Chapter 8

Question 1

“The number of people working” would be put into what category?

Answer 1

Employed

Question 2

“The number of people out of work and currently looking for a job” would be put into what category?

Answer 2

Unemployed

Question 3

How can we calculate unemployment?

Answer 3

labour force x unemployment rate/100

Question 3

“The number of people employed and unemployed” would be put into what category?

Answer 3

Labour Force

Question 4

What are people over the age of 15 known as?

Answer 4

Adult Population

Question 5

“The number of people employed and apart of the adult population” would be put into what category?

Answer 5

The Employment Rate

Question 6

The Unemployment Rate is the

Answer 6

The percent of adults who are in the labour force but don’t have jobs
(Unemployed ÷ Labour ForceX100)

Question 7

The Labour Force Participation Rule is

Answer 7

the percentage of adults in the economy who are either employed or unemployed

Question 8

how can we calculate the labour force participation rate?

Answer 8

Total labour force÷Total adult population X100

Question 9

Unemployment Rate can be affected by…

Answer 9

Gender, Race and Age

Question 10

One should be cautious when comparing national unemployment due to..

Answer 10

Different Definitions of Unemployment, Different Survey tools for measuring, Poorer countries lacking resources and technical Capabilities and Different Labour Markets

Question 11

Patterns in Unemployment include

Answer 11

the unemployment rate moves up and down as an economy moves in and out(fluctuates), never falls to 0, almost never seems to drop below 3%, stays low for short periods, unemployment rate always returns to a range between 6-8%

Question 11

what causes short-run changes in employment ?

Answer 11

the Standard Economic Model, the Competitive Model, the Business Cycle, and the Sticky Wage theory

Question 12

Cyclical Unemployment

Answer 12

Is the thing in unemployment that the economy causes due to moving from expansion to recession or recession to expansion
, is the Short term unemployment

Question 13

What is known as the booms and recessions that shift the demand for the labour curve creating short term unemployment?

Answer 13

The Business Cycle

Question 14

Wages might be sticky downwards due to..

Answer 14

implicit contract, efficient wage theory, adverse selection, insider-outsider model, and the relative wage coordination

Question 15

The Sticky Wage theory tries to?

Answer 15

reconcile the supply and demand model with the reality of unemployment

Question 16

Hidden Employment workers are those who work….

Answer 16

part time/ temporarily and are looking for a full-time job

Question 17

The Underemployed are those who are…

Answer 17

Employed in a job that is below their skills

Question 18

Discouraged workers are those who….

Answer 18

Stop looking for employment due to lack of suitable positions available

Question 19

The sticky wage theory states that …

Answer 19

wages are slow to adjust downwards when the economy is in poor condition

Question 20

In a supply and demand model of the labour market, the labour market should move toward an?

Answer 20

Equilibrium(equal) wage(We) and quantity(Qe) where the labour supplied by workers is equal to quantity of labour demanded by employers

Question 21

An Implicit Contract is

Answer 21

when the employer tries to keep wages from falling when the economy is weak or the business is in trouble

Question 22

The Efficiency Wage Theory is

Answer 22

the idea that the productivity of workers will increase if the employer pays them more then the wage/equilibrium

Question 23

Adverse Selection

Answer 23

the idea that if employers reduce wages for all workers the best will leave. to prevent this firms decide which workers should leave through firings/layoffs rather then by reducing wages

Question 24

The Insider-Outsider Model is

Answer 24

the idea that “insiders” are those who are already working for and are familiar with the firm and the “outsiders” are the recent hires, cutting wages may affect the insiders and damage the firms productivity

Question 25

The Relative Wage Coordination is

Answer 25

the idea that wage cuts are hard for the economy to implement because workers fight against them

Question 26

What causes changes in unemployment in the long run?

Answer 26

Natural Rate of Unemployment and Full Employment

Question 27

What is the Natural Rate of Unemployment

Answer 27

the unemployment rate that always exists even in a growing well functioning economy

Question 28

What is the type of natural rate of unemployment that occurs when workers move between jobs?

Answer 28

Frictional Unemployment

Question 29

What is the type of natural rate of unemployment that occurs because individuals lack the skills that an employer is looking for?

Answer 29

Structural Unemployment

Question 30

Full Employment is

Answer 30

when the unemployment rate=the natural rate

Question 31

Supply-side policies

Answer 31

are policies that assist the unemployed (ex. assistance for job searching, retraining, insurance, benefits, food stamps, medical benefits,etc.)

Question 32

Demand-side policies

Answer 32

policies that can affect the willingness of firms to hire (ex. government imposing strict regulations towards businesses,etc)

Question 33

the most significant cost of high unemployment is

Answer 33

the potential goods and services that might have been produced but weren’t due to lack of workers

Question 34

if everyone who looked for a job gave up, the unemployment rate would..

Answer 34

decrease

Question 35

Reasons for downward tendency of natural rate of unemployment?

Answer 35

the internet which makes jobs searching easier, growth of the temporary worker (agencies that provide jobs for workers while they are searching for permanent jobs), aging of the baby boon generation”(leaves less young people competing for jobs)

Question 36

The Natural rate of unemployment is related to…

Answer 36

full employment and potential real GDP

Question 37

what can have a powerful affect on the natural rate of unemployment?

Answer 37

shifts in productivity