Chapter 11

Question 1

What is the working age population?

Answer 1

Non institutionalize civilians age 16 and over

Question 2

How are unemployed people apart of the labor force?

Answer 2

Unemployed and looking for jobs

Question 3

What is the labor force participation rate?

Answer 3

The share of working age population that is either employed or unemployed

Question 4

What is the formula for labor force participation rate?

Answer 4

= (labor force / working age population) * 100

Question 5

What is the unemployment rate?

Answer 5

The share of the labor force that’s unemployed

Question 6

What is the formula for unemployment rate?

Answer 6

= (unemployed / labor force) * 100

Question 7

What is the equilibrium unemployment rate?

Answer 7

The unemployment rate to which the economy tend sit return in the long run

Question 8

Define underemployed.

Answer 8

Someone who has work, but once more hours, or whose job isn’t adequately using their skills

Question 9

Define marginally attached.

Answer 9

Someone who wants a job, and who 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 10

Define involuntarily part time.

Answer 10

Someone who wants full-time work and is working part-time because they haven’t found a full time job yet

Question 11

Define frictional unemployment.

Answer 11

Unemployment due to the time it takes for employers to search for workers, and for workers to search for jobs

Question 12

What are three sources of frictional unemployment?

Answer 12

1. Job search resources
2. Skills mismatch
3. Unemployment insurance and other income support

Question 13

Define structural unemployment.

Answer 13

Unemployment that occurs because wages don’t fall to bring labor demand, and supply to equilibrium

Question 14

What are the two sources of structural unemployment?

Answer 14

1. Efficiency wages (wages above minimum to increase efficiency)
2. Institutional causes (unions, job protection regulations, minimum wage laws)

Question 15

Define cyclical unemployment.

Answer 15

Unemployment that is due to a temporary downturn in the economy

Question 16

What are the six cost of Unemployment?

Answer 16

1. Lower wages and worse career opportunities
2. Permanent joblessness can rise from period of high unemployment
3. Lower tax revenue and higher government spending
4. Isolating and painful
5. Long term unemployment is associated with worse outcomes
6. Children whose parents experience unemployment suffer