Question 1

In the one-sided search model, if the job offer rate goes down,

Accepted Answer

A)  the reservation wage goes down and the effect on long-run unemployment is ambiguous. 
B)  the reservation wage goes up and long-run unemployment goes down. 
C)  the reservation wage and long-run unemployment are unchanged. 
D)  the reservation wage goes up and long-run unemployment goes up. 
E)  unemployed workers stop searching. 
A)  the reservation wage goes down and the effect on long-run unemployment is ambiguous. 
B)  the reservation wage goes up and long-run unemployment goes down. 
C)  the reservation wage and long-run unemployment are unchanged. 
D)  the reservation wage goes up and long-run unemployment goes up. 
E)  unemployed workers stop searching. A

Question 2

In the one-sided search model, a decrease in the fraction of the unemployed receiving job offers

Accepted Answer

A)  increases the welfare of the employed. 
B)  reduces the welfare of the employed. 
C)  reduces the welfare of the unemployed. 
D)  increases the welfare of the unemployed. 
E)  is irrelevant. 
A)  increases the welfare of the employed. 
B)  reduces the welfare of the employed. 
C)  reduces the welfare of the unemployed. 
D)  increases the welfare of the unemployed. 
E)  is irrelevant. C

Question 3

In equilibrium in the two-sided search model, aggregate output is given by

Accepted Answer

A)  Y = Qem(j,1). 
B)  Y = zF(Q,N). 
C)  Y = Qem(1,j). 
D)  Y = Qem(Q,
A) . 
E) Y =z $ \frac{Q}{A} $ 
A)  Y = Qem(j,1). 
B)  Y = zF(Q,N). 
C)  Y = Qem(1,j). 
D)  Y = Qem(Q,
A) . 
E) Y =z $ \frac{Q}{A} $ C

Question 4

The two-sided search model is consistent with which of the following business cycle facts?

Accepted Answer

A)  The unemployment rate is procyclical and the vacancy rate is procyclical. 
B)  The unemployment rate is countercyclical and the vacancy rate is acyclical. 
C)  The unemployment rate is countercyclical and the vacancy rate is countercyclical. 
D)  The unemployment rate is countercyclical and the vacancy rate is procyclical. 
E)  The unemployment rate is acyclical and the vacancy rate is procyclical. 
A)  The unemployment rate is procyclical and the vacancy rate is procyclical. 
B)  The unemployment rate is countercyclical and the vacancy rate is acyclical. 
C)  The unemployment rate is countercyclical and the vacancy rate is countercyclical. 
D)  The unemployment rate is countercyclical and the vacancy rate is procyclical. 
E)  The unemployment rate is acyclical and the vacancy rate is procyclical.

Question 5

In the one-sided search model, an increase in the separation rate

Accepted Answer

A)  reduces the welfare of an employed worker. 
B)  increases the welfare of an unemployed worker. 
C)  reduces wages. 
D)  increases the employment insurance benefit. 
E)  results in fewer marriages. 
A)  reduces the welfare of an employed worker. 
B)  increases the welfare of an unemployed worker. 
C)  reduces wages. 
D)  increases the employment insurance benefit. 
E)  results in fewer marriages.

Question 6

Since World War II, the participation rate

Accepted Answer

A)  has remained constant. 
B)  has declined. 
C)  has increased. 
D)  has been quite variable. 
E)  has declined since 1980. 
A)  has remained constant. 
B)  has declined. 
C)  has increased. 
D)  has been quite variable. 
E)  has declined since 1980.

Question 7

Constant returns to scale in the matching function means that, given any constant x > 0,

Accepted Answer

A) m(xQ, x A) = xm(Q, A) . B) m(xQ, x A) > xm(Q, A) . C) m(xQ, x A) < xm(Q, A) . D) m(xQ, x A) = $e^{xm(Q, A) }$. E) m(xQ, x A) = $ \frac{1}{x} $ m(Q, A) . A) m(xQ, x A) = xm(Q, A) . B) m(xQ, x A) > xm(Q, A) . C) m(xQ, x A) < xm(Q, A) . D) m(xQ, x A) = $e^{xm(Q, A) }$. E) m(xQ, x A) = $ \frac{1}{x} $ m(Q, A) .

Question 8

Which of the following best describes mismatch that can increase the unemployment rate?

