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Exam 28: Unemployment and Its Natural Rate

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Question 151

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Explain how the following apparently contradictory statement can be true: Most spells of unemployment are short, and most unemployment observed at any given time is long-term.

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Most people who become unemplo...

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Question 152

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The demand for workers often rises in one region of the U.S. and falls in another. This illustrates

A) frictional unemployment created by sectoral shifts.
B) frictional unemployment created by efficiency wages.
C) structural unemployment created by efficiency wages.
D) structural unemployment created by sectoral shifts.

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Question 153

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A minimum wage that is below the equilibrium wage rate does not raise unemployment.

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is higher and the quantity demanded of labor is lower than at the equilibrium wage.

Unemployment generated by the existence of labor unions is structural unemployment and so contributes to the natural rate of unemployment.

Over the past several decades, the difference between the labor-force participation rates of men and women in the U.S. has gradually increased.

The Bureau of Labor Statistics computes labor-force participation rates for the entire adult population and for groups based on age, gender, and race.

The unemployment that results from the process of matching workers and jobs is called structural unemployment.

Table 28-3 ​ ​ $\begin{array} { | l | l | } \hline \text { Civilian labor force } & 100 \text { million } \\\hline \text { Persons unemployed } 15 \text { weeks or longer } & 1.6 \text { million } \\\hline \text { Job losers and persons who have completed temporary jobs (excludes job leavers) } & 3.1 \text { million } \\\hline \text { Total unemployed } & 6.2 \text { million } \\\hline \text { Total unemployed plus discouraged workers } & 7.0 \text { million } \\\hline \text { Total unemployed plus all marginally attached workers } & 8.1 \text { million } \\\hline \text { Total unemployed plus all marginally attached workers plus total employed part-time } & 9.2 \text { million } \\\text { for economic reasons } & \\\hline\end{array}$ -Refer to Table 28-3. What is the U-1 measure of labor underutilization?

Most U.S. workers have wages well above the legal minimum, so minimum-wage laws do not prevent the wage from adjusting to balance supply and demand.

Sectoral shifts contribute to frictional unemployment.

The unemployment rate equals the percentage of the adult population that is unemployed.

Suppose that the Bureau of Labor Statistics reported that there were 62 million people over age 25 whose highest level of education was some college or an associate degree. Of these, 45.3 million were employed and 3.6 million were unemployed. What were the labor-force participation rate and the unemployment rate for this group?

A labor union is similar to a __________.

Suppose that a large number of people who used to work or seek work no longer do either. Other things the same, this makes

Someone who is without work but is not looking for work is included in the Bureau of Labor Statistics' "unemployed" category.

A firm might offer efficiency wages to reduce worker turnover and thereby reduce production costs.

Octavia is a stay-at-home parent who has not searched for work in recent years. Michael does not currently have a job, but has applied for several jobs in the previous week. Who does the Bureau of Labor Statistics count as "not in the labor force"?

Table 28-2 Suppose people in the adult population in a small country are classified based on their age. ​ ​ ​ -Refer to Table 28-2. Suppose that the natural rate of unemployment is 5% for those under 55 and 3% for those 55 and older. The cyclical unemployment rate for those under 55 is

U.S. Department of Labor data show that minimum-wage workers tend to be young, less educated, more likely to be working part time, and concentrated in the leisure and hospitality industry.