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AP Macroeconomics
Unit 2: Economic Indicators and the Business Cycle
2.2 Unemployment
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What condition defines unemployment?
Actively seeking employment
Structural unemployment arises from changes in the economy that make some skills
obsolete
.
True
Seasonal unemployment varies due to seasonal changes in employment
demand
Frictional unemployment occurs when individuals are between
jobs
Which type of unemployment results from fluctuations in the business cycle?
Cyclical unemployment
What is an example of frictional unemployment?
A recent college graduate
Frictional unemployment occurs when individuals are actively seeking better employment
opportunities
Why does cyclical unemployment occur?
Fluctuations in the business cycle
What is the most commonly reported measure of unemployment?
U-3
Match the unemployment measure with its definition:
U-3 ↔️ The official unemployment rate
U-4 ↔️ U-3 plus discouraged workers
U-6 ↔️ U-5 plus part-time workers who want full-time employment
What does the employment population ratio measure?
Percentage of the population employed
What is the formula for calculating the overall unemployment rate?
Number of Unemployed
Labor Force
×
100
\frac{\text{Number of Unemployed}}{\text{Labor Force}} \times 100
Labor Force
Number of Unemployed
×
100
Structural unemployment arises from mismatches between worker skills and available
jobs
What type of unemployment varies based on seasonal changes in employment demand?
Seasonal
There are four main types of unemployment, each with distinct causes and
characteristics
What is an example of structural unemployment?
Auto workers displaced by automation
What does the U-3 unemployment measure represent?
The official unemployment rate
What does the U-6 measure add to the U-5 measure?
Part-time workers seeking full-time employment
What does the unemployment rate (U-3) measure?
Unemployed and actively seeking
What does the U-2 measure of unemployment focus on?
Lost jobs or temporary work
Arrange the unemployment measures in order from the smallest to the largest group they represent.
1️⃣ U-1
2️⃣ U-2
3️⃣ U-3
4️⃣ U-4
5️⃣ U-5
6️⃣ U-6
Match the unemployment measure with its definition:
U-1 ↔️ Unemployed 15 weeks or longer
U-2 ↔️ Lost jobs or temporary work
U-3 ↔️ The official unemployment rate
U-4 ↔️ U-3 plus discouraged workers
U-5 ↔️ U-4 plus other marginally attached workers
U-6 ↔️ U-5 plus part-time workers seeking full-time employment
What are the four main types of unemployment?
Frictional, structural, cyclical, seasonal
Unemployment reduces consumer
confidence
and spending.
True
What are three policies to combat unemployment?
Fiscal stimulus, monetary policy, education and training
The long-run Phillips Curve is a vertical line at the natural rate of
unemployment
.
Match the type of unemployment with its example:
Structural ↔️ Auto workers displaced by automation
Cyclical ↔️ Retail workers laid off during a recession
Seasonal ↔️ Ski instructors out of work in summer
What is an example of structural unemployment?
Auto workers displaced by automation
Seasonal unemployment affects industries like tourism and
agriculture
.
True
U-1 measures the percentage of the labor force unemployed for 15 weeks or
longer
The labor force participation rate measures the
percentage
of the population in the labor force.
True
The labor force participation rate measures the percentage of the population in the labor
force
The employment population ratio measures the percentage of the population that is employed.
True
What type of unemployment occurs when individuals are between jobs or seeking better opportunities?
Frictional
Cyclical unemployment is caused by fluctuations in the business cycle, such as
recessions
.
True
Match the unemployment category with its description:
Employed ↔️ Individuals currently working for pay or profit
Unemployed ↔️ Actively seeking work but unable to find a job
Not in Labor Force ↔️ Not actively seeking work
Frictional unemployment occurs when workers are displaced by automation and their skills no longer match available jobs.
False
Order the alternative measures of unemployment from narrowest to broadest scope:
1️⃣ U-1
2️⃣ U-2
3️⃣ U-3
4️⃣ U-4
5️⃣ U-5
6️⃣ U-6
The U-4 measure includes discouraged workers in addition to the
U-3
unemployment rate.
True
The U-5 measure includes other marginally attached workers who are available but not actively
seeking
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