Accepted Answer

A)  a decrease in the availability of information for firms about the skills of workers 
B)  firms move production to Mexico 
C)  an increase in the availability of information for firms about the skills of workers 
D)  an overall decrease in the available skills of the labour force 
E)  production moves from Mexico to Canada 
A)  a decrease in the availability of information for firms about the skills of workers 
B)  firms move production to Mexico 
C)  an increase in the availability of information for firms about the skills of workers 
D)  an overall decrease in the available skills of the labour force 
E)  production moves from Mexico to Canada

Question 9

In equilibrium, an decrease in matching efficiency

Accepted Answer

A)  increases the unemployment rate and vacancies are constant. 
B)  increases the unemployment rate and vacancies increase. 
C)  decreases the unemployment rate and vacancies are constant. 
D)  decreases the unemployment rate and vacancies increase. 
E)  increases the unemployment rate and vacancies decrease. 
A)  increases the unemployment rate and vacancies are constant. 
B)  increases the unemployment rate and vacancies increase. 
C)  decreases the unemployment rate and vacancies are constant. 
D)  decreases the unemployment rate and vacancies increase. 
E)  increases the unemployment rate and vacancies decrease.

Question 10

In equilibrium, an increase in Employment Insurance benefits

Accepted Answer

A)  increases the unemployment rate and decreases the vacancy rate. 
B)  increases the unemployment rate and increases the vacancy rate. 
C)  decreases the unemployment rate and decreases the vacancy rate. 
D)  decreases the unemployment rate and increases the vacancy rate. 
E)  increases the unemployment rate, but does not affect the vacancy rate. 
A)  increases the unemployment rate and decreases the vacancy rate. 
B)  increases the unemployment rate and increases the vacancy rate. 
C)  decreases the unemployment rate and decreases the vacancy rate. 
D)  decreases the unemployment rate and increases the vacancy rate. 
E)  increases the unemployment rate, but does not affect the vacancy rate.

Question 11

In the two-sided search model, an increase in productivity

Accepted Answer

A)  shifts v(Q) down, increasing Q and j. 
B)  shifts v(Q) up, increasing Q and decreasing j. 
C)  shifts v(Q) up, decreasing Q and j. 
D)  shifts v(Q) down, decreasing Q and increasing j. 
E)  shifts v(Q) up, increasing Q and j. 
A)  shifts v(Q) down, increasing Q and j. 
B)  shifts v(Q) up, increasing Q and decreasing j. 
C)  shifts v(Q) up, decreasing Q and j. 
D)  shifts v(Q) down, decreasing Q and increasing j. 
E)  shifts v(Q) up, increasing Q and j.

Question 12

The unemployment rate is defined as

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 13

In equilibrium, an increase in Employment Insurance benefits

Accepted Answer

A)  decreases labour market tightness, but has ambiguous effects on Q and Y. 
B)  increases labour market tightness, but has ambiguous effects on Q and Y. 
C)  decreases labour market tightness and Q, but increases Y. 
D)  decreases unemployment, but has ambiguous effects on Q and Y. 
E)  increases labour market tightness, Q, and Y. 
A)  decreases labour market tightness, but has ambiguous effects on Q and Y. 
B)  increases labour market tightness, but has ambiguous effects on Q and Y. 
C)  decreases labour market tightness and Q, but increases Y. 
D)  decreases unemployment, but has ambiguous effects on Q and Y. 
E)  increases labour market tightness, Q, and Y.

Question 14

Labour market tightness in the two-sided search model is defined by

Accepted Answer

A)  the number of firms divided by the number of consumers searching for work. 
B)  the number of firms multiplied by the number of consumers searching for work. 
C)  the number of consumers searching for work divided by the number of firms. 
D)  the number of employed consumers divided by the number of firms. 
E)  the number of firms divided by the number of employed consumers. 
A)  the number of firms divided by the number of consumers searching for work. 
B)  the number of firms multiplied by the number of consumers searching for work. 
C)  the number of consumers searching for work divided by the number of firms. 
D)  the number of employed consumers divided by the number of firms. 
E)  the number of firms divided by the number of employed consumers.

Question 15

In the two-sided search model, Nash Bargaining implies

Accepted Answer

A)  the firm receives the total surplus from a match. 
B)  the worker receives the total surplus from a match. 
C)  the firm and the worker receive a constant share of the surplus from a match. 
D)  the firm receives an increasing share of the surplus and the worker a decreasing share. 
E)  the firm and the worker reduce the total surplus to zero. 
A)  the firm receives the total surplus from a match. 
B)  the worker receives the total surplus from a match. 
C)  the firm and the worker receive a constant share of the surplus from a match. 
D)  the firm receives an increasing share of the surplus and the worker a decreasing share. 
E)  the firm and the worker reduce the total surplus to zero.

