Chapter 10

Question 0

What is the labor force?

Answer 0

It is the number of people who are willing and able to work (whether or not they actually have jobs.)

Question 1

What is employment?

Answer 1

It refers to the situation in which individuals who are willing and able to work have jobs. (Percentage of the work force that have jobs.)

Question 2

What is the working age population?

Answer 2

The number of individuals between the ages of 16-24.

Question 3

What is unemployment?

Answer 3

This refers to the situation in which individuals who are willing and able to work but don’t have jobs. (Percentage of labor force that do not have jobs.)

Question 4

What is the natural rate of unemployment?

Answer 4

This is the level of employment where the quantity demanded of labor is equal to the quantity supplied of labor.

Question 5

What is the natural rate of unemployment?

Answer 5

This is the level of unemployment consistent with the natural level of employment.

Question 6

What is frictional unemployment?

Answer 6

This is a short-term unemployment resulting from the process of matching workers with jobs.

Question 7

What is structural unemployment?

Answer 7

This is unemployment resulting from the persistent mismatch of a worker’s skill and characteristics with the job requirements.

Question 8

What is cyclical unemployment?

Answer 8

This is unemployment resulting from a business cycle recession. It is the unemployment in excess of the natural rate of unemployment.

Question 9

What is full employment?

Answer 9

This is when the only unemployment left in the economy is frictional or structural.

Question 10

What are discouraged workers?

Answer 10

This refers to individuals who are willing and able to work, but do not have jobs and are not looking for jobs because they do not believe they will get a job.

Question 11

What does labor force participation rate mean and tell you?

Answer 11

The participation rate is an important metric to note when looking at unemployment data because unemployment figures reflect the number of people who are looking for jobs but are unable to secure employment.

Question 12

What is the equation to find labor force participation rate?

Question 13

Draw a graph illustrating the natural rate of unemployment

Question 14

what is the equation to calculate the natural rate of employment

Answer 14

Question 15

The CPI does not account for what?

Answer 15

Consumer responses to change in relative prices. Because componets of the market basket are fixed

Question 16

What does a fixed basket exclude?

Answer 16

New Goods and services

Question 17

What is something that might now be accounted for in CPI?

Answer 17

The change in the quaility of a good or service

Question 18

Does CPI over state inflation?

Answer 18

Yes