Identify the Choice That Best Completes the Statement Or Answers the Question s2

Multiple Choice

Identify the choice that best completes the statement or answers the question.

____ 1. 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.

____ 2. The designation "natural" implies that the natural rate of unemployment

a. / is desirable.
b. / is constant over time.
c. / is impervious to economic policy.
d. / does not go away on its own even in the long run.

____ 3. The Bureau of Labor Statistics places people in the “employed” category if they

a. / are without a job, but are available for work and have tried to find a job during the previous 4 weeks.
b. / work without pay in a family member’s business.
c. / are waiting to be recalled to a job from which they had been laid off.
d. / All of the above are correct.

____ 4. Egzon is working part-time. Dijana is on temporary layoff. Who is included in the Bureau of Labor Statistics’ “employed” category?

a. / only Egzon
b. / only Dijana
c. / both Egzon and Dijana
d. / neither Egzon nor Dijana

____ 5. Who is included in the labor force by the Bureau of Labor Statistics?

a. / Azibo, a homemaker not looking for other work
b. / Kwamie, a full-time student not looking for work
c. / Geroy, who does not have a job, but is looking for work
d. / None of the above is correct.

____ 6. Pekelo owns his own business. The Bureau of Labor Statistics counts Pekelo 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.

____ 7. The sum of which of the following must be equal to the adult population?

a. / employed, unemployed
b. / employed, unemployed, labor force
c. / employed, unemployed, not in the labor force
d. / employed, unemployed, labor force, not in the labor force

____ 8. 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.

____ 9. 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.

____ 10. If an unemployed person quits looking for work, then, other things the same, the unemployment rate

a. / decreases and the labor-force participation rate is unaffected.
b. / and the labor-force participation rate both decrease.
c. / is unaffected and the labor-force participation rate decreases.
d. / and the labor-force participation rate are both unaffected.

Table 28-1

Labor Data for Wrexington

Year / 2004 / 2005 / 2006
Adult population / 2000 / 3000 / 3200
Number of employed / 1400 / 1300 / 1600
Number of unemployed / 200 / 600 / 200

____ 11. Refer to Table 28-1. The labor force of Wrexington in 2004 was

a. / 1400.
b. / 1600.
c. / 1800.
d. / 2000.

____ 12. Refer to Table 28-1. The labor force of Wrexington in 2005 was

a. / 1300.
b. / 1900.
c. / 2400.
d. / 3000.

____ 13. Refer to Table 28-1. The labor force of Wrexington in 2006 was

a. / 1600.
b. / 1800.
c. / 3000.
d. / 3200.

____ 14. Refer to Table 28-1. The labor force of Wrexington

a. / increased from 2004 to 2005 and increased from 2005 to 2006.
b. / increased from 2004 to 2005 and decreased from 2005 to 2006.
c. / decreased from 2004 to 2005 and increased from 2005 to 2006.
d. / decreased from 2004 to 2005 and decreased from 2005 to 2006.

____ 15. Refer to Table 28-1. The number of adults not in the labor force of Wrexington in 2004 was

a. / 200.
b. / 400.
c. / 600.
d. / 1800.

____ 16. Refer to Table 28-1. The number of adults not in the labor force of Wrexington in 2005 was

a. / 600.
b. / 1100.
c. / 1700.
d. / 2400.

____ 17. Refer to Table 28-1. The number of adults not in the labor force of Wrexington in 2006 was

a. / 200.
b. / 1400.
c. / 1600.
d. / 3000.

____ 18. Refer to Table 28-1. The number of adults not in the labor force of Wrexington

____ 19. Refer to Table 28-1. The unemployment rate of Wrexington in 2004 was

a. / 10%.
b. / 12.5%.
c. / 14.3%.
d. / 80%.

____ 20. Refer to Table 28-1. The unemployment rate of Wrexington in 2005 was

a. / 20%.
b. / 31.6%.
c. / 46.2%.
d. / 63.3%.

____ 21. Refer to Table 28-1. The unemployment rate of Wrexington in 2006 was

a. / 6.25%.
b. / 11.1%.
c. / 12.5%.
d. / 56.25%.

____ 22. Refer to Table 28-1. The unemployment rate of Wrexington

____ 23. Refer to Table 28-1. The labor-force participation rate of Wrexington in 2004 was

a. / 70%.
b. / 77.8%.
c. / 80%.
d. / 87.5%.

____ 24. Refer to Table 28-1. The labor-force participation rate of Wrexington in 2005 was

a. / 43.3%.
b. / 54.2%.
c. / 63.3%.
d. / 68.4%.

____ 25. Refer to Table 28-1. The labor-force participation rate of Wrexington in 2006 was

a. / 50%.
b. / 53.3%.
c. / 56.25%.
d. / 88.9%.

