r
etoli
veandthepeopl
eshewor
kswi
th.Laur
aisl
ooki
ng
foraj
obthatmake sbestuseofhe rskil
ls.
a. NancyandLaur aarebothf ri
c ti
onallyune mployed.
b.Nanc yandLaur aareboths tructurallyunempl oyed.
c. Nancyisf
ric
t i
onall
yune mpl oyed,a ndLaur aisstruc
turall
yunempl
oyed.
d.Na ncyiss
tructura
llyunempl oyed,a ndLa uraisfr
ict
ionall
yunemplo
yed.
ANSWER: a
. Nanc yandLaur aa r
ebot hfrict
ionall
yune mployed.
TYPE:
M DIFFICULTY:2SECTI ON: 15.1

80. Tom islooki

ngf orworka ft
ers chool ,
buteve r
ywhe r
ehefil lsoutanappli
cat
ionheist
oldtha
tsoha
vel
otsofot
hers
.
Simonhasal aw degree.Severalfir msha vemadehi m offe r
s,buthethi
nkshemightbeablet
ofindafir m wher
ehi
s
tal
entscouldbeputt obetterus e.
a. Tom andSi mona rebothfric t
ionallyunemployed.
b.Tom a ndSi mona rebothstr ucturall
yune mployed.
c. Tom isfri
cti
onall
yune mpl oye d,andS i
moni sstruc
tura
llyunemploye
d.
d.Tom i sstr
uctural
lyune mpl oye d,andSimoni sfr
ict
iona
llyunemploye
d.
ANSWER: d. Tom isst
ructurall
yune mployed,andSimonisfri
cti
onall
yunemployed.
TYPE:
M DI FFICULTY:2SECTI ON: 15.1
 Chapter 15/Unemployment and Its Natural Rate  417

81. Thena turalune mployme ntrateincl

udes
a. bothf ri
ctionalands t
ructuralunemployme nt.
b.ne it
he rfricti
onalnorstructuralune
mpl oyme nt
.
c.s t
ruc tural,butnotfri
cti
onalune mployme nt.
d.f r
ictional,butnots t
ructura
lune mployme nt.
ANSWER: a. bothf r
ict
ionalands truc
tur
alunempl oyment
.
TYPE:
M DI FFICULTY:2SECTI ON: 15.1

82. Jobs
earch
a.explai
nswhyfir mspa ylessthanthecompe ti
ti
vee qui
li
brium wage.
b.isdues i
mplytothefail
ureofwa gestobala
nc elaborsupplyandlaborde
mand.
c.istheproce
ssofma t
chingwor kerswithappropriat
ejobs.
d.Alloftheabovearecorrec
t.
ANSWER:c. ist
heproces
sofma tc
hingwor ke
rswi thappropri
atejobs
.
TYPE:
M DIFFICULTY:1SECTI ON: 15.
1

83. Peoplewhoar eune mpl oye dbecauseofj

obs
ear
char
ebe
stc
las
sifie
das
a.c ycl
ic al
lyunempl oye d.
b.s tr
uc tural
lyunempl oyed.
c.f ri
ctionall
yune mpl oye d.
d.di scouragedwor kers .
ANSWER: c. fr
ict
ionall
yune mployed.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

84. Sec
toralshi
ftsi
nt heeconomy
a.c r
eatestr
ucturalunemployme nt
.
b.imme di
atel
yr educeunemployme nt
.
c.increaseunempl oymentduetojobsearc
h.
d.onne tleaveune mploymentunchanged.
ANSWER: c. i
ncreaseunemployme ntduetoj
obse
arc
h.
TYPE:
M DIFFICULTY:1SECTI ON: 15.
1

85. From ti
met otimethedemandf orwor kershasris
e ninoneregionoft
heUni
tedSt
ate
sandf
all
eni
nanot
her
.Thi
s
il
lus
trate
s
a.fricti
onalunempl oyme ntc reat
edbye ffic i
enc ywages.
b.s t
ructuralunempl oymentc r
eatedbye ffic iencywa ge
s.
c.fricti
onalunempl oyme ntc reat
edbys ect
oralshifts
.
d.s t
ructuralunempl oyme ntc r
eatedbys ec
toralshift
s.
ANSWER: c. fri
cti
onalune mpl oyme ntcre
atedbys ectorals
hif
ts.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
1

86. In2002,thedemandf orconstructi

onwor kersi ncr e
aseda ndthede
mandsf
ort
ext
il
eands
tee
lwor
ker
sdi
mini
she
d.
Thisil
lustr
ates
a.f r
icti
onalunemployme ntc reat
edbyas ector alshif
t .
b.s t
ructuralunemploymentc r
eatedbyas ector alshi
f t
.
c.f r
icti
onalunemployme ntc reat
edbye ffic i
enc ywa ges.
d.s t
ructuralunemployme ntc r
eatedbyeffic ie
ncywage s
.
ANSWER: a. fri
cti
ona
lune mpl oyme ntcr
eatedb yas ectorals
hift
.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
1

87. Fri
cti
onalune mployme ntcanbet heconseque nc
eof
a. workersleavi
nge xist
ingjobstofindonest heyli
kebe
tte
r.
b.a nindustrydecli
ningwhi l
eanotherisgrowing.
c.c hangesinthewor kingconditionsoffe redbycompet
ingfir
ms.
d.Al loftheabovea recorre
c t
.
ANSWER: d. Allofthea bovearecorrect
.
TYPE:
M DI FFI
CULTY:1SECTI ON: 15.
1
418  Chapter 15/Unemployment and Its Natural Rate

88. Whichofthefollowingisac auseoff

ric
tionalunemployment?
a.themi ni
mum wa ge
b.awor kerleavingajobt ofindonewi thbett
erbenefit s
c.laborunions
d.Al l
ofthea bovearec orr
ect.
ANSWER:b. awor kerleavingajobtofindonewi t
hbe t
terbenefit
s
TYPE:
M DIFFICULTY:1SECTI ON:15.1

89. Whi c
hoft hef oll
owingi sincorrec
t?
a. Fric
tionalune mployme ntisinevit
ableinadyna mi ceconomy.
b.Al thought heune mpl oyme ntcre
atedbys e
ctoralshift
sisunf
ortunate
,inthel
ongr
uns
uchc
hangesl
eadt
ohi
ghe
r
produc t
ivityandhi gherli
vings t
andards.
c. Atleast10pe rce
ntofU. S.manufacturi
ngjobsa r
ede str
oyedeveryyear.
d.I nat ypicalmonthmor ethan5pe r
centofwor ker
sl e
avethei
rjobs.
ANSWER: d. Inat ypicalmont hmor ethan5pe rcentofwor ker
sle
avet he
irjobs
.
TYPE:
M DI FFICULTY:1SECTI ON: 15.1

90. Thegovernmentope r
a t
esprogramsforjobtrainingandjobi nf
ormati
onint
endedtore
duc eune
mployme nt.
a. Almostalle
conomi st
sagreethatsuchprogr amsa r
eofnous e.
b.Al mostalle
conomi st
sagreethatsuchprogr amswor kverywe l
l.
c. Somee c
onomistsclai
mt hatthegovernme ntca ndothe
s ethi
ngsnobett
ertha
nfir msandindi
vidualscoulddo
themforthemsel
ve s
.
d.Noneoft heabovea recorrect
.
ANSWER: c. Somee conomi s
tsclai
mt hatthegove rnmentca
ndot he
sethi
ngsnobett
erthanfirmsa ndindividual
s
coulddot hemf orthemsel
ves.
TYPE:
M DI FFI
CULTY:1SECTI ON: 15.
1

91. Wewoul dpredictt

hatthemor ege nerousune mployme ntcompensa tionac ountryhas,
a.theshort
ert hedura
tionofe achs pellofunempl oyme nt
,andthehi ghe rtheunempl oymentrate.
b.theshort
ert hedura
tionofe achs pellofunempl oyme nt
,andthel owe rtheunempl oyme ntr
ate.
c.thelonge
rt hedurati
onofe ac hspellofunempl oyme nt,
andthehi ghe rtheunempl oyme ntr
a t
e.
d.thelonge
rt hedurat
ionofe ac hspellofunempl oyme nt,
andthel owe rtheune mployme ntrat
e.
ANSWER:c. t
hel ongert
hedura tionofe achspellofune mployment,andt hehi ghert
heunempl oymentr
ate
.
TYPE:
M DIFFICULTY:1SECTI ON: 15. 1

