Question 1

If all employers pay an efficiency wage, then which of the following will increase the unemployment rate, other things the same?

Accepted Answer

A)  it becomes less costly to monitor workers productivity 
B)  firms due to a mistake reduce their wages 
C)  the cost to the firm of workers shirking goes up 
D)  workers put a lower value on shirking 
A)  it becomes less costly to monitor workers productivity 
B)  firms due to a mistake reduce their wages 
C)  the cost to the firm of workers shirking goes up 
D)  workers put a lower value on shirking C

Question 2

A worker who has quit one job to have time to search for a similar position is counted as what type of unemployment?

Accepted Answer

A)  frictional 
B)  occupational 
C)  regional 
D)  cyclical 
A)  frictional 
B)  occupational 
C)  regional 
D)  cyclical A

Question 3

A nation has full employment when

Accepted Answer

A)  wages and prices are stable. 
B)  unemployment is at its lowest level. 
C)  unemployment rates are the same across all demographic groups. 
D)  workers are earning a living wage. 
A)  wages and prices are stable. 
B)  unemployment is at its lowest level. 
C)  unemployment rates are the same across all demographic groups. 
D)  workers are earning a living wage. A

Question 4

European policies which make it difficult to dismiss workers and reduce wage flexibility have probably

Accepted Answer

A)  increased the rate of job creation. 
B)  decreased the unemployment rate. 
C)  decreased the rate of long-term unemployment. 
D)  increased the costs of doing business. 
A)  increased the rate of job creation. 
B)  decreased the unemployment rate. 
C)  decreased the rate of long-term unemployment. 
D)  increased the costs of doing business.

Question 5

A research observes that more generous unemployment benefits results in a greater duration of unemployment and a great improvement in job matches. This suggests that more generous benefits

Accepted Answer

A)  makes job searchers more selective in the jobs they accept. 
B)  makes job searchers increase the intensity of search by searching more opening per period. 
C)  both A and B. 
D)  neither A nor B. 
A)  makes job searchers more selective in the jobs they accept. 
B)  makes job searchers increase the intensity of search by searching more opening per period. 
C)  both A and B. 
D)  neither A nor B.

Question 6

If the unemployment rate increases

Accepted Answer

A)  the employment rate must decrease. 
B)  the employment rate must increase. 
C)  the employment rate will generally decrease by the same amount. 
D)  the employment rate may either increase or decrease. 
A)  the employment rate must decrease. 
B)  the employment rate must increase. 
C)  the employment rate will generally decrease by the same amount. 
D)  the employment rate may either increase or decrease.

Question 7

The natural rate of unemployment

Accepted Answer

A)  is currently about 4%. 
B)  must be the same for every demographic group. 
C)  occurs when job vacancies equal the number of unemployed workers. 
D)  hit bottom in the 1970s. 
A)  is currently about 4%. 
B)  must be the same for every demographic group. 
C)  occurs when job vacancies equal the number of unemployed workers. 
D)  hit bottom in the 1970s.

Question 8

If all employers pay an efficiency wage, then, comparing average wages and unemployment rates across areas, and if workers in areas with low unemployment rate can easily find alternative jobs, one would expect

Accepted Answer

A)  average wages to be directly (positively) related to unemployment rates. 
B)  average wages times one minus the unemployment rate to be the same across areas. 
C)  the duration of unemployment, but not necessarily the rate, to be inversely related to the average wage. 
D)  average wages will be higher in areas with low unemployment rates. 
A)  average wages to be directly (positively) related to unemployment rates. 
B)  average wages times one minus the unemployment rate to be the same across areas. 
C)  the duration of unemployment, but not necessarily the rate, to be inversely related to the average wage. 
D)  average wages will be higher in areas with low unemployment rates.

Question 9

Theoretically, existence of generous unemployment insurance will

Accepted Answer

A)  reduce the unemployment rate. 
B)  reduce reservation wages. 
C)  improve job matches. 
D)  increase income inequality. 
A)  reduce the unemployment rate. 
B)  reduce reservation wages. 
C)  improve job matches. 
D)  increase income inequality.

