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Chapter 21: Q. 38 (page 525)

Under what condition would a decrease in

unemployment be bad for the economy?

Short Answer

Expert verified

A decrease in unemployment would be bad for the economy when there is an increase in the number of discouraged workers.

Step by step solution

01

Step 1. Unemployment Rate.

The unemployment rate is the percentage of adults who are in the labor force and thus seeking jobs, but who do not have jobs.

02

Step 2. Decrease in Unemployment.

A decrease in unemployment would be bad for the economy when there is an increase in the number of discouraged workers which will lead to a decrease in the labor force. The unemployment rate will fall despite bad economic conditions.

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Most popular questions from this chapter

Whose unemployment rates are commonly higher in the U.S. economy:

a. Whites or nonwhites?

b. The young or the middle-aged?

c. College graduates or high school graduates?

Are all adults who do not hold jobs counted as unemployed?

Using the above data, what is the unemployment rate? These data are U.S. statistics from 2010. How does it compare to the February 2015 unemployment rate computed earlier?

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?

Assess whether the following would be counted as “unemployed” in the Current Employment Statistics survey.

a. A husband willingly stays home with children while his wife works.

b. A manufacturing worker whose factory just closed down.

c. A college student doing an unpaid summer internship.

d. A retiree.

e. Someone who has been out of work for two years but keeps looking for a job.

f. Someone who has been out of work for two months but isn’t looking for a job.

g. Someone who hates her present job and is

actively looking for another one.

h. Someone who decides to take a part-time job because she could not find a full-time position.
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