92. Compa redt otheUni tedS t

ate
s, Germanyha shi
gherunempl
oyme
ntra
tes
.Thecauseofmuc
hoft
hisdi
ffe
renc
e
seemstobea t
tributa
bl et
o
a. ave r
yhi ghmi nimum wage .
b.agove rnme ntthatspendsve rylit
tl
e.
c. highune mpl oyme ntinsurance.
d.t herefusalofGe rma nfir mst os e
twa gesa
ccordi
ngtoe
ffic i
encywagethe
ory.
ANSWER: c. hi
ghune mpl oyme ntinsuranc
e.
TYPE:
M DI FFICULTY:1SECTI ON: 15.2

93. A t
ypi c
alAmer i
canwor kercove r
edbyunemploymentins
ura
ncer
ece
ive
s
a.6 5pe rc
entofthei
rforme rwage sf
or26weeks.
b.5 0pe rc
entofthei
rforme rwage sf
or26weeks.
c.3 5pe rc
entofthei
rforme rwage sf
or39weeks.
d.Noneoft heabovearec orrect
.
ANSWER: b. 50perce
ntoft heirformerwage
sfor26weeks.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
2

94. Economis t
shavefounde vi
dencethatre
ceivingunemployment-i
nsur
anc
ebenefit
s
a. decreasest
hejob-se
archeffor toft
heune mployed.
b.hasnoeffe ctonthejob-s
earc
he ffor toft
heune mploye
d.
c.i ncr
ea s
esthejob-
searcheffortoftheune mploye
d.
d.hasa nunc ert
ainaffe ctonthejob-
searcheffortoftheune mpl
oye
d.
ANSWER: a. decre
asesthejob-s
earc
he ffor toft
heune mploye
d.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
2
 Chapter 15/Unemployment and Its Natural Rate  419

95. Unemployme nti

nsuranc
e
a.reducessearc
he ffortandr a
isesune mployme nt
b.reducessearc
he ffortsandlowe r
sune mpl oyme nt
c.incr
easessearcheffortandr ai
sesune mployme nt
d.incr
easessearcheffortandde crea
se sunempl oyment
ANSWER:a. reducesse
archeffor tandr ais
esune mpl oyme
nt
TYPE:
M DIFFICULTY:1SECTI ON: 15.
2

96. Mosteconomi s
tsagreethateli
mi na
tingune mploymentinsura nc ewould
a.incr
e aseunemployme ntbecausepe oplewoul dquitj
obst he ythoughtwe r
enots e
cure.
b.incr
e aseunemployme ntbecausei ft
hegove rnmentdidn’tpr ovideunempl oymentins
uranc
e,pr
ivat
efir mswoul
d
offe rsuperi
orinsurance.
c.reduceune mployme ntands oimpr oveeconomicwe ll
-being.
d.reduceune mployme nt,buttheydi s
agreeaboutwhe therec onomicwe ll
-beingwouldbeenhanc
edbys ucha
change .
ANSWER:d. r
educeune mployme nt,buttheydisagreeaboutwhe thereconomicwe l
l-
beingwouldbeenhance
dby
s
uchac hange.
TYPE:
M DIFFICULTY:2SECTI ON: 15.2

97. Aninc r
easeinthewor l
dpriceofoilwouldc re
ateasect
orals
hifttha
twoul dl
ikel
y
a. decreaseunemployment,andthedecre asewoul dbegrea
terinac ount
rywithunemploymentinsur
a ncethanin
onewi thout
.
b.de creaseunemployment,butthedecreas ewouldbes mal
lerinac ount
rywithunemploymentinsur
a ncethanin
onewi thout
.
c.inc r
ea s
eune mployment
,andt heinc
reas ewoul dbegreat
erinac ountr
ywi t
hunemploymentinsurancethanin
onewi thout
.
d.inc r
easeune mployment
,buttheincreas ewouldbes mall
erinac ountr
ywi t
hunemploymentinsura
nc ethanin
onewi thout
.
ANSWER: c. incr
easeunemployme nt
,andt hei ncr
easewouldbegr ea
terinacountrywi
thunemployme ntinsuranc
e
thaninonewithout.
TYPE:
M DI FFICULTY:2SECTI ON: 15.
2

98. Consume rsdecidetobuymor ec omputer

sa ndfewert ypewrit
ers.
Asar es
ult
,comput
erc
ompani
ese
xpa
nd
producti
onwhi letypewr i
terc
ompani esl
ay-offwor kers
.Thisisanexampleof
a.s tr
ucturalunempl o
yme ntcreat
edbye ffic i
encywa ges.
b.c ycl
icalunemployme ntcrea
tedb yarece
s s
ion.
c.f ri
cti
onalune mployme ntc
reatedbyasec t
oralshif
tinde mand.
d.Noneoft heabovea recorr
ect.
ANSWER: c.fr
icti
onalunempl oymentc r
eat
edbyas e
ctoralshi
ftindema nd.
TYPE:
M DI FFICULTY:2SECTI ON:15.2

99. Whichoft hef ollowingisc orr

e c
t?
a. Unempl oyme ntinsurancer ai
sesstr
uc turalunemplo
ymentbecaus
ei treducesthejobsearchoftheune mployed.
b.Mos teconomi s
tsareske pti
caloftheval ueofunemploymenti
nsurancebe causetheybeli
evethatitres
ult
si na
poorerma t
c hbe t
we e
nwor kersandj obs.
c. Atypi c
a lunempl o
yedwor kernearthee ndofthet
imeinwhichshec anre c
eivebenefitsi nc
reas
e sherj
obs earc
h
effor ts.
d.Al lofthea bovea r
ecorr ec
t.
ANSWER: c. At ypicalunempl oyedwor ke rne art
heendofthet
imeinwhi chs hecanr e
cei
vebe nefitsi nc
rea
se sherjob
sear che fforts.
TYPE:
M DIFFI CULTY:2SECTI ON: 15.
2

100. Anincr
easeint hemi ni
mum wa gewould
a.incr
ea s
ebot hthequantit
ydemande dandt
hequanti
tys uppl
iedofl
abor.
b.decreaseboththequantityde mandedandthequant
itysuppli
edoflabor
.
c.incr
ea s
ethequant it
yoflaborde mandedwhil
edecrea
s i
ngthequanti
tysuppl
ied.
d.decreasethequa nti
tyoflabordemandedwhilei
ncre
as i
ngthequantit
ysuppl
ied.
ANSWER: d. de c
reasethequantityofla
bordemandedwhileincre
asingt
hequanti
tysuppl
ied.
TYPE:M DIFFICULTY:2SECTI ON: 15.3
420  Chapter 15/Unemployment and Its Natural Rate

101. Ift
hemi ni
mum wagewasc urrent
lyabovetheequi
libr
ium wage,thanade c
reasei
nthemini
mum wa
gewoul
d
a.increas
eboththequantit
ydemande dandthequantit
ysuppliedoflabor.
b.de cr
easeboththequant
ityde mandedandthequa nti
tysuppli
e dofl
abor.
c.increas
ethequantit
yoflaborde mandedandde cre
asethequa nti
tysuppli
ed.
d.de cr
easethequanti
tyoflabordemandedandi ncre
asethequa nti
tysuppli
ed.
ANSWER: c
. incr
easethequantit
yoflabordemande dandde c
reasethequantit
ysuppl
ied.
TYPE:M DIFFICULTY:2SECTI ON: 15.3

102. The
rewillbestruct
uralunemployme ntif
a.somewa gesarekeptabovet heequil
ibri
um level
.
b.somepe oplechoosenottowor kattheequil
ibri
um wage.
c.somewa gesarebelow t
hee quil
ibri
um level
.
d.Alloftheabovecouldbec orre
ct.
ANSWER: a. somewa gesarekeptabovet heequi
libr
ium l
eve
l.
TYPE:M DIFFI
CULTY:1SECTI ON: 15.3

103. Minimum- wa gelaws

a.a rethema jorcauseofnat
ur alunempl
o yment
.
b.pr obabl
yr educet e
enageempl oyment
.
c. mainlyaffe c
ts ki
lle
dwor kers.
d.Noneoft heabovea recor
r ect
.’
ANSWER: b. probablyreduceteenageemployment.
TYPE:M DI FFICULTY:1SECTI ON: 15.
3

104. Whi choft hefoll

owingwouldbea ss
ociatedwiththetypeofunempl oymentcreat
edbyt heminimum wa gelaw?
a. Gregqui t
shisjobasagrocerycashierbecausehewouldr at
herwor katt
hel i
brary
.
b.Fr edde ci
destoclos
ehisThair e
staurantbecausehecannotaffor dtopaywor kerst
hegoingwa ge.
c.I nhope sofearni
nghigherincomeBr ucegoe sbackt
otradeschooltogetfurt
hertrai
ning.
d.Li zpa ysthewor ker
sforherplumbi ngandhe a
tingc
ompa nymor ethantheequili
bri
um wa gebecaus
es he
beli
eve sitwillmakethem workhar der.
ANSWER: b. Fredde c
idest
oclosehisThair es
taurantbec
ausehec annotaffor dtopaywor ke
rsthegoingwa ge.
TYPE:M DI FFICULTY:2SECTI ON: 15.
3

Thef
oll
owi
ngt
hre
eque
sti
onsar
ebas
edont
hefigur
ebe
low whi
chs
howst
hee
ffe
ctofami
nimum-
wagel
aw.

