Chapter 9

Question 1

labour force includes?

Answer 1

unemployed + employed, does not include full time student, retiree, homemaker

Question 2

cyclical unemployment

Answer 2

deviation of unemployment from its natural rate (fluctuations)

Question 3

frictional unemployment

Answer 3

it takes time for workers to search for the jobs that best suite them (transition between jobs)

Question 4

structural unemployment

Answer 4

The number of jobs in the market is not enough for the number of workers (skills gap)

Question 5

efficiency wages

Answer 5

above equilibrium wages paid by firms in order to increase worker productivity

Question 6

unemployment rate

Answer 6

of unemployed / labour force (x 100)

Question 7

labour force participation rate

Answer 7

labour force / adult population (x 100)

Question 8

natural rate

Answer 8

the rate the economy returns to in the long run

Question 9

how is structural unemployment affected by min wage laws?

Answer 9

min wage laws keep wage above equilibrium level, meaning there will be more people willing to work at that wage than there are jobs available

Question 10

how is structural unemployment affected by unions?

Answer 10

when unions raise wage above equilibrium levels, raises the quantity of labour supplied, but lowers quantity demanded, resulting in unemployment.

Question 11

how is structural unemployment affected by efficiency wages?

Answer 11

Raise wage above equilibrium levels, causing unemployment