Chapter 28
Unemployment
TRUE/FALSE
1. Most people rely on income other than their labor earnings to maintain their standard of living.
ANS: F DIF: 1 REF: 28-0
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Income | Standard of living MSC: Definitional
2. The amount of unemployment that a country typically experiences is a determinant of that country's standard
of living.
ANS: T DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation
TOP: Unemployment | Standard of living MSC: Definitional
3. Some degree of unemployment is inevitable in a complex economy.
ANS: T DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation TOP: Unemployment
MSC: Definitional
4. The amount of unemployment varies little over time and across countries.
ANS: F DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation TOP: Unemployment
MSC: Definitional
5. When a country keeps its workers as fully employed as possible, it achieves a higher level of GDP than it
would if it left many of its workers standing idle.
ANS: T DIF: 1 REF: 28-0
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Employment | GDP MSC: Definitional
6. An economy’s natural rate of unemployment refers to the amount of unemployment that the economy
normally experiences.
ANS: T DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation
TOP: Natural rate of unemployment MSC: Definitional
7. Cyclical unemployment refers to the year-to-year fluctuations in unemployment around its natural rate.
ANS: T DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation TOP: Cyclical unemployment
MSC: Definitional
8. The natural rate of unemployment is closely associated with the short-run ups and downs of economic activity.
ANS: F DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation
TOP: Natural rate of unemployment MSC: Definitional
9. The natural rate of unemployment is the desirable rate of unemployment for an economy.
ANS: F DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation
TOP: Natural rate of unemployment MSC: Definitional
10. The natural rate of unemployment is constant over time.
ANS: F DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation
TOP: Natural rate of unemployment MSC: Definitional
80
81 Chapter 28/Unemployment
11. The natural rate of unemployment is impervious to economic policy.
ANS: F DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation
TOP: Natural rate of unemployment MSC: Definitional
12. Government policy can do nothing about the natural rate of unemployment.
ANS: F DIF: 2 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation
TOP: Natural rate of unemployment MSC: Interpretive
13. The natural rate of unemployment is a type of unemployment that does not go away on its own even in the
long run.
ANS: T DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation
TOP: Natural rate of unemployment MSC: Definitional
14. Long-run unemployment arises from a single problem that has a single solution.
ANS: F DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation
TOP: Natural rate of unemployment MSC: Definitional
15. There is no easy way for policymakers to reduce the economy’s natural rate of unemployment.
ANS: T DIF: 1 REF: 28-0
NAT: Analytic LOC: Unemployment and inflation
TOP: Natural rate of unemployment MSC: Definitional
16. Measuring unemployment is the job of the Bureau of Labor Statistics.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation TOP: Bureau of Labor Statistics
MSC: Definitional
17. Measuring unemployment is the job of the Bureau of Labor Statistics, which is part of the U.S. Department of
Commerce.
ANS: F DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation TOP: Bureau of Labor Statistics
MSC: Definitional
18. Every week, the Bureau of Labor Statistics produces data on unemployment.
ANS: F DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation TOP: Bureau of Labor Statistics
MSC: Definitional
19. The Bureau of Labor Statistics produces data on unemployment, types of employment, length of the average
workweek, and the duration of unemployment.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation TOP: Bureau of Labor Statistics
MSC: Definitional
20. The Bureau of Labor Statistics produces data on unemployment and other aspects of the labor market from a
regular survey of about 600 households, called the Current Population Survey.
ANS: F DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation TOP: Bureau of Labor Statistics
MSC: Definitional
21. The Bureau of Labor Statistics produces data on unemployment and other aspects of the labor market from a
regular survey of about 60,000 households, called the Current Population Survey.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation TOP: Bureau of Labor Statistics
MSC: Definitional
Chapter 28/Unemployment 82
22. The Bureau of Labor Statistics produces data on unemployment and other aspects of the labor market from a
regular survey of about 60,000 households, called the Census.
ANS: F DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation TOP: Bureau of Labor Statistics
MSC: Definitional
23. The Bureau of Labor Statistics places each adult (aged 16 and older) of each surveyed household into one of
three categories: employed, unemployed, and not in the labor force.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation TOP: Bureau of Labor Statistics
MSC: Definitional
24. The Bureau of Labor Statistics places each adult (aged 16 and older) of each surveyed household into one of
four categories: employed, underemployed, unemployed, and not in the labor force.