Question 10

If workers for a firm have mainly general human capital, then when the demand for its output falls, the firm will mainly

Accepted Answer

A)  lower wages. 
B)  cut back on employment. 
C)  cut work hours of all workers. 
D)  increase its specific investment in workers as the opportunity cost of training is low. 
A)  lower wages. 
B)  cut back on employment. 
C)  cut work hours of all workers. 
D)  increase its specific investment in workers as the opportunity cost of training is low.

Question 11

Paying efficiency wages to reduce turnover may be profit-maximizing for companies, but it also contributes to ________ unemployment.

Accepted Answer

A)  frictional 
B)  regional 
C)  cyclical 
D)  structural 
A)  frictional 
B)  regional 
C)  cyclical 
D)  structural

Question 12

Unemployment tends to go up when aggregate demand falls mainly because

Accepted Answer

A)  when wages fall, workers seek alternative employment. 
B)  unions renegotiate for lower wages, making it difficult for job searchers to find suitable jobs. 
C)  wage rates then to be downward rigid. 
D)  most human capital is general and not firm-specific. 
A)  when wages fall, workers seek alternative employment. 
B)  unions renegotiate for lower wages, making it difficult for job searchers to find suitable jobs. 
C)  wage rates then to be downward rigid. 
D)  most human capital is general and not firm-specific.

Question 13

The unemployment rate tells us

Accepted Answer

A)  the percentage of the population that is not working. 
B)  the percentage of the population that is searching for work. 
C)  the percentage of the labor force that has been laid off. 
D)  the percentage of the labor force that is not working. 
A)  the percentage of the population that is not working. 
B)  the percentage of the population that is searching for work. 
C)  the percentage of the labor force that has been laid off. 
D)  the percentage of the labor force that is not working.

Question 14

Suppose that no one enters or leaves the labor force and that the fraction of the unemployed getting a job (in a given period) is 0.10 and the fraction of the employment becoming unemployed is 0.02. What is the approximate unemployment rate when the flows into and out of unemployed are in balance?

Accepted Answer

A)  9% 
B)  10% 
C)  17% 
D)  22% 
A)  9% 
B)  10% 
C)  17% 
D)  22%

Question 15

Most workers who are laid off

Accepted Answer

A)  return to work with the same employer. 
B)  find work with another employer. 
C)  stay unemployed for a relatively long duration. 
D)  drop out of the labor force. 
A)  return to work with the same employer. 
B)  find work with another employer. 
C)  stay unemployed for a relatively long duration. 
D)  drop out of the labor force.

Question 16

The largest source of unemployed workers is ________ and the second largest is ________.

Accepted Answer

A)  job losers; new entrants 
B)  job losers; reentrants 
C)  job leavers; new entrants 
D)  job leavers; reentrants 
A)  job losers; new entrants 
B)  job losers; reentrants 
C)  job leavers; new entrants 
D)  job leavers; reentrants

Question 17

Unemployment insurance in the United States is structured so that

Accepted Answer

A)  replacement rates are constant. 
B)  almost all unemployed workers can collect UI benefits. 
C)  UI benefits are partially linked to previous pay. 
D)  UI benefits may be collected for one year after the job loss. 
A)  replacement rates are constant. 
B)  almost all unemployed workers can collect UI benefits. 
C)  UI benefits are partially linked to previous pay. 
D)  UI benefits may be collected for one year after the job loss.

Question 18

If all employers pay an efficiency wage, then

Accepted Answer

A)  more employees would shirk. 
B)  unemployment would be higher. 
C)  firms would be better able to monitor their employees productivity. 
D)  all of the above 
A)  more employees would shirk. 
B)  unemployment would be higher. 
C)  firms would be better able to monitor their employees productivity. 
D)  all of the above

Question 19

Advance notice of lay-offs should help to reduce

Accepted Answer

A)  frictional unemployment. 
B)  structural unemployment. 
C)  cyclical unemployment and frictional unemployment. 
D)  frictional unemployment and structural unemployment. 
A)  frictional unemployment. 
B)  structural unemployment. 
C)  cyclical unemployment and frictional unemployment. 
D)  frictional unemployment and structural unemployment.

