Question 1

When a union raises the wage above the equilibrium level, ceteris paribus:

Accepted Answer

A) it reduces the quantity of labour supplied 
B) it increases the quantity of labour demanded 
C) it results in surplus of labour in the labour market 
D) it decreases unemployment 
A) it reduces the quantity of labour supplied 
B) it increases the quantity of labour demanded 
C) it results in surplus of labour in the labour market 
D) it decreases unemployment

Question 2

Graph 9-1  
-In Graph 9-1, without a minimum wage law, the equilibrium market wage is:

Accepted Answer

A) W0, and the equilibrium market quantity of labour hired is L0 
B) W0, and the equilibrium market quantity of labour hired is L1 
C) W1, and the equilibrium market quantity of labour hired is L1 
D) W1, and the equilibrium market quantity of labour hired is L0 
E) W1, and the equilibrium market quantity of labour hired is L2 
A) W0, and the equilibrium market quantity of labour hired is L0 
B) W0, and the equilibrium market quantity of labour hired is L1 
C) W1, and the equilibrium market quantity of labour hired is L1 
D) W1, and the equilibrium market quantity of labour hired is L0 
E) W1, and the equilibrium market quantity of labour hired is L2

Question 3

A person quits her job in order to spend time looking for a better paying job.This is an example of:

Accepted Answer

A) frictional unemployment 
B) cyclical unemployment 
C) seasonal unemployment 
D) structural unemployment 
A) frictional unemployment 
B) cyclical unemployment 
C) seasonal unemployment 
D) structural unemployment

Question 4

Fred decides to hire some additional mechanics to work in his expanded automotive business.The going wage is $16 per hour.Efficiency-wage theory suggests that Fred should offer:

Accepted Answer

A) very little as the automotive industry is a sunset industry 
B) the minimum wage which is $14 per hour, since some mechanics would be willing to work at that level 
C) more than $16 per hour, so as to attract a better pool of applicants 
D) enough to attract the number of applicants necessary to fill the jobs available 
A) very little as the automotive industry is a sunset industry 
B) the minimum wage which is $14 per hour, since some mechanics would be willing to work at that level 
C) more than $16 per hour, so as to attract a better pool of applicants 
D) enough to attract the number of applicants necessary to fill the jobs available

Question 5

If David recently graduated and is looking for a job, then, ceteris paribus, the unemployment rate will fall and the labour-force participation rate will fall.

Accepted Answer

A) True 
 B)False

Question 6

Efficiency wages are:

Accepted Answer

A) one explanation for the natural rate of unemployment 
B) wages paid for time-motion studies 
C) the lowest wage an employer can pay 
D) none of the above 
A) one explanation for the natural rate of unemployment 
B) wages paid for time-motion studies 
C) the lowest wage an employer can pay 
D) none of the above

Question 7

Most of the economy's structural unemployment problem is attributable to:

Accepted Answer

A) relatively large numbers of workers who are jobless for relatively long periods of time 
B) relatively large numbers of workers who are jobless for relatively short periods of time 
C) relatively few workers who are jobless for relatively long periods of time 
D) relatively few workers who are jobless for relatively short periods of time 
A) relatively large numbers of workers who are jobless for relatively long periods of time 
B) relatively large numbers of workers who are jobless for relatively short periods of time 
C) relatively few workers who are jobless for relatively long periods of time 
D) relatively few workers who are jobless for relatively short periods of time

Question 8

An economy's natural rate of unemployment refers to the lowest rate of unemployment the economy experiences over the business cycle.

Accepted Answer

A) True 
 B)False

Question 9

The natural rate of unemployment is:

Accepted Answer

A) unchanging 
B) inevitable 
C) always increasing 
D) affected by minimum wage laws 
A) unchanging 
B) inevitable 
C) always increasing 
D) affected by minimum wage laws

Question 10

A recent accounting graduate from a major business school is searching for a place to begin his career as an accountant.This individual is:

Accepted Answer

A) structurally unemployed 
B) seasonally unemployed 
C) cyclically unemployed 
D) frictionally unemployed 
A) structurally unemployed 
B) seasonally unemployed 
C) cyclically unemployed 
D) frictionally unemployed

Question 11

Which of the following statements about unemployment benefits is correct?