105. Theequi
li
brium wageandemploymenti
s
a.$6and2 0workers
.
b.$5and3 0workers
.
c.$4and4 0workers
d.Anyoft heabovecoul
dbecorre
ct.
ANSWER: b. $5and30worker
s.
TYPE:M DIFFI
CULTY:1SECTI ON:15.3
 Chapter 15/Unemployment and Its Natural Rate  421

106. Ift
herewasnomi ni
mum wa geandthenthegove
rnme
nti
nst
it
ute
dami
nimum wa
geof$
6,i
nthi
sma
rke
t
a.e mploymentwouldriseby10.
b.e mploymentwouldfallby20.
c. unemploymentwouldi nc
reas
eby1 0.
d.une mploymentwoul
di nc
reas
eby2 0.
ANSWER: d. unemploymentwoul dincr
easeby20.
TYPE:M DI FFI
CULTY:2SECTI ON: 15.
3

107. Ift
herewasami ni
mum wa geof$4andthenthegove
rnme
nti
nst
itut
edami
nimum wa
geof$
5,
a. unemploymentwouldbeunchanged.
b.unempl oymentwoulddropby10.
c. unemploymentwouldri
seby1 0.
d.une mploymentwoul
dr i
seby2 0.
ANSWER: a. unemploymentwouldbeunchanged.
TYPE:M DI FFI
CULTY:2SECTION: 15.
3

Us
ethegr
aphbe
low t
oans
wert
hef
oll
owi
ngf
ourque
sti
ons
.

108. Ift
hemi nimum wagei s$5,t
henumbe rofpeopleune
mpl
oye
dis
a.4 0andi ftheminimum wagei s$6itis0.
b.2 0andi ftheminimum wagei s$6itis20.
c.4 0andi ftheminimum wagei s$6itis20.
d.0andi ft heminimum wa geis$6itis0.
ANSWER: d. 0a ndi
fthemi ni
mum wa geis$6iti
s0.
TYPE:M DI FFI
CULTY:2SECTI ON: 15.
3

109. Ift
hemi nimum wagef e
llfr
om $ 7to$5
a. unemploymentwoul dfallby20.
b.unempl oymentwoul dfallby40.
c. unemploymentwoul dbeunc hanged.
d.une mployme ntwouldriseby2 0.
ANSWER: b. une
mpl oymentwoul df a
llby40.
TYPE:M DI FFI
CULTY:2SECTI ON: 15.
3

110. Ift
hemi ni
mum wageros
efr
om $5to$7,
une
mpl
oymentwoul
d
a.r i
seby40.
b.r i
seby20.
c.fallby20.
d.fallby40.
ANSWER: a. ri
seby40.
TYPE:M DIFFICULTY:2SECTI
ON: 15.
3
422  Chapter 15/Unemployment and Its Natural Rate

111. Ift
hemi ni
mum wageros
efr
om $6to$7,
une
mpl
oymentwoul
d
a.r i
seby40.
b.r i
seby20.
c.fallby20.
d.fallby40.
ANSWER: a. ri
seby40.
TYPE:M DIFFICULTY:2SECTI
ON: 15.
3

112. Coll
ectivebargai
ningref
erst
o
a.thepr oc
essbywhi c
hthegover nmentset
se x
empt i
onsf r
om themi ni
mum wa gela
w.
b.se tt
ingthesamewa geforallemployee
stopr eventje
alousyamongwor kers
.
c. fir mscoll
udingtosett
hewa gesofemployeesinor dertokeepthem below equi
li
bri
um.
d.thepr oc
essbywhichunionsa ndfir msa greeonthet er
msofe mployme nt.
ANSWER: d. theproces
sbywhi chunionsandfir msa greeonthetermsofempl oyment
.
TYPE:M DI FFICULTY:1SECTI ON: 15.
4

113. Bet
we enthe1940sandt oday,unionme mbershi
p
a.ros ef
rom aboutone-sixthtoone-t
hirdofthelaborforc
e.
b.ros ef
rom aboutone-thirdtoone-hal
fofthelaborforce
.
c.fellfr
om aboutone-ha l
ftoone -
thi
rdofthelaborforce.
d.fellfr
om aboutone-thirdtoone-si
xthofthelaborforce
.
ANSWER: d. fe
llfrom aboutone -t
hirdtoone-
sixt
hoft helaborf
orc
e.
TYPE:M DI FFI
CULTY:2SECTI ON: 15.4

114. InSwede nandDe nmark,thepe r

cent
ageoft hewor
ker
swhobe
longt
ouni
onsi
s
a.a lmostzer
o.
b.a boutthesameasint heUni t
edStat
es.
c. abitgrea
terthanintheUni t
edStat
es.
d.muc hgreat
erthanintheUni t
edStates.
ANSWER: d. muchgreate
rt hanintheUnitedStat
es.
TYPE:M DI FFI
CULTY:2SECTI ON: 15.
4

115. Whi chofthefoll

owi ngi sincor rec
t?
a. A unionisafor m ofc art
e l
.
b.Uni onwor kerstypi c
al l
ye arn20t o30pe r
centmor ethansi
mi l
arnonunionizedwor ker
s.
c. Thepowe rofauni onc ome sfrom it
sabil
it
ytost r
ikeifi
tsdema ndsar
enotme t
.
d.Wor ker
sinuni onsr eapt hebe ne fitsofcol
lec
tivebargai
ning,whileworkersnotinunionsbearsomeoft
hec
ost
.
ANSWER: b. Unionwor kerstypi callyear
n20t o30pe r
centmorethans i
milarnonunionizedworke
r s
.
TYPE:M DI FFICULTY:2SECTI ON: 15.4

116. Unionme mber

stypic
all
year
n_________pe
rcentmor
etha
nsi
mil
arwor
ker
swhodonotbe
longt
oauni
on.
a. 0to5
b.5t o10
c.1 0to20
d.20t o30
ANSWER: c. 10to20
TYPE:M DI FFI
CULTY:1SECTION:15.
4

117. Whe nauni onbargai

nssuccessful
lywithempl oyers,
int hatindustry
a. boththequantit
yoflabors uppli
edandt hequa nti
tyofl aborde mandedincrease.
b.bot hthequantit
yoflabors uppli
edandt hequa nti
tyofl aborde mandedde c
rease.
c.t hequantit
yoflaborsuppliedincre
asesandt hequa ntit
yofl abordema ndedde crea
ses
.
d.t hequantit
yoflaborsuppliedincre
asesthequant i
tyofl aborde mande ddecr
e a
s e
s.
ANSWER: c. thequanti
tyoflaborsuppliedincr
e as
esandt hequantityoflabordema ndeddecr
eas
es.
TYPE:M DI FFI
CULTY:2SECTI ON: 15.4

118. Whe naunionbargainssuc c

essful
lywi thane mplo
yer
,int
hati
ndus
try
a. unemploymentandwa gesincrease.
b.unempl oymentandwa gesde c
reas e
.
c. unemploymentde c
reasesa ndwa gesincre
ase.
d.une mploymentincreasesandwa gesdecre
ase.
ANSWER: a. unemploymenta ndwa ge sinc
rease.
TYPE:M DI FFI
CULTY:1SECTI ON: 15.4
 Chapter 15/Unemployment and Its Natural Rate  423

