AP Macro Unemployment 2 — Questions and Answers
Question 1: Which of the following workers would be classified as structurally unemployed?
- A factory worker laid off during a recession
- A coal miner whose job was eliminated by automation (Correct answer)
- A teacher who quit to search for a better-paying school
- A ski instructor who cannot find work in summer
Correct answer: A coal miner whose job was eliminated by automation
Structural unemployment occurs when workers' skills no longer match available jobs due to technological or industrial change.
Question 2: If the natural rate of unemployment is 4% and actual unemployment is 7%, the economy is experiencing:
- A positive output gap
- Demand-pull inflation
- A negative output gap (Correct answer)
- Full employment
Correct answer: A negative output gap
Unemployment above the natural rate means output is below potential, creating a negative (recessionary) output gap.
Question 3: Which policy would MOST directly reduce frictional unemployment?
- Increasing government spending on infrastructure
- Improving job-matching websites and career counseling services (Correct answer)
- Raising the federal minimum wage
- Cutting corporate income tax rates
Correct answer: Improving job-matching websites and career counseling services
Better job-matching resources reduce the time workers spend searching between jobs, directly lowering frictional unemployment.
Question 4: A person who has given up looking for work is called:
- Cyclically unemployed
- Structurally unemployed
- A discouraged worker (Correct answer)
- Underemployed
Correct answer: A discouraged worker
Discouraged workers have stopped actively seeking employment and are excluded from the official unemployment rate.
Question 5: Which statement about the unemployment rate is most accurate?
- It counts all adults without jobs
- It overstates joblessness by including part-time workers
- It may understate true joblessness by excluding discouraged workers (Correct answer)
- It includes unpaid family workers as unemployed
Correct answer: It may understate true joblessness by excluding discouraged workers
The official rate excludes discouraged workers and underemployed part-timers, likely understating the full extent of labor underutilization.
Question 6: Which of the following best describes the relationship between unemployment and inflation according to the short-run Phillips curve?
- They are positively related
- They are unrelated
- There is an inverse trade-off between them (Correct answer)
- They both increase together during stagflation
Correct answer: There is an inverse trade-off between them
The short-run Phillips curve shows an inverse relationship: lower unemployment is associated with higher inflation.
Question 7: An economy has 150 million in the labor force and 9 million unemployed. What is the unemployment rate?
- 3%
- 5%
- 6% (Correct answer)
- 9%
Correct answer: 6%
Unemployment rate = (unemployed ÷ labor force) × 100 = (9 ÷ 150) × 100 = 6%.
AP Macro Unemployment 2
Which of the following workers would be classified as structurally unemployed?