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Exam 28: Unemployment and Its Natural Rate

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Question 81

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Retirees are included in the Bureau of Labor Statistics' "not in the labor force" category.

A) True
B) False

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Question 82

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The unemployment rate never falls to zero.

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B) False

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Question 83

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The natural rate of unemployment refers to the current unemployment rate.

List a few of the characteristics of workers who typically earn at or below the minimum wage.

Do economists believe that labor unions are good or bad for the U.S. economy?

Someone who has a job but is absent from work because she is on vacation is counted as "employed."

What problems arise in interpreting unemployment data?

The natural rate of unemployment is the desirable rate of unemployment for an economy.

Sheila is on temporary layoff. The Bureau of Labor Statistics counts Sheila as

The amount of unemployment that a country typically experiences is a determinant of its standard of living.

How does the government measure the economy's rate of unemployment?

The normal rate of unemployment around which the unemployment rate fluctuates is called the natural rate of unemployment.

When a union is present in a labor market, wages are not determined by the equilibrium of supply and demand.

According to the theory of efficiency wages, it may be profitable for firms to keep wages high even in the presence of a surplus of labor.

Within the U.S. population, blacks of prime working age (ages 25-54) have similar rates of unemployment than whites of prime working age (ages 25-54), regardless of gender.

The table below uses data for the year 2003 provided by the Bureau of Labor Statistics and adjusted to be comparable to U.S. data. All values are in thousands. Fill in the blank entries in the table. $\begin{array}{|l|l|l|l|l|l|l|}\hline&&&&&&\text { Labor-Force }\\&\text {Aduilt}&\text {Labor}&&&\text { Unemployment}&\text { Patticipation }\\\text { Courtry }&\text { Population }&\text {Force }&\text {Employed}&\text { Unemployed}&\text { Rate }&\text {Rate }\\\hline \text { Japan } & 109,474 & & 62,510 & 3,500 & & \\\hline \text { France } & & 26,870 & & 2,577 & & 57.41 \\\hline \text { Germany } & 70,159 & 39,591 & && 9.69 & \\\hline\end{array}$

Kamila is an unpaid worker in her family's restaurant. The Bureau of Labor Statistics counts Kamila as

If the number of people employed rises by 180,000 and the number of people unemployed falls by 200,000 while the adult population stays the same, then the labor force participation rate rises.

The demand for labor by a certain firm fluctuates as the demand for that firm's product fluctuates.

In the early 1900s, Henry Ford introduced a