119. Unemploymentinsurance
a.andunionsbot hcreat
estruc t
uralunempl oyment.
b.andunionsbot hcreat
efricti
onalune mployment.
c.creat
esfr
ict
ionalunempl oyme ntanduni onscrea
testruct
ura
lunemployment
.
d.creat
esst
ructuralunempl oyme ntanduni onsc
reatefr
ict
iona
lunemployment
.
ANSWER: c. cr
eatesfri
cti
onalune mpl oymentanduni onscre
ates
truc
tur
alunemployme
nt.
TYPE:M DIFFICULTY:2SECTI ON: 15.4

120. Whe nuni onsr aisewa gesi nsomes ect

orsoftheec onomy,thes upplyofl
abori
not
hers
ect
orsoft
hee
conomy
a. decreases,raisingwage sinindus t
riesthatarenotunionized.
b.de creases,reduc i
ngwa ge sinindus t
rie
stha tarenotunionized.
c.inc r
ea se
s, r
a isi
ngwa gesini ndustri
esthatar enotunionize
d.
d.inc r
eas e
s,re duc i
ngwa gesini ndustri
esthatarenotuni oni
ze d.
ANSWER: d. i
ncr eases,re
duc i
ngwa gesinindustriestha
tarenotuni oni
zed.
TYPE:M DI FFICULTY:2SECTI ON: 15.
4

121. Supposethatinsomec ountryneithertexti

lewor kersnorshoe make r
sareuni
oni
zed.I
fte
xti
lewor
ker
suni
oni
zea
nd
soareabletorai
setheirwages,then
a.thede mandf orshoemakerswi llris
e,andt heirwa geswillri
se.
b.thede mandf orshoemakerswi llfal
l,andthe irwa ge
swi llf
all
.
c.thes upplyofshoemake r
swi llrise
,andt heirwa geswillfal
l.
d.thes upplyofshoemake r
swi llfall
,andtheirwa ge swil
lrise.
ANSWER: c. t
hesupplyofs hoemake r
swi l
lrise
,a ndt hei
rwa geswillfal
l.
TYPE:M DI FFI
CULTY:2SECTI ON: 15.4

122. TheWa gne

rAc tof1 935
a. prevent
suni onsfrom a ct
ingasc arte
ls.
b.a l
lowswor kersjoiningauni onizedfir mtochoosenottojoi
ntheunion.
c. prevent
se mploye r
sf rom interfe
ringwhe nworkerstr
yt oorgani
zeaunion.
d.Noneoft heabovea r ec orrect
.
ANSWER: c
. preventsempl oyersfrom inter
fer
ingwhenwor kerstr
ytoorga
ni z
eauni
on.
TYPE:M DIFFI CULTY:1SECTI ON: 15.
4

123. TheNationalLaborRe lati

onsBoa rd
a.enforcesanti
tr
us tlawsa gains
tunions.
b.enforcesworke rs
'rightstounionize
.
c.foraf eewil
lac tasauni on’sre
present
ativeinc
oll
ect
ivebarga
ini
ng.
d.isrequiredtoa pprovea l
lcoll
ecti
vebargaini
ngagre
eme nt
sbefor
etheyc
anbee
nfor
ce.
ANSWER: b. e
nforceswor kers'r
ightstouni
oni ze
.
TYPE:M DIFFICULTY:1SECTI ON: 15.
4

124. Right-t
o-worklaws
a. guarante
ewor kerst
her i
ghttoform unions.
b.gi veworke r
si nauni oni
zedfir mt herighttochoosewhe therornottojoi
ntheunion.
c. preventempl oyersfrom hi
ri
ngpe rmanentreplacementsforworkerswhoa reonstr
ike.
d.s aythatwor kerscannotbefir e
dbe causeofincreas
esinwa gesbroughtaboutbycolle
cti
vebarga
ini
ng.
ANSWER: b. givewor kersinaunionizedfir mt herighttochoosewhe t
herornottojoi
nt heunion.
TYPE:M DI FFICULTY:1SECTI ON:15.
4

125. Inthea bse

nc eofri
ght-
to-
wor klaws,worker
s
a.t hatwe ntonstri
kecouldnotbepe rmanent
lyreplace
d.
b.woul dha vet
ojointheuni onift
heyworkedforaunionize
dfir m.
c. woul dnotbeabletouni onize
.
d.woul dnotbea bl
etostrike.
ANSWER: b. wouldhavetojointheunionift
heywor kedforauni
oni
zedfir
m.
TYPE:M DI FFICULTY:1SECTI ON: 15.
4
424  Chapter 15/Unemployment and Its Natural Rate

126. Whi chofthefoll

owi ngisanexampl eofaviolat
ionofr ight
-to-
wor klaws?
a. Mus i
ciansagreet oj
oinauni on.Eventhoughhevot e dagainstt
heunion,Rickymus tjoinit
.
b.Luc yiswi l
li
ngt owor katthec andyfact
or ywhi l
etheot herwor ke
rsareonstrike
, butt heuniondoe
snotpe
rmit
i
t.
c. Fredandhi sco-
wor kersar
enota ll
owedbyt hei
rfir mt oform aunion.
d.Be causeEthelbelongstoauni ons hecan’tbargainforhe rowns al
aryincr
eases;shemus tbargai
nwitht
her
estof
theunion.
ANSWER: a. Mus i
ciansagreetojoinauni on.Event houghhevot e
da gains
ttheunion,Ri ckymus tjoi
nit
.
TYPE:M DI FFI
CULTY:2SECTI ON:15. 4

127. Whic hofthefoll

owi ngi scorrect
?
a. Alleconomistsbe l
ievetha tunionsarebadf ortheec onomya sawhole.
b.Uni onsrai
s ewa gesa bovet hecompe ti
tiveequi
libr
ium l e
vel
.
c. Unionsincreasethel evelofempl oyme ntinunionizedfir ms .
d.Uni onsdecreaset helevelofe mployme ntinnonuni onizedfir ms.
ANSWER: b. Unionsr ais
ewage sabovet hecompe ti
ti
vee quili
bri
um leve
l.
TYPE:M DI FFI
CULTY:1SECTI ON: 15.4

128. Unions
a. donotinc rea
sethenaturalrateofunemployment.
b.donotr ais
ethewa gesofwor kersint
heunion.
c.r ai
sethepr ofitsoffir msthe yworkfor.
d.c ausewa gesofnonunionizedwor ker
stofall
.
ANSWER: d. causewa ge
sofnonuni oni
zedworkerst
ofall
.
TYPE:M DI FFICULTY:1SECTI ON: 15.
4

129. IfU.
S.anti
trustl
awswer eapplie
dt ounions
,
a.thena t
uralrat
eofune mployme ntrat
ewouldinc
rease,cet
eri
sparib
us.
b.thena t
uralrat
eofune mployme ntrat
ewoulddecre
ase,cete
rispar
ibus.
c.thena t
uralrat
eofune mployme ntrat
ewouldnotchange.
d.theeffe c
tont henatur
alrateofunemploymentrat
ei suncert
ain.
ANSWER: b. thenaturalr
ateofune mploymentra
tewouldde creas,c
e ete
rispa
rib
us.
TYPE:M DIFFICULTY:2SECTI ON: 15.4

130. Whi c
hoft hefol
lowingisc or
rec
t?
a. Thereisconsensusamonge conomi s
tst
hatunionsaregoodf ortheeconomy.
b.The reisconsensusamonge conomi s
tst
hatunionsarebadf ortheeconomy.
c. Thereisconsensusamonge conomi s
tst
hat,onnet,
uni onshavea l
mos tnoi
mpactonmacr
oe c
onomicvar
iabl
es.
d.Ther eisnocons ens
usa monge conomis
tsaboutwhe therunionsaregoodorbadfort
heeconomy.
ANSWER: d. Ther
ei snoc onse
nsusa mongeconomistsaboutwhe therunionsar
egoodorbadf
ort hee
conomy.
TYPE:M DI FFI
CULTY:1SECTI ON:15.4

131. Thetheoryofeffic iencywa ge sexpla

inswhy
a.setti
ngwagesa tt
hee quil
ibr ium levelmayi ncre
as eunemployme nt.
b.itma ybeinthebestinter
es toffir mst ooffe rwa gestha
tar eabovetheequil
ibr
ium le
vel
.
c.themos teffic ie
ntwa yt opa ywor ker
sist opa yt
he ma c
cordingt ot
heirski
ll
s.
d.itiseffic i
entforfir mst osetwa ge
sa tthee qui
libri
um level
.
ANSWER: b. itmaybei nthebe sti nte
r e
stoffir mst ooffe rwa gesthatar
eabovethee qui
li
bri
um l
eve
l.
TYPE:M DIFFICULTY:1SECTI ON: 15. 5

