Question

1. State whether each of the following statements is true or false, and explain why. a. An example of a discouraged worker is someone who is suddenly laid off from his/her job, is still looking for work, but has received no other job offers at the moment. b. An increase in the unemployment rate is only due to a smaller fraction of the population being employed. c. Natural unemployment includes temporary unemployment caused by new labor entry or job-switching, as well as longer unemployment caused by insufficient skills or recessions. d. Your parents imported 20 bottles of Bordeaux wine from France in 2019. This causes the GDP of the US in the same year to decline. e. The production approach to measuring the GDP tends to overstate GDP compared to the spending approach because firms sometimes produce more than people actually spend. f A college student decides to sign up on Wag!! as a dog-walker on the weekends. If the app sets her up with a neighbor's dog for $25/hour on Saturdays and Sundays, she will be counted as part of the labor force. (Assume she has no other job.)

Answer 1

Answer 1:

a. False. A discouraged worker is not looking for work any more and is considered to be discouraged by not finding a job.

b. False. An increase in unemployment rate can also occur when the labor force of the economy declines or number of unemployed increases.

c. True, Natural rate of unemployment includes people who are frictionally and structurally unemployed in the economy.

d. True. This is because it reduces net exports of the nation because of increase in imports of the nation.