Simply counting the number of unemployed workers will not necessarily give the Bureau of Labor Statistics (BLS) the most accurate indication of theextent of underemployment in the economy. Some part-time workers will be counted as employed even if they'd like to work full-time. Furthermore,some jobless workers will not qualify as unemployed because they have given up on their job search, frustrated with their inability to find work.Fortunately, the BLS can use the information provided in the household survey to classify workers in ways that account for these types ofunderemployment.The BLS classifies those who work part-time because they cannot find full-time employment as involuntary part-time workers. The BLS classifiesas discouraged workers those who want and are available for work but have not searched for employment during the previous four weeks becausethey believe their job search is currently futile. By keeping track of discouraged and involuntary part-time workers, the BLS gets a clearer picture ofunderemployment than if it looked only at the number of unemployed workers.Which of the following statements correctly describe discouraged workers? Check all that apply.They are part-time workers who want to work full-time.They are employed workers who want to earn higher wages.They are full-time workers who would like to work only part-time.They are available for work.Consider a hypothetical economy in which the labor force consists of 300 people. Of those, 270 people are employed full-time and 30 people areunemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore,initially the unemployment rate is calculated as follows:Unemployment Rate =Number of Unemployed PeopleNumber of People in the Labor Force3030 x 100300= 10%=Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. Thefollowing table offers two possible scenarios resulting from the recession.x 100Calculate the unemployment rate associated with each scenario in the following table. Assume that each scenario describes the only labor marketchanges in this economy.ScenarioA: Firms reduce work hours by 20%. The number of involuntary part-time workers risesas firms respond to the reduction in the demand for their products by reducing the hoursof each employed person from 40 to 32 hours per week.TrueB: Firms reduce employment by 20%. The number of unemployed workers rises as firmsrespond to the reduction in the demand for their products by laying off 54 previouslyemployed workers.FalseUnemployment Rate%True or False: The unemployment rate for scenario A in the previous table overstates the true extent of underemployment in the economy because theBLS counts part-time workers as employed.%

Answered: Which of the following statements…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations

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Simply counting the number of unemployed workers will not necessarily give the Bureau of Labor Statistics (BLS) the most accurate indication of the
extent of underemployment in the economy. Some part-time workers will be counted as employed even if they'd like to work full-time. Furthermore,
some jobless workers will not qualify as unemployed because they have given up on their job search, frustrated with their inability to find work.
Fortunately, the BLS can use the information provided in the household survey to classify workers in ways that account for these types of
underemployment.
The BLS classifies those who work part-time because they cannot find full-time employment as involuntary part-time workers. The BLS classifies
as discouraged workers those who want and are available for work but have not searched for employment during the previous four weeks because
they believe their job search is currently futile. By keeping track of discouraged and involuntary part-time workers, the BLS gets a clearer picture of
underemployment than if it looked only at the number of unemployed workers.
Which of the following statements correctly describe discouraged workers? Check all that apply.
They are part-time workers who want to work full-time.
They are employed workers who want to earn higher wages.
They are full-time workers who would like to work only part-time.
They are available for work.
Consider a hypothetical economy in which the labor force consists of 300 people. Of those, 270 people are employed full-time and 30 people are
unemployed. The economy follows the same conventions as the U.S. Bureau of Labor Statistics (BLS) in computing its employment figures. Therefore,
initially the unemployment rate is calculated as follows:
Unemployment Rate =
Number of Unemployed People
Number of People in the Labor Force
30
30 x 100
300
= 10%
=
Suppose a reduction in foreign demand for this economy's products causes an economic recession-a prolonged period of declining output. The
following table offers two possible scenarios resulting from the recession.
x 100
Calculate the unemployment rate associated with each scenario in the following table. Assume that each scenario describes the only labor market
changes in this economy.
Scenario
A: Firms reduce work hours by 20%. The number of involuntary part-time workers rises
as firms respond to the reduction in the demand for their products by reducing the hours
of each employed person from 40 to 32 hours per week.
True
B: Firms reduce employment by 20%. The number of unemployed workers rises as firms
respond to the reduction in the demand for their products by laying off 54 previously
employed workers.
False
Unemployment Rate
%
True or False: The unemployment rate for scenario A in the previous table overstates the true extent of underemployment in the economy because the
BLS counts part-time workers as employed.
%

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A country faces a variety of issues that would affect its growth and this includes poverty, unemployment, economic inequality, public debt, inflation, corruption, recession, and so on. The government of a country must take suitable measures by drafting suitable policies to tackle these issues and failure to do so will not only retard the country's development but also affect the citizens living in the country. Based on their economic status, countries can be categorized as underdeveloped, developing, and developed nations.

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