Tasksheet #6: Unemployment

What is frictional unemployment?

• Unemployment resulting from people moving between jobs

• Unemployment due to government policies

• Unemployment due to economic recession

• Unemployment caused by technological advancements

Answer explanation

Frictional unemployment occurs when individuals are temporarily unemployed while transitioning between jobs. This is a normal part of the job market, unlike unemployment caused by government policies, economic recession, or technological changes.

What effect does the Minimum Wage Law have on employment?

• It has no effect on employment

• It guarantees employment for all workers

• It creates a surplus of labor

• It increases the number of jobs available

Answer explanation

The Minimum Wage Law can lead to a surplus of labor because it sets a wage floor. If the minimum wage is above the equilibrium wage, more people will want jobs than there are positions available, resulting in unemployment.

Which group is most affected by minimum wage increases?

• Workers with low skills

• Highly skilled workers

• Self-employed individuals

• Government employees

Answer explanation

Workers with low skills are most affected by minimum wage increases as they typically earn lower wages. Raising the minimum wage directly impacts their earnings, helping to improve their financial situation.

What does the Statistical Theory of unemployment propose?

• It argues that minimum wage laws create unemployment

• It claims that welfare makes not working attractive

• It states that education can cure unemployment

• It suggests that job market growth lags behind workforce growth

Answer explanation

The Statistical Theory of unemployment suggests that job market growth lags behind workforce growth, leading to higher unemployment rates as more individuals enter the job market than there are available jobs.

What does the Disease Theory propose as a solution to unemployment?

• Reducing the workforce size

• Creating more welfare programs

• Increasing minimum wage

• Providing job training in new technologies

Answer explanation

The Disease Theory suggests that unemployment can be addressed by equipping workers with new skills through job training in technologies, enabling them to adapt to changing job markets and improve employability.

What does the Criminal Theory claim regarding unemployment?

• It blames technological changes for job loss

• It suggests that job creation is the only solution

• It focuses on the need for better job opportunities

• It views the unemployed as lazy individuals exploiting welfare

Answer explanation

The Criminal Theory regarding unemployment views the unemployed as lazy individuals exploiting welfare, suggesting a negative perception of those without jobs rather than focusing on systemic issues or job creation.

What is a major flaw in workfare systems?

• They are universally accepted by economists

• They guarantee employment for all participants

• They often lead to worthless retraining programs

• They provide too many job opportunities

Answer explanation

A major flaw in workfare systems is that they often lead to worthless retraining programs, which do not equip participants with valuable skills or improve their employability, undermining the system's intended purpose.

What is a proposed solution for those unable to find employment?

• Reducing the workforce size

• Eliminating welfare programs

• Providing unemployment checks

• Increasing the minimum wage

Answer explanation

Providing unemployment checks is a proposed solution for those unable to find employment, as it offers financial support during job searches, helping individuals meet their basic needs while they seek work.

What is the relationship between wages and employment according to the Law of Demand?

• Higher wages lead to more hiring

• Higher wages lead to less hiring

• Wages have no effect on employment

• Lower wages increase demand for labor

Answer explanation

According to the Law of Demand, higher wages increase the cost of hiring, leading employers to hire fewer workers. Thus, the correct choice is that higher wages lead to less hiring.

What is a significant challenge in retraining programs?

• They are too expensive for governments

• They are only available for skilled workers

• They often do not match future job market needs

• They guarantee job placement

Answer explanation

A significant challenge in retraining programs is that they often do not align with future job market needs, leading to a mismatch between skills taught and available job opportunities.