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Name: _____________________________________________ Macroeconomics D

Unemployment: ch 10 (part 2)

1. Classify each of the following unemployment situations as cyclical (C), frictional (F), structural (ST)

or seasonal (SE).

a. Kerry, a trained ski instructor, loses her job when Spring comes.

b. Jim graduates from CU with a degree in beach management and is applying for work in California

where there is a known shortage of beach managers.

c. Abby is looking for a job as a waitress but due to an economic downturn, no restaurants are hiring.

d. Craig loses his job as a teller because the bank he works for is moving toward automated tellers.

2. The following table of unemployment data is from the Bureau of Labor Statistics.

Table 1-2 Unemployment

rates

(In percent)

Year

United

StatesGermany Italy Netherlands Sweden

United

Kingdom

2000 4.0 7.8 10.2 3.0 5.8 5.5

2001 4.7 7.9 9.2 2.3 5.0 5.1

2002 5.8 8.6 8.7 2.8 5.1 5.2

2003 6.0 9.3 8.5 3.7 5.8 5.0

2004 5.5 10.3 8.1 4.6 6.6 4.8

2005 5.1 11.2 7.8 4.8 7.7 4.9

2006 4.6 10.4 6.9 3.9 7.0 5.5

2007 4.6 8.7 6.2 3.2 6.1 5.4

2008 5.8 7.5 6.8 2.8 6.0 5.7

2009 9.3 7.8 7.9 3.4 8.2 7.7

Comment on the USs natural rate of unemployment versus the other countries.

For each country, estimate its

natural rate of unemployment for thepast decade, prior to 2009.

US:

Germany:

Italy:

Netherlands:

Sweden:

UK:

8/3/2019 Macro ICA Ch10 Part2

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Macroeconomics Dr. Saue

3. The following graph illustrates the labor market for unskilled workers.

Hourly wage

Quantity of Labor

Supply ofLabor

Demand for

Labor

Minimum

wage

Illustrate the number of workers who want ajob (Qw), the number of workers the firms

will hire (Qj) and the number of unemployedworkers.

Now suppose a record number of teenagers

turn 16. Illustrate the impact this would havein the market (that is, shift either supply or

demand).

Illustrate the new number of workers whowant a job (Qw2), the number of workers the

firms will hire (Qj2) and the number ofunemployed workers.