Page 167 - Krugmans Economics for AP Text Book_Neat

e. Natasha, a graduate student, went back to school because a. A rise in the unemployment rate accompanies a fall in
jobs were scarce. real GDP.
b. An exceptionally strong business recovery is associated
3. Which of the following are consistent with the observed
with a greater percentage of the labor force being employed.
relationship between growth in real GDP and changes in the
c. Negative real GDP growth is associated with a fall in the
unemployment rate? Which are not?
unemployment rate.
Tackle the Test: Multiple-Choice Questions Section 3 Measurement of Economic Performance

1. To be considered unemployed, a person must d. 10%
I. not be working. e. 5%
II. be actively seeking a job.
3. How many people are unemployed?
III. be available for work.
a. 10,000
a. I only
b. 20,000
b. II only
c. 30,000
c. III only
d. 100,000
d. II and III
e. 110,000
e. I, II, and III
4. What is the unemployment rate?
Use the information for a hypothetical economy presented in the
a. 70%
following table to answer questions 2, 3, and 4.
b. 50%
c. 20%
Population age 16 and older = 200,000 d. 10%
Labor Force = 100,000 e. 5%
Number of people working part time = 20,000 5. The unemployment problem in an economy may be
Number of people working full time = 70,000 understated by the unemployment rate due to
a. people lying about seeking a job.
b. discouraged workers.
2. What is the labor force participation rate?
c. job candidates with one offer but waiting for more.
a. 70%
d. overemployed workers.
b. 50%
e. none of the above.
c. 20%
Tackle the Test: Free-Response Questions

1. Use the data provided below to calculate each of the following. 2. What is the labor market classification of each of the following
Show how you calculate each. individuals? Be as specific as possible, and explain your answer.
a. the size of the labor force a. Julie has a graduate degree in mechanical engineering. She
b. the labor force participation rate works full-time mowing lawns.
c. the unemployment rate b. Jeff was laid off from his previous job. He would very much
Population age 16 and older = 12 million like to work at any job, but, after looking for work for a year,
Employment = 5 million has stopped looking for work.
Unemployment = 1 million c. Ian is working 25 hours per week at a bookstore, and has no
desire to work full time.
d. Raj has decided to take a year off from work to stay home
Answer (6 points) with his daughter.

1 point: 6 million
1 point: employment + unemployment = 5 million + 1 million = 6 million
1 point: 50%
1 point: (labor force/population) × 100 = ((5 million + 1 million)/12 million) ×
100 = (6 million/12 million) × 100 = 50%
1 point: 17%
1 point: (unemployment/labor force) × 100 = (1 million/(5 million +1 million)) ×
100 = (1 million/6 million) × 100 = 17%

module 12 The Meaning and Calculation of Unemployment 125