Test Your Knowledge
Unemployment
Click on the letter choices to test your
understanding
A
B
C
Question 1
• The labor force is:
A
• The sum of people
employed
B
• The sum of all people
unemployed
C
• The sum of all people
who are employed and
unemployed
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The sum of all people employed is
employment. This is a measure of the
proportion of the country’s working age
population that is employed.
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Try again!
The unemployment rate is a measure of the
unemployed and is calculated as a percentage
by dividing the number of unemployed
individuals by all individuals currently in the
labor force.
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Correct!
The labor force consists of everyone of
working age who are actively employed or
seeking employment. People who are not
counted are students, retired people, stay-athome parents, people in prisons or similar
institutions, and discouraged workers who are
unable to find work and have left the labor
force.
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Question 2
• A person is counted as unemployed if:
A
• They are not looking for
work
B
• They are under the age
of 16
C
• They are available to
work and actively
looking for employment
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If someone is not looking for a job, for
example a stay-at-home parent, they are not
included in the labor force and therefore not
counted as unemployed.
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Someone who is under the age of 16 is legally
too young to work and therefore not in the
labor force.
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Correct!
• A person who is without a job but available to
work and has actively looked for employment
in the past four weeks is counted as
unemployed. People who are laid off but
expecting to return to work are also counted
as unemployed.
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Question 3
• A medical doctor working as a waiter would be
considered:
A
• Underemployed
B
• Discouraged
C
• Unemployed
Correct!
• Underemployed workers may be workers who
are working only part-time but would prefer a
full-time job
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Try again!
Workers who are available for work and have
searched for a job for at least some time
during the last year, but who have become
discouraged at their prospects of finding a job
and left the labor force are known as
discouraged workers.
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A person who is without a job but available to
work and has actively looked for employment
in the past four weeks is counted as
unemployed.
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Question 4
• Someone who is available for work, has searched for
a job, found few prospects, and has left the labor
force is considered:
A
• Underemployed
B
• Discouraged
C
• Unemployed
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Underemployed workers may be workers
who are working only part-time but who
would prefer a full-time job, or workers who
are highly skilled but are working in lowwage jobs that do no use those skills.
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Correct!
Workers who are available for work and have
searched for a job for at least some time
during the last year, but who have become
discouraged at their prospects of finding a job
and left the labor force, are known as
discouraged workers.
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Try again!
A person who is without a job but available to
work and has actively looked for employment
in the past four weeks is counted as
unemployed.
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Question 5
• The labor force participation rate identifies:
A
• The number of
unemployed
B
• The number of
employed
C
• The percentage of the
adult population in the
labor force
Try again!
The unemployment rate is a measure of the
unemployed and is calculated as a percentage
by dividing the number of unemployed
individuals by all individuals currently in the
labor force.
Back
Try again!
The employment rate is a statistical ratio that
measures the proportion of the country’s
working age population that is employed.
Back
Correct!
The labor force participation rate identifies
what percentage of the adult population is
in the labor force. It is calculated by dividing
the labor force by the adult population, and
then multiplying by 100.
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Question 6
• When workers lack the skills necessary to get a job,
they are ________________ unemployed.
A
• Structurally
B
• Frictionally
C
• Cyclically
Correct!
• Structural unemployment occurs when
workers have skills that are obsolete or no
longer demanded by employers, when they
lack the skills necessary to get a job, or when
they cannot move to a new location to find
work. Efficiency wages, a binding minimum
wage, labor unions and unemployment
insurance may also contribute to structural
unemployment.
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Try again!
Frictional unemployment is the result of
workers searching for jobs, or waiting for new
jobs to begin. Frictional unemployment is
often called job search unemployment.
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Cyclical unemployment occurs when workers
are unemployed as a result of economic
changes associated with the business cycle. At
times, economic conditions can cause the
aggregate demand for goods and services to
decline, therefore lowering the demand for
labor needed to produce these goods and
services.
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Question 7
• New and recent entrants into the labor force are
________________ unemployed.
A
• Structurally
B
• Frictionally
C
• Cyclically
Try again!
• Structural unemployment occurs when
workers have skills that are obsolete or no
longer demanded by employers, when they
lack the skills necessary to get a job, or when
they cannot move to a new location to find
work. Efficiency wages, a binding minimum
wage, labor unions and unemployment
insurance may also contribute to structural
unemployment.
Back
Correct!
Frictional unemployment is the result of
workers searching for jobs, or waiting for new
jobs to begin. Frictional unemployment is
often called job search unemployment.
Next
Try again!
Cyclical unemployment occurs when workers
are unemployed as a result of economic
changes associated with the business cycle. At
times, economic conditions can cause the
aggregate demand for goods and services to
decline, therefore lowering the demand for
labor needed to produce these goods and
services.
Back
Question 8
________ unemployment occurs when workers are
displaced as a result of economic changes associated
with the business cycle.
A
• Structural
B
• Frictional
C
• Cyclical
Try again!
Structural unemployment occurs when
workers have skills that are obsolete or no
longer demanded by employers, when they
lack the skills necessary to get a job, or when
they cannot move to a new location to find
work. Efficiency wages, a binding minimum
wage, labor unions and unemployment
insurance may also contribute to structural
unemployment.
Back
Try again!
Frictional unemployment is the result of
workers searching for jobs, or waiting for new
jobs to begin. Frictional unemployment is
often called job search unemployment.
Back
Correct!
Cyclical unemployment occurs when workers
are unemployed as a result of economic
changes associated with the business cycle. At
times, economic conditions can cause the
aggregate demand for goods and services to
decline, therefore lowering the demand for
labor needed to produce these goods and
services.
Next
Question 9
Any deviation from the natural rate of
unemployment is ___________ unemployment.
A
• Structural
B
• Frictional
C
• Cyclical
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This type of unemployment is caused by
structural factors in the economy such as
worker skills mismatch, efficiency wages, a
binding minimum wage, labor unions, and
unemployment insurance.
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Try again!
Frictional unemployment results when
workers are searching for a job, or waiting for
a job to begin.
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Correct!
The natural rate of unemployment is the
lowest rate of unemployment over the long
run, often thought of as the rate of
unemployment that usually occurs in the
economy. Deviations from this rate are cyclical
unemployment.
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Question 10
The unemployment rate is closely tied to Real GDP. If
Real GDP falls:
A
• Aggregate demand has
risen
B
• Unemployment rises
C
• Unemployment falls
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• A decrease in Aggregate Demand is associated
with falling Real GDP.
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Correct!
• When Real GDP falls, output declines. This
means that fewer workers will be needed to
produce goods and services and
unemployment should rise.
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Try again!
When Real GDP rises, this indicates an
increase in Aggregate Demand and greater
output in the economy. This should lead to a
decrease in unemployment as more workers
are hired to meet the increased demand for
goods and services.
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