Accepted Answer

A) Unemployment benefits reduce search efforts but raise unemployment 
B) Unemployment benefits increase the income uncertainty that workers face 
C) Unemployment benefits improve the ability of the economy to match each worker with the most appropriate job 
D) Unemployment benefits do not protect workers against income loss 
A) Unemployment benefits reduce search efforts but raise unemployment 
B) Unemployment benefits increase the income uncertainty that workers face 
C) Unemployment benefits improve the ability of the economy to match each worker with the most appropriate job 
D) Unemployment benefits do not protect workers against income loss

Question 12

Frictional unemployment may be economically beneficial if it leads to a better match between worker and job.

Accepted Answer

A) True 
 B)False

Question 13

What is the distinction between the natural rate of unemployment and cyclical unemployment?

Accepted Answer

The natural rate of unemployment is the

Question 14

Efficiency-wage theory suggests that to improve workers performance, firms should:

Accepted Answer

A) fire all existing workers and hire new ones 
B) spend more money and effort on monitoring 
C) raise wages above the market equilibrium level 
D) give incentive pay to employees for dobbing in their fellow workers who are shirking 
A) fire all existing workers and hire new ones 
B) spend more money and effort on monitoring 
C) raise wages above the market equilibrium level 
D) give incentive pay to employees for dobbing in their fellow workers who are shirking

Question 15

An appropriate policy for reducing structural unemployment would be:

Accepted Answer

A) a tax cut 
B) an increase in government spending 
C) programs for the retraining and relocating of labour 
D) an increase in the money supply 
A) a tax cut 
B) an increase in government spending 
C) programs for the retraining and relocating of labour 
D) an increase in the money supply

Question 16

Which of the following does not cause unemployment?

Accepted Answer

A) Unions 
B) Minimum wage laws 
C) Job matching programs 
D) Efficiency wages 
A) Unions 
B) Minimum wage laws 
C) Job matching programs 
D) Efficiency wages

Question 17

Cyclical unemployment arises when the economy is experiencing a recession.

Accepted Answer

A) True 
 B)False

Question 18

Graph 9-1  
-The government has introduced the minimum wage law.The minimum wage is set at W1 as shown in Graph 9-1.After introducing the minimum wage law, the quantity of labour supplied is _______

Accepted Answer

A) L0, the quantity of labour demanded is L0 and the amount of unemployed labour is zero 
B) L0, the quantity of labour demanded is L1 and the amount of unemployed labour is L0 - L1 
C) L2, the quantity of labour demanded is L0 and the amount of unemployed labour is L2 - L0 
D) L2, the quantity of labour demanded is L1 and the amount of unemployed labour is L2 - L1 
A) L0, the quantity of labour demanded is L0 and the amount of unemployed labour is zero 
B) L0, the quantity of labour demanded is L1 and the amount of unemployed labour is L0 - L1 
C) L2, the quantity of labour demanded is L0 and the amount of unemployed labour is L2 - L0 
D) L2, the quantity of labour demanded is L1 and the amount of unemployed labour is L2 - L1

Exam 28: The Natural Rate of Unemployment

When a union raises the wage above the equilibrium level, ceteris paribus:

Graph 9-1 -In Graph 9-1, without a minimum wage law, the equilibrium market wage is:

A person quits her job in order to spend time looking for a better paying job.This is an example of:

Fred decides to hire some additional mechanics to work in his expanded automotive business.The going wage is $16 per hour.Efficiency-wage theory suggests that Fred should offer:

If David recently graduated and is looking for a job, then, ceteris paribus, the unemployment rate will fall and the labour-force participation rate will fall.

Efficiency wages are:

Most of the economy's structural unemployment problem is attributable to:

An economy's natural rate of unemployment refers to the lowest rate of unemployment the economy experiences over the business cycle.

The natural rate of unemployment is:

A recent accounting graduate from a major business school is searching for a place to begin his career as an accountant.This individual is:

Which of the following statements about unemployment benefits is correct?

Frictional unemployment may be economically beneficial if it leads to a better match between worker and job.

What is the distinction between the natural rate of unemployment and cyclical unemployment?

Efficiency-wage theory suggests that to improve workers performance, firms should:

An appropriate policy for reducing structural unemployment would be:

Which of the following does not cause unemployment?

Cyclical unemployment arises when the economy is experiencing a recession.

Graph 9-1 -The government has introduced the minimum wage law.The minimum wage is set at W1 as shown in Graph 9-1.After introducing the minimum wage law, the quantity of labour supplied is _______

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

Filters

Graph 9-1 -The government has introduced the minimum wage law.The minimum wage is set at W₁ as shown in Graph 9-1.After introducing the minimum wage law, the quantity of labour supplied is _______