Question

In June there are 30,000 people classified as unemployed and the size of the labor force is 600,000. The only change between June and July is that 10,000 of the unemployed give up looking for work. Which of the following is true? A) In June the unemployment rate was 6% and in July the unemployment rate was 3.8%. B) The unemployment rate in both June and July was 5%. C) In June the unemployment rate was 5% and in July the unemployment rate was 3.39%. D) In June the unemployment rate was 3.8% and in July the unemployment rate was 6%. An auto worker in Ohio who loses her job because the company relocated the plant to another country represents an example of A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment. A textile firm closes a plant in Massachusetts and transfers production to a plant in South Carolina, where the firm can take advantage of cheaper labor. The plant supervisor at the Massachusetts plant is given the opportunity to move to South Carolina to become the plant supervisor at that plant. He turns down this opportunity because of family obligations. While he is searching for a new job he would be classified as A) structurally unemployed B) cyclically unemployed. C) frictionally unemployed. D) not in the labor force because he turned down the opportunity to relocate. The natural rate of unemployment is generally thought of as the A) ratio of the frictional unemployment rate to the cyclical unemployment rate. B) sum of structural unemployment and cyclical unemployment. C) sum of frictional unemployment and cyclical unemployment. D) sum of frictional unemployment and structural unemployment. The economy is in a recession and the housing market is in a slump. As a result of this, a real estate firm lays off half of its real estate agents. This is an example of A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) natural unemployment.

Answer 1

Solution: • In June 30000 people classified of unemployed. labor-force Size = 600,000 only change between June and July = 10,000. Thwe is: June uromployment = 30000/600000 = 5.1. > Since in month of July, 10,000 people have given up looking for the job, they will no longer be the part of the labor force and cannot be classified unempolyed. Thus the unemployment rate in the month of July can be calculated as: * 100 Unemployment rate = labor employed Total labor force = (20000 (590000) #100 öffinc)";s correct - 3.39.10) (C): In June, unemployment rate was 5% and in july Unemployment rate was 3.39-4-