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Chapter 21: Q. 3 (page 523)

Over the long term, has the U.S. unemployment rate generally trended up, trended down, or remained at basically the same level?

Short Answer

Expert verified

Same level roughly.

Step by step solution

01

Step1. Introduction

The unemployment rate is the proportion of the labor force which is unemployed. An uptrend indicates rising rate, and hence more unemployment and vice versa for downtrend.

02

Step2. Explanation

Roughly, the unemployment rate has fairly stayed stable with some little fluctuations here and there.

This indicates the Fed has been successful in maintaining and achieving the targeted unemployment.

The Fed has been able to maintain the unemployment rate around 5%.

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Most popular questions from this chapter

While unemployment is highly negatively correlated with the level of economic activity, in the real world it responds with a lag. In other words, firms do not immediately lay off workers in response to a sales decline. They wait a while before responding. Similarly, firms do not immediately hire workers when sales pick up. What do you think accounts for the lag in response time?

How do you calculate the unemployment rate? How do you calculate the labor force participation rate?

Many college students graduate from college before they have found a job. When graduates begin to look for a job, they are counted as what category of unemployed?

What happens to the unemployment rate when unemployed workers are reclassified as discouraged workers?

Is the increase in labor force participation rates among women better thought of as causing an increase in cyclical unemployment or an increase in the natural rate of unemployment? Why?

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