Q: Suppose the U.S. working-age population is 260 million, the labor force is 165 million, and 6.6 million people are unemployed. What is the U3 unemployment rate?

$$\frac{6.6}{165} \times 100\% = 4.0\%$$

Q: If the labor force participation rate is 62% and the working-age population is 250 million, what is the size of the labor force?

$$0.62 \times 250 = 155$$ million

Q: If the employment-population ratio is 61% and the working-age population is 260 million, how many people are employed?

$$0.61 \times 260 = 158.6$$ million

Q: Suppose the labor force is 160 million, and 6.4 million are unemployed. What is the unemployment rate?

$$\frac{6.4}{160} \times 100\% = 4.0\%$$

Question 1

Suppose the U.S. working-age population is 260 million, the labor force is 165 million, and 6.6 million people are unemployed. What is the U3 unemployment rate?

Accepted Answer

$$\frac{6.6}{165} 	imes 100\% = 4.0\%$$

Question 2

Which of the following best describes structural unemployment?

Accepted Answer

Unemployment caused by a mismatch between workers’ skills and the requirements of available jobs.

Question 3

A recent college graduate spends several months searching for a job that matches her qualifications. This is an example of:

Accepted Answer

Frictional unemployment

Question 4

If the labor force participation rate is 62% and the working-age population is 250 million, what is the size of the labor force?

Accepted Answer

$$0.62 	imes 250 = 155$$ million

Question 5

Which of the following is NOT included in the labor force according to the BLS definition?

Accepted Answer

A full-time college student not seeking employment

Question 6

The natural rate of unemployment is defined as:

Accepted Answer

The sum of frictional and structural unemployment

Question 7

If the employment-population ratio is 61% and the working-age population is 260 million, how many people are employed?

Accepted Answer

$$0.61 	imes 260 = 158.6$$ million

Question 8

Which of the following is a shortcoming of the official unemployment rate (U3)?

Accepted Answer

It does not distinguish between full-time and part-time employment.

Question 9

A construction worker is laid off during the winter due to lack of work and rehired in the spring. This is an example of:

Accepted Answer

Seasonal unemployment

Question 10

If the minimum wage is increased by 10%, studies suggest teenage employment will:

Accepted Answer

Decrease by about 2%

Question 11

Which of the following policies is most likely to increase the duration of unemployment spells?

Accepted Answer

Increasing unemployment insurance benefits

Question 12

Suppose the labor force is 160 million, and 6.4 million are unemployed. What is the unemployment rate?

Accepted Answer

$$\frac{6.4}{160} 	imes 100\% = 4.0\%$$

Question 13

Which of the following would cause the labor force participation rate to decrease?

Accepted Answer

A rise in the number of retirees

Question 14

Which of the following best describes cyclical unemployment?

Accepted Answer

Unemployment that occurs due to changes in the business cycle

Question 15

If the natural rate of unemployment is 4% and the actual unemployment rate is 7%, what is the cyclical unemployment rate?

Accepted Answer

$$7\% - 4\% = 3\%$$

Question 16

Which of the following is most likely to be classified as frictional unemployment?

Accepted Answer

A recent graduate searching for their first job

Question 17

If the working-age population grows by 1% per year and the labor force participation rate remains constant, what happens to the labor force?

Accepted Answer

It increases by 1% per year

Question 18

Which of the following is a direct effect of a decline in net immigration on the labor market?

Accepted Answer

A decrease in the growth rate of the labor force

Question 19

If the employment-population ratio is 60% and the labor force participation rate is 65%, what percentage of the labor force is employed?

Accepted Answer

$$\frac{60}{65} 	imes 100\% = 92.3\%$$

Question 20

Which of the following best explains why the unemployment rate may understate the true level of unemployment?

Accepted Answer

It excludes discouraged workers who have stopped looking for work

Unemployment and Inflation: Key Concepts in Macroeconomics

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