Ch 20 Homework Quiz Answers

EXAM 2 Review Biology Questions
October 11, 2019
Graeter’s Grows Through Good Management
October 13, 2019

Ch 20 Homework Quiz Answers

Question 1

/ 1 pts
Below is data on the natural rate of unemployment and actual unemployment.

Natural rate of unemployment Actual unemployment
5% 5%

The information provided above reflects an economy that is

Correct!

healthy
FEEDBACK: To determine the health of an economy, we can compare the actual rate of unemployment with the natural rate of unemployment. The natural rate is the typical rate of unemployment in a healthy, growing economy. Therefore, if actual unemployment equals the natural rate, the economy is healthy. If the actual rate of unemployment is lower than the natural rate, the economy is expanding past its long-run potential—eventually, unemployment will increase to the natural rate. If the actual rate of unemployment is higher than the natural rate, the economy is in a recession.

in a recession

undergoing a temporary expansion

FEEDBACK: To determine the health of an economy, we can compare the actual rate of unemployment with the natural rate of unemployment. The natural rate is the typical rate of unemployment in a healthy, growing economy. Therefore, if actual unemployment equals the natural rate, the economy is healthy. If the actual rate of unemployment is lower than the natural rate, the economy is expanding past its long-run potential—eventually, unemployment will increase to the natural rate. If the actual rate of unemployment is higher than the natural rate, the economy is in a recession.

Question 2

/ 1 pts
Creative destruction would be associated with which of the following types of unemployment?

Frictional

Cyclical
Correct!

Structural
FEEDBACK: Creative destruction occurs when the introduction of new products and technologies leads to the end of other industries and jobs. As some jobs become obsolete, the result is structural unemployment, which is caused by changes in the industrial makeup (structure) of the economy. Although structural unemployment can cause transitional problems, it is often a sign of a healthy, growing economy.

FEEDBACK: Creative destruction occurs when the introduction of new products and technologies leads to the end of other industries and jobs. As some jobs become obsolete, the result is structural unemployment, which is caused by changes in the industrial makeup (structure) of the economy. Although structural unemployment can cause transitional problems, it is often a sign of a healthy, growing economy.

Question 3

/ 1 pts
Data on the natural rate of unemployment and actual employment are provided in the table below.

Natural rate of unemployment Actual unemployment
5% 8%

Based on these numbers, the amount of cyclical unemployment in the economy is

Correct!

positive
FEEDBACK: Cyclical unemployment occurs during recessions, when actual unemployment is higher than the natural rate. During temporary expansions, with unemployment below the natural rate, cyclical unemployment is negative. If the actual unemployment rate is higher than the natural rate, cyclical unemployment must be positive. If actual unemployment is below the natural rate, cyclical unemployment must be negative. If the rates are the same, cyclical unemployment is zero.

negative

zero

FEEDBACK: Cyclical unemployment occurs during recessions, when actual unemployment is higher than the natural rate. During temporary expansions, with unemployment below the natural rate, cyclical unemployment is negative. If the actual unemployment rate is higher than the natural rate, cyclical unemployment must be positive. If actual unemployment is below the natural rate, cyclical unemployment must be negative. If the rates are the same, cyclical unemployment is zero.

Question 4

/ 1 pts
In January 2008, the U.S. unemployment rate dropped to 4.9%. However, employment also fell from the prior month. How could this have happened?

The population increased.

The population decreased.

The labor force increased.
Correct!

The labor force decreased.
FEEDBACK: This is possible if some of the people who were employed or unemployed leave the labor force. Consider a simple economy with a labor force of 100 people, where 10 are unemployed and 90 are employed. Suppose 5 of the people who were employed lose their jobs and become unemployed, and the 10 previously unemployed workers get tired of looking for work and leave the labor force. Then, the final number in the labor force is 90, and 85 are employed and 5 are unemployed. Before the transition, we had an unemployment rate of 10%, and afterward the unemployment rate is 5.5%.

FEEDBACK: This is possible if some of the people who were employed or unemployed leave the labor force. Consider a simple economy with a labor force of 100 people, where 10 are unemployed and 90 are employed. Suppose 5 of the people who were employed lose their jobs and become unemployed, and the 10 previously unemployed workers get tired of looking for work and leave the labor force. Then, the final number in the labor force is 90, and 85 are employed and 5 are unemployed. Before the transition, we had an unemployment rate of 10%, and afterward the unemployment rate is 5.5%.

Question 5

/ 1 pts
In his song “Allentown,” Billy Joel sings about the demise of the steel and coal industry in Pennsylvania. In areas like Allentown and much of the Midwest, manufacturing was once the largest employer, but many of those jobs have disappeared as technology has changed. What type of unemployment is the song about?
Correct!

