F: Chapter 28

Question 1

natural rate of unemployment

Answer 1

amount of unemployment the economy normally experiences

- unemployment does not go away on its own

Question 2

cyclical unemployment

Answer 2

year-to-year fluctuations un unemployment

Question 3

how is unemployment measured?

Answer 3

1. monthly survey of households

2. claimant count

Question 4

labour force

Answer 4

total number of workers including both the employed and the unemployed

Question 5

unemployment rate formula

Answer 5

unemployment rate = # unemployed/ labour force x 100

Question 6

labour force participation rate

Answer 6

percentage of the adult population that is in the labour force

Question 7

labour force participation rate formula

Answer 7

labour force/ adult pop x 100

Question 8

problems with measuring unemployment

Answer 8

1. discourage workers

2. people who claim to be unemployed to receive financial assistance

Question 9

discourage workers

Answer 9

people who want to work but have given up looking for jobs

Question 10

frictional unemployment

Answer 10

unemployment that results from the time that it takes to match workers with jobs

Question 11

structural unemployment

Answer 11

unemployment that results because the number of jobs available in some labour markets is insufficient to provide a job for everyone who wants one

Question 12

unemployment insurance

Answer 12

• offers partial payment of former wages for a limited time to those who are laid off
• increases the amount of search unemployment
• reduces search efforts of the unemployed
• improve the chances of workers being matched with the right jobs

Question 12

minimum wage

Answer 12

when it is set above the level that balances supply and demand, it creates unemployment

Question 13

union

Answer 13

worker association that bargains with employers over wages and working conditions

Question 13

collective bargaining

Answer 13

the process by which unions and firms agree on the terms of employment

Question 14

strikes

Answer 14

workers in unions will benefit while workers not in the union will bear some of the costs

Question 14

efficiency wages

Answer 14

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

Question 15

firms may prefer higher wages because (4)

Answer 15

1. worker health
2. worker turnover: higher paid worker is less likely to look for another job
3. worker effort: more motivation
4. worker quality

Question 15

collective bargaining

Answer 15

the process by which unions and firms agree on the terms of employment

Question 16

strikes

Answer 16

workers in unions will benefit while workers not in the union will bear some of the costs

Question 16

strikes

Answer 16

workers in unions will benefit while workers not in the union will bear some of the costs

Question 17

efficiency wages

Answer 17

above equilibrium

Question 17

efficiency wages

Answer 17

above equilibrium

Question 18

unemployment insurance

Answer 18

• offers partial payment of former wages for a limited time to those who are laid off
• increases the amount of search unemployment
• reduces search efforts of the unemployed
• improve the chances of workers being matched with the right jobs

Question 19

minimum wage

Answer 19

when it is set above the level that balances supply and demand, it creates unemployment

Question 20

union

Answer 20

worker association that bargains with employers over wages and working conditions

Question 21

collective bargaining

Answer 21

the process by which unions and firms agree on the terms of employment

Question 22

strikes

Answer 22

workers in unions will benefit while workers not in the union will bear some of the costs

Question 23

efficiency wages

Answer 23

above equilibrium

Question 24

firms may prefer higher wages because (4)

Answer 24

1. worker health 2. worker turnover: higher paid worker is less likely to look for another job 3. worker effort: more motivation 4. worker quality