If an economy is at its Natural Rate of Unemployment...

• Only Cyclical Unemployment would be present

• There would be no frictional unemployment

• Only frictional and structural unemployment would be present

• Everyone is working Everyone is working

A labor force of 20 million people has 18.5 million people employed. Find the unemployment rate.

• 10%

• 8.5%

• 7.5%

• 6%

Discouraged workers in

the economy implies that the measurement of unemployment...

• understates the true unemployment rate

• overstates the true unemployment rate

• correctly measures the true unemployment rate

• doubles the unemployment rate

If operators are fired and replaced with computer technology, the operators would be considered

• frictionally unemployed

• structurally unemployed

• cyclically unemployed

• dissatisfiededly unemployed dissatisfiededly unemployed

Which of the following statements is true of an economy at its "natural

rate of unemployment"?

• Everyone who wants to work is working

• The economy is producing at its potential

• The economy is only experiencing cyclical unemployment

• The economy is producing beyond the PPF The economy is producing beyond the PPF

If actual GDP is less than potential GDP...

• Actual unemployment exceeds the natural unemployment rate

• Actual unemployment rate is less than the natural rate

• No cyclical unemployment is present

• Hyperinflation is present Hyperinflation is present

Cyclical unemployment

• Describes recent college graduates

• Lasts longer than 6 months

• Describes employees moving from one job to another

• Increases inflation Increases inflation

The unemployment rate is the ratio of

• unemployed to labor force

• employed to labor force

• seeking employment to labor force

• dissatisfied to labor force

Seasonal unemployment

• Describes recent college graduates

• Is predictable

• Is a result of changes in technology

• Slows the economy Slows the economy

The unemployment rate will drop if

• A person is hired into a new job

• Someone who was previously laid off is rehired

• An unemployed person stops looking

• ALL of these answers are CORRECT