Consider an economy made up of 500 people (i.e., the working-age population). Of which, 400 are employed, 20 are unemployed and looking for jobs, 30 are full-time students, 35 are discouraged workers, and 15 are retired, under-aged and other individuals. What is the labor force participation rate? 80% O 84% O 90% O 97% A

What is frictional unemployment? Give examples of frictional unemployment.

Assess whether the following would be counted as unemployed in the Current Employment Statistics survey. A husband willingly stays home with children while his wife works. A manufacturing worker whose factory just closed down. A college student doing an unpaid summer internship. A retiree. Someone who has been out of work for two years but keeps looking for a job. Someone who has been out of work for two months but isnt looking for a job. Someone who hates her present job and is actively looking for another one. Someone who decides to take a part time job because she could not find a full time position.

Is it desirable to eliminate natural unemployment? Why or why not? Hint: Think about what our economy would look like today and what assumptions would have to be met to have a zero rate of natural unemployment.

What is structural unemployment? Give examples of structural unemployment.

What happens to the labor force participation rate when employed individuals are reclassified as unemployed? What happens when they are reclassified as discouraged workers?

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 forces create the natural rate of unemployment for an economy?

Would you expect the natural rate of unemployment to remain the same within one country over the long run of several decades?

When would you expect cyclical unemployment to be rising? Falling?