The natural rate of unemployment is
A. zero since everyone who is unemployed is voluntarily unemployed
B. determined in part by labor market frictions as people changes careers, etc.
C. rarely more than 3 percent
D. the amount of unemployment caused by an average recession
E. generally the result of misguided government policy
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The ill effects of unemployment are often more severe than official data suggest since
A. the natural rate of unemployment is not accounted for
B. much of the unemployment that is reported is structural
C. over 50 percent of the unemployed are unemployed for more than half a year
D. the incidence of unemployment, both in frequency and duration, is spread unevenly throughout the population
E. workers who enter the labor force for the first time are not counted as unemployed
The natural rate of unemployment can be reduced by
A. expansionary monetary policies, but this would create more inflation
B. expansionary fiscal policies, such as an income tax decrease
C. restrictive fiscal policies designed to balance the federal budget
D. training and skills programs that focus on teenagers and the long-term unemployed
E. none of the above
Some evidence suggests that prolonged periods of high unemployment actually increase the natural unemployment rate. This phenomenon is known as
A. Okun's law
B. structural unemployment
C. unemployment hysteresis
D. the misery effect
E. the long-term unemployment effect
Generous unemployment benefits may actually lead to an increase in the measured rate of unemployment since
A. people who are not really looking for jobs may report themselves as unemployed to collect unemployment benefits
B. receiving unemployment benefits reduces the opportunity costs of looking for a better job even after a job offer may have been made
C. firms are more likely to lay off workers knowing that the consequences of being unemployed are not too severe
D. unemployment benefits increase the replacement ratio and that, in turn, affects the reservation wage
E. all of the above
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