Question 20

The stock of unemployed workers at any given time consists mostly of

Accepted Answer

A)  people who have short spells of unemployment. 
B)  people who have long spells of unemployment. 
C)  people who have been laid off from one employer and become employed by another. 
D)  people who have searched for jobs, but who have become discouraged. 
A)  people who have short spells of unemployment. 
B)  people who have long spells of unemployment. 
C)  people who have been laid off from one employer and become employed by another. 
D)  people who have searched for jobs, but who have become discouraged.

If all employers pay an efficiency wage, then which of the following will increase the unemployment rate, other things the same?

A worker who has quit one job to have time to search for a similar position is counted as what type of unemployment?

A nation has full employment when

European policies which make it difficult to dismiss workers and reduce wage flexibility have probably

A research observes that more generous unemployment benefits results in a greater duration of unemployment and a great improvement in job matches. This suggests that more generous benefits

If the unemployment rate increases

The natural rate of unemployment

If all employers pay an efficiency wage, then, comparing average wages and unemployment rates across areas, and if workers in areas with low unemployment rate can easily find alternative jobs, one would expect

Theoretically, existence of generous unemployment insurance will

If workers for a firm have mainly general human capital, then when the demand for its output falls, the firm will mainly

Paying efficiency wages to reduce turnover may be profit-maximizing for companies, but it also contributes to ________ unemployment.

Unemployment tends to go up when aggregate demand falls mainly because

The unemployment rate tells us

Suppose that no one enters or leaves the labor force and that the fraction of the unemployed getting a job (in a given period) is 0.10 and the fraction of the employment becoming unemployed is 0.02. What is the approximate unemployment rate when the flows into and out of unemployed are in balance?

Most workers who are laid off

The largest source of unemployed workers is and the second largest is .

Unemployment insurance in the United States is structured so that

If all employers pay an efficiency wage, then

Advance notice of lay-offs should help to reduce

The stock of unemployed workers at any given time consists mostly of

Introduction

Overview of the Labor Market

The Demand for Labor

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: the Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Compensating Wage Differentials and Labor Markets

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Pay and Productivity: Wage Determination Within the Firm

Gender, Race, and Ethnicity in the Labor Market

Unions and the Labor Market

Inequality in Earnings

The Labor Market Effects of International Trade and Production Sharing

Filters

Exam 14: Unemployment

If all employers pay an efficiency wage, then which of the following will increase the unemployment rate, other things the same?

A worker who has quit one job to have time to search for a similar position is counted as what type of unemployment?

A nation has full employment when

European policies which make it difficult to dismiss workers and reduce wage flexibility have probably

A research observes that more generous unemployment benefits results in a greater duration of unemployment and a great improvement in job matches. This suggests that more generous benefits

If the unemployment rate increases

The natural rate of unemployment

If all employers pay an efficiency wage, then, comparing average wages and unemployment rates across areas, and if workers in areas with low unemployment rate can easily find alternative jobs, one would expect

Theoretically, existence of generous unemployment insurance will

If workers for a firm have mainly general human capital, then when the demand for its output falls, the firm will mainly

Paying efficiency wages to reduce turnover may be profit-maximizing for companies, but it also contributes to ________ unemployment.

Unemployment tends to go up when aggregate demand falls mainly because

The unemployment rate tells us

Suppose that no one enters or leaves the labor force and that the fraction of the unemployed getting a job (in a given period) is 0.10 and the fraction of the employment becoming unemployed is 0.02. What is the approximate unemployment rate when the flows into and out of unemployed are in balance?

Most workers who are laid off

The largest source of unemployed workers is ________ and the second largest is ________.

Unemployment insurance in the United States is structured so that

If all employers pay an efficiency wage, then

Advance notice of lay-offs should help to reduce

The stock of unemployed workers at any given time consists mostly of

Introduction

Overview of the Labor Market

The Demand for Labor

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: the Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Compensating Wage Differentials and Labor Markets

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Pay and Productivity: Wage Determination Within the Firm

Gender, Race, and Ethnicity in the Labor Market

Unions and the Labor Market

Inequality in Earnings

The Labor Market Effects of International Trade and Production Sharing

Filters

The largest source of unemployed workers is and the second largest is .