The unemployment rate will decrease whenever there is
a. an increase in the number of persons classified as unemployed.
b. a decrease in the number of unemployed relative to the size of the labor force.
c. a decrease in the size of the population and there is no change in the number of persons classified as employed.
d. a reduction in the size of the labor force.
e. a decrease in the number of unemployed and the population does not change.
Answer: b. a decrease in the number of unemployed relative to the size of the labor force.
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Which of the following is an example of adverse selection?
A) Overgrazing of a common piece of land B) Passengers travelling in a subway without a ticket C) A customer buying a defective appliance from a used goods market D) The generation of a harmful chemical during the production of a good
In the bank lending channel, an important reason for output increases in the short run after an expansionary monetary policy is that
A) the funds directly available for households and firms to spend will increase. B) prices will increase, making increased production more profitable for firms. C) the increase in government spending from an expansionary monetary policy increases output through the multiplier effect. D) the ability of banks to make loans will increase.
An important factor that contributes to labor productivity growth is:
A) growth in the capital stock. B) technological change. C) the standard of living. D) A and B only E) A, B, and C are correct.
In the short run, the fixed costs of a firm:
A. are irrelevant in deciding whether to shut down production. B. are equal to zero when quantity produced is zero. C. are all the costs it incurs when it produces some positive quantity. D. can sometimes be avoided in the short run.