132. Sar
ahistheCEO ofac orpor at
i ont hathi
re snonunionl
abor.Ac
cor
dingtot
het
heor
yofe
ffic
ienc
ywage
s,i
fshe
dec
idestopayherwor kersmor et hanthec ompe t
it
iveequi
li
bri
um wage
,
a.theprofit sofherfir m ma yi ncr
eas e.
b.thehigherwageswi llinduc ehe rwor kerstoshi
rk.
c.theturnoverofherwor ker
sma yincr
e ase.
d.shewi l
lfaceashortageofl a bor.
ANSWER: a
. theprofit sofhe rfir m ma yincre
ase.
TYPE:M DIFFICULTY:1SECTI ON: 15.5
 Chapter 15/Unemployment and Its Natural Rate  425

1
33. Sama ntha,theCEO ofac orpor at
ionope ra t
inginUganda,
de c
ide
st orais
et hewagesofherworker
seventhough
shefacesane xces
ss uppl yofl abor.He rdec i
sion
a. mightincreasepr ofit sifitme anst hatthewa geishi
ghenoughforhe rwor ke
rstoeatanut
rit
iousdi
etthatmakes
them mor eproduc t
ive.
b.wi llhelpeliminatethee x
c e
s ssupplyofl aborifsher
ais
esi
tsuffic i
entl
y .
c. willcauseune mpl oyme ntt of a
ll.
d.Al lofthea bovea rec orrect
.
ANSWER: a. mi ghtincreas eprofit sifitme anst hatt
hewageishi
ghe noughf orherworker
stoeatanutr
iti
ousdiett
hat
make sthe m mor epr oducti
ve .
TYPE:
M DI FFICULTY:1SECTI ON: 15.5

134. Arnieistheowne rofafir mt hatproduc esbott

ledwa terinWas hingt
ons t
ate
.Therea
remanys
uchfir msinthear
ea.
Arniedecidest
ha ti
fhepa yshi sworker sawa gehigherthant hegoingma r
ketwa ge
,hi
spr
ofitswil
linc
rea
se.Which
ofthefol
lowingisalikel
ye xplanati
onf orhi sdec
ision?
a. Thehigherthewa ge,thelessofte
nhi sworkerswi l
lchoos etol
eavehisfir m.
b.Thehi gherthewa ge,thelowe rwillbet hecostofobtainingneededsupplies
.
c. Thehigherthewa ge,themor ehec anc hargeforhiswa ter.
d.Al loftheabovear el
ikelyexplanationsforArnie '
sdecisi
on.
ANSWER: a. Thehi gherthewa ge,thelessof t
enhiswor kerswi l
lchoosetolea
vehisfir m.
TYPE:M DI FFI
CULTY:1SECTI ON: 15.
5

135. Ma rySueisthene wlyappointedCEO ofac ompanyt hatmanufacture

sCD dr i
vesonanas se
mblyli
ne.He
rst
affha
s
tol
dhe rthatt
heout putthefir m produces,giventhenumbe rofworkersemployed,indi
cat
est
hatsomewor
ker
sma
y
beshirki
ng.Accordingtoeffic i
encywaget heory,whatshouldshedo?
a. payallworkersmor ethantheequili
bri
um wager at
e
b.pa yallworkersbelow theequi
libr
ium wa ger at
et omakeupf orthelossf
rom shir
king
c. makes uretha
twor kersaregett
ingpaide xactl
yt heequi
libri
um wa gerat
e
d.r educeproduction
ANSWER: a. payallworkersmor et
hant heequilibri
um wa gerate
TYPE:M DI FFI
CULTY:2SECTI ON: 15.5

136. Acc
ordingtoeffic ie
nc ywa gethe
or y
,anew andl
essc
ost
lywa
ytomoni
tore
mpl
oye
es’wor
keffor
twoul
dbet
o
a.incr
e a
serealwa ges.
b.incr
e a
seshirking.
c.incr
e a
selabor -
forcepart i
cipati
onr a
tes.
d.reducestr
uct uralune mpl oyme nt
.
ANSWER: d. re
duc es t
ructuralune mployment.
TYPE:M DIFFICULTY:1SECTI ON: 15.5

137. Effic i
encywage s
a.reducelabor-f
orcepartic
ipati
onra t
es.
b.reducethena t
uralrateofune mployment
.
c.reducetheincenti
vet oshirk.
d.incr
easewor kerturnover.
ANSWER: c. reducetheinc e
ntivetoshir
k.
TYPE:M DIFFICULTY:1SECTI ON: 15.5

138. Ane ffic i

entwa ge
a.r equire
sinc r
easedt urnover.
b.ma yde c
reasethec ostofproducti
on.
c. helpstoreduc ethelevelofunempl oyment.
d.Al lofthea bovea r
ec orrec
t.
ANSWER: b. ma yde cre
as ethecostofproduct
ion.
TYPE:M DI FFICULTY:1SECTI ON: 15.
5
426  Chapter 15/Unemployment and Its Natural Rate

139. Sec
toralchange s
a.c reat
efri
ctionalunempl oyme nt.Firmspa yingwa gesabovee quili
bri
um toat
tractabetterpoolofcandidat
es
cr
e a
testr
uc turalunempl oyme nt
.
b.c reat
estr
uc turalunempl oyme nt.Firmspa yingwa gesabovee quil
ibr
ium t
oatt
r actabett
erpoolofc andi
dates
cr
e a
tefri
ctionalunempl oyme nt.
c.a ndfir mspa yingwa ge sabovee quil
ibri
um t oa
t tr
actabett
e rpoolofcandi
da te
sbothc re
atestr
uctural
unemployment .
d.andfir mspa yingwage sabovee quil
ibri
um t oa
t tr
actabett
e rpoolofcandi
da te
sbothc re
atefri
cti
onal
unemployment .
ANSWER: a. createfri
cti
onalune mpl oyme nt.
Fi r
mspa yingwa gesa boveequi
li
bri
um t oatt
ractabett
erpoolof
candida t
escre
a t
es truc t
ur alunempl oyment.
TYPE:M DI FFICULTY:2SECTI ON: 15.5

140. Theminimum wa ge
a.creat
esfrict
ionalune mployme nt.Firmspa yingwa ge saboveequil
ibr
ium toatt
ractabe t
terpoolofc andi
dat
es
crea
testructuralunempl oyme nt.
b.creat
esstructuralunempl oyme nt.Fi
rmspa yingwa gesabovee qui
li
brium t
oa t
tractabett
e rpoolofcandida
tes
crea
tefri
c t
ionalune mployme nt.
c.andfir mspa yingwa ge sabovee quil
ibr
ium t oattractabette
rpoolofcandidat
e sbothcreatest
ructural
unemployment .
d.andfir mspa yingwage sabovee quil
ibr
ium t oattractabette
rpoolofcandidat
e sbothcreatef
rict
ional
unemployment .
ANSWER: c. andfir mspayi ngwa gesabovee qui l
ibr
ium t oat
tractabet
terpoolofcandidatesbothcreatest
ruct
ural
unempl oyment.
TYPE:M DIFFICULTY:2SECTI ON: 15.
5

141. Dandecidestohiresomea dditi

onalwor kersf
orhi sgol
f-ballf
actory
. Theequil
ibr
ium wa
gei
s$12pe
rhour
.
Effic ie
ncywaget heorysugge s
tsthatitisreas
ona bl
ef orDant ooffe r
a.$12pe rhour.
b.lesst
han$12pe rhour
,sincesomepe opl ewoul dbewi ll
ingtowor kforles
s.
c.enought oat
tractthenumberofappl icantsnecessar
yt ofil lthejobsavai
labl
e.
d.mor ethan$12pe rhour,soastoattr
ac tabetterpoolofa ppl
icants.
ANSWER: d. moret han$12pe rhour,s
oast oatt
ractabetterpoolofa ppli
cants
.
TYPE:M DIFFICULTY:1SECTI ON: 15.
5

