Question 1

According to your text, what is NOT a reason that actual labour markets experience unemployment?

Accepted Answer

A)  unions 
B)  job search 
C)  flexible wages 
D)  minimum-wage legislation 
A)  unions 
B)  job search 
C)  flexible wages 
D)  minimum-wage legislation

Question 2

Four employers have justified their actions as follows. Whose logic is consistent with the logic of efficiency wage theory?

Accepted Answer

A)  Jay develops a new assembly line technology that limits the amount shirking workers may do, so he reduces what he pays his employees so as to make it closer to the equilibrium wage. 
B)  Kay pays her workers less than the equilibrium wage so they won't have the time or money to look for work somewhere else. 
C)  Ray pays his workers in a developing country more than the going wage, hoping that they will get a better diet and so be more productive. 
D)  Ms. Fay pays her workers the market wages, but she hires more supervisors to make sure workers do not shirk. 
A)  Jay develops a new assembly line technology that limits the amount shirking workers may do, so he reduces what he pays his employees so as to make it closer to the equilibrium wage. 
B)  Kay pays her workers less than the equilibrium wage so they won't have the time or money to look for work somewhere else. 
C)  Ray pays his workers in a developing country more than the going wage, hoping that they will get a better diet and so be more productive. 
D)  Ms. Fay pays her workers the market wages, but she hires more supervisors to make sure workers do not shirk.

Question 3

In one year, you meet 40 people who are each unemployed for one week and 10 people who are each unemployed for the whole year. Which statistic best describes this situation?

Accepted Answer

A)  80 percent are short-term unemployed, and 25.3 percent are long-term unemployed 
B)  20 percent are short-term unemployed, and 80 percent are long-term unemployed 
C)  80 percent are short-term unemployed, and 20 percent are long-term unemployed 
D)  75 percent are short-term unemployed, and 25 percent are long-term unemployed 
A)  80 percent are short-term unemployed, and 25.3 percent are long-term unemployed 
B)  20 percent are short-term unemployed, and 80 percent are long-term unemployed 
C)  80 percent are short-term unemployed, and 20 percent are long-term unemployed 
D)  75 percent are short-term unemployed, and 25 percent are long-term unemployed

Question 4

What is most likely to reduce the natural rate of unemployment?

Accepted Answer

A)  the Internet providing more readily available information about available jobs 
B)  provincial legislators voting for increasing the minimum wage 
C)  passing laws that make it more difficult to monitor the efforts of workers 
D)  firms offering higher-than-equilibrium wages to reduce worker turnover 
A)  the Internet providing more readily available information about available jobs 
B)  provincial legislators voting for increasing the minimum wage 
C)  passing laws that make it more difficult to monitor the efforts of workers 
D)  firms offering higher-than-equilibrium wages to reduce worker turnover

Question 5

What will an efficient wage most likely do?

Accepted Answer

A)  require increased turnover 
B)  increase profitability 
C)  help reduce the level of unemployment 
D)  make the union stronger 
A)  require increased turnover 
B)  increase profitability 
C)  help reduce the level of unemployment 
D)  make the union stronger

Question 6

Over half of the unemployed are recent entrants into the labour force.

Accepted Answer

A) True 
 B)False

Question 7

How is the labour-force participation rate defined?

Accepted Answer

A)  (Employed ÷ Adult population) × 100 
B)  (Employed ÷ Labour force) × 100 
C)  (Labour force ÷ Adult population) × 100 
D)  (Adult population ÷ Labour force) × 100 
A)  (Employed ÷ Adult population) × 100 
B)  (Employed ÷ Labour force) × 100 
C)  (Labour force ÷ Adult population) × 100 
D)  (Adult population ÷ Labour force) × 100

Question 8

What would be associated with the type of unemployment created by the minimum-wage law?

Accepted Answer

A)  Cam quits his job in a grocery store because he would rather work in landscaping. 
B)  Wayne decides to close his Thai restaurant because he cannot afford to pay workers the going wage. 
C)  In hopes of earning a higher income, Lucas goes back to school to become an electrician. 
D)  Nicole pays the workers for her auto mechanics business more than the equilibrium wage because she believes it will make them work harder. 
A)  Cam quits his job in a grocery store because he would rather work in landscaping. 
B)  Wayne decides to close his Thai restaurant because he cannot afford to pay workers the going wage. 
C)  In hopes of earning a higher income, Lucas goes back to school to become an electrician. 
D)  Nicole pays the workers for her auto mechanics business more than the equilibrium wage because she believes it will make them work harder.

