2.2 Unemployment

• Structural unemployment arises from changes in the economy that make some skills obsolete.


  True
• Which type of unemployment results from fluctuations in the business cycle?

  Cyclical unemployment
• What condition defines unemployment?

  Actively seeking employment
• Seasonal unemployment varies due to seasonal changes in employment demand
• Frictional unemployment occurs when individuals are actively seeking better employment opportunities
• What is the most commonly reported measure of unemployment?

  U-3
• 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
• Structural unemployment arises from mismatches between worker skills and available jobs
• There are four main types of unemployment, each with distinct causes and characteristics
• 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-5 measure includes other marginally attached workers who are available but not actively seeking
• The U-1 measure of unemployment represents the percentage of the labor force unemployed for 15 weeks or longer.
• 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
• Two other key labor market statistics are the labor force participation rate and the employment-population ratio.
• What are three policies to combat unemployment?

  Fiscal stimulus, monetary policy, education and training
• Frictional unemployment occurs when individuals are between jobs
• What is an example of frictional unemployment?

  A recent college graduate
• What is an example of structural unemployment?

  Auto workers displaced by automation
• Seasonal unemployment affects industries like tourism and agriculture.


  True
• 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 is the formula for calculating the overall unemployment rate?

  $\frac{\text{Number of Unemployed}}{\text{Labor Force}} \times 100$
• What type of unemployment occurs when individuals are between jobs or seeking better opportunities?

  Frictional
• 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
• What is an example of structural unemployment?

  Auto workers displaced by automation
• The U-4 measure includes discouraged workers in addition to the U-3 unemployment rate.


  True
• 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
• 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
• Match the type of unemployment with its description:

  Frictional ↔️ Between jobs or seeking better employment

  Structural ↔️ Mismatch between worker skills and jobs

  Cyclical ↔️ Fluctuations in the business cycle

  Seasonal ↔️ Changes in employment demand due to seasons
• Higher unemployment leads to increased government spending on unemployment benefits.
• 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
• Why does cyclical unemployment occur?

  Fluctuations in the business cycle
• U-1 measures the percentage of the labor force unemployed for 15 weeks or longer
• What does the employment population ratio measure?

  Percentage of the population employed
• The employment population ratio measures the percentage of the population that is employed.

  True
• Cyclical unemployment is caused by fluctuations in the business cycle, such as recessions.


  True
• What type of unemployment varies based on seasonal changes in employment demand?

  Seasonal
• Frictional unemployment occurs when workers are displaced by automation and their skills no longer match available jobs.

  False