Suppose the Official Rate of Unemployment Reported by Statistics Canada

question 103

Multiple Choice

Suppose the official rate of unemployment reported by Statistics Canada is 7.2%.One reason this is likely to be an understatement of the amount of "true" unemployment is that

• A)the official rate is a measure of gross flows into and out of unemployment rather than net flows.
• B)discouraged workers who have given up searching for a job,but would take one if offered,are not included.
• C)the official rate is a measure of net flows into and out of unemployment rather than gross flows.
• D)Statistics Canada does not have a good measure of the numbers of people entering the labour force,so the denominator in the measured ratio is smaller than in reality.
• E)seasonal workers are not included at all in the official data.

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Definitions:

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of the good that suppliers are willing to produce and sell.

Perfectly Elastic

Describes a situation in which the demand or supply for a product responds immediately and proportionately to changes in price, leading to an infinite elasticity.

Present Value

The present value of a future amount of money or series of cash inflows, calculated using a predetermined interest rate.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets over a specific time frame, often noted on an annual basis.