Question

8. What is the difference between being unemployed and being out of the labor force?

9. How do you calculate the unemployment rate? How do you calculate the labor force participation rate?

23. What forces create the natural rate of unemployment for an economy?

26. What is frictional unemployment? Give examples of frictional unemployment.

27. What is structural unemployment? Give examples of structural unemployment.

29. What type of unemployment (cyclical, frictional, or structural) applies to each of the following:

a. landscapers laid off in response to drop in new housing construction during a recession.

b. coal miners laid off due to EPA regulations that shut down coal fired power

c. a financial analyst who quits his/her job in Chicago and is pursing similar work in Arizona

d. printers laid off due to drop in demand for printed catalogues and flyers as firms go the internet to promote an advertise their products.

e. factory workers in the U.S. laid off as the plants shut down and move to Mexico and Ireland.

16 ssess whether the following would be counted as “unemployed” in the Current Employment Statistics survey.

a. A husband willingly stays home with children while his wife works.

b. A manufacturing worker whose factory just closed down.

c. A college student doing an unpaid summer internship.

d. A retiree.

e. Someone who has been out of work for two years but keeps looking for a job.

f. Someone who has been out of work for two months but isn’t looking for a job.

g. Someone who hates her present job and is actively looking for another one.

h. Someone who decides to take a part time job because she could not find a full time position.

a) Draw a diagram of the demand and supply of labor. Label the axes, and label the initial equilibrium price (wage) and quantity.

b) Now draw a new curve to show what happens if there is a decrease in the demand for labor. Use the number 2 to distinguish the new curve from the old curve. Show the new equilibrium price (wage) and quantity.

c) What condition exists if the price (wage) remains at the initial equilibrium level instead of moving to the new equilibrium level?

d) When there is a decrease in the demand for labor, why don't wage rates quickly fall to eliminate the condition you described in c?

Answer 1

8. Unemployed is a person who is willing to work but cannot get work.

Out of labor force means workers who are discouraged i.e. stop looking for a job after being not able to get a job.

9. Unemployment rate = No. of unemployed / Labor force x 100

Labor force participation rate = Labor force / Adult population

26. Frictional unemployment occurs when a person is unemployed when he or she is moving from one job to another. Example: John is a software engineer who quit his job because of low salary and now searching for a new job. John is frictionally unemployed.

27. Unemployment which occurs due to technological change is called structural unemployed. Example: Introduction of computers in the market decreases the demand of workers who are not familier with computers or not able to work on it.