Chapter 24 — Quiz

Multiple choice

Q1. The unemployment rate is: a) Unemployed / Population b) Unemployed / Labor force c) Not in labor force / Population d) Employed / Population

Q2. A discouraged worker is: a) Counted as unemployed b) Someone who wants work but has stopped looking; NOT counted as unemployed c) Always counted in U-6 d) Employed part-time

Q3. Frictional unemployment is: a) Caused by recessions b) Workers between jobs (normal, healthy) c) A sign of economic failure d) Always long-term

Q4. Structural unemployment results from: a) A recession b) A mismatch between workers' skills/location and available jobs c) Workers being lazy d) Too much government spending

Q5. Cyclical unemployment is caused by: a) Technology changes b) Workers moving between jobs c) A recession — insufficient aggregate demand d) Minimum wages

Q6. NAIRU is: a) The lowest possible unemployment rate b) The unemployment rate consistent with stable inflation (~4–5%) c) Always zero d) The same as the labor force participation rate

Q7. U-6 includes: a) Only U-3 unemployed b) U-3 + discouraged + marginally attached + part-time for economic reasons c) Everyone not working d) Only discouraged workers

Q8. Hysteresis means: a) Unemployment always returns to the natural rate b) A recession can permanently raise the natural rate c) The natural rate is constant d) Long-term unemployment has no lasting effects

Q9. Black unemployment is approximately ___ times white unemployment: a) 0.5 b) Equal c) 2 d) 5

Q10. The COVID recession peaked at ___ unemployment: a) 5% b) 10% c) 14.7% d) 25%

Short answer

SA1. Why is U-3 incomplete as a measure of labor market health?

SA2. Distinguish frictional, structural, and cyclical unemployment in one sentence each.

SA3. What is hysteresis and why does it matter?

SA4. Why was the COVID recovery faster than the 2008 recovery?

SA5. What is NAIRU and why does the Fed care about it?

True / False

TF1. A healthy economy has zero unemployment. (True / False)

TF2. Discouraged workers are counted as unemployed in U-3. (True / False)

TF3. Long-term unemployment has the same economic effects as short-term. (True / False)

TF4. Cyclical unemployment can be addressed by expansionary fiscal and monetary policy. (True / False)

TF5. The racial unemployment gap has narrowed significantly since the 1950s. (True / False)

Selected answers in appendices/answers-to-selected.md.