1. Suppose that the overall size of the population is 50,000. Of these 50,000, 2

ID: 1177657 • Letter: 1

Question

1. Suppose that the overall size of the population is 50,000. Of these 50,000,

27,000 are employed,

3,000 are unemployed

20,000 are not in the labor force.

What is the unemployment rate?

10.0%

11.1%

6.0%

7.4%

2. To the extent that there are discouraged workers in the economy,

the official unemployment rate calculated by the BLS understates the true unemployment rate.

the official unemployment rate calculated by the BLS overstates the true unemployment rate.

the official count of the number of workers employed overstates the true number employed.

the official count of the number of workers employed understates the true number employed.

3. The natural rate of unemployment is about

0% to 1%.

3% to 4%.

5% to 6%.

7% to 8%.

4. Thomas is a 14 year-old who works for his father in his father's store every afternoon after school.

Thomas would be classified as.

not in the labor force.

unemployed.

not in the population

employed.

5. Which of the following policies would be most appropriate if the government wants to reduce structural unemployment?

providing better information to employers about the workers who are available to work and about their skills.

subsidizing the retaining of laid-off workers.

cutting income-tax rates.

increasing income-tax rates.

6. Which of the following is the most appropriate policy if the government wants to reduce cyclical unemployment?

providing more information about job seekers and their skills to employers.

an increase in government spending.

increasing income tax rates.

providing retraining to unemployed workers.

7. A large leftward shift of the aggregate supply curve would be called

a supply shock.

a structural shock.

a frictional shock.

a demand shock.

8. Which of the following would be an appropriate way to reduce cyclical unemployment?

using monetary policy to reduce interest rates.

providing better information about available jobs and wage rates.

providing retraining programs for unemployed workers.

reducing government spending.

Explanation / Answer