142. Foure mpl oyershavejusti

fie dt hei
rac ti
onsa sfol l
ows.Whos elogi
cisinconsi
stentwit
ht hel
ogi
cofe ffic i
encywa
ge
the
or y?
a.J ayde velopsane w assemblylinetechnologyt hatl
imitst
hea mountofs hir
kingworkersmaydo ,s
oher educe
s
wha thepa yshi semployeess oastomakei tc l
osertotheequili
bri
um wa ge.
b.Ka ypa yshe rworkerslesst
hant hee quil
ibrium wa gesotheywon’ thavethetimeormone ytolookforwork
some whe ree l
se.
c. Ra ypa yshiswor kersi
nade vel
opingc ountrymor ethanthegoingwa gehopingthattheywil
lgetabe t
terdi
et
ands obemor epr oducti
ve.
d.Al lofthea bovea r
einconsis
tentwitht helogi cofeffic iencywa getheory.
ANSWER: b. Kaypa ysherwor kerslessthanthee quili
bri
um wa gesotheywon’ thavetheti
meormone yt ol
ookfor
wor ksome whereelse.
TYPE:M DI FFICULTY:1SECTI ON: 15.5

143. Anythi
ngt hatmakesthee ffic iencywa geriser
e l
ativetothemarket-
clea
r i
ngwa gewill
a.increas
ebot hthequantit
ydemande da ndthequant i
tysuppl
iedoflabor.
b.de c
reaseboththequant i
tyde mande dandt hequa nti
tysuppli
edoflabor .
c.increas
et hequantit
yde mande dandde c
reaset
hequa nti
tysuppli
edofl abor.
d.de c
reasethequa nt
itydemande da ndincreasethequant i
tysuppli
edofl abor.
ANSWER: d. decr
easethequantityde mandeda ndincreasethequantit
ys upplie
dofl abor
.
TYPE:M DIFFICULTY:2SECTI ON: 15.5
 Chapter 15/Unemployment and Its Natural Rate  427

144. HenryFord
a. wasforcedbyauni ontopa y$5.
00pe rda
y.
b.paid$5. 00perdaytoimprovewor kernutr
iti
on.
c. be
lie
ve dthat$5.0
0ada ywoul dincr
easeworke rproducti
vity.
d.paid$ 5.00perdaytoill
ustrat
ehewasahuma nit
aria
n.
ANSWER: c
. bel
ievedthat$5
.00ada ywoul di
ncreasewor ke
rpr oduct
ivi
ty.
TYPE:M DIFFICULTY:1SECTI ON: 15.
5

145. Whichoft hefol

lowingc ause
sofune
mpl
oymenti
snota
ssoc
iat
edwi
thane
xce
sss
uppl
yofl
abor
?
a. minimum- wagela ws
b.uni ons
c.jobs earc
h
d.effic ienc
ywa ges
ANSWER: c
. j
obse ar
ch
TYPE:M DIFFI CULTY:2SECTI ON:15.
6

146. Whichoft hefoll

owingcausesofunemplo
ymenti
sas
soc
iat
edwi
thawager
atea
bovet
hema
rke
tequi
li
bri
um l
eve
l?
a. mi nimum- wagelaws
b.uni ons
c.e ffic ie
nc ywages
d.Al l oftheabovea r
ecorre
ct.
ANSWER: d. Alloftheabovearecorr
ect
.
TYPE:M DI FFI CULTY:1SECTI ON: 15.
6

147. Whi c
hoft hefol
lowingcause
sofune
mpl
oymenti
snota
ssoc
iat
edwi
thawa
ger
atea
bovet
hee
qui
li
bri
um l
eve
l?
a. unions
b.e ffic ienc
ywage s
c.jobs earc
h
d.mi nimum- wagelaws
ANSWER: c. j
obse ar
ch
TYPE:M DI FFICULTY:1SECTI ON:15.
6

148. Whi c
hoft hefoll
owingwoul dr educethenaturalrateofunemployme nt
?
a. TheInternetprovidesmor ereadi
lyavai
lableinformati
onabouta vai
lablejobs
.
b.Congr essincre
asesthemi nimum wa ge.
c. Lawsa repassedthatmakei tmorediffic ulttomonitort
hee ffor tsofwor ker
s .
d.Al loftheabovea recorre
ct.
ANSWER: a. TheInternetprovidesmorereadilyavailabl
einf
orma t
ionabouta vail
ablejobs.
TYPE:M DI FFI
CULTY:2SECTI ON: 15.
6

149. Whichofthefol
lowinglawswoul dreducethenaturalr
ateofune
mployme nt
?
a. Congre
sspassesalawt hatmakesallsta
tesre
pe alri
ght-
to-
workla
ws .
b.Congr e
sspassesla
wst hatmakei thardert
ofindoutaboutj obcandi
dat
espas
tjobhi
stor
y.
c. Congre
ssaboli
shesthemi nimum wa ge.
d.Noneoft heabovea r
ec or
re ct
.
ANSWER: c
. Congressaboli
shest heminimum wage .
TYPE:M DIFFICULTY:2SECTI ON: 15.6

1
50. Whi choft
hef ol
lowingexplanat
ionsoft
henatur
alrateofunemploymenti
smos
timpor
tantf
ort
heU.
S.
economy?
a.j obs ear
ch
b.mi ni
mum- wagelaws
c. uni ons
d.Ec onomist
sha venotdet
e r
mi nedtheans
we rt
othisquesti
on.
ANSWER: d. Ec
onomi st
shavenotde ter
minedtheans
we rtothisque
sti
on.
TYPE:
M DI FFICULTY:1SECTI ON: 15.
6

TRUE/
FALSE

1. Governme
ntpol
icycandonot
hinga
boutthenat
uralr
ateofune
mpl
oyme
nt.
ANSWER:
FTYPE:TFDI FFI
CULTY1SECTION 28.
1
428  Chapter 15/Unemployment and Its Natural Rate

2. TheBLSus
esdat
afrom e
achs
tat
e’sunemploymenti
nsur
anc
eagenc
ytoc
omput
eune
mpl
oyme
nts
tat
ist
ics
.
ANSWER:
FTYPE:TFDIFFI
CULTY1SECTI ON 28.1

3. Someonewhoi
swit
houtworkbuti
snotl
ookingf
orwor
kwoul
dbec
ount
eda
sune
mpl
oye
dbyt
heBLS.
ANSWER:
FTYPE:TFDI
FFICULTY1SECTION 28
.1

4
. Theunemployme ntr
ateisdefinedast
heper c
entageoft
helaborfor
cet
hatisune
mployed.Thel
aborf
orc
e
par
tici
pat
ionra
teisthepercent
ageoft
headultpopula
tiontha
tise
itherempl
oyedorunemployed.
ANSWER: TTYPE:TFDI FFICULTY1SECTION 28.
1

5
. IntheUnit
edSta
tes
,bl
acksandwhi
teshavesi
mil
arl
aborf
orc
epar
tic
ipa
tionr
ate
s,butbl
acksha
veahi
ghe
r
unemploymentr
ate
.
ANSWER: TTYPE:TFDIFFI
CULTY1SECTI ON 28
.1

6
. Eventhought
hedi
fferenc
einl
aborf
orc
epart
ici
pat
ionr
ate
sofma
lesa
ndf
ema
lesha
snar
rowe
d,t
hepar
tic
ipa
tion
ra
teofma l
esr
emai
nshi
gher.
ANSWER: TTYPE:TFDI
FFI
CULTY1SECTION 28
.1

7. Full
-t
imest
udent
s,ret
ire
es,
andunpa
ids
tay-
at-
homef
athe
rsa
rec
ount
eda
sune
mpl
oye
d.
ANSWER:FTYPE:TFDIFFI
CULTY2SECTION 28
.1

8. Overone
-hal
foft
heunempl
oye
darer
ece
ntent
rant
sint
othel
aborf
orc
e.
ANSWER:
FTYPE:TFDIFFI
CULTY1SECTI
ON 28
.1

9. Aboutone
-hal
fofalls
pel
lsofune
mpl
oymentendwhe
ntheune
mpl
oye
dpe
rsonl
eave
sthel
aborf
orc
e.
ANSWER:
TTYPE:TFDI FFI
CULTY1SECTION 2
8.1

10. Cynthiaisc
olle
ctingunemploymentinsuranc
ebe ne
fit s.T
oc ontinuet
orece
ivehe rbenefitsshemustbelooki
ngfor
work.Howe ver
,sheonlyappli
esatpl
a ceswheresheisunli
kel
yt obehiredbecauseshedoesn’
treal
lywantt
owor k.
Peopleli
keCynthiamakether e
port
edune mpl oymentra
teles
st hanthetr
uerateofune mpl
oyme nt
.
ANSWER: FTYPE: TFDI FFI
CULTY1SECTI ON 28.
1

