Question 1

The natural rate of unemployment is equal to zero when the economy is at full capacity.

Accepted Answer

A) True 
 B)False

Question 2

An increase in the tax rate on wages will likely result in

Accepted Answer

A) both a lower equilibrium real wage and a lower equilibrium level of employment. 
B) no changes in the equilibrium real wage and the equilibrium level of employment. 
C) both a higher equilibrium real wage and a higher equilibrium level of employment. 
D) a higher equilibrium real wage and a lower equilibrium level of employment. 
E) a lower equilibrium real wage and a higher equilibrium level of employment. 
A) both a lower equilibrium real wage and a lower equilibrium level of employment. 
B) no changes in the equilibrium real wage and the equilibrium level of employment. 
C) both a higher equilibrium real wage and a higher equilibrium level of employment. 
D) a higher equilibrium real wage and a lower equilibrium level of employment. 
E) a lower equilibrium real wage and a higher equilibrium level of employment.

Question 3

If the number of people working part-time increases and there is no change in the number of people employed, then aggregate hours will fall.

Accepted Answer

A) True 
 B)False

Question 4

The minimum-wage, insider-outsider, and the efficiency-wage explanations all seek to explain

Accepted Answer

A) the increase in the employment-to-population ratio over the past 40 years. 
B) the trend in real wages over the past 40 years. 
C) why the labor market is always in a state of flux. 
D) why the real wage is above the equilibrium real wage. 
E) why there is a persistent excess demand for labor. 
A) the increase in the employment-to-population ratio over the past 40 years. 
B) the trend in real wages over the past 40 years. 
C) why the labor market is always in a state of flux. 
D) why the real wage is above the equilibrium real wage. 
E) why there is a persistent excess demand for labor.

Question 5

Which indicators of conditions in the labor market are sensitive to measurement errors of the labor force?

Accepted Answer

A) The unemployment rate and the labor force participation rate 
B) None of these 
C) The employment-to-population ratio and the labor force participation rate 
D) The employment-to-population ratio and the unemployment rate 
E) The employment-to-population ratio, the unemployment rate, and the labor force participation rate 
A) The unemployment rate and the labor force participation rate 
B) None of these 
C) The employment-to-population ratio and the labor force participation rate 
D) The employment-to-population ratio and the unemployment rate 
E) The employment-to-population ratio, the unemployment rate, and the labor force participation rate

Question 6

What type of policies will reduce frictional unemployment due to job search?

Accepted Answer

Policies that improve information about

Question 7

The natural unemployment rate

Accepted Answer

A) can be precisely estimated at any given time. 
B) declined in the 1970s. 
C) has declined since 2000. 
D) has remained constant since the 1950s. 
E) is increasing as the labor force ages. 
A) can be precisely estimated at any given time. 
B) declined in the 1970s. 
C) has declined since 2000. 
D) has remained constant since the 1950s. 
E) is increasing as the labor force ages.

Question 8

When the overall unemployment rate declines, the unemployment rate for all of the different demographic groups will tend to decline as well.

Accepted Answer

A) True 
 B)False

Question 9

Minimum-wage laws are the only valid explanation for why so many young people are unemployed.

Accepted Answer

A) True 
 B)False

Question 10

Suppose a labor union is able to effectively negotiate higher wages for its members and is able to prevent the firm from hiring new workers at a lower wage. The best explanation for this is

Accepted Answer

A) the minimum-wage explanation. 
B) the job-search explanation. 
C) the discouraged-worker explanation. 
D) the insider-outsider explanation. 
E) the efficiency-wage explanation. 
A) the minimum-wage explanation. 
B) the job-search explanation. 
C) the discouraged-worker explanation. 
D) the insider-outsider explanation. 
E) the efficiency-wage explanation.

Question 11

Discouraged workers are not part of the labor force.

Accepted Answer

A) True 
 B)False

Question 12

Why would a firm elect to pay the efficiency wage?

Accepted Answer

A) To reduce job turnover 
B) All of these 
C) They are required to do so by law. 
D) Firms have an incentive to pay the lowest wage possible. 
E) This is the only wage people are willing to work for. 
A) To reduce job turnover 
B) All of these 
C) They are required to do so by law. 
D) Firms have an incentive to pay the lowest wage possible. 
E) This is the only wage people are willing to work for.