Structural
FEEDBACK: The steel and coal industry closed down in Allentown, causing workers to seek new employment. They don’t necessarily have the skills to match new jobs, meaning this represents structural unemployment. The song “Allentown” expresses how difficult it is for small communities when people have to adjust to changes in the structure of an economy. The focus of the song is on structural unemployment, which arises from factories closing in the town. Because the whole town was dependent on the factories, which were the biggest employers, after they closed, there were far fewer job opportunities for people in the community. Thus, Billy Joel sings about needing to find a new place to live. Structural unemployment may be a sign of a growing and dynamic economy, but it causes real pain for people who are caught in the middle of a dying industry.

Frictional

Cyclical

FEEDBACK: The steel and coal industry closed down in Allentown, causing workers to seek new employment. They don’t necessarily have the skills to match new jobs, meaning this represents structural unemployment. The song “Allentown” expresses how difficult it is for small communities when people have to adjust to changes in the structure of an economy. The focus of the song is on structural unemployment, which arises from factories closing in the town. Because the whole town was dependent on the factories, which were the biggest employers, after they closed, there were far fewer job opportunities for people in the community. Thus, Billy Joel sings about needing to find a new place to live. Structural unemployment may be a sign of a growing and dynamic economy, but it causes real pain for people who are caught in the middle of a dying industry.

Question 6

/ 1 pts

 

Number unemployed Working-age population Labor force
2,000 40,000 36,000

Using the data provided in the table above, calculate the labor force participation rate is

5%

5.5%

Correct!

90%

FEEDBACK: The labor force participation rate is calculated by dividing the total number of people in the labor force by the total population, and multiplying by 100 to obtain a percentage figure. Using the data provided in the table, the labor force participation rate = (36,000 / 40,000) × 100 = 90%.

95%

FEEDBACK: The labor force participation rate is calculated by dividing the total number of people in the labor force by the total population, and multiplying by 100 to obtain a percentage figure. Using the data provided in the table, the labor force participation rate = (36,000 / 40,000) × 100 = 90%.

Question 7

/ 1 pts

Refer to the table below. If 4 million of those who are currently unemployed become discouraged workers, the unemployment rate will _______________.

Category
Number of people (millions)
Institutionalized 14
Full-time workers 113
Less than 16 years of age 40
Armed forces (non-civilian) 20
Part-time workers 27
Population 314
Looking for work 14

increase to 9.3%
Correct!

decrease to 6.7%

FEEDBACK:The formula for the unemployment rate:

To calculate the unemployment rate before workers become discouraged, begin by calculating the number of employed workers. Looking at the table, we see that the number employed is equal to part-time workers plus full-time workers = 27 + 113 = 140. The question tells you that 14 million people are looking for work. They will be counted as unemployed until they become discouraged workers. Therefore, the previous labor force = 140 + 14 = 154, and the unemployment rate before workers become discouraged = (14 ÷ 154) x 100 = 9.1%.

To calculate the current unemployment rate, begin by considering the 4 million people who become discouraged, stop looking for jobs, and drop out of the labor force. When we account for the discouraged workers, the number of unemployed = 14 million – 4 million = 10 million. The new labor force = 140 + 10 = 150. Therefore, the new unemployment rate = (10 ÷ 150) x 100 = 6.7%. Thus we can see that the unemployment rate decreases to 6.7%.

increase to 6.7%

decrease to 9.3%

remain unchanged

FEEDBACK:The formula for the unemployment rate:

To calculate the unemployment rate before workers become discouraged, begin by calculating the number of employed workers. Looking at the table, we see that the number employed is equal to part-time workers plus full-time workers = 27 + 113 = 140. The question tells you that 14 million people are looking for work. They will be counted as unemployed until they become discouraged workers. Therefore, the previous labor force = 140 + 14 = 154, and the unemployment rate before workers become discouraged = (14 ÷ 154) x 100 = 9.1%.

To calculate the current unemployment rate, begin by considering the 4 million people who become discouraged, stop looking for jobs, and drop out of the labor force. When we account for the discouraged workers, the number of unemployed = 14 million – 4 million = 10 million. The new labor force = 140 + 10 = 150. Therefore, the new unemployment rate = (10 ÷ 150) x 100 = 6.7%. Thus we can see that the unemployment rate decreases to 6.7%.

Question 8

/ 1 pts
Which of the following best explains why the United States has shifted from an agricultural economy to a service-based economy?

The population of the United States has moved from rural to urban locations.
Correct!

Changes in the nature of agricultural production mean that fewer farm workers are needed.
FEEDBACK: The answer that best exemplifies the change from agriculture to service accounts for creative destruction—the introduction of new products and technologies that lead to the end of other industries and jobs. Changes in the production process allow farmers to produce much more food with far fewer workers.

Outsourcing agricultural production means fewer jobs in the farm sector.

People have started to value the output of the service sector more than that of the agricultural sector.

FEEDBACK: The answer that best exemplifies the change from agriculture to service accounts for creative destruction—the introduction of new products and technologies that lead to the end of other industries and jobs. Changes in the production process allow farmers to produce much more food with far fewer workers.

Question 9

/ 1 pts
Which of the following people would be considered unemployed?
Correct!