Question 9

Regarding the categories of unemployment, which statement best describes how the effect of sectoral changes compares to the effect of firms paying higher-than-equilibrium wages?

Accepted Answer

A)  Sectoral changes create frictional unemployment, while firms paying wages above equilibrium create structural unemployment. 
B)  Sectoral changes create structural unemployment, while firms paying wages above equilibrium create frictional unemployment. 
C)  Sectoral changes and firms paying wages above equilibrium both create structural unemployment. 
D)  Sectoral changes and firms paying wages above equilibrium both create frictional unemployment. 
A)  Sectoral changes create frictional unemployment, while firms paying wages above equilibrium create structural unemployment. 
B)  Sectoral changes create structural unemployment, while firms paying wages above equilibrium create frictional unemployment. 
C)  Sectoral changes and firms paying wages above equilibrium both create structural unemployment. 
D)  Sectoral changes and firms paying wages above equilibrium both create frictional unemployment.

Question 10

Figure 9-2  
-Refer to Figure 9-2. If the minimum wage rose from $6 to $7, what would happen to unemployment?

Accepted Answer

A)  It would rise by 40. 
B)  It would rise by 20. 
C)  It would fall by 20. 
D)  It would fall by 40. 
A)  It would rise by 40. 
B)  It would rise by 20. 
C)  It would fall by 20. 
D)  It would fall by 40.

Question 11

Who is considered unemployed?

Accepted Answer

A)  Rachel, who is on maternity leave 
B)  Leslie, who is an involuntary contract to contract worker 
C)  Cassandra, who is on voluntary unpaid leave to travel the world 
D)  Lucas, who is on temporary layoff 
A)  Rachel, who is on maternity leave 
B)  Leslie, who is an involuntary contract to contract worker 
C)  Cassandra, who is on voluntary unpaid leave to travel the world 
D)  Lucas, who is on temporary layoff

Question 12

According to most economists, what would be an effect of eliminating unemployment insurance?

Accepted Answer

A)  It would cause an increase in unemployment because people would quit jobs they thought were not secure. 
B)  It would cause an increase in unemployment because if the government didn't provide unemployment insurance, private firms would offer superior insurance. 
C)  It would cause a decrease in unemployment and an improvement in economic well-being. 
D)  It would cause a decrease in unemployment, but economists disagree about whether economic well-being would be enhanced by such a change. 
A)  It would cause an increase in unemployment because people would quit jobs they thought were not secure. 
B)  It would cause an increase in unemployment because if the government didn't provide unemployment insurance, private firms would offer superior insurance. 
C)  It would cause a decrease in unemployment and an improvement in economic well-being. 
D)  It would cause a decrease in unemployment, but economists disagree about whether economic well-being would be enhanced by such a change.

Question 13

In Canada, what fraction of the unemployed are recent entrants into the labour force?

Accepted Answer

A)  about 1/6 of those who are unemployed 
B)  about 1/5 of those who are unemployed 
C)  about 1/4 of those who are unemployed 
D)  about 1/3 of those who are unemployed 
A)  about 1/6 of those who are unemployed 
B)  about 1/5 of those who are unemployed 
C)  about 1/4 of those who are unemployed 
D)  about 1/3 of those who are unemployed

Question 14

In a labour demand and supply diagram, show the effects of the following events. In each case, discuss the changes in the equilibrium wage and employment.
a. an increase in the wage income tax
b. a new trade agreement that allows for foreign competition in the Canadian food sector (Hint: Consider how the elasticity of demand for food changes. How does that affect the elasticity of demand for labour in the food sector?)

Accepted Answer

a. If the income tax increases, employme

Question 15

According to Statistics Canada data, which category had the highest percentage of the labour force in 2017?

Accepted Answer

A)  unemployed 1 to 4 weeks 
B)  unemployed 5 to 13 weeks 
C)  unemployed 14 to 25 weeks 
D)  unemployed 26 to 52 weeks 
A)  unemployed 1 to 4 weeks 
B)  unemployed 5 to 13 weeks 
C)  unemployed 14 to 25 weeks 
D)  unemployed 26 to 52 weeks

Question 16

Wade decides to hire some additional workers for his golf club factory. The equilibrium wage is $14 per hour. What does efficiency wage theory suggest is a reasonable wage for Dan to offer?

