Question : 8.2   The Natural Unemployment Rate 1) The unemployment rate at full : 1238526

8.2   The Natural Unemployment Rate

1) The unemployment rate at full employment is

A) zero.

B) the natural unemployment rate.

C) equal to the rationed rate of unemployment.

D) undefined because the economy is never at full employment.

E) equal the amount of unemployment caused by job search.

2) Which of the following explain the natural rate of unemployment?

i.job search

ii.the Okun Gap

iii.the production function

A) i and iii

B) i only

C) iii only

D) ii and iii

E) i and ii

3) The natural unemployment rate is the result of

A) bad government policies.

B) insufficient demand for labor.

C) job search and job rationing.

D) the Lucas Wedge.

E) the Okun Gap.

4) Suppose job search has decreased over the last several years. This decrease could be a result of

i.a change in unemployment benefits.

ii.a positive structural change.

iii.a higher inflation rate.

A) ii only

B) i only

C) i and ii

D) ii and iii

E) i and iii

5) The increase in the average unemployment rate in the 1970s was the result of

A) the reduction of overly generous unemployment benefits in the 1970s.

B) an increase in the birth rate in the early 1970s.

C) an increase in the birth rate in the late 1940s and early 1950s.

D) higher real wage rates.

E) repeated increases in the minimum wage.

6) A newspaper headline reads “A New Wave of Workers Enters the Job Market!” This wave of young, new entrants to the labor market is likely to lead to

A) an increase in the natural unemployment rate.

B) a decrease in the unemployment rate.

C) no effect on the unemployment rate.

D) a decrease in the country’s potential GDP.

E) a decrease in the natural unemployment rate but an increase in the actual unemployment rate.

7) Which of the following increases frictional and/or structural unemployment?

i.more young workers entering the labor force

ii.more generous unemployment benefits

iii.a structural slump with some industries dying

A) i only

B) ii only

C) iii only

D) i and ii

E) i, ii. and iii

8) The length of time an unemployed person searches for a job is likely to increase as

A) the working age population gets older.

B) the birth rate declines.

C) new technologies make workers more productive.

D) unemployment benefits become more generous.

E) job rationing decreases.

9) If the amount paid as unemployment benefits decreases, the opportunity cost of job search

A) rises and people would stay unemployed longer.

B) is not affected because unemployment benefits do not change job availability.

C) rises and people stay unemployed for a shorter time.

D) falls and people stay unemployed for a shorter time.

E) falls and people stay unemployed for a longer time.

10) More generous unemployment benefits ________ the opportunity cost of looking for a new job and therefore ________ the job search process

A) lower; extend

B) lower; shorten

C) raise; extend

D) raise; shorten

E) lower; does not change