Question

The demand for automobiles rises when the economy experiences an expansion. If an automobile manufacturer hires additional workers during an expansion, this would be best described as an example of a reduction in

a) cyclical unemployment.

b) natural unemployment.

c) structural unemployment.

d) frictional unemployment.

When the Fed increases the rate of growth of the money supply to jump start the economy, the unemployment type that will be directly affected is the

a) frictional unemployment.

b) cyclical unemployment.

c) structural unemployment.

d) natural rate of unemployment.

If Lola is classified as a discouraged worker, she is

a) part of the labor force.

b) structurally unemployed.

c) frictionally unemployed.

d) not part of the labor force.

The demand for refrigerators falls when the economy enters a downturn. If a refrigerator manufacturer lays off workers during an economic downturn, this would be an example of

a) frictional unemployment.

b) structural unemployment.

c) natural unemployment.

d) cyclical unemployment.

An auto worker in Ohio who loses her job because the company relocated the plant to another country represents an example of

a) cyclical unemployment.

b) seasonal unemployment.

c) frictional unemployment.

d) structural unemployment.

Answer 1

(1) (a)

Cyclical unemployment arises from business cycle recessions. Hiring during economic expansion reduces Cyclical unemployment.

(2) (b)

Higher growth rate in money supply causes economic expansion, which reduces Cyclical unemployment.

(3) (d)

A discouraged worker is excluded from labor force.

(4) (d)

Cyclical unemployment arises from business cycle recessions.

(5) (d)

Job loss arising due to change in business policies is structural unemployment.