(a)
Whether the participation rate in the U.S has remained constant at 60% since 1950 or not.
(a)
Answer to Problem 1QAP
The given statement is false.
Explanation of Solution
The labor force participation rate has risen steadily since 1950. The participation rate in 2006 was 66 per cent of the civilian workforce. Since the 1950s, the participation rate has risen primarily due to the rise of women in the work force. One in three women became a member of the work force in 1950. One in three women is in the workplace today. Thus, the participation in the U.S has increased since, 1950.
(b)
Whether the flow out and into the employment is very small as compared to the labor force for each month or not.
(b)
Answer to Problem 1QAP
The given statement is true.
Explanation of Solution
The estimated number of monthly flows to and from jobs is about 7.8 million. There are about 151.4 million people in the labor force. Therefore, the movement into and out of jobs is roughly 5 percent of the workforce. Even though 7.8 million is a very large amount, flows in and out of jobs are very small compared to the size of the labor market.
(c)
Whether less than 10% of unemployed people exit
(c)
Answer to Problem 1QAP
The given statement is false.
Explanation of Solution
Around 45 per cent of unemployed workers leave unemployment per month on average. In fact, unemployment averages around two to three months. Using figures, the total number of unemployed a month is 6.2 million and the total number of unemployed people who leave unemployment is 2.8 million per month.
(d)
Whether the unemployment rate is higher in recession and low in expansion or not.
(d)
Answer to Problem 1QAP
The given statement is true.
Explanation of Solution
The rate of unemployment is closely tied to expansions and recessions. Unemployment rate appears to be low during expansions and high during recessions. During the 1982 recession, for example, unemployment peaked at 9.7 per cent, which is a very high unemployment rate. By comparison, the unemployment rate in 2000 was about 4%, a relatively low unemployment rate. Thus, the given statement is true.
(e)
Whether most of the workers are paid reservation wage or not.
(e)
Answer to Problem 1QAP
The given statement is false.
Explanation of Solution
Usually, most workers get paid equals their reservation wage. That is, the majority of workers earn a salary that is high enough that they choose to be working rather than unemployed. Although this can fluctuate slightly during recessions, overall workers usually get paid a salary that exceeds their reservation pay. Thus, the above statement is false.
(f)
Whether workers who does not belong to union have no bargaining power or not.
(f)
Answer to Problem 1QAP
The given statement is false.
Explanation of Solution
Bargaining power depends on two factors: how difficult it will be to replace the worker, and how hard to find a new job for the worker. When replacing the worker will be very costly, they have plenty of bargaining power because the employer would want to reduce the costs of replacing the worker. If a worker can quickly find a job they have greater bargaining power because they have nothing to lose. They will easily get a new job, if they get fired. Hence, the given statement is false.
(g)
Whether the best interest of the employers is to pay higher wage then reservation wage or not.
(g)
Answer to Problem 1QAP
The given statement is uncertain.
Explanation of Solution
Paying more than the reservation wage depends on the type of job. In general, paying more than a reservation wage for staff would reduce the turnover of the employees. However, in some sectors, such as pre-9/11 airport management, the approach is to recruit staff on their reservation wage and accept a high turnover rate. Hence, the given statement is uncertain.
(h)
Whether natural rate of unemployment is unaffected by policy change or not.
(h)
Answer to Problem 1QAP
The given statement is false.
Explanation of Solution
The natural unemployment rate is affected by the change in policies. Two changes in policy have a major impact on the natural unemployment rate. Firstly, the rise in unemployment benefits would result in an increase in the natural unemployment rate. Secondly, less strict implementation of antitrust laws would lead to a rise in the natural unemployment rate. Thus, the given statement is false.
Want to see more full solutions like this?
