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Chapter 8: Q 38 (page 215)

Under what condition would a decrease in

unemployment be bad for the economy?

Short Answer

Expert verified

Unemployment rate depicts percentage of individuals unemployed in total labor force

Step by step solution

01

Step 1. Unemployed people

Unemployed people: People who are looking for job but are not able to find it.

02

Step 2. Discouraged workers

those workers who are eligible for jobs but have they have stopped looking for job because they might not find suitable options they are looking for.

03

Step 3. Reason

Increase in unemployment does not always means country is not doing good. Discouraged workers are not considered as unemployed nor they are included in labor force.

So, if these discouraged workers join the labor force again and start looking for work it would contribute to increased unemployment. But this increase would not be a bad sign for the economy.

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Most popular questions from this chapter

What type of unemployment (cyclical, frictional,

or structural) applies to each of the following:

a. landscapers laid off in response to a drop in new housing construction during a recession.

b. coal miners laid off due to EPA regulations that shut down coal fired power

c. a financial analyst who quits his/her job in

Chicago and is pursing similar work in Arizona

d. printers laid off due to drop in demand for printed catalogues and flyers as firms go the internet to promote an advertise their products.

e. factory workers in the U.S. laid off as the plants shut down and move to Mexico and Ireland.

Beginning in the 1970s and continuing for three decades, women entered the U.S. labor force in a big way. If we assume that wages are sticky in a downward direction, but that around 1970 the demand for labor equaled the supply of labor at the current wage rate, what do you imagine happened to the wage rate, employment, and unemployment as a result of increased labor force participation?

What is structural unemployment? Give examples of structural unemployment.

If you are out of school but working part time, are you considered employed or unemployed in U.S. labor statistics? If you are a full time student and working 12 hours a week at the college cafeteria are you considered employed or not in the labor force? If you are a senior citizen who is collecting social security and a pension and working as a greeter at Wal-Mart are you considered employed or not in the labor force?

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?
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