Tackle the Test: Free-Response Questions

1. Question

   
   

   1. The natural rate of unemployment is made up of which of the types of unemployment?

      
      
   
   

   2. Explain how cyclical unemployment relates to the natural rate of unemployment.

      
      
   
   

   3. List three factors that can lead to a change in the natural rate of unemployment.

      
      
   
   

   Rubric for FRQ 1 (6 points)

   1 point: The natural rate of unemployment is made up of frictional unemployment . . .

   1 point: . . . plus structural unemployment.

   1 point: Cyclical unemployment is the deviation of the actual rate of unemployment from the natural rate. Or, cyclical unemployment is the difference between the actual and natural rates of unemployment.

   1 point: Changes in labor force characteristics

   1 point: Changes in labor market institutions such as unions

   1 point: Changes in government policies

2. Question

   In each of the following situations, what type of unemployment is Melanie facing? Explain.

   
   

   
   

   1. After completing a complex programming project, Melanie is laid off. Her prospects for a new job requiring similar skills are good, and she has signed up with a programmer placement service. She has passed up offers for low-paying jobs.

      
      
   
   

   2. Melanie loses her programming job because the development of new packaged software programs means employers no longer need to hire as many programmers.

      
      
   
   

   3. Due to the current slump in investment spending, Melanie has been laid off from her programming job. Her employer promises to rehire her when business picks up.(6 points)

      
      
   
   

   Rubric for FRQ 2 (6 points)

   1 point: Frictional

   1 point: Melanie is between jobs.

   1 point: Structural

   1 point: Melanie is unemployed because the demand for her skills has decreased.

   1 point: Cyclical

   1 point: Melanie is unemployed due to an economic slowdown (recession).