____ 26. Refer to Table 28-1. The labor-force participation rate of Wrexington

____ 27. Suppose some country had an adult population of about 25 million, a labor-force participation rate of 60 percent, and an unemployment rate of 6 percent. How many people were employed?

a. / 0.9 million
b. / 14.1 million
c. / 15 million
d. / 23.5 million

____ 28. According to 2007 data on the U.S. population, which of the following groups of adults (ages 20 and older) has the highest labor-force participation rate?

a. / white males
b. / white females
c. / black males
d. / black females

____ 29. According to 2007 data on the U.S. population, which of the following groups of teenagers (ages 16-19) has the lowest labor-force participation rate?

a. / white males
b. / white females
c. / black males
d. / black females

____ 30. Since 1960, the natural rate of unemployment in the U.S. has been between

a. / 0.4 and 0.6 percent.
b. / 4 and 6 percent.
c. / 14 and 16 percent.
d. / 40 and 60 percent.

____ 31. Over the past several decades, the difference between the labor-force participation rates of men and women in the U.S. has

a. / gradually increased.
b. / remained constant.
c. / gradually decreased.
d. / been eliminated.

____ 32. Recent entrants into the labor force account for about

a. / 1/5 of those who are unemployed.
b. / 1/4 of those who are unemployed.
c. / 1/3 of those who are unemployed.
d. / 1/2 of those who are unemployed.

____ 33. Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called

a. / the natural rate of unemployment.
b. / cyclical unemployment.
c. / structural unemployment.
d. / frictional unemployment.

____ 34. 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.

____ 35. Which of the following is an explanation for the existence of frictional unemployment?

a. / efficiency wages
b. / minimum-wage laws
c. / unions
d. / job search

____ 36. The natural unemployment rate includes

a. / both frictional and structural unemployment.
b. / neither frictional nor structural unemployment.
c. / structural, but not frictional unemployment.
d. / frictional, but not structural unemployment.

____ 37. Sectoral shifts in demand for output

a. / create structural unemployment.
b. / immediately reduce unemployment.
c. / increase unemployment due to job search.
d. / do not affect demand for labor.

____ 38. Consumers decide to buy more computers and fewer typewriters. As a result, computer companies expand production while typewriter companies lay-off workers. This is an example of

a. / frictional unemployment created by efficiency wages.
b. / frictional unemployment created by sectoral shifts.
c. / structural unemployment created by efficiency wages.
d. / structural unemployment created by sectoral shifts.

____ 39. Policies that reduce the time it takes unemployed workers to find new jobs

a. / can reduce both frictional unemployment and the natural rate of unemployment.
b. / can reduce frictional unemployment, but it cannot reduce the natural rate of unemployment.
c. / cannot reduce frictional unemployment, but it can reduce the natural rate of unemployment.
d. / cannot reduce either frictional unemployment or the natural rate of unemployment.

____ 40. 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.

____ 41. When a minimum-wage law forces the wage to remain above the level that balances supply and demand, there are

a. / more workers willing to work than there are jobs, so some workers are unemployed.
b. / fewer workers willing to work than there are jobs, so some workers are unemployed.
c. / more workers willing to work than there are jobs, so unemployment decreases.
d. / fewer workers willing to work than there are jobs, so unemployment decreases.

Figure 28-1

____ 42. Refer to Figure 28-1. At the equilibrium wage, how many workers are unemployed?

a. / 0
b. / 4000
c. / 5000
d. / 8000

____ 43. Refer to Figure 28-1. If the government imposes a minimum wage of $8, then how many workers will be unemployed?

a. / 0
b. / 3000
c. / 4000
d. / 7000

____ 44. Refer to Figure 28-1. If the government imposes a minimum wage of $8, then how many workers will be employed?

a. / 3000
b. / 4000
c. / 5000
d. / 7000

____ 45. Workers waiting for jobs to open up is most closely associated with

a. / cyclical unemployment.
b. / frictional unemployment.
c. / seasonal unemployment.
d. / structural unemployment.

____ 46. When a union bargains successfully with employers, in that industry,

a. / both the quantity of labor supplied and the quantity of labor demanded increase.
b. / both the quantity of labor supplied and the quantity of labor demanded decrease.
c. / the quantity of labor supplied increases and the quantity of labor demanded decreases.
d. / the quantity of labor demanded increases and the quantity of labor supplied decreases.

____ 47. Suppose that efficiency wages become more common in the economy. Economists would predict that this would

a. / increase the quantity demanded and decrease the quantity supplied of labor, thereby decreasing the natural rate of unemployment.
b. / decrease the quantity demanded and increase the quantity supplied of labor, thereby increasing the natural rate of unemployment.
c. / increase the quantity demanded and decrease the quantity supplied of labor, thereby increasing the natural rate of unemployment.
d. / decrease the quantity demanded and increase the quantity supplied of labor, thereby decreasing the natural rate of unemployment.

____ 48. Sectoral changes

a. / create frictional unemployment, while firms paying wages above equilibrium to attract a better pool of candidates creates structural unemployment.
b. / create structural unemployment, while firms paying wages above equilibrium to attract a better pool of candidates creates frictional unemployment.
c. / and firms paying wages above equilibrium to attract a better pool of candidates both create structural unemployment.
d. / and firms paying wages above equilibrium to attract a better pool of candidates both create frictional unemployment.

____ 49. 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.

____ 50. Quinn, the CEO of a corporation operating in a relatively poor country where wages are low, decides to raise the wages of her workers even though she faces an excess supply of labor. Her decision