What effect does the existence of discouraged workers have on the ability of the official unemployment rate to provide accurate information about the extent to which labor is employed?
What will be an ideal response?
Discouraged workers are individuals who have stopped searching for employment because, for example, they have become "discouraged" with the prospects of finding employment. Once they stop searching (after 4 weeks), they are no longer counted as unemployed and, therefore, in the labor force. Such a dynamic would cause the official unemployment to fall. Alternatively, the existence of discouraged workers implies that the official unemployment rate underestimates the extent to which labor is being is not being used. This explains why the existence of discouraged workers can cause the unemployment rate to be an imperfect measure of the utilization of labor.
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Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda
A) will increase and she'll buy more soda. B) will decrease and she'll buy fewer sodas. C) will decrease and she'll buy more pizza. D) Both B and C are correct.
In the long run, a sustained increase in money supply growth relative to the growth rate of potential real output will most likely: a. cause the nominal interest rate to fall
b. cause the real interest rate to fall. c. reduce the natural rate of unemployment. d. none of the above
The price system is based on the law of __________________.
Fill in the blank(s) with the appropriate word(s).
Use the figure below to answer the following question.
The figure shows three supply curves for apples. If you observe the supply of apples shift from S1 to S3, which of the following could be responsible for this shift?
A. Apple production has increased. B. The producers of apples now receive a subsidy. C. The producers of apples now must pay a tax. D. Apple producers are willing to sell more at every price.