Exam 7:The Economy at Full Employment

Figure 7.1 -Refer to Figure 7.1. In equilibrium, the real wage is ________ and the amount of labor employed is ________.

The term "classical" refers to an economic theory which states that over a relatively short period of time, wages and prices will adjust quickly to bring the economy back to full employment.

If the supply of labor ________, real wages fall and the amount of labor employed ________.

If the government stops granting temporary work permits to foreign nationals, the demand for labor will ________, the supply of labor will ________, and the quantity of labor hired will ________.

Increased immigration is likely to lead to the labor demand curve shifting to the right.

A decrease in the demand for labor will ________ real wages and ________ employment.

Which of the following would result in a higher real wage rate and a greater level of employment in the United States?

The marginal benefit of a worker to a firm is the value of the extra output that results when

If the demand for labor ________, real wages rise and the amount of labor employed ________.

When firms increase capital stock, the productivity of their workers increases.

Figure 7.1 -Refer to Figure 7.1. Start from initial equilibrium. If firms increase their capital stock, the new real wage could be ________ and the new amount of labor employed could be ________.

The extent of the decline in output associated with the imposition of an employment tax depends on the

Figure 7.1 -Refer to Figure 7.1 . Start from initial equilibrium. If firms reduce their capital stock, the new real wage could be ________ and the new amount of labor employed could be ________.

The labor demand curve is downward sloping because as the real wage ________ the amount of labor hired ________.

When considering a two-input production function, one of which is increasing while the other is fixed, at some point called the point of diminishing returns, output will increase at a decreasing rate.

A decrease in the population of an economy is likely to lead to lower wages and a lower quantity of labor used.

In an open economy with strong international trade, increases in government spending are likely to have an overall "crowding out" effect.

If current unemployment is close to the natural rate of unemployment, the level of the ________ GDP is likely to be close to the level of potential output.

________ unemployment occurs naturally in the labor market as workers search for jobs.

Explain the concept of "crowding in."