Question 1

Countries with a higher percentage of young adults living at home with their parents tend to have lower unemployment rates for young adults.

Accepted Answer

A) True 
 B)False

Question 2

Higher taxes in a country will tend to reduce labor demand and increase unemployment.

Accepted Answer

A) True 
 B)False

Question 3

The term natural in the phrase natural unemployment rate implies

Accepted Answer

A) that the unemployment rate is as low as it can be when it is at the natural rate. 
B) that unemployment is at an ideal rate when it is at the natural rate. 
C) the unemployment rate that prevails when real GDP equals potential GDP. 
D) that the unemployment rate is at the highest rate it can be when it is at the natural rate. 
E) that the unemployment rate is at the rate it would be at if there were no minimum wage laws. 
A) that the unemployment rate is as low as it can be when it is at the natural rate. 
B) that unemployment is at an ideal rate when it is at the natural rate. 
C) the unemployment rate that prevails when real GDP equals potential GDP. 
D) that the unemployment rate is at the highest rate it can be when it is at the natural rate. 
E) that the unemployment rate is at the rate it would be at if there were no minimum wage laws.

Question 4

According to the labor demand curve, as the real wage rises,

Accepted Answer

A) workers are willing to provide more labor. 
B) employers are willing to provide more jobs. 
C) workers are willing to provide less labor. 
D) employers are willing to provide fewer jobs. 
E) employers will not change the number of jobs they provide. 
A) workers are willing to provide more labor. 
B) employers are willing to provide more jobs. 
C) workers are willing to provide less labor. 
D) employers are willing to provide fewer jobs. 
E) employers will not change the number of jobs they provide.

Question 5

There will be more job turnover and shirking if workers are paid the efficiency wage instead of the equilibrium wage.

Accepted Answer

A) True 
 B)False

Question 6

Structural unemployment occurs because

Accepted Answer

A) of inflation. 
B) people have insufficient skills. 
C) of recessions. 
D) it takes time to find a job. 
E) of economic booms. 
A) of inflation. 
B) people have insufficient skills. 
C) of recessions. 
D) it takes time to find a job. 
E) of economic booms.

Question 7

To be counted as unemployed a person must be

Accepted Answer

A) All of these 
B) actively looking for work. 
C) 14 or older. 
D) working less than five hours per week. 
E) a discouraged worker. 
A) All of these 
B) actively looking for work. 
C) 14 or older. 
D) working less than five hours per week. 
E) a discouraged worker.

Question 8

Frictional unemployment occurs because

Accepted Answer

A) it takes time to find a job. 
B) people have insufficient skills. 
C) of economic booms. 
D) of recessions. 
E) of inflation. 
A) it takes time to find a job. 
B) people have insufficient skills. 
C) of economic booms. 
D) of recessions. 
E) of inflation.

Question 9

During the post-World War II period, both the employment-to-population ratio and real wages have been rising. Use the labor demand and supply analysis to explain how this is possible.

Accepted Answer

This can be explained by the demand for

Question 10

If the number of people working part-time increases, aggregate hours will fall.

Accepted Answer

A) True 
 B)False

Question 11

Why are unemployment rates for young people so high?

Accepted Answer

A) Young people are more likely to be discouraged workers. 
B) Young people change jobs more frequently. 
C) Young people are too educated. 
D) Young people have too much training. 
E) Jobs that employ young people are more likely to be destroyed. 
A) Young people are more likely to be discouraged workers. 
B) Young people change jobs more frequently. 
C) Young people are too educated. 
D) Young people have too much training. 
E) Jobs that employ young people are more likely to be destroyed.

Question 12

Lowering unemployment compensation paid to laid-off workers will reduce unemployment by decreasing the amount of time workers are permitted to search for a job.

Accepted Answer

A) True 
 B)False

Question 13

Ceteris paribus, a rightward shift in the labor supply curve would cause

Accepted Answer

A) both the real wage and the amount of labor employed to decrease. 
B) the real wage to increase and the amount of labor employed to decline. 
C) neither the real wage nor the amount employed to change. 
D) both the real wage and the amount employed to increase. 
E) the real wage to decrease and the amount of labor employed to increase. 
A) both the real wage and the amount of labor employed to decrease. 
B) the real wage to increase and the amount of labor employed to decline. 
C) neither the real wage nor the amount employed to change. 
D) both the real wage and the amount employed to increase. 
E) the real wage to decrease and the amount of labor employed to increase.