Question 13

The labor-supply-and-demand model predicts that during an economic expansion

Accepted Answer

A) there will be an increase in the real wage and an increase in employment. 
B) there will be a decrease in the real wage and an increase in employment. 
C) there will be an increase in the real wage and a decrease in employment. 
D) there will be a decrease in the real wage and a decrease in employment. 
E) there will be no change in the real wage but employment will increase. 
A) there will be an increase in the real wage and an increase in employment. 
B) there will be a decrease in the real wage and an increase in employment. 
C) there will be an increase in the real wage and a decrease in employment. 
D) there will be a decrease in the real wage and a decrease in employment. 
E) there will be no change in the real wage but employment will increase.

Question 14

Answer the questions below:

Accepted Answer

The answer of Answer the questions below:
   ...

Question 15

According to the Current Population Survey, if a person is not counted as employed, then he or she is unemployed.

Accepted Answer

A) True 
 B)False

Question 16

During a recession, people may drop out of the labor force because they are unable to find a job. All else being equal, this causes

Accepted Answer

A) no change in the unemployment rate. 
B) the unemployment rate to increase. 
C) the unemployment rate to decrease. 
D) a decrease in the working-age population. 
E) an increase in the employment-to-population ratio. 
A) no change in the unemployment rate. 
B) the unemployment rate to increase. 
C) the unemployment rate to decrease. 
D) a decrease in the working-age population. 
E) an increase in the employment-to-population ratio.

Question 17

Creative destruction results in stochastic equilibrium in the labor market.

Accepted Answer

A) True 
 B)False

Question 18

The Current Population Survey is conducted by the

Accepted Answer

A) Council of Economic Advisers. 
B) Federal Reserve Board. 
C) U.S.Census Bureau. 
D) U.S.Department of Commerce. 
E) Department of Labor. 
A) Council of Economic Advisers. 
B) Federal Reserve Board. 
C) U.S.Census Bureau. 
D) U.S.Department of Commerce. 
E) Department of Labor.

Question 19

The insider-outsider explanation of job rationing is more likely to apply in firms without union representation.

Accepted Answer

A) True 
 B)False

Question 20

An increase in the employment-to-population ratio would

Accepted Answer

A) cause the labor force participation rate to increase. 
B) cause aggregate hours to decrease. 
C) cause aggregate hours to increase. 
D) cause the labor force participation rate to decrease. 
E) have no effect on aggregate hours. 
A) cause the labor force participation rate to increase. 
B) cause aggregate hours to decrease. 
C) cause aggregate hours to increase. 
D) cause the labor force participation rate to decrease. 
E) have no effect on aggregate hours.

Exam 20: Unemployment and Employment

The natural rate of unemployment is equal to zero when the economy is at full capacity.

An increase in the tax rate on wages will likely result in

If the number of people working part-time increases and there is no change in the number of people employed, then aggregate hours will fall.

The minimum-wage, insider-outsider, and the efficiency-wage explanations all seek to explain

Which indicators of conditions in the labor market are sensitive to measurement errors of the labor force?

What type of policies will reduce frictional unemployment due to job search?

The natural unemployment rate

When the overall unemployment rate declines, the unemployment rate for all of the different demographic groups will tend to decline as well.

Minimum-wage laws are the only valid explanation for why so many young people are unemployed.

Suppose a labor union is able to effectively negotiate higher wages for its members and is able to prevent the firm from hiring new workers at a lower wage. The best explanation for this is

Discouraged workers are not part of the labor force.

Why would a firm elect to pay the efficiency wage?

The labor-supply-and-demand model predicts that during an economic expansion

Answer the questions below:

According to the Current Population Survey, if a person is not counted as employed, then he or she is unemployed.

During a recession, people may drop out of the labor force because they are unable to find a job. All else being equal, this causes

Creative destruction results in stochastic equilibrium in the labor market.

The Current Population Survey is conducted by the

The insider-outsider explanation of job rationing is more likely to apply in firms without union representation.

An increase in the employment-to-population ratio would

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

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