ANS: F DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation TOP: Bureau of Labor Statistics
MSC: Definitional
25. The Bureau of Labor Statistics’ “employed” category includes those who worked as paid employees, worked
in their own business, or worked as unpaid workers in a family member’s business.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Employment MSC: Definitional
26. Only paid workers are included in the Bureau of Labor Statistics’ “employed” category.
ANS: F DIF: 2 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Employment MSC: Interpretive
27. Both full-time and part-time workers are included in the Bureau of Labor Statistics’ “employed” category.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Employment MSC: Definitional
28. Some adults who were not working are included in the Bureau of Labor Statistics’ “employed” category.
ANS: T DIF: 2 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Employment MSC: Interpretive
29. Adults who were not working but who had jobs from which they were temporarily absent are included in the
Bureau of Labor Statistics’ “employed” category.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Employment MSC: Definitional
30. Adults who were waiting to be recalled to a job from which they had been laid off are included in the Bureau
of Labor Statistics’ “employed” category.
ANS: F DIF: 2 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Employment MSC: Interpretive
31. The Bureau of Labor Statistics’ “unemployed” category includes those who were not employed, were
available for work, and had tried to find employment during the previous 4 weeks.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation
TOP: Bureau of Labor Statistics | Unemployment MSC: Definitional
83 Chapter 28/Unemployment
32. Every adult who was not employed during the previous 4 weeks is included in the Bureau of Labor Statistics’
“unemployed” category.
ANS: F DIF: 2 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation
TOP: Bureau of Labor Statistics | Unemployment MSC: Interpretive
33. Someone who is without work but is not looking for work is included in the Bureau of Labor Statistics’
“unemployed” category.
ANS: F DIF: 2 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation
TOP: Bureau of Labor Statistics | Unemployment MSC: Interpretive
34. Full-time students and homemakers are included in the Bureau of Labor Statistics’ “unemployed” category.
ANS: F DIF: 2 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation
TOP: Bureau of Labor Statistics | Unemployment MSC: Interpretive
35. Stay-at-home fathers are included in the Bureau of Labor Statistics’ “unemployed” category.
ANS: F DIF: 2 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation
TOP: Bureau of Labor Statistics | Unemployment MSC: Interpretive
36. Adults who were waiting to be recalled to a job from which they had been laid off are included in the Bureau
of Labor Statistics’ “unemployed” category.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation
TOP: Bureau of Labor Statistics | Unemployment MSC: Definitional
37. Retirees are included in the Bureau of Labor Statistics’ “not in the labor force” category.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Labor force MSC: Definitional
38. The adult population must equal the sum of the employed, the unemployed, and those not in the labor force.
ANS: T DIF: 2 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Adult population MSC: Interpretive
39. The adult population must equal the sum of the employed and the unemployed.
ANS: F DIF: 2 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Adult population MSC: Interpretive
40. The Bureau of Labor Statistics defines the labor force as the sum of the employed and the unemployed.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Labor force MSC: Definitional
41. The labor force minus the number of employed equals the number of unemployed.
ANS: T DIF: 2 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation TOP: Unemployment
MSC: Interpretive
42. The Bureau of Labor Statistics defines the unemployment rate as the percentage of the adult population that is
unemployed.
ANS: F DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation
TOP: Bureau of Labor Statistics | Unemployment rate MSC: Definitional
Chapter 28/Unemployment 84
43. The Bureau of Labor Statistics defines the unemployment rate as the percentage of the labor force that is
unemployed.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation
TOP: Bureau of Labor Statistics | Unemployment rate MSC: Definitional
44. The Bureau of Labor Statistics computes unemployment rates for the entire adult population and for more
narrowly defined groups.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: Unemployment and inflation
TOP: Bureau of Labor Statistics | Unemployment rate MSC: Definitional
45. The Bureau of Labor Statistics defines the labor-force participation rate as the percentage of the labor force
that is employed.
ANS: F DIF: 1 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Labor-force participation rate MSC: Definitional
46. The Bureau of Labor Statistics defines the labor-force participation rate as the percentage of the total adult
population that is in the labor force.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Labor-force participation rate MSC: Definitional
47. The labor-force participation rate is the percentage of the adult population that is either employed or
unemployed.
ANS: T DIF: 2 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Labor-force participation rate MSC: Interpretive
48. The labor-force participation rate tells us the fraction of the population that is able to participate in the labor
market.
ANS: F DIF: 1 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Labor-force participation rate MSC: Definitional
49. The labor-force participation rate tells us the fraction of the population that has chosen to participate in the
labor market.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Labor-force participation rate MSC: Definitional
50. The Bureau of Labor Statistics computes labor-force participation rates for the entire adult population and for
more narrowly defined groups.
ANS: T DIF: 1 REF: 28-1
NAT: Analytic LOC: The study of economics and definitions of economics
TOP: Bureau of Labor Statistics | Labor-force participation rate MSC: Definitional