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Economists would refer to this situation as a high 



1. "In the U.S. or Britain, economic recoveries put people back to work relatively quickly. But Germany is bogged down by high labor costs and other structural factors that discourage hiring. So the recent unemployment rate of 11.4% is not likely to fall by much in the near future." Economists would refer to this situation as a high 
a) natural rate of unemployment b) cyclical rate of unemployment 
c) frictional rate of unemployment d) structural rate of unemployment 
2. Suppose the unemployment rate is 8%, and the labor force is 20 million. If the number of encouraged workers rises by 100,000, the unemployment rate becomes 
a) 7% or less b) between 7% and 8% c) 8% d) greater than 8% 
3. "Though President Clinton has called for a global summit on unemployment, neither the president nor his critics have clearly formulated the most important economic question raised by his economic proposals. Should the U.S., like the European Community, accept an ever higher __________ as the cost of expanding social programs." The blank is best filled with 
a) interest rate b) inflation rate c) unemployment rate d) level of inequality 13 
4. "The problem first appeared in the 1920s after Britain instituted the "dole," or unemployment benefit. Prices fell after a tremendous wartime inflation. But the dole, which was fixed in nominal terms, stopped money wages from adjusting. For the first time, Britain suffered permanent and high unemployment." The dole could cause unemployment by 
a) pulling down wages b) requiring higher taxes 
c) creating incentives not to work d) increasing structural unemployment 
5. "In advocating expanded unemployment benefits, President Clinton observed that 'All the European countries have higher unemployment rates than we do but also stronger support systems for the unemployed.' " This argument supporting expanded unemployment benefits can best be countered by arguing that 
a) we can not afford stronger support systems 
b) stronger support systems have caused higher unemployment 
c) we have low unemployment and so don't need stronger support systems 
d) higher unemployment has forced Europeans to develop stronger support systems



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