Chapter 7 Solutions
Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)
- Typically, even at similar stages of the economic cycle, the unemployment rate in several West European countries is higher than in the United States. To what extent can the above observation possibly be linked or not with the fact that in Europe: (1) the unionization rate is higher (2) laws often make it more difficult to lay off people, (3) collective bargaining is more or less centralized, (4) unemployment insurance programs are relatively more generous.arrow_forwardWhich of the following statements regarding policy measures to reduce unemployment is/are correct? a) Additional employment opportunities can be created by increasing automated production of goods and services. b) Consumption and investment must be lowered by increasing taxes or interest rates. c) The population growth rate must be lowered.arrow_forwardSuppose the population of a fictional economy falls into the following categories: 28 million are retired or homemakers; 30 million have full-time employment; 24 million have one part-time job; 28 million have two part-time jobs; 12 million do not have employment, but are actively looking for employment; and 20 million would like employment but do not have employment and are not actively looking for employment. 5 million are under the age of 10. Calculate the official unemployment rate (as a percentage, not decimals)as calculated by the U.S. Bureau of Labor Statistics. Round your answer to two decimal places. What is total employment as measured by the establishment survey? Use the numbers from Abovearrow_forward
- Which of the following is not an example of structural unemployment? Select the correct answer below: Morgan never finished high school and has trouble finding work that she is qualified for. Companies in her area have declined to hire her. Will has been offered a job on the other side of the country. Before he can start working, he expects to need around a month to sell his house and move to the new location. Molly completed an advanced degree in a highly specific engineering discipline. Since graduating, she has not been able to find a job that matches her expertise. Steven lost his manufacturing job when the company he worked for shut down. There are no other opportunities for him in the same industry and he lacks the skills to pursue other types of work.arrow_forwardThe three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics. Identify each person in the table as structurally, frictionally, or cyclically unemployed. Unemployment Type Lucia just graduated from college and is looking for a full-time position with an investment banking firm. Demand for new vehicles has fallen during a recent recession, and Sharon has been laid off from her job at an automotive factory. Kenji recently lost his job as a delivery driver. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. The following table presents data on frictional, cyclical, structural, and total unemployment for an economy. Rate Unemployment Type (Percent) 3.6 0.0 1.1 4.7 Frictional Cyclical Structural Total unemployment True or False: This economy is not currently at its natural rate of unemployment. True False Structural Frictional Cyclicalarrow_forwardFull employment unemployment rate" (also called the natural rate of unemployment) is defined as a) The situation when all people who want to work are actually employed. b) Zero involuntary unemployment. c) The unemployment rate that would exist in the absence of cyclical unemployment. d) The situation of only frictional unemployment. e) The unemployment rate that would exist in the absence of structural unemployment.arrow_forward
- Consider a hypothetical economy in which the labor force consists of 200 people. Of those, 180 people are employed full-time and 20 people are unemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore, initially the unemployment rate is calculated as follows: Unemployment Rate Number of Unemployed People Number of People in the Labor Force х 100 20 х 100 200 = 10% Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. The following table offers two possible scenarios resulting from the recession. Calculate the unemployment rate associated with each scenario in the following table. Assume that each scenario describes the only labor market changes in this economy. Scenario Unemployment Rate A: Firms reduce work hours by 10%. The number of involuntary part-time workers rises % as firms respond to the reduction in the demand…arrow_forwardA friend and fellow student shares her employment experience over the last 12-week summer break. It took her one full week to find a job. She started on the first day of week two and was able to keep her job for the remaining eleven weeks. Use this information to answer the following three questions, assuming the unemployment rate is not changing: 1. Calculate the rate of job finding (f) for the summer, using an average rate per week. Enter this value in the box below. Note that if fis the rate of job finding, then the average spell of unemployment is (1/f). The value of fis: 1 2. Calculate the rate of job separation (s), using an average rate per week. Enter this value into the box below. Note that if s is the rate of job separation, then the average length of employment is (1/s). The value of s is: 11arrow_forwardIn August of 2020, the United States unemployment rate was 8.4%; in September, it was 7.8%. Which of the following is true? There is a 7.7% decrease in the United States unemployment rate from August to September, 2020. There is a 0.077 percentage point decrease in the United States unemployment rate from August to September, 2020. There was a 0.071 percentage point decrease in the United States unemployment rate from August to September, 2020. There was a 0.6% decrease in the United States unemployment rate from August to September, 2020. There was a 7.1% decrease in the United States unemployment rate from August to September, 2020.arrow_forward
- Classify each statement about the U.S. unemployment rate as true or false. True False Answer Bank Changes in technology and new workers joining the workforce have coñtributed to an overall upward trend in the unemployment rate. It is very likely that an unemployment rate of 0% will never be observed. The end of the 20th century saw some of the highest rates of unemployment in US history. Unemployment generally remains stable and static over time, The behavior of the unemployment rate is related to the business cycle.arrow_forwardSuppose the world price of cotton falls substantially. The demand for labor among cotton-producing firms in Texas will . The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will The temporary unemployment resulting from such sectoral shifts in the economy is best described as unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply. Extending the number of weeks for which unemployed workers are eligible for unemployment insurance benefits from the government Establishing government-run employment agencies to connect unemployed workers to job vacancies Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeksarrow_forwardA country with a civilian (work-eligible) population of 90,000 (all over age 16) has 70,000 employed and 10,000 unemployed persons. Of the unemployed, 5,000 are frictionally unemployed and another 3,000 are structurally unemployed. On the basis of these data, answer the following questions. What is the natural rate of unemployment for this country? Is this economy in recession or expansion? Explain.arrow_forward
- Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning