The Difference Between the Official Unemployment Rate and the Alternate

question 15

Multiple Choice

The difference between the official unemployment rate and the alternate measure of unemployment that includes discouraged workers and underemployed workers

• A) equals zero when there is no cyclical unemployment.
• B) shows that there are no shortcomings with the official unemployment rate.
• C) grows when the economy enters an expansion.
• D) shows short-term and long-term unemployment spells.
• E) grows when the economy enters a recession.

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Definitions:

Shut Down

A short-term decision by a firm to cease production due to market conditions, typically because the market price is below the minimum of average variable costs.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating profitability beyond normal returns.

Long-run

A period of time in which all factors of production and costs are variable, allowing companies to adjust to market changes completely.

Perfectly Competitive

Describes a market structure where many firms offer identical products, there are no barriers to entry or exit, and all firms are price takers, meaning they accept the market price as given.