Question 16

In the two-sided search model, an increase in Employment Insurance benefits makes labour search

Accepted Answer

A)  more attractive. 
B)  equivalent to working. 
C)  more difficult to monitor. 
D)  unambiguously decrease. 
E)  unambiguously increase. 
A)  more attractive. 
B)  equivalent to working. 
C)  more difficult to monitor. 
D)  unambiguously decrease. 
E)  unambiguously increase.

Question 17

In the two-sided search model, the number of firms is

Accepted Answer

A)  endogenous. 
B)  neither endogenous nor exogenous. 
C)  fixed. 
D)  exogenous. 
E)  irrelevant. 
A)  endogenous. 
B)  neither endogenous nor exogenous. 
C)  fixed. 
D)  exogenous. 
E)  irrelevant.

Question 18

In the one-sided search model, the welfare of an employed worker

Accepted Answer

A)  is convex in the real wage. 
B)  decreases with the real wage. 
C)  in a concave function of the real wage. 
D)  increases with employment insurance benefits. 
E)  is lower than the welfare of an unemployed workers. 
A)  is convex in the real wage. 
B)  decreases with the real wage. 
C)  in a concave function of the real wage. 
D)  increases with employment insurance benefits. 
E)  is lower than the welfare of an unemployed workers.

Question 19

In the two-sided search model, there

Accepted Answer

A)  is a single representative agent. 
B)  is an exogenously fixed number of firms. 
C)  are N total consumers and N total firms. 
D)  are N total consumers. 
E)  are only employed and unemployed consumers. 
A)  is a single representative agent. 
B)  is an exogenously fixed number of firms. 
C)  are N total consumers and N total firms. 
D)  are N total consumers. 
E)  are only employed and unemployed consumers.

Question 20

Percentage deviations from trend in unemployment are

Accepted Answer

A)  procyclical and have been larger than the percentage deviations from trend in real GDP. 
B)  procyclical and have been smaller than the percentage deviations from trend in real GDP. 
C)  countercyclical and have been larger than the percentage deviations from trend in real GDP. 
D)  countercyclical and have been smaller than the percentage deviations from trend in real GDP. 
E)  procyclical and have been smaller than the percentage deviations from trend in labour force participation. 
A)  procyclical and have been larger than the percentage deviations from trend in real GDP. 
B)  procyclical and have been smaller than the percentage deviations from trend in real GDP. 
C)  countercyclical and have been larger than the percentage deviations from trend in real GDP. 
D)  countercyclical and have been smaller than the percentage deviations from trend in real GDP. 
E)  procyclical and have been smaller than the percentage deviations from trend in labour force participation.

In the one-sided search model, if the job offer rate goes down,

In the one-sided search model, a decrease in the fraction of the unemployed receiving job offers

In equilibrium in the two-sided search model, aggregate output is given by

The two-sided search model is consistent with which of the following business cycle facts?

In the one-sided search model, an increase in the separation rate

Since World War II, the participation rate

Constant returns to scale in the matching function means that, given any constant x > 0,

Which of the following best describes mismatch that can increase the unemployment rate?

In equilibrium, an decrease in matching efficiency

In equilibrium, an increase in Employment Insurance benefits

In the two-sided search model, an increase in productivity

The unemployment rate is defined as

In equilibrium, an increase in Employment Insurance benefits

Labour market tightness in the two-sided search model is defined by

In the two-sided search model, Nash Bargaining implies

In the two-sided search model, an increase in Employment Insurance benefits makes labour search

In the two-sided search model, the number of firms is

In the one-sided search model, the welfare of an employed worker

In the two-sided search model, there

Percentage deviations from trend in unemployment are

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 6: Search and Unemployment

In the one-sided search model, if the job offer rate goes down,

In the one-sided search model, a decrease in the fraction of the unemployed receiving job offers

In equilibrium in the two-sided search model, aggregate output is given by

The two-sided search model is consistent with which of the following business cycle facts?

In the one-sided search model, an increase in the separation rate

Since World War II, the participation rate

Constant returns to scale in the matching function means that, given any constant x > 0,

Which of the following best describes mismatch that can increase the unemployment rate?

In equilibrium, an decrease in matching efficiency

In equilibrium, an increase in Employment Insurance benefits

In the two-sided search model, an increase in productivity

The unemployment rate is defined as

In equilibrium, an increase in Employment Insurance benefits

Labour market tightness in the two-sided search model is defined by

In the two-sided search model, Nash Bargaining implies

In the two-sided search model, an increase in Employment Insurance benefits makes labour search

In the two-sided search model, the number of firms is

In the one-sided search model, the welfare of an employed worker

In the two-sided search model, there

Percentage deviations from trend in unemployment are

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters