Unemployment and Economic Growth Quiz

Suppose that the actual unemployment rate is 8% and the natural rate of unemployment is 5.5%. Which of the following is correct?

• Cyclical unemployment is 8%

• The sum of frictional, structural, and classical (real-wage) unemployment is 5.5%

• Classical (real-wage) unemployment is 2.5%

• Frictional unemployment is 5.5%

Which of the following causes the unemployment rate to overstate the true extent of joblessness?

• A drug dealer reports herself as unemployed.

• Discouraged workers are counted as unemployed.

• Discouraged workers are not counted as unemployed.

• People who don't want to work and don't try to find a job are not considered part of the labor force.

In a given year the nominal GDP growth rate is 8% with an inflation rate of 3% and population growth rate of 2%. Thus, the growth rate of real GDP per capita is:

• 13%.

• 1%.

• 3%.

• 5%.

• 9%.

When we speak of long-run economic growth in an economy, we typically focus on the growth rate of which variable?

• nominal GDP per capita

• real GDP per capita

• GDP Per capita

When a country adds more capital to its existing stock:

• the additional productivity is less than the previous increases to productivity.

• it experiences rapidly increasing rates of growth.

• the additional productivity is more than the previous increases to productivity.

• it experiences rapid declines in its level of income

The convergence theory is based on the idea of:

• increasing opportunity costs.

• decreasing income per capita.

• increasing rates of income per capita.

• decreasing marginal returns

Fill in the blanks in the following sentences to correctly explain how cyclical unemployment occurs in an economic recession. The recession causes labor ___________ to decrease. Wages ___________ which causes the quantity demanded of labor ___________ the quantity supplied of labor.

• demand ; remain stuck at their original level ; to be less than

• supply ; rise ; to be less than

• demand ; fall ; to equal

• supply ; remain stuck at their original level ; to be greater than

Which of the following is an example of a worker experiencing structural unemployment?

• A college student who graduated last month and began looking for work.

• An assembly line worker who loses his job because of automation.

• A worker quits his job because he does not get along with his boss.

• A worker that changes jobs to move closer her family.

In which case(s) does technological progress occur?

• Case 2 and Case 3

• Case 3 only

• Case 1 only

• Cases 1, 2, and 3

• Case 1 and Case 3

If GDP is currently $15 trillion and is growing at a rate of 3.5% per year, how long will it take GDP to reach $30 trillion?

• about 14 years

• about 10 years

• about 7 years

• about 20 years