Chapter 21: Introduction to Macroeconomics: Unemployment, Inflation, and Economic
True or False
Economic growth means a growth in real, per capita total output over time.
Individuals, because they may differ considerably in their evaluation of the relative importance
of certain issues, may disagree about whether certain so-called problems are really problems
Economic growth is considered to be positive by all individuals.
Other things being equal, relatively high rates of unemployment are almost universally viewed
The unemployment rate is the number of people officially unemployed divided by a country’s
population aged 16 or over.
The civilian labor force figure excludes those in the armed services, prison, and mental
hospitals, as well homemakers, retirees, and full-time students because they are not considered
currently available for employment.
By far, the worst employment downturn in U.S. history was the Great Depression.
Before 1960, variations in unemployment tended to be more pronounced than since 1960.
Discouraged workers, who have not actively sought work for four weeks, are counted as
People looking for full-time work who grudgingly settle for a part-time job are counted as
employed, even though they are only “partly” employed.
Some people working in the underground economy may be counted in labor statistics as
unemployed, while others may be counted as not in the labor force.
Unemployment rates are usually similar across different segments of the population, but they
vary substantially over time.
In the short run, a reduction in unemployment may come at the expense of a higher rate of
The duration of unemployment tends to be greater when the amount of unemployment is low
and smaller when the amount of unemployment is high.
Unemployment means a loss of potential output.
When the baby-boom generation began entering the labor force, it raised the labor force
Frictional unemployment results from persons being temporarily between jobs.
Frictional unemployment, while not good in itself, is a by-product of a healthy phenomenon;
and because it is short lived, it is not generally viewed as a serious problem.
Structural employment can arise because jobs that require particular skills disappear.
Structural unemployment is easily measured and stable over time.
Cyclical unemployment may result from an insufficient level of demand for goods and
Given the volatility and dimensions of unemployment, governments view it as the result of
inadequate demand, which is especially correctable through government policies.
The natural rate of unemployment roughly equals the sum of frictional and cyclical
unemployment when they are at a maximum.
When unemployment rises above the natural rate, it reflects the existence of cyclical