Question

13. Which of the following statements is (are) correct?
(x) The natural rate of unemployment is the amount of the unemployment that the economy normally experiences.
(y) Cyclical unemployment refers to the year-to-year fluctuations of unemployment around its natural rate that are due to short-run ups and downs of the economy
(z) Suppose the natural rate of unemployment is 5.5 percent and the current rate of unemployment is 8.1 percent. The cyclical unemployment rate is a positive value of 2.6 percent
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

14. Which of the following unemployed persons would you consider cyclically unemployed?
A. Violet, a painter on a Ford Motors assembly line who recently lost her job to a robot and can’t find another job because there are not enough openings for car painters.
B. Woody, a carpenter who voluntarily quit his job in order to find a similar position with higher pay.
C. Xavier, whose layoff by U.S. Steel was due to "the nations’ poor economic conditions".
D. A and B, only
E. B and C, only

15. Which of the following statements is (are) correct?
(x) Economists have found evidence that receiving unemployment-insurance benefits decreases the job-search effort of the unemployed.
(y) We would predict that the more generous the unemployment compensation a country has, the longer the duration of each spell of unemployment, and the higher the unemployment rate.
(z) A typical American worker covered by unemployment insurance receives 100 percent of their former wages for 26 weeks.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

Answer 1

13. The answer is option A, which means all statements are correct.

14. The answer is option C ie Xavier is cyclically unemployed. The kind of unemployment Violet and woody are facing are Structural and Frictional respectively. Whereas Xavier is laid off from work because thw economy has slowed down which means he is facing cyclican unemployment

15. The answer is option B ie x and y statements are correct. Statement z is incorrect because in US unemployment insurance does not cover 100% of their former wages, but covers only a certain percentage.