Question 1

Why don't wages fall so that everyone with the skills and desire gets a job?

Accepted Answer

A)   The government might prevent it, through minimum-wage legislation.
B)   Labor unions might prevent it, through bargaining backed by the threat to strike.
C)   Firms themselves might prevent it, by voluntarily choosing to pay higher wages than necessary.
D)   All of these are reasons why wages may not fall to equilibrium.E) B) and D)
F) A) and D)

Question 2

When the economy goes through ups and downs over time:

Accepted Answer

A)   it is not reflected by changes in GDP growth.
B)   economists call this pattern the business cycle.
C)   it affects the supply of labor.
D)   All of these are true.E) A) and B)
F) A) and C)

Question 3

The Bureau of Labor Statistics measures unemployment by surveying:

Accepted Answer

A)   every household at least once a year.
B)   a sample of about 60,000 households every month.
C)   a sample of about 60,000 employers every month.
D)   every business at least once a year.E) None of the above
F) All of the above

Question 4

The magnitude of the impact taxes have on job-search effort is:

Accepted Answer

A)   inconclusive.
B)   hugely negative.
C)   slightly positive.
D)   slightly negative.E) A) and D)
F) None of the above

Question 5

One reason Henry Ford is famous was for instituting:

Accepted Answer

A)   assembly lines in an effort to reduce worker turnover.
B)   efficiency wages in an effort to reduce worker absenteeism.
C)   minimum wages in an effort to increase productivity.
D)   unemployment benefits in response to the first unionized workers.E) A) and B)
F) None of the above

Question 6

Johnny has been working in a sandwich shop full-time while he attends college. When he graduates, he quits the sandwich shop and begins to search for full-time employment related to his college degree. Johnny would be considered:

Accepted Answer

A)   frictionally unemployed.
B)   structurally unemployed.
C)   cyclically unemployed.
D)   classically unemployed.E) A) and D)
F) A) and C)

Question 7

In 2015, the labor force participation rate was 62.6 percent. This means that:

Accepted Answer

A)   62.6 % of all working age people wanted a job.
B)   there was 37.4 % unemployment.
C)   62.6 % of all working age people were employed.
D)   only 62.4 percent of labor force was in working age population.E) None of the above
F) All of the above

Question 8

Cyclical unemployment is:

Accepted Answer

A)   unemployment caused by short-term economic fluctuations reflected in GDP growth.
B)   unemployment resulting from a mismatch between the skills workers can offer and the skills demanded.
C)   unemployment caused by workers who are changing their location, job, or career.
D)   the effect of wages remaining persistently above the market-clearing level.E) All of the above
F) None of the above

Question 9

When the prevailing market wage is above equilibrium:

Accepted Answer

A)   the surplus of labor is the amount of unemployment in the market.
B)   the difference between the quantity supplied and the quantity of labor demanded is unemployment.
C)   unemployment occurs.
D)   All of these are true.E) None of the above
F) All of the above

Question 10

Unemployment is a:

Accepted Answer

A)   leading indicator, because the business cycle follows it.
B)   lagging indicator, because the business cycle follows it.
C)   leading indicator, because it follows the business cycle.
D)   lagging indicator, because it follows the business cycle.E) A) and D)
F) C) and D)

Question 11

The natural rate of unemployment:

Accepted Answer

A)   is typically zero.
B)   is the normal level of unemployment in an economy in the long run.
C)   is constant over time.
D)   None of these is true.E) C) and D)
F) B) and C)

Question 12

We would expect that policies to protect workers would:

Accepted Answer

A)   lead to greater unemployment.
B)   lead to less unemployment.
C)   have no impact on unemployment.
D)   affect those seasonally unemployed more profoundly than other unemployed workers.E) A) and B)
F) None of the above

Question 13

Carol is a coal miner who just got laid off when the last coal mine in the area was shut down. She has looked everywhere for another job as a miner, but cannot find one. Given that Carol is unlikely to find another job as a miner, she would be considered:

Accepted Answer

A)   frictionally unemployed.
B)   structurally unemployed.
C)   real-wage unemployed.
D)   Carol is a discouraged worker.E) B) and D)
F) A) and C)

Question 14

Employers choose to offer efficiency wages because:

Accepted Answer

A)   they give employees an incentive to work hard to keep their jobs.
B)   it will reduce turnover, saving the employer time and money to hire and train new workers.
C)   it has proven to make workers more productive.
D)   All of these are true.E) C) and D)
F) B) and C)

Question 15

An economic boom predicts the new equilibrium wage would be:

Accepted Answer

A)   lower because the labor demand curve shifts left.
B)   higher because the labor demand curve shifts left.
C)   lower because the labor demand curve shifts right.
D)   higher because the labor demand curve shifts right.E) None of the above
F) A) and B)

Question 16

Unemployment insurance is:

Accepted Answer

A)   money that is paid by the government to people who are unemployed.
B)   money that is paid to the government by employers who lay off employees.
C)   offered by the government as a way to affect the level of cyclical unemployment.
D)   offered by the government as a way to affect the level of seasonal unemployment.E) B) and C)
F) A) and B)

Question 17

When the prevailing market wage is above equilibrium, we say:

Accepted Answer

A)   there is no unemployment.
B)   there is a surplus of labor.
C)   the quantity of labor demanded is more than the quantity supplied.
D)   All of these are true.E) B) and D)
F) B) and C)

Question 18

Which type of unemployment leads to a natural rate of unemployment above zero?

Accepted Answer

A)   The natural rate of unemployment is always zero.
B)   Frictional unemployment
C)   Unemployment of government workers
D)   Cyclical unemploymentE) A) and C)
F) All of the above

Question 19

When the economy is going strong the:

Accepted Answer

A)   demand for workers increases.
B)   supply of workers increases.
C)   demand for workers decreases.
D)   supply of workers decreases.E) A) and D)
F) All of the above

Question 20

The unemployment rate:

Accepted Answer

A)   is measured by the number of people who are unemployed divided by the labor force.
B)   is never zero.
C)   measures what percentage of our labor force is currently looking for a job and can't find one.
D)   All of these are true.E) A) and D)
F) A) and C)

Exam 9: Unemployment and the Labor Market

Employers choose to offer efficiency wages because:

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The magnitude of the impact taxes have on job-search effort is:

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Unemployment insurance is:

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We would expect that policies to protect workers would:

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When the prevailing market wage is above equilibrium, we say:

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In 2015, the labor force participation rate was 62.6 percent. This means that:

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Which type of unemployment leads to a natural rate of unemployment above zero?

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The natural rate of unemployment:

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Unemployment is a:

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Why don't wages fall so that everyone with the skills and desire gets a job?

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When the economy goes through ups and downs over time:

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The unemployment rate:

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An economic boom predicts the new equilibrium wage would be:

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When the prevailing market wage is above equilibrium:

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When the economy is going strong the:

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One reason Henry Ford is famous was for instituting:

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Carol is a coal miner who just got laid off when the last coal mine in the area was shut down. She has looked everywhere for another job as a miner, but cannot find one. Given that Carol is unlikely to find another job as a miner, she would be considered:

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Cyclical unemployment is:

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The Bureau of Labor Statistics measures unemployment by surveying:

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Johnny has been working in a sandwich shop full-time while he attends college. When he graduates, he quits the sandwich shop and begins to search for full-time employment related to his college degree. Johnny would be considered:

Correct AnswerverifiedShow Answer

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