11. Theunempl
oymentra
terepor
tedbyt
heBLSc l
ear
lyunder
sta
test
het
rueune
mpl
oyme
ntr
ate
.
ANSWER:FTYPE:TFDIFFICULTY1SECTION 28
.1

12. Eve
nt houghmos
tspel
lsofune
mpl
oymenta
reshor
t,mos
tune
mpl
oyme
ntr
esul
tsf
rom l
ong-
ter
m une
mpl
oyme
nt.
ANSWER: TTYPE:TFDIFFI
CULTY1SECTI
ON 28.
1

13. Fri
cti
onalune
mploymente
xis
tsbe
caus
eoft
hetimei
tta
kesf
orwor
ker
stos
ear
chf
ort
hej
obst
hatbe
sts
uitt
hei
rta
ste
s
andskil
ls
.
ANSWER: TTYPE:TFDIFFI
CULTY1SECTION 2
8.1

14. Fr
ict
ionalunemployme nti
sdiffer
entfrom unemploymentari
si
ngfr
om minimum-wagela
ws ,
unions,
ande ffic
ienc
y
wagesbecauseintheformer
,wor
kersarese
archingf
orthejobst
hatbe
sts
uitthem,whi
leinthelat
ter
,worke
rsar
e
wait
ingforjobst
oope nup.
ANSWER: TTYPE:TFDI FFI
CULTY1SECTI ON 28.
2

15. Unempl
oymentduetojobse
arc
hisbe
stcl
assi
fie
dass
truc
tur
alune
mpl
oyme
nt.
ANSWER:FTYPE:
TFDI FFICULTY1SECTION 28
.2

16. Unemploymentins
ura
ncer
educ
eshar
dshi
psofune
mpl
oyme
ntbutal
soi
ncr
eas
est
hea
mountofs
truc
tur
al
unemployment
.
ANSWER: FTYPE:TFDIFFI
CULTY1SECTION 28
.2

17. Alt
houghGermanyha
smuc hmor
ege
ner
ousune
mpl
oyme
ntc
ompe
nsa
tion,
the
irune
mpl
oyme
ntr
atei
saboutt
he
s
amea si
ntheUnit
edSta
tes
.
ANSWER:FTYPE:TFDIFFI
CULTY1SECTI
ON 28
.2

18. A mi
nimum wagea
bovee
qui
li
bri
um c
rea
tesal
abors
urpl
us.
ANSWER:TTYPE:TFDIFFI
CULTY1SECTI
ON 28.
3

19. I
fthewa
geiskepta
bovet
heequi
li
bri
um wagefora
nyr
eas
on,
ther
esul
tiss
truc
tur
alune
mpl
oyme
nt.
ANSWER:TTYPE:TFDIFFI
CULTY1SECTION 2
8 .
3
 Chapter 15/Unemployment and Its Natural Rate  429

20. Si
ncet
he1940sand1950
s,t
heper
cent
ageofU.S.wor
ker
swhobe
longt
ouni
onshasr
ise
nbyaboutone
-thi
rd.
ANSWER:FTYPE:TFDIFFICULTY1SECTION 28
.4

21. Uni
onworker
sear
nabout10pe
rce
ntt
o20perc
entmor
ethans
imi
larwor
ker
swhodonotbe
longt
ouni
ons
.
ANSWER:TTYPE:TFDIFFI
CULTY1SECTI
ON 28.
4

22. Ri
ght
-t
o-wor
klawsall
ow s
tri
kinguni
onme mber
stobepe
rma
nent
lyr
epl
ace
d.
ANSWER:FTYPE:TFDIFFI
CULTY1SECTI ON 28.
4

23. Accordi
ngtothetheor
yofeffic i
encywages
,fir
msope
rat
emor
eeffic
ient
lyi
fthe
ycanpa
ywa
gest
hata
rebe
low t
he
equil
ibr
ium l
evel
.
ANSWER: FTYPE:TFDI FFI
CULTY1SECTION 28
.4

24. Effici
encywagesc
rea
tes
truc
tur
alune
mployme
nt.
ANSWER:
TTYPE:TFDIFFI
CULTY1SECTION 28
.4

25. Fi
rmsmi
ghtoffereffici
encywagesi
nor de
rtoa
ttr
actabe
tte
rpoolofappl
ica
nts
.
ANSWER:TTYPE:TFDI
FFI
CULTY1SECTION 28
.4

26. I
n1914,Henr
yFordbe ganpayinghisworke
rs$5perda
y,aboutt
wic
ethegoi
ngwa
ge.Asar
esul
t,t
urnove
rand
a
bse
nteei
smfell
,andpr oduc
tivi
tyandprofit sr
ose
.
ANSWER:TTYPE:TFDI FFI
CULTY1SECTI ON 28.4

SHORTANSWER

1
. Thet
abl
ebelo
w us e
sdat
afort
heyear2000pr
ovidebytheBLSa ndadjus
tedt
obec
ompar
abl
etoU.
S.da
ta.
All
val
ues
ar
einmil
li
ons.Fi
lli
nthebl
ankent
rie
sinthetabl
e.Show yourwork!

Labor-
For
c e
Count
ry Adult Labor Empl
oye
d Une
mpl
oye
d Unempl
oyme
nt Pa
r t
ici
pat
ion
Popula
tion Forc
e Rat
e Rate
Japan 108.
12 6
3.79 3.
20
France 2
5.98 2.
45 5
6.4pe
rcent
Ge r
many 6
9.17 3
9.75 8
.08pe
rcent

ANSWER:
Labor-
Force
De mogra
phi
c Popul
ati
on Labor Empl
oye
d Une
mpl
oye
d Unempl
oyme nt Part
ici
pati
on
Group Forc
e Rate Rate
Japan 1
08.12 66.
99 63.
79 3.
20 4.
78per
cent 61.
96percent
France 4
6.06 25.
98 23.
53 2.
45 9.
43per
cent 56.
4percent
Ge r
many 6
9.17 39.
75 36.
54 3.
21 8.
08per
cent 57.
47percent

TYPE:
SDI
FFI
CULTY:2SECTI
ON:
15.
1

2
. Whyha velabor-for
cepar ti
cipat
ionr atesf
orwomeni ntheUnit
e dStat
esincreasedsinceWor l
dWa rIIwhi l
elabor-
forcepar tic
ipati
onr at
e sforme nha vede c
reased?
ANSWER: Labor -
forcepartici
pa t
ionratesforwome nhaveincre
asedlarge
lyasar esultofachangeint heattit
udeofs oci
ety
t
owar dwome nwor kingout si
det hehomea ndaninc r
easeine
duc ati
onalandvoc ati
onaloppor t
unitiesforwome n.
Adva nce sinbirt
hc ontrolhavemadei tpossil
beforwoment ostayinthelaborf or
celonger.
Labor -
forcepartic
ipat
ion
rat
esf ormenha vede creas
edbe caus eyoungme nnow s t
ayinschoollongerthantheyus edto,olderme nnow r e
tir
e
ear
liera ndl i
velonger,andmor efathersnow sta
ya thometoraisethei
rchildren.
TYPE:
SDI FFICULTY2SECTI ON 28.1

3
. Mos ts
pe l
lsofunemployme ntareshort,andmos tune
mploymentobser
veda tanygiventimeislongte
rm. How c
an
thisbe
?
ANSWER: Mos tunemployedpeopleinthee conomyar eunempl
oyedforre
lat
ive
lys hortperi
odsoftime,whil
efewer
peopl
ea reunemployedforrel
ati
velylongpe ri
odsofti
me.Ify
ouwe retot
rackt hela
borhour slos
tdueto
unemployment,i
tisli
kel
yt hatmos tofthem wouldbeamongthosewhoa reune mployedforlongper
iodsoft
ime.
TYPE:
SDI FFICULTY:2SECTI ON: 15.
1
430  Chapter 15/Unemployment and Its Natural Rate

4
. Whymi ghtafavora
blecha ngetotheec onomys uchastechnologicalchangeorade c
reaseinthepr ic
eofimport
edoil
beass ociat
edwi t
hani ncr
e aseinfri
cti
onalune mployme nt
?
ANSWER: Evengene rall
yfavorablechangeswi llus
uallyinvol
ves omes ortofsect
oralshockthatchangesthedemandof
l
aboramongdi ffe rentfir ms .Forexampleade creas
ei nthepr ic
eofimpor t
edoilwoul dlikel
yreducethedemandfor
U.
S.oi lworke
rsa ndincreasethede mandf orautomobilewor ker
s.Te c
hnologic
alprogres
sma kessomeindust
rie
s
dec
lineandot hersadvancec re
a t
ingfri
c t
ionalunemployme nt.
TYPE:
SDI FFI CULTY:3SECTI ON: 15.
2

