ECON1220DE

Introductory Macroeconomics

3rd Tutorial: Unemployment

(answers to in-class questions)
Labour Force & Unemployment
• True of False?

1. Person A doesn’t have a job and therefore he/she is

unemployed. False

2. Full time students are employed. False

3. A retiree is in the labour force. False

4. Labour force would increase if the government lowers

the minimum legal working age. True

Labour Force & Unemployment
• True of False?

5. Person B helps in his family’s firm and doesn’t get paid,

so he/she is employed. False

6. Person C quit his job 2 months ago, and is currently

taking a round-the-world tour. He plans to find job again

after the trip is finished. He is unemployed. False
Labour Force & Unemployment
• Suppose we take U.S. as example:
Number of Persons

Population aged 16 or above 20 000 000

Employed population 10 000 000
Unemployed population 2 500 000
Underemployed population 900 000

• Labour force = employed + unemployed

= 10,000,000+2,500,000 = 12,500,000

• Labour force participation rate = Labour force/working age population

=12,500,000/20,000,000 = 62.5%
Labour Force & Unemployment
• Fill in the missing values in the table of data. Show your work.

Working-age population 500,000

Employment 332,500

Unemployment 17,500

Unemployment rate 5.0%

Labor force 350,000

Labor force participation rate 70.0%

Labour Force & Unemployment
• Which of the following would increase the unemployment
rate?
1. The government increases the unemployment benefit.
Increase
2. Some workers retire from their position, all else remain the
same. Increase
3. University graduates start looking for jobs. Uncertain
4. The government eases the screening procedure of imported
foreign workers. Uncertain
Labour Force & Unemployment
• Which of the following would increase the

unemployment rate?

5. During the World Cup and being the Host Country.

Decrease

6. An increase in Statutory Minimum Wage. Increase

Labour Force & Unemployment
•
Total population 20,000

Working-age population 15,000

Employment 1,000

Unemployment 100

• 1) The unemployment rate for this simple economy equals

A. (100/1,000) × 100.
B. (100/1,100) × 100.
C. (100/15,000) × 100.
D. (100/20,000) × 100.
Labour Force & Unemployment
•
Total population 20,000

Working-age population 15,000

Employment 1,000

Unemployment 100

• 2) The labor force participation rate for this simple economy

equals
A. (1,000/1,100) × 100.
B. (1,000/15,000) × 100.
C. (1,100/15,000) × 100.
D. (1,100/20,000) × 100.
Labour Force & Unemployment
• 3) A labour retraining programme can help to
reduce

A. under-employment.
B. frictional unemployment.
C. structural unemployment.
D. cyclical unemployment.
Labour Force & Unemployment
• 4) Improving job market information can help to
reduce

A. seasonal unemployment.
B. frictional unemployment.
C. structural unemployment.
D. cyclical unemployment.
Labour Force & Unemployment
• 5) A zero unemployment rate is almost impossible
because

A. workers must retire when they get old.

B. there are always people who are unable to
work.
C. matching workers and jobs is a time-
consuming process.
D. All of the above.
Labour Force & Unemployment
• 6) Which of the following policies is the best to
combat structural unemployment?

A. providing training to workers.

B. increasing government expenditure.
C. providing unemployment benefits.
D. promoting exports.
Labour Force & Unemployment
• 7) According to the text, economists consider full
employment to occur when

A. everyone who wants a job has a job.

B. frictional unemployment equals zero.
C. the sum of frictional unemployment and
structural unemployment equals zero.
D. the unemployment rate consists of only
frictional and structural unemployment.