Question 1

A firm hires labor up to the point where the

Accepted Answer

A)  real wage rate equals the nominal wage rate. 
B)  additional hour of labor produces extra output that equals the real wage rate. 
C)  additional hour of labor produces extra output that equals the nominal wage rate. 
D)  firm can sell the extra output. 
E)  real wage rate exceeds the nominal wage rate. 
A)  real wage rate equals the nominal wage rate. 
B)  additional hour of labor produces extra output that equals the real wage rate. 
C)  additional hour of labor produces extra output that equals the nominal wage rate. 
D)  firm can sell the extra output. 
E)  real wage rate exceeds the nominal wage rate.

Question 2

The level of real GDP the economy produces at full employment is called

Accepted Answer

A)  possible GDP. 
B)  nominal GDP. 
C)  potential GDP. 
D)  maximum GDP. 
E)  Lucas GDP. 
A)  possible GDP. 
B)  nominal GDP. 
C)  potential GDP. 
D)  maximum GDP. 
E)  Lucas GDP.

Question 3

Looking over the last six decades since 1950, how did the average U.S.unemployment rate during the 2000s compare to the other five decades?
 What was the pattern in these decade-average unemployment rates?

Accepted Answer

The average unemployment rate during the

Question 4

The level of real GDP that the economy produces at full employment is called

Accepted Answer

A)  real GDP. 
B)  nominal GDP. 
C)  potential GDP. 
D)  sustainable GDP. 
E)  total GDP. 
A)  real GDP. 
B)  nominal GDP. 
C)  potential GDP. 
D)  sustainable GDP. 
E)  total GDP.

Question 5

Compared to the U.S.production function, the European production function is

Accepted Answer

A)  higher. 
B)  lower. 
C)  the same. 
D)  lower than the U.S.production function at low levels of employment and higher than the U.S.production function at high levels of employment. 
E)  higher than the U.S.production function at low levels of employment and lower than the U.S.production function at high levels of employment. 
A)  higher. 
B)  lower. 
C)  the same. 
D)  lower than the U.S.production function at low levels of employment and higher than the U.S.production function at high levels of employment. 
E)  higher than the U.S.production function at low levels of employment and lower than the U.S.production function at high levels of employment.

Question 6

-The above figure shows a nation's production function.Point C is

Accepted Answer

A)  unattainable given the nation's resource level. 
B)  attainable if the nation uses resources efficiently. 
C)  attainable if the nation uses resources inefficiently. 
D)  the maximum amount of real GDP the nation can produce. 
E)  the labor market equilibrium point. 
A)  unattainable given the nation's resource level. 
B)  attainable if the nation uses resources efficiently. 
C)  attainable if the nation uses resources inefficiently. 
D)  the maximum amount of real GDP the nation can produce. 
E)  the labor market equilibrium point.

Question 7

A newspaper headline reads "A New Wave of Workers Enters the Job Market!" This wave of young, new entrants to the labor market is likely to lead to

Accepted Answer

A)  an increase in the natural unemployment rate. 
B)  a decrease in the unemployment rate. 
C)  no effect on the unemployment rate. 
D)  a decrease in the country's potential GDP. 
E)  a decrease in the natural unemployment rate but an increase in the actual unemployment rate. 
A)  an increase in the natural unemployment rate. 
B)  a decrease in the unemployment rate. 
C)  no effect on the unemployment rate. 
D)  a decrease in the country's potential GDP. 
E)  a decrease in the natural unemployment rate but an increase in the actual unemployment rate.

Question 8

At full employment, actual ________ equals ________.

Accepted Answer

A)  nominal GDP; potential GDP 
B)  real GDP; potential GDP 
C)  real GDP; nominal GDP 
D)  potential GDP; nominal GDP 
E)  unemployment; zero 
A)  nominal GDP; potential GDP 
B)  real GDP; potential GDP 
C)  real GDP; nominal GDP 
D)  potential GDP; nominal GDP 
E)  unemployment; zero

Question 9

-The figure above shows the U.S.supply of labor curve.An increase in the income tax rate leads to a

Accepted Answer

A)  rightward shift of the supply of labor curve. 
B)  movement upward along the supply of labor curve from a point such as C to a point such as B. 
C)  movement downward along the supply of labor curve from a point such as A to a point such as B. 
D)  leftward shift of the supply of labor curve. 
E)  None of the above answers is correct because there is no change in the supply of labor curve. 
A)  rightward shift of the supply of labor curve. 
B)  movement upward along the supply of labor curve from a point such as C to a point such as B. 
C)  movement downward along the supply of labor curve from a point such as A to a point such as B. 
D)  leftward shift of the supply of labor curve. 
E)  None of the above answers is correct because there is no change in the supply of labor curve.

