Q.1 What is unemployment?
Lack of jobs in an economy
People not willing to work
Mismatch between skills and jobs
Only seasonal joblessness
Explanation - Unemployment is a situation where people who are willing and able to work at prevailing wages cannot find jobs.
Correct answer is: Lack of jobs in an economy
Q.2 Which type of unemployment arises due to changes in weather conditions?
Frictional unemployment
Seasonal unemployment
Cyclical unemployment
Structural unemployment
Explanation - Seasonal unemployment occurs when demand for labor fluctuates with the season, such as in agriculture or tourism.
Correct answer is: Seasonal unemployment
Q.3 Cyclical unemployment is mainly associated with:
Technological changes
Economic recessions
Weather patterns
Labor strikes
Explanation - Cyclical unemployment results from downturns in the business cycle, when overall demand in the economy falls.
Correct answer is: Economic recessions
Q.4 Who gave the concept of 'natural rate of unemployment'?
John Maynard Keynes
Milton Friedman
Karl Marx
Adam Smith
Explanation - Milton Friedman introduced the idea of a natural rate of unemployment, which exists even when the economy is at full employment.
Correct answer is: Milton Friedman
Q.5 What does 'full employment' mean in macroeconomics?
Zero unemployment
No cyclical unemployment
Everyone has a job
High wages
Explanation - Full employment does not mean zero unemployment; it means absence of cyclical unemployment while allowing frictional and structural unemployment.
Correct answer is: No cyclical unemployment
Q.6 Frictional unemployment occurs due to:
Economic slowdowns
Job transitions
Skill mismatches
Government policies
Explanation - Frictional unemployment occurs when workers are temporarily between jobs or searching for new ones.
Correct answer is: Job transitions
Q.7 Which theory suggests that wages are rigid downward and cause unemployment?
Classical theory
Keynesian theory
Human capital theory
Supply-side theory
Explanation - Keynes argued that wage rigidity prevents wages from falling during recessions, leading to unemployment.
Correct answer is: Keynesian theory
Q.8 Structural unemployment is mainly caused by:
Poor education
Technological changes
Bad weather
Cyclical demand
Explanation - Structural unemployment arises when workers' skills do not match available jobs, often due to technology or industry shifts.
Correct answer is: Technological changes
Q.9 Which of the following is an example of disguised unemployment?
Overstaffing on farms
Temporary layoffs
High unemployment during recessions
Automation replacing workers
Explanation - Disguised unemployment occurs when more workers are employed than needed, such as in traditional farming.
Correct answer is: Overstaffing on farms
Q.10 According to classical economists, unemployment is caused by:
Deficient demand
Voluntary choice
Skill mismatch
Wage rigidity
Explanation - Classical theory suggested unemployment was voluntary, as wages adjust to clear labor markets.
Correct answer is: Voluntary choice
Q.11 Okun’s law relates unemployment to:
Inflation
Output growth
Wages
Labor supply
Explanation - Okun’s law states that for every 1% increase in unemployment, GDP falls by about 2%.
Correct answer is: Output growth
Q.12 Which type of unemployment is common in underdeveloped countries?
Frictional unemployment
Disguised unemployment
Cyclical unemployment
Seasonal unemployment
Explanation - Disguised unemployment is prevalent in underdeveloped economies, especially in agriculture.
Correct answer is: Disguised unemployment
Q.13 The Phillips curve shows the relationship between:
Unemployment and inflation
Wages and employment
GDP and interest rates
Labor supply and demand
Explanation - The Phillips curve illustrates the inverse relationship between unemployment and inflation in the short run.
Correct answer is: Unemployment and inflation
Q.14 Underemployment refers to:
People working part-time involuntarily
Zero employment
High unemployment rates
Labor migration
Explanation - Underemployment occurs when workers are employed but not in their full capacity, such as part-time when they want full-time.
Correct answer is: People working part-time involuntarily
Q.15 Which policy can reduce cyclical unemployment?
Monetary expansion
Immigration control
Minimum wage laws
Trade barriers
Explanation - Cyclical unemployment can be reduced by expansionary fiscal and monetary policies to boost demand.
Correct answer is: Monetary expansion
Q.16 Involuntary unemployment was emphasized by:
Adam Smith
Keynes
Ricardo
Say
Explanation - Keynes argued that involuntary unemployment occurs when workers are willing to work at prevailing wages but cannot find jobs due to deficient demand.
Correct answer is: Keynes
Q.17 The concept of 'frictional unemployment' is most linked with:
Job search process
Business cycles
Structural changes
Government policies
Explanation - Frictional unemployment arises when people are searching for or transitioning between jobs.
Correct answer is: Job search process
Q.18 What does 'NAIRU' stand for?
Natural Accelerating Inflation Rate of Unemployment
Non-Accelerating Inflation Rate of Unemployment
National Average Inflation Rate of Unemployment
Nominal Actual Inflation Rate of Unemployment
Explanation - NAIRU refers to the unemployment rate at which inflation remains stable.
Correct answer is: Non-Accelerating Inflation Rate of Unemployment
Q.19 Which sector is most affected by seasonal unemployment?
Banking
Agriculture
Information technology
Telecommunications
Explanation - Seasonal unemployment is common in agriculture, where work depends on crop cycles.
Correct answer is: Agriculture
Q.20 Voluntary unemployment occurs when:
People refuse jobs at prevailing wages
Economy is in recession
Skills are outdated
Government imposes wage laws
Explanation - Voluntary unemployment occurs when workers choose not to accept available jobs at current wage rates.
Correct answer is: People refuse jobs at prevailing wages
Q.21 According to Keynes, the main cause of unemployment is:
High population growth
Deficient aggregate demand
Skill mismatches
Labor immobility
Explanation - Keynes believed unemployment results from insufficient demand for goods and services in the economy.
Correct answer is: Deficient aggregate demand
Q.22 Which type of unemployment is inevitable in a dynamic economy?
Cyclical unemployment
Frictional unemployment
Structural unemployment
Seasonal unemployment
Explanation - Frictional unemployment is inevitable because workers are always moving between jobs or entering the workforce.
Correct answer is: Frictional unemployment
Q.23 Employment elasticity measures:
Response of jobs to GDP growth
Inflation to unemployment
Labor supply to wages
Government policies to employment
Explanation - Employment elasticity measures how much employment changes when GDP grows by 1%.
Correct answer is: Response of jobs to GDP growth
Q.24 Which of the following is an example of structural unemployment?
A farmer losing job in winter
A typist replaced by computers
A worker searching for a better job
Layoffs during recession
Explanation - When technology replaces certain jobs, it leads to structural unemployment as skills become obsolete.
Correct answer is: A typist replaced by computers
Q.25 What is the main policy tool to address structural unemployment?
Job training programs
Lowering interest rates
Increasing government spending
Tax cuts
Explanation - Structural unemployment requires reskilling and retraining workers to adapt to new job requirements.
Correct answer is: Job training programs