Labor Force and Unemployment Measurements Quiz

Retired individuals are not actively seeking work and therefore not part of the labor force.

Labor force participation rate gauges the proportion of the population that is actively engaged in the labor force.

Voluntary unemployment doesn't fit within the standard classifications of unemployment, as it generally refers to individuals choosing not to work for various reasons.

Unemployment rate is calculated by dividing the number of unemployed individuals by the total labor force.

Frictional unemployment arises due to temporary transitions in employment, such as job changes.

Cyclical unemployment is tied to fluctuations in the business cycle and increases during economic downturns.

Underemployment pertains to individuals working below their skill or desired employment level, often part-time when seeking full-time work.

BLS categorizes individuals as unemployed if they are actively searching for jobs and willing to work.

Structural unemployment arises when individuals lack the necessary skills for available positions.

Natural rate of unemployment reflects the equilibrium level of unemployment in absence of frictional or structural factors.

Unemployment rate overlooks individuals who have stopped seeking employment out of frustration, known as discouraged workers.

Raising the minimum wage often leads to higher unemployment rates as businesses may reduce hiring to offset increased labor costs.

U-3 is the traditional unemployment rate, counting those actively seeking jobs, while U-6 encompasses a broader range of underutilized labor resources.

Creative destruction describes the replacement of old industries with new ones, often resulting in temporary unemployment in the displaced sectors.

Hysteresis suggests that even after an economic downturn ends, unemployment may persist due to long-term effects, such as discouraged workers or loss of skills.