A 17-year-old offers to pet-sit, but no one hires her.
FEEDBACK: To be considered unemployed, a person must be part of the labor force and searching for a job without success. The pet-sitter is looking but no one will hire her.

A college graduate spends the summer after graduation touring Europe before starting a job search.

A part-time teacher is only able to work two days a week, even though he would like a full-time job.

An automobile worker becomes discouraged about the prospects for future employment and decides to quit looking for work.

FEEDBACK: To be considered unemployed, a person must be part of the labor force and searching for a job without success. The pet-sitter is looking but no one will hire her.

Question 10

/ 1 pts
Which of the following situations would increase the labor force participation rate?
Correct Answer

the government increasing the retirement age.

more people filing for disability

more people going back to school full time

You Answered

more people deciding to stay at home to look after their children.

FEEDBACK:

If the retirement age increases, this increases the amount of people in the labor force. If more workers file for disability, this means that they leave the labor force, and this would lower the labor force participation rate. The same applies to more people going back to school full time and more people becoming stay at home parents.

FEEDBACK:

If the retirement age increases, this increases the amount of people in the labor force. If more workers file for disability, this means that they leave the labor force, and this would lower the labor force participation rate. The same applies to more people going back to school full time and more people becoming stay at home parents.

Question 11

/ 1 pts
Which of the following situations would not be considered frictional unemployment?

A recent college graduate takes a month to gather more information about two potential job offers.

A worker with ten years of experience in finance gets laid off. He has rejected three job offers because they are below his skill level.
Correct!

A worker in a textile factory loses her job when manufacturing is mechanized. There are no other factories looking to hire someone with her skillset.
FEEDBACK: Frictional unemployment occurs because of delays in matching workers to jobs. Delays happen because of a lack of information or because of government policies. Frictional unemployment also occurs when workers wait to find better opportunities. The worker in the textile factory is an example of structural unemployment because the job loss was due to changes in technology.

A software development firm finds the perfect employee, but waits to hire her because government regulations require them to consider other candidates before they make an offer.

FEEDBACK: Frictional unemployment occurs because of delays in matching workers to jobs. Delays happen because of a lack of information or because of government policies. Frictional unemployment also occurs when workers wait to find better opportunities. The worker in the textile factory is an example of structural unemployment because the job loss was due to changes in technology.

Question 12

/ 1 pts
Which of the following would be an example of someone experiencing cyclical unemployment?

someone who changes jobs to be closer to their family

coal miners laid off due to EPA regulations that shut down coal fired power

Correct!

landscapers laid off in response to drop in new housing construction during a recession

FEEDBACK: Someone who changes jobs to be closer to their family would be considered frictional, because they would be in between jobs. The coal miners are structural due to changes in how the industry is run. The ski resort workers fall under seasonal. The landscapers are an example of cyclical because their unemployment is a result of a significant reduction in spending in the economy.

someone who is working at a ski resort and is laid off when the winter season is over

FEEDBACK: Someone who changes jobs to be closer to their family would be considered frictional, because they would be in between jobs. The coal miners are structural due to changes in how the industry is run. The ski resort workers fall under seasonal. The landscapers are an example of cyclical because their unemployment is a result of a significant reduction in spending in the economy.

Question 13

/ 1 pts
You have been hired to determine if unemployment is running too high. First you must determine the natural state of unemployment. You have been provided the data in the table below.

Frictional unemployment Structural unemployment Cyclical unemployment
2% 2% 1%

Using the data above, the natural rate of unemployment is

2%

3%

Correct!

4%

FEEDBACK: There are three different types of unemployment, but only two are considered part of the natural rate—structural and frictional. Cyclical unemployment occurs when an economy is in recession, and is therefore not counted as part of the natural rate.

5%

FEEDBACK: There are three different types of unemployment, but only two are considered part of the natural rate—structural and frictional. Cyclical unemployment occurs when an economy is in recession, and is therefore not counted as part of the natural rate.

Question 14

/ 1 pts
______ unemployment is the area in which policymakers can have their greatest impact.
Correct!

Cyclical

FEEDBACK: Cyclical unemployment, is caused by recessions, or economic downturns. This type of unemployment generates the greatest concern among economists and policymakers. It is the most serious type of unemployment because it means that jobs are not available for many people who want to work. Policymakers can pass legislation that will cut taxes and increase spending in the economy in order to lower cyclical unemployment. Structural unemployment would be better tackled by the states themselves since they can deal directly with the skills issues in their areas. Frictional unemployment is not that much of a concern to policymakers.

Structural

Frictional

Under

FEEDBACK: Cyclical unemployment, is caused by recessions, or economic downturns. This type of unemployment generates the greatest concern among economists and policymakers. It is the most serious type of unemployment because it means that jobs are not available for many people who want to work. Policymakers can pass legislation that will cut taxes and increase spending in the economy in order to lower cyclical unemployment. Structural unemployment would be better tackled by the states themselves since they can deal directly with the skills issues in their areas. Frictional unemployment is not that much of a concern to policymakers.

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