Test Your Knowledge Unemployment

Test Your Knowledge Unemployment Click on the letter choices to test your understanding A

B

C

Question 1 • The labor force is:

A

• The sum of people employed

B

• The sum of all people unemployed

C

• The sum of all people who are employed and unemployed

Try again! The sum of all people employed is employment. This is a measure of the proportion of the country’s working age population that is employed.

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Try again! The unemployment rate is a measure of the unemployed and is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force.

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Correct! The labor force consists of everyone of working age who are actively employed or seeking employment. People who are not counted are students, retired people, stay-athome parents, people in prisons or similar institutions, and discouraged workers who are unable to find work and have left the labor force. Next

Question 2 • A person is counted as unemployed if:

A

• They are not looking for work

B

• They are under the age of 16

C

• They are available to work and actively looking for employment

Try again! If someone is not looking for a job, for example a stay-at-home parent, they are not included in the labor force and therefore not counted as unemployed.

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Try again! Someone who is under the age of 16 is legally too young to work and therefore not in the labor force.

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Correct! • A person who is without a job but available to work and has actively looked for employment in the past four weeks is counted as unemployed. People who are laid off but expecting to return to work are also counted as unemployed.

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Question 3 • A medical doctor working as a waiter would be considered:

A

• Underemployed

B

• Discouraged

C

• Unemployed

Correct! • Underemployed workers may be workers who are working only part-time but would prefer a full-time job

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Try again! Workers who are available for work and have searched for a job for at least some time during the last year, but who have become discouraged at their prospects of finding a job and left the labor force are known as discouraged workers.

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Try again! A person who is without a job but available to work and has actively looked for employment in the past four weeks is counted as unemployed.

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Question 4 • Someone who is available for work, has searched for a job, found few prospects, and has left the labor force is considered:

A

• Underemployed

B

• Discouraged

C

• Unemployed

Try again! Underemployed workers may be workers who are working only part-time but who would prefer a full-time job, or workers who are highly skilled but are working in lowwage jobs that do no use those skills.

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Correct! Workers who are available for work and have searched for a job for at least some time during the last year, but who have become discouraged at their prospects of finding a job and left the labor force, are known as discouraged workers.

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Try again! A person who is without a job but available to work and has actively looked for employment in the past four weeks is counted as unemployed.

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Question 5 • The labor force participation rate identifies:

A

• The number of unemployed

B

• The number of employed

C

• The percentage of the adult population in the labor force

Try again! The unemployment rate is a measure of the unemployed and is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force.

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Try again! The employment rate is a statistical ratio that measures the proportion of the country’s working age population that is employed.

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Correct! The labor force participation rate identifies what percentage of the adult population is in the labor force. It is calculated by dividing the labor force by the adult population, and then multiplying by 100.

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Question 6 • When workers lack the skills necessary to get a job, they are ________________ unemployed.

A

• Structurally

B

• Frictionally

C

• Cyclically

Correct! • Structural unemployment occurs when workers have skills that are obsolete or no longer demanded by employers, when they lack the skills necessary to get a job, or when they cannot move to a new location to find work. Efficiency wages, a binding minimum wage, labor unions and unemployment insurance may also contribute to structural unemployment. Next

Try again! Frictional unemployment is the result of workers searching for jobs, or waiting for new jobs to begin. Frictional unemployment is often called job search unemployment.

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Try again! Cyclical unemployment occurs when workers are unemployed as a result of economic changes associated with the business cycle. At times, economic conditions can cause the aggregate demand for goods and services to decline, therefore lowering the demand for labor needed to produce these goods and services. Back

Question 7 • New and recent entrants into the labor force are ________________ unemployed.

A

• Structurally

B

• Frictionally

C

• Cyclically

Try again! • Structural unemployment occurs when workers have skills that are obsolete or no longer demanded by employers, when they lack the skills necessary to get a job, or when they cannot move to a new location to find work. Efficiency wages, a binding minimum wage, labor unions and unemployment insurance may also contribute to structural unemployment. Back

Correct! Frictional unemployment is the result of workers searching for jobs, or waiting for new jobs to begin. Frictional unemployment is often called job search unemployment.

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Try again! Cyclical unemployment occurs when workers are unemployed as a result of economic changes associated with the business cycle. At times, economic conditions can cause the aggregate demand for goods and services to decline, therefore lowering the demand for labor needed to produce these goods and services. Back

Question 8 ________ unemployment occurs when workers are displaced as a result of economic changes associated with the business cycle.

A

• Structural

B

• Frictional

C

• Cyclical

Try again! Structural unemployment occurs when workers have skills that are obsolete or no longer demanded by employers, when they lack the skills necessary to get a job, or when they cannot move to a new location to find work. Efficiency wages, a binding minimum wage, labor unions and unemployment insurance may also contribute to structural unemployment. Back

Try again! Frictional unemployment is the result of workers searching for jobs, or waiting for new jobs to begin. Frictional unemployment is often called job search unemployment.

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Correct! Cyclical unemployment occurs when workers are unemployed as a result of economic changes associated with the business cycle. At times, economic conditions can cause the aggregate demand for goods and services to decline, therefore lowering the demand for labor needed to produce these goods and services. Next

Question 9 Any deviation from the natural rate of unemployment is ___________ unemployment.

A

• Structural

B

• Frictional

C

• Cyclical

Try again! This type of unemployment is caused by structural factors in the economy such as worker skills mismatch, efficiency wages, a binding minimum wage, labor unions, and unemployment insurance.

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Try again! Frictional unemployment results when workers are searching for a job, or waiting for a job to begin.

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Correct! The natural rate of unemployment is the lowest rate of unemployment over the long run, often thought of as the rate of unemployment that usually occurs in the economy. Deviations from this rate are cyclical unemployment.

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Question 10 The unemployment rate is closely tied to Real GDP. If Real GDP falls:

A

• Aggregate demand has risen

B

• Unemployment rises

C

• Unemployment falls

Try again! • A decrease in Aggregate Demand is associated with falling Real GDP.

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Correct! • When Real GDP falls, output declines. This means that fewer workers will be needed to produce goods and services and unemployment should rise.

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Try again! When Real GDP rises, this indicates an increase in Aggregate Demand and greater output in the economy. This should lead to a decrease in unemployment as more workers are hired to meet the increased demand for goods and services.

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