Question 10

A minimum wage set above the equilibrium wage rate

Accepted Answer

A)  increases the natural unemployment rate. 
B)  increases the demand for labor. 
C)  increases the number of workers employed. 
D)  decreases job rationing. 
E)  decreases the natural unemployment rate because fewer workers will become unemployed. 
A)  increases the natural unemployment rate. 
B)  increases the demand for labor. 
C)  increases the number of workers employed. 
D)  decreases job rationing. 
E)  decreases the natural unemployment rate because fewer workers will become unemployed.

Question 11

It is estimated that, on the average and without taking account of skill differentials, union wages are

Accepted Answer

A)  less than nonunion wages. 
B)  equal to nonunion wages. 
C)  10 to 25 percent higher than nonunion wages. 
D)  100 percent higher than nonunion wages. 
E)  66 percent higher than nonunion wages. 
A)  less than nonunion wages. 
B)  equal to nonunion wages. 
C)  10 to 25 percent higher than nonunion wages. 
D)  100 percent higher than nonunion wages. 
E)  66 percent higher than nonunion wages.

Question 12

The Keynesian macroeconomic model states that

Accepted Answer

A)  the economy is inherently unstable and government intervention is required to maintain continued economic growth. 
B)  markets work efficiently to produce the best macroeconomic outcomes. 
C)  fluctuations in the quantity of money are responsible for most economic recessions. 
D)  changes in technology generate business cycles. 
E)  the economy is fairly stable. 
A)  the economy is inherently unstable and government intervention is required to maintain continued economic growth. 
B)  markets work efficiently to produce the best macroeconomic outcomes. 
C)  fluctuations in the quantity of money are responsible for most economic recessions. 
D)  changes in technology generate business cycles. 
E)  the economy is fairly stable.

Question 13

Which of the following increases frictional and/or structural unemployment?
i. more young workers entering the labor force
ii. more generous unemployment benefits
iii. a structural slump with some industries dying

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and ii 
E)  i, ii.and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and ii 
E)  i, ii.and iii

Question 14

Hershey Chocolate Factory pays a money wage rate equal to $30 per hour and sells its candy bars for $1.50 each.Hershey Chocolate Factory should hire labor until an additional unit of labor produces ________ candy bars an hour.

Accepted Answer

A)  45 
B)  1.5 
C)  20 
D)  30 
E)  10 
A)  45 
B)  1.5 
C)  20 
D)  30 
E)  10

Question 15

The natural unemployment rate is higher if

Accepted Answer

A)  unemployment benefits become more generous. 
B)  there is a decrease in the working-age population. 
C)  there are fewer two-income households. 
D)  many of the new jobs created require skills possessed by the available labor. 
E)  efficiency wages are lower. 
A)  unemployment benefits become more generous. 
B)  there is a decrease in the working-age population. 
C)  there are fewer two-income households. 
D)  many of the new jobs created require skills possessed by the available labor. 
E)  efficiency wages are lower.

Question 16

The production function shows that potential GDP increases when the

Accepted Answer

A)  price level rises. 
B)  price level falls. 
C)  inflation rate falls. 
D)  quantity of labor employed increases. 
E)  the wage rate falls. 
A)  price level rises. 
B)  price level falls. 
C)  inflation rate falls. 
D)  quantity of labor employed increases. 
E)  the wage rate falls.

Question 17

When the labor market is in equilibrium, real GDP ________ potential GDP.

Accepted Answer

A)  is greater than 
B)  is equal to 
C)  is less than 
D)  might be greater than, less than, or equal to 
E)  is not comparable to 
A)  is greater than 
B)  is equal to 
C)  is less than 
D)  might be greater than, less than, or equal to 
E)  is not comparable to

Question 18

To increase workers' incomes, the City of New York's government set a wage below which it is illegal for employers to pay employees.This wage is referred to as the

Accepted Answer

A)  minimum wage. 
B)  efficiency wage. 
C)  government wage. 
D)  union wage. 
E)  city wage. 
A)  minimum wage. 
B)  efficiency wage. 
C)  government wage. 
D)  union wage. 
E)  city wage.

Question 19

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Real wage rate Quantity of labor demanded } \
\text { (2005 dollars } \
\text { (millions of hours } \
\