Test Your Knowledge

Unemployment

Click on the letter choices to

A B C
 The sum of all people
who are employed
C
and unemployed
The sum of all people
unemployed
B
The sum of people
employed
A
The labor force is:
Question 1
 Try again!
The sum of all people employed is
employment. This is a measure of
the proportion of the countrys
working age population that is
employed.

Back
 Try again!
The unemployment rate is a measure
of the unemployed and is calculated
as a percentage by dividing the
number of unemployed individuals
by all individuals currently in the
labor force.

Back
 Correct!
The labor force consists of everyone
of working age who are actively
employed or seeking employment.
People who are not counted are
students, retired people, stay-at-
home parents, people in prisons or
similar institutions, and discouraged
workers who are unable to find work
and have left the labor force. Next
 They are available to
work and actively
looking for
C
employment
They are under the
age of 16
B
They are not looking
for work
A
A person is counted as unemployed if:
Question 2
 Try again!
If someone is not looking for a job,
for example a stay-at-home parent,
they are not included in the labor
force and therefore not counted as
unemployed.

Back
 Try again!
Someone who is under the age of 16
is legally too young to work and
therefore not in the labor force.

Back
 Correct!
A person who is without a job but
available to work and has actively
looked for employment in the past
four weeks is counted as
unemployed. People who are laid off
but expecting to return to work are
also counted as unemployed.

Next
 Question 3
A medical doctor working as a waiter
would be considered:

A
Underemployed

B
Discouraged

C
Unemployed
 Correct!
Underemployed workers may be
workers who are working only part-
time but would prefer a full-time job

Next
 Try again!
Workers who are available for work
and have searched for a job for at
least some time during the last year,
but who have become discouraged at
their prospects of finding a job and
left the labor force are known as
discouraged workers.

Back
 Try again!
A person who is without a job but
available to work and has actively
looked for employment in the past
four weeks is counted as
unemployed.

Back
 Question 4
Someone who is available for work, has
searched for a job, found few prospects,
and has left the labor force is considered:
 Try again!
Underemployed workers may be
workers who are working only part-
time but who would prefer a full-
time job, or workers who are highly
skilled but are working in low-wage
jobs that do no use those skills.

Back
 Correct!
Workers who are available for work
and have searched for a job for at
least some time during the last year,
but who have become discouraged at
their prospects of finding a job and
left the labor force, are known as
discouraged workers.

Next
 Try again!
A person who is without a job but
available to work and has actively
looked for employment in the past
four weeks is counted as
unemployed.

Back
 Question 5
The labor force participation rate
identifies:
 Try again!
The unemployment rate is a measure
of the unemployed and is calculated
as a percentage by dividing the
number of unemployed individuals
by all individuals currently in the
labor force.

Back
 Try again!
The employment rate is a statistical
ratio that measures the proportion of
the countrys working age population
that is employed.

Back
 Correct!
The labor force participation rate
identifies what percentage of the
adult population is in the labor
force. It is calculated by dividing
the labor force by the adult
population, and then multiplying by
100.

Next
 Question 6
When workers lack the skills necessary to
get a job, they are ________________
unemployed.
 Correct!
Structural unemployment occurs
when workers have skills that are
obsolete or no longer demanded by
employers, when they lack the skills
necessary to get a job, or when they
cannot move to a new location to
find work. Efficiency wages, a binding
minimum wage, labor unions and
unemployment insurance may Next also
contribute to structural
 Try again!
Frictional unemployment is the result
of workers searching for jobs, or
waiting for new jobs to begin.
Frictional unemployment is often
called job search unemployment.

Back
 Try again!
Cyclical unemployment occurs when
workers are unemployed as a result
of economic changes associated with
the business cycle. At times,
economic conditions can cause the
aggregate demand for goods and
services to decline, therefore
lowering the demand for labor
needed to produce these goods and
Back
services.
 Question 7
New and recent entrants into the labor
force are ________________ unemployed.
 Try again!
Structural unemployment occurs
when workers have skills that are
obsolete or no longer demanded by
employers, when they lack the skills
necessary to get a job, or when they
cannot move to a new location to
find work. Efficiency wages, a binding
minimum wage, labor unions and
unemployment insurance mayBack also
contribute to structural
 Correct!
Frictional unemployment is the result
of workers searching for jobs, or
waiting for new jobs to begin.
Frictional unemployment is often
called job search unemployment.

Next
 Try again!
Cyclical unemployment occurs when
workers are unemployed as a result
of economic changes associated with
the business cycle. At times,
economic conditions can cause the
aggregate demand for goods and
services to decline, therefore
lowering the demand for labor
needed to produce these goods and
services. Back
 Question 8
________ unemployment occurs when
workers are displaced as a result of
economic changes associated with the
business cycle.
 Try again!
Structural unemployment occurs
when workers have skills that are
obsolete or no longer demanded by
employers, when they lack the skills
necessary to get a job, or when they
cannot move to a new location to
find work. Efficiency wages, a binding
minimum wage, labor unions and
unemployment insurance mayBack also
contribute to structural
 Try again!
Frictional unemployment is the result
of workers searching for jobs, or
waiting for new jobs to begin.
Frictional unemployment is often
called job search unemployment.

Back
 Correct!
Cyclical unemployment occurs when
workers are unemployed as a result
of economic changes associated with
the business cycle. At times,
economic conditions can cause the
aggregate demand for goods and
services to decline, therefore
lowering the demand for labor
needed to produce these goods and
services. Next
 Question 9
Any deviation from the natural rate of
unemployment is ___________
unemployment.
 Try again!
This type of unemployment is caused
by structural factors in the economy
such as worker skills mismatch,
efficiency wages, a binding minimum
wage, labor unions, and
unemployment insurance.

Back
 Try again!
Frictional unemployment results
when workers are searching for a job,
or waiting for a job to begin.

Back
 Correct!
The natural rate of unemployment is
the lowest rate of unemployment
over the long run, often thought of as
the rate of unemployment that
usually occurs in the economy.
Deviations from this rate are cyclical
unemployment.

Next
 Question 10
The unemployment rate is closely tied to
Real GDP. If Real GDP falls:
 Try again!
A decrease in Aggregate Demand is
associated with falling Real GDP.

Back
 Correct!
When Real GDP falls, output declines.
This means that fewer workers will
be needed to produce goods and
services and unemployment should
rise.

Next
 Try again!
When Real GDP rises, this indicates
an increase in Aggregate Demand
and greater output in the economy.
This should lead to a decrease in
unemployment as more workers are
hired to meet the increased demand
for goods and services.

Back
Thank you for participating in
Test Your Knowledge