2.2 Unemployment

• What does the term "unemployment" refer to?

  Being without a job
• Match the type of unemployment with its definition:

  Frictional ↔️ Workers changing jobs

  Structural ↔️ Mismatch of skills

  Cyclical ↔️ Fluctuations in demand

  Seasonal ↔️ Seasonal variations
• Cyclical unemployment is a temporary form of unemployment


  True
• High unemployment reduces aggregate demand
• Fiscal policy involves government spending and taxation.


  True
• Unemployment refers to the state of being without a job while actively seeking employment.

  True
• Frictional unemployment is considered a natural form of unemployment.
• Cyclical unemployment rises during economic recessions and falls during expansions


  True
• Which types of unemployment are considered natural?

  Frictional and structural
• When unemployment is high, inflation tends to be low


  True
• Policymakers must balance the tradeoffs between unemployment and inflation
• Fiscal policy uses government spending and taxation to influence aggregate demand
• What influences the overall unemployment rate?

  Economic growth
• The labor force includes only employed individuals.

  False
• Monetary policy is faster to implement than fiscal policy.


  True
• Frictional unemployment is caused by workers transitioning between jobs
• Seasonal unemployment fluctuates with seasonal changes in economic activity
• The labor force includes all individuals who are either employed or unemployed
• What happens to inflation when unemployment is high?

  Inflation decreases
• What is the key tool of monetary policy used to reduce unemployment?

  Interest rates
• Match the type of unemployment with its definition:

  Frictional ↔️ Short-term unemployment due to workers changing jobs

  Structural ↔️ Unemployment caused by a mismatch of skills

  Cyclical ↔️ Unemployment that rises and falls with the business cycle
• How is the unemployment rate calculated?

  $(Number of Unemployed / Labor Force) \times 100$
• What does the Phillips Curve illustrate in the context of unemployment and inflation?

  Inverse relationship
• The labor force participation rate measures the proportion of the working-age population in the labor force