30. Structural unemployment occurs when: A) Workers do not have the skills requi

Question

30. Structural unemployment occurs when: A) Workers do not have the skills required to fill the vacant positions in the job market. B) Firms fail in the normal course of business activity C) An industry experiences a seasonal downturn. D) There is inadequate demand for labor. E) 31. Which of the following usually increases before the CPI increases? A) GDP deflator. B) Consumer price index. C) Producer price index. D) COLAs 32. A laissez faire policy approach during a recession would advocate: A) Non-interference by the government. B) Increasing AS by funding programs which improve worker skills. C) Increasing AD by increasing government spending. D) Increasing both AD and AS 33. Underemployment means A) The same thing as unemployment. B) A person is lazy and not working hard at his or her job. C) A person is not able to use his or her full capabilities in his or her job. D) A person is a discouraged worker. 34. Price stability: A) Is defined as a zero percent rate of inflation in the Full Employment and Balanced Growth Act of 1978. B) Has never been achieved in the history of the United States C) Has been officially set by Congress at 3 percent. D) Has been achieved consistently in the twentieth century in the United States. 35. Which of the following automatically adjusts some nominal wages to changing price indexes? A) The CPI B) The PPI. C) The GDP deflator. D) The COLA 36. An extremely deep and long recession is called a: A) Growth recession. B) Depression. C) Normal period of adjustment. D) Temporary deviation from full employment. 37. The business cycle is defined as: A) Changing wages and prices. B) An effort to reach full employment. C) The growth of real GDP. D) Alternating periods of economie growth and contraction.

Explanation / Answer

30. Structural unemployment is the unemployment that results from workers not having the skills to obtain long-term employment. Therefore, the correct option is

31. Consumer price index is a measure of the change in cost of a market basket that represents the consumption of a typical household. We can measure the inflation by price index. It measures the goods and services bought by consumers both domestically and internationally. CPI reflects the cost of whatever consumer buys including goods in underground economy. The GDP deflator measures the average level of prices of all final goods and services produced in the economy. The GDP deflator measures goods and services produced domestically. The Producers' Price Index or PPI measures the changes in wholesale price received by the producers. The COLAs measures the cost of standard of living and accounts for changes in substitution effect when price of a good changes.

The PPI is a true measures of inflation and increases before CPI. Because this measures the price faced by the producers. The input price inflation hits before the producers increases their price of final goods and hence a rise in CPI.

Then the correct option is

32. The phrase "laissez faire" means "allow to do" and refers to free market economy with no or minimum government interventions. Then the correct option is

33. Underemployment implies employment below the potential level. Then if a person is unable to work at his/her full potential is termed as underemployed.

Then the correct option is

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