5. Ge rmanyha shighunempl oyme ntcompe nsat

ion. Whataresomeoft heconsequencesoft
his?
ANSWER: Theune mployme ntrat
ei srel
a t
ivelyhigh, about12percentcomparedtoa bout4or5percenti
ntheUnit
ed
St
a t
es.Taxesarehigh,about50pe r c
e ntofincome .Peopl
es t
ayune mployedforave r
ylongtime.Someess
enti
all
y
becomepr ofes
sionall
yune mpl oyed.The reisli
t t
leinc
enti
veforpeopletotakepar tt
imeorlow-paidj
obs
.Companie
s
havemove dtone ighbori
ngPol andt ot a
kea dvant a
geoflowe rcostl
abor.
TYPE:
SDI FFICULTY:2SECTI ON: 15.2

6
. Teenageune mployme ntishi gherthanune mpl oyme ntofpe opleages20andove r.Explainwhye conomist
swould
attr
ibuteatl
eastpa rtoft hisdiffe rencetomi nimum- wagel a
ws .(
Hint:whoi sli
kelytoge tpaidmore?)
ANSWER: Peoplewhoar eexpe r
ienc e
da ndeduc ate
dar elikelytofindj obswhe r
et heequilibri
um wageisabovethe
minimum wa ge.I
nl a
borma rketswherethee quili
brium wagei sabovethemi nimum wa ge,t
hemi ni
mum wa gedoes
notcre
a t
eunempl oyme nt.Sincepe opl
ea ges20a ndove rtendt ohavemor eexperienceande ducati
onthanyounger
pers
ons,theminimum wa gema tte
rslessands oc r
ea t
eslessune mployment.
TYPE:
SDI FFICULTY:3SECTI ON: 15.3

7. Wha tist het he oryofeffic iencywa ges ?Giveac oupl eofe xpl anationsf orhow e ffic i
enc ywa gesmi ghtwor k.
ANSWER: Ac cordi ngt ot het he oryofe ffic ie ncywa ges,fir msope ratemor ee ffic ie
nt l
yi fwage sar eabovet hee quil
ibri
um
l
e vel
.The refor e,itma ybepr ofit ablef orfir mst okee pwage shighe veni nthepr esenceofa nex cesssuppl yoflabor.If
so,fir mswi llke epwa gesabovet hee qui l
ibri
um level,creati
ngune mpl oyme nt
.
(1)Wor kerHe alth:
Better-pai dwor kersea tamor enut ritiousdi e
t,andwor kerswhoe a tabe tte
rdi e tarehe althierandmor e
produc tive. A fir m ma yfindi tprofit abletopa yhighe rwa gesinor dertoha vehe althier,mor epr oduc ti
vewor kers
.
(2)Wor kerTur nove r:
Themor eafir m paysi tswor kers, t
hel es
sof t
enwi l
litswor kersc hooset olea vee mpl oyme nt.Sinc eitiscostl
yt o
hireandt rainne w wor ker s
,itma ybepr ofit ablefora ne mpl oye rtopa yhighe rthane qui l
ibrium wa ge sinor derto
reducewor kert ur nove rra t
es.
(3)Wor kerEffor t
Injobswhe rewor kersha ves omedi sc reti
onove rhow har dt he ywor k,wor kersma ys hirk. Asar esul t
,fir ms
moni t
ort hee ffor toft he i
rwor kers
,andt hosecaughts hirkinga refir ed. Howe ver,itiscos t
lytomoni torwor kers,and
moni t
or ingi sof t
e nimpe rfect.Bypa yinghi gherwa ges,fir msmakei tmor ee xpe nsiveforwor kerstos hirk,sinceif
theyar ec aughtt he ywi llnotbeabl etofindot herempl oyme nta tawa gea shigha sthe ircur r
entwa ge.Itma ybe
profit ablef orafir mt opa yhi ghert ha nma rketwa gesi nor de rtor educ eshirki ng.
(4)Wor kerQua l
ity
Whe nafir m hiresne w wor kers,itc annotpe rf
ec t
lyga uget hequa lit
yoft hea ppl i
cant s
. Bypa yingahi gherwa ge,
thefir ma t
tr actsabe tt
e rpoolofwor ke r stoapplyf oritsjobs.Itma ybepr ofit ablef orafir mt opa yhi gherthan
mar ketwa ge si nor dert oinc re
as ethepr oba bi
lit
ytha titwillhiregood- qualit
ywor kers
.
TYPE:
SDI FFI CULTY:2SECTI ON: 15.5

8
. Suppos et hatthereisane xcesss upplyofe c
onomi cspr ofessors.Shoulduni versi
ti
esne c essaril
yr e
ducesalari
es?Wha t
doe sstanda r
de conomict heor ys uggest
?Wha tdoe seffic iency-wa getheorysugges t?
ANSWER: Standa rde conomict heor ysugge s
tsthatifuni versiti
esa reinterestedinmaximi zingpr ofit sorminimizingcost
s,
t
he ys houl dreduc esal
a r
iesunt i
lthesupplyofwor kersisequalt ot hedemand.Thi swi llreduc ecos
tsofproduc t
ion
andr aisepr ofit s.Effic ienc y-wagetheorys ugge ststha titmightbepr ofit ablef oruni versi
ti
estokeepwa gesabovet
he
equili
br ium levelinorde rt
or educ eworkertur nove r
,increas eworke rqualit
y,inc
re as
ewor kereffor t(
reduce
s
hirking) ,andt herefor
ewor kerpr oducti
vity.(Fortuna t
e l
ys alari
esofe c
onomi c
spr ofessorsa reusuall
yabi tabove
wha tisne c
essarytoe atnutritiousdiets,
sot hewor ker-healthvariantoft heeffic i
e nc ywa geisnotli
kelytobe
i
mpor tanthe re.
)
TYPE:
SDI FFI CULTY:3SECTI ON: 15.5
 Chapter 15/Unemployment and Its Natural Rate  431

9
. Cyc licalunempl oymenta ndt hena t
ur alr at
eofune mpl oyme nta res ome t
ime shardt odi stingui shfrom e achot her,s
o
ec onomi stsar enotve ryconfide ntaboute sti
ma tesoft hena turalr ateofune mployme nt .St ill
,sinc
eune mpl oyme nt
ratesa rec ons is
tentlyhighe rinCa na daa ndmos tWe sternEur ope anc ount riesthani nt heUni tedStates,itappe ars
tha tthena turalrateofune mpl oyme nti sloweri ntheUni tedS t
a t
e s.Wha tmi ghtexpl aint hi sdi ffe rence?
ANSWER: Thet extoffe r
st woe xpl ana ti
onsf orthena turalr at
eofune mpl oyme nt.Thefir sti sf rict
ionalune mpl oyme nt,
whi char ise saspe oplea nde mpl oyeest a keti
met os e archforthebe stma tch.Fr i
cti
ona lune mpl oyme ntwoul dbe
higheri nc ount rie
st hatha vef reque nta ndl argese ct
or alshift
sandgene rousune mpl oyme ntc ompe ns at
ion.Its e
e ms
unl i
ke l
yt ha tCanadaandWe sternEur ope anc ountrieswoul dha vegr eat
e rs ec
torals hiftst hant heUni t
edSt ates.So,
someoft hedi ffe r
enc emi ghtbeduet omor ege nerousune mpl oymentc ompe nsationi nCa nadaa ndWe s
tern
Eur ope.
Thes ec onde xplana t
ionf ort hena t uralrat
eofune mpl oyme nti sthatwa gesinsomel a borma rketsarea bove
equi li
brium.Oner ationalefors e t
t i
ngwa gesabovee quili
br i
um ist oa tt
racta ndr etainpr oduc ti
vewor ker s
.The reis
noobvi ousr eas
onwhyt he s
ee ffic iencywa gesshoul dc ontri
but et oune mployme ntmor einCanadaandWe st
ern
Eur opet ha ni ntheUni t
edSt ates .Wa ge sc analsobeabovee quili
br ium ins omemar ketsbe causeofmi nimum- wa ge
l
a ws .So,s omeune mpl oyme ntinCanadaa ndWe st
er nEur opemi ghtr es
ul tfrom hi ghe rmi ni mum wa ges.
TYPE:
SDI FFI CULTY:3SECTI ONS: 28.2-28.5