Accepted Answer

A)  $14 per hour 
B)  less than $14 per hour, since some people would be willing to work for less 
C)  enough to attract the number of applicants necessary to fill the jobs available 
D)  more than $14 per hour, so as to attract a better pool of applicants 
A)  $14 per hour 
B)  less than $14 per hour, since some people would be willing to work for less 
C)  enough to attract the number of applicants necessary to fill the jobs available 
D)  more than $14 per hour, so as to attract a better pool of applicants

Question 17

If the minimum wage was currently above the equilibrium wage, what would a decrease in the minimum wage do to the quantity demanded and quantity supplied of labour?

Accepted Answer

A)  It would increase both the quantity demanded and the quantity supplied of labour. 
B)  It would decrease both the quantity demanded and the quantity supplied of labour. 
C)  It would increase the quantity of labour demanded and decrease the quantity supplied. 
D)  It would decrease the quantity of labour demanded and increase the quantity supplied. 
A)  It would increase both the quantity demanded and the quantity supplied of labour. 
B)  It would decrease both the quantity demanded and the quantity supplied of labour. 
C)  It would increase the quantity of labour demanded and decrease the quantity supplied. 
D)  It would decrease the quantity of labour demanded and increase the quantity supplied.

According to your text, what is NOT a reason that actual labour markets experience unemployment?

Four employers have justified their actions as follows. Whose logic is consistent with the logic of efficiency wage theory?

In one year, you meet 40 people who are each unemployed for one week and 10 people who are each unemployed for the whole year. Which statistic best describes this situation?

What is most likely to reduce the natural rate of unemployment?

What will an efficient wage most likely do?

Over half of the unemployed are recent entrants into the labour force.

How is the labour-force participation rate defined?

What would be associated with the type of unemployment created by the minimum-wage law?

Regarding the categories of unemployment, which statement best describes how the effect of sectoral changes compares to the effect of firms paying higher-than-equilibrium wages?

Figure 9-2 -Refer to Figure 9-2. If the minimum wage rose from $6 to $7, what would happen to unemployment?

Who is considered unemployed?

According to most economists, what would be an effect of eliminating unemployment insurance?

In Canada, what fraction of the unemployed are recent entrants into the labour force?

According to Statistics Canada data, which category had the highest percentage of the labour force in 2017?

Wade decides to hire some additional workers for his golf club factory. The equilibrium wage is $14 per hour. What does efficiency wage theory suggest is a reasonable wage for Dan to offer?

If the minimum wage was currently above the equilibrium wage, what would a decrease in the minimum wage do to the quantity demanded and quantity supplied of labour?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 9: Unemployment and Its Natural Rate

According to your text, what is NOT a reason that actual labour markets experience unemployment?

Four employers have justified their actions as follows. Whose logic is consistent with the logic of efficiency wage theory?

In one year, you meet 40 people who are each unemployed for one week and 10 people who are each unemployed for the whole year. Which statistic best describes this situation?

What is most likely to reduce the natural rate of unemployment?

What will an efficient wage most likely do?

Over half of the unemployed are recent entrants into the labour force.

How is the labour-force participation rate defined?

What would be associated with the type of unemployment created by the minimum-wage law?

Regarding the categories of unemployment, which statement best describes how the effect of sectoral changes compares to the effect of firms paying higher-than-equilibrium wages?

Figure 9-2 -Refer to Figure 9-2. If the minimum wage rose from $6 to $7, what would happen to unemployment?

Who is considered unemployed?

According to most economists, what would be an effect of eliminating unemployment insurance?

In Canada, what fraction of the unemployed are recent entrants into the labour force?

According to Statistics Canada data, which category had the highest percentage of the labour force in 2017?

Wade decides to hire some additional workers for his golf club factory. The equilibrium wage is $14 per hour. What does efficiency wage theory suggest is a reasonable wage for Dan to offer?

If the minimum wage was currently above the equilibrium wage, what would a decrease in the minimum wage do to the quantity demanded and quantity supplied of labour?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters