Question

(66)Christopher is a musician who is out of work because increasingly electronic equipment is replacing live musicians at various gigs. This is an example of:

(a)Frictional unemployment

(b)Technological unemployment

(c)Natural rate of unemployment

(d)Cyclical unemployment

(67)Consider an economy made up of 150 million people, 100 million of whom hold jobs, 30 million of whom are looking for jobs, 8 million of those with jobs are underemployed and 4 million of whom are prisoners, 3 million are less than the legal working age of 16 years and the rest are retired workers and institutionalized persons. The underemployment rate is approximately:

(a)25 percent

(b)4 percent

(c)8 percent

(d)None of the above

(68)What is the rate of unemployment in the labor force referenced in Q#67 above?

(a)8 percent

(b)15 percent

(c)23 percent

(d)None of the above

(69)A person who voluntarily quits his\her job in Los Angeles and expects to get a similar job in Seattle is an example of:

(a)Cyclical unemployment

(b)Frictional unemployment

(c)Structural unemployment

(d)Seasonal unemployment

(70)The presence of discouraged workers may cause:

(a)The employment rate to be overrated

(b)The unemployment rate to be overstated

(c)The unemployment rate to be understated

(d)The employment rate to be understated

Answer 1

Question 66

In the given case, technological change has reduced the employment opportunities for the person.

When unemployment happens because change in technology has made some jobs redundant and thus people has lost such jobs then such unemployment is referred to as technological unemployment.

Hence, the correct answer is the option (b).

Question 67

Calculate the Labor force -

Labor force = Employed + Unemployed + Underemployed

Labor force = 100 million + 30 million + 8 million

Labor force = 138 million

The labor force is 138 million.

Calculate the underemployment rate -

Underemployment rate = [Underemployment/Labor force] * 100

Underemployment rate = [8 million/138 million] * 100 = 5.97%

So,

The underemployment rate is approximately 6%.

Hence, the correct answer is the option (d).

Question 68

Calculate the Labor force -

Labor force = Employed + Unemployed + Underemployed

Labor force = 100 million + 30 million + 8 million

Labor force = 138 million

The labor force is 138 million.

Calculate the rate of unemployment -

Unemployment rate = [Unemployed/Labor force] * 100

Unemployment rate = [30 million/138 million] * 100 = 21.74%

So,

The unemployment rate is approximately 22%.

Hence, the correct answer is the option (d).

Question 69

When a person quits one job and is searching for another job then he is considered and is referred to as frictionally unemployed.

So,

A person who voluntarily quits his\her job in Los Angeles and expects to get a similar job in Seattle is an example of frictional unemployment.

Hence, the correct answer is the option (b).

Question 70

Discouraged workers are not counted in the labor force.

So, even though, discouraged workers are unemployed but they are not counted as unemployed for the purpose of calculating the unemployment rate.

This leads to understating of unemployment as true extent of unemployment is not measured which is much larger than the official unemployment figure.

Hence, the correct answer is the option (c).