revision questions chapter 21 pt4

Question 1

When the automobile replaced horse-drawn carriages as the principal means of transportation, firms producing horse-drawn carriages went bankrupt and permanently laid off all their workers, thereby increasing

Answer 1

structural unemployment

Question 2

Which of the following most likely would decrease frictional unemployment?

Answer 2

Effective Internet-based employment services and job registries.

Question 3

> Total population (millions) : 80
Currently employed (millions) : 40
Not working and looking for work (million) : 2
Want to work but no longer looking for work (millions) : 4

Answer 3

2/(40+2+4) x100= 5mill

Question 4

The natural rate of unemployment is the unemployment rate that exists when there is no

Answer 4

cyclical unemployment

Question 5

what is The retail prices index (RPI)

Answer 5

compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period.

Question 6

how to work out the inflation rate using price index

Answer 6

new price index - old price index
———————————————- x100
old price index

Question 7

Under 16: 50
Working full-time: 90
Working part-time: 30
Between the age of 16 and retirement age: 165
Unemployed: 5

Using the data in the above table, the economic activity rate is

Answer 7

total labour force / population x100
(50+90+30)/165 x100= 75.8%

Question 8

recessions…

Answer 8

are an economy-wide decrease in the level of aggregate economic activity.

Question 9

Full employment occurs only if

Answer 9

the unemployment rate is equal to the natural rate of unemployment.

Question 10

Full employment occurs when

Answer 10

cyclical unemployment is zero.

Question 11

The money wage rate equals £10 per hour. If the price level rises and the money wage rate does not change…

Answer 11

• the real wage rate decreases and the quantity of goods and services that an hour of work can buy decreases

Question 12

The smallest and most stable source of unemployment is

Answer 12

job leavers.

Question 13

Total population 2600
Working-age population 2,000
Economically inactive 500
Employed 1,300

Using the information in the table above, calculate the number of people in the workforce

Answer 13

working age population - economically inactive
2000 - 500 = 1500