BEC - Gross Measures - Employment/Unemployment

Question 1

There can be official full employment when there is which of the following kinds of unemployment?

I. Structural unemployment.

II. Frictional unemployment.

III. Seasonal unemployment.

A. 	Only I.
B. 	Only II.
C. 	Only III.
D. 	I, II, and III.

Answer 1

There could be official full employment not only when there is frictional unemployment, but also when there is structural and seasonal unemployment.

Only cyclical unemployment is considered in the official measure of full employment.

Question 2

Which of the following is not included in what is considered the natural rate of unemployment?
	A. 	Cyclical unemployment.
	B. 	Structural unemployment.
	C. 	Frictional unemployment.
	D. 	Seasonal unemployment.

Answer 2

A. Cyclical unemployment.

Cyclical unemployment, which results from a downturn in the business cycle that has reduced the current need for workers, is not considered an element of the natural rate of unemployment. The natural rate of unemployment would include structural, frictional, and seasonal unemployment.

Question 3

If the U.S. economy is experiencing a 9% total unemployment rate and the natural rate of unemployment is 5.5%, which of the following is the cyclical rate of unemployment?

A. 	0.0%.
B. 	3.5%.
C. 	5.5%.
D. 	14.5%.

Answer 3

B. 3.5%.

The cyclical rate of unemployment is the difference between the total rate of unemployment and the natural rate of unemployment (which includes all categories of unemployment except cyclical unemployment). Thus, cyclical unemployment is calculated as the total unemployment rate 9.0% minus the natural rate of unemployment 5.5% = 3.5% cyclical rate of unemployment.

Question 4

Which of the following changes in unemployment is most likely to be associated with a period of economic contraction?

A. 	Decrease in the cyclical unemployment rate.
B. 	Increase in the natural unemployment rate.
C. 	Increase in the cyclical unemployment rate.
D. 	Increase in the structural unemployment rate.

Answer 4

C. Increase in the cyclical unemployment rate.

Cyclical unemployment results from a contraction in economic activity (i.e., a decrease in aggregate demand). During a period of economic contraction, the cyclical unemployment rate would be expected to increase.

Question 5

ason, 14 years old, has been working delivering newspapers for the past two years. Because he just entered high school, he has had to give up his newspaper delivery job. Although he has been seeking a new job, he has not been able to find one. Jason would be considered

frictionally unemployed YES / NO
structurally unemployed YES / NO
cyclically unemployed YES / NO

Answer 5

Frictionally Unemployed: NO
Structurally Unemployed: NO
Cyclically Unemployed: NO

Jason is not considered frictionally, structurally, or cyclically unemployed. Because Jason is only 14 years old, he is not considered a member of the workforce and, therefore, is not counted as unemployed. To be considered part of the workforce, an individual must be at least 16 years old.

Question 6

Frictional Unemployment

Answer 6

when a worker is in transition between jobs (or has imperfect information about job opportunities)

Question 7

Structural Unemployment

Answer 7

when a worker’s prior type of work has been greatly reduced or eliminated, or when the worker does not have the skills needed for available jobs.

Question 8

Cyclical Unemployment

Answer 8

when a downturn in the business cycle has reduced the current need for workers.

Question 9

Which of the following types of unemployment typically results from technological advances?

A. Cyclical.

B. Frictional.

C. Structural.

D. Short-term.

Answer 9

C. Structural Unemployment

Structural unemployment consists of members of the workforce who are not employed because the types of jobs they had previously have been greatly reduced or eliminated, including as a result of technological advances, or because they lack the skills needed for available jobs. Technological advances cause structural unemployment.

Question 10

As a result of the recession in 2009 and the related decline in tourism, several thousand hospitality industry workers in Florida became unemployed. These workers were

A. 	frictionally unemployed.
B. 	structurally unemployed.
C. 	cyclically unemployed.
D. 	seasonally unemployed.

Answer 10

C. cyclically unemployed.

Workers who are unemployed because of a recession are considered cyclically unemployed. They are unemployed because a downturn in the business cycle (including a recession) has reduced the current need for workers.