chapter 11

Question 1

What is the working-age population

Answer 1

those aged 16 or older who are not in the military or institutionalized.

Question 2

Who are the employed

Answer 2

working-age people who are
working.

Question 3

Who are the unemployed

Answer 3

Working-age people without jobs who are trying to get jobs.

Question 4

To be unemployed, you must be…

Answer 4

➢ Part of the working-age population.
➢ Not currently working.
➢ Actively searching for work.
➢ Able to accept a job if it were offered.

Question 5

You are employed as long as you work at least BLANK during the week for BLANK of some kind.

Answer 5

1. one hour
2. pay

Question 6

To be unemployed, you must…

Answer 6

be trying to get a job.

Question 7

What is the labor force

Answer 7

the employed plus the
unemployed.

Question 8

Who is not in the laborforce

Answer 8

Those in the working-age population who are neither employed nor unemployed.
➢ People who are retired, in school,
unwell, taking care of a child or family
member, or have given up looking for a job.

Question 9

What is the labor force participation rate

Answer 9

the percentage of the working-age population that is either employed or unemployed.

Question 10

What is the labor force participation rate equation

Answer 10

Employed + Unemployed divided by
Working age population x 100

Question 11

what is the unemployment rate

Answer 11

the percentage of the labor force that is unemployed.

Question 12

what is the unemployment rate formula

Answer 12

the unemployed divided by the labor force x 100

Question 13

what is the equilibrium unemployment rate

Answer 13

the level of unemployment that occurs when the economy is doing well and everyone who wants a job at the going wage rate has one.

Question 14

who are the long-term unemployed

Answer 14

people who have
been unemployed for six consecutive
months or longer.

Question 15

who are the marginally attached

Answer 15

someone who wants a job and has looked for a job within the past year, but who isn’t counted as unemployed because they aren’t currently searching for work.

Question 16

who are the underemployed

Answer 16

someone who has some work, but wants more hours, or whose job isn’t adequately using their skills.

Question 17

what is the labor supply

Answer 17

the quantity of labor that individuals are willing and able to offer at different wage rates in a given period.

Question 18

is the labor supply upward or downward sloping

Answer 18

Upward sloping: Workers supply more labor when wages are high.

Question 19

what is the labor demand

Answer 19

the quantity of labor (workers) that employers are willing and able to hire at a given wage rate in a specific period

Question 20

is the labor demand upward or downward sloping

Answer 20

Downward sloping: Employers demand less labor when the price of labor is high.

Question 21

what is equilibrium

Answer 21

Where the quantity of labor demanded is equal to the quantity of labor supplied.
➢ Everyone who wants to work for the market wage is hired.

Question 22

what is frictional unemployment

Answer 22

unemployment due to the time it takes for employers to search for workers, and for workers to search for jobs.
➢ Lots of time spent going on interviews, and considering which job is the best fit.

Question 23

what is structural unemployment

Answer 23

unemployment that occurs because wages don’t fall to bring labor demand and supply into equilibrium.
➢ Wages may remain high as a result of unions, government, or employer actions.

Question 24

what is cyclical unemployment

Answer 24

unemployment that is due to a temporary downturn in the
economy.
➢ During an economic downturn (2020 recession, 2008 recession), many resources,
including labor, go unused.

Question 25

what are the three major factors that determine how much time it takes for workers and employers to find each other

Answer 25

1. The efficiency of the resources
   employers and workers use to find each other.
2. The alignment of the skills workers
   have and the skills employers desire.
3. Unemployment insurance and other income support during unemployment.

Question 26

what is the gap between the number of available jobs and the number of available workers called

Answer 26

structural unemployment.

Question 27

what is Hysteresis

Answer 27

High levels of unemployment that increases the equilibrium unemployment rate.

Question 28

what are the social costs of unemployment

Answer 28

1. Unemployment is isolating and painful:
   ➢ Surveys show more likely to experience depression, anxiety, divorce, and poverty.
   ➢ Higher risk of death, including suicide.
2. Associated with worse outcomes:
   Greater permanent earnings losses, and more likely to have health problems.
3. Children of laid-off workers:
   Worse academic outcomes, worse mental health outcomes, and worse employment
   outcomes, making less money as adults.