Question 14

The Internet has made some types of job searches a little bit easier because a number of websites post job vacancies. How is this likely to affect frictional unemployment, structural unemployment, cyclical unemployment, and the natural unemployment rate?

Accepted Answer

This is likely to reduce frictional unem

Question 15

Based on the historic average, how many individuals were unemployed for more than six months?

Accepted Answer

On average, 17 percent of unem

Question 16

Which of the following best explains how employment can increase at the same time as the real wage is decreasing?

Accepted Answer

A) The labor supply and demand curves both shift to the right; however, the shift in the labor demand curve is greater than the shift in the labor supply curve. 
B) The labor supply and demand curves both shift to the left; however, the shift in the labor supply curve is greater than the shift in the labor demand curve. 
C) A rightward shift of the labor demand curve and a movement along the labor supply curve occur. 
D) The labor supply and demand curves both shift to the right; however, the shift in the labor supply curve is greater than the shift in the labor demand curve. 
E) The labor supply and demand curves both shift to the left; however, the shift in the labor demand curve is greater than the shift in the labor supply curve. 
A) The labor supply and demand curves both shift to the right; however, the shift in the labor demand curve is greater than the shift in the labor supply curve. 
B) The labor supply and demand curves both shift to the left; however, the shift in the labor supply curve is greater than the shift in the labor demand curve. 
C) A rightward shift of the labor demand curve and a movement along the labor supply curve occur. 
D) The labor supply and demand curves both shift to the right; however, the shift in the labor supply curve is greater than the shift in the labor demand curve. 
E) The labor supply and demand curves both shift to the left; however, the shift in the labor demand curve is greater than the shift in the labor supply curve.

Question 17

Studies have shown that the labor supply of women is more sensitive to changes in the real wage than the labor supply of men. The figure below shows two different labor supply curves (labeled Labor supply 1 and Labor supply 2), one for women and one for men. Which of these two labor supply curves best illustrates the labor supply of women? Why?

Accepted Answer

Labor supply 2 is the better example of

Question 18

People who look for work for the first time are considered

Accepted Answer

A) job losers. 
B) job re-entrants. 
C) new job entrants. 
D) job leavers. 
E) not in the labor force. 
A) job losers. 
B) job re-entrants. 
C) new job entrants. 
D) job leavers. 
E) not in the labor force.

Question 19

If people have more children, the labor force participation rate will increase when the children enter the work force.

Accepted Answer

A) True 
 B)False

Question 20

Why does greater unemployment compensation cause higher unemployment rates?

Accepted Answer

More generous compensation of

Exam 20: Unemployment and Employment

Countries with a higher percentage of young adults living at home with their parents tend to have lower unemployment rates for young adults.

Higher taxes in a country will tend to reduce labor demand and increase unemployment.

The term natural in the phrase natural unemployment rate implies

According to the labor demand curve, as the real wage rises,

There will be more job turnover and shirking if workers are paid the efficiency wage instead of the equilibrium wage.

Structural unemployment occurs because

To be counted as unemployed a person must be

Frictional unemployment occurs because

During the post-World War II period, both the employment-to-population ratio and real wages have been rising. Use the labor demand and supply analysis to explain how this is possible.

If the number of people working part-time increases, aggregate hours will fall.

Why are unemployment rates for young people so high?

Lowering unemployment compensation paid to laid-off workers will reduce unemployment by decreasing the amount of time workers are permitted to search for a job.

Ceteris paribus, a rightward shift in the labor supply curve would cause

The Internet has made some types of job searches a little bit easier because a number of websites post job vacancies. How is this likely to affect frictional unemployment, structural unemployment, cyclical unemployment, and the natural unemployment rate?

Based on the historic average, how many individuals were unemployed for more than six months?

Which of the following best explains how employment can increase at the same time as the real wage is decreasing?

People who look for work for the first time are considered

If people have more children, the labor force participation rate will increase when the children enter the work force.

Why does greater unemployment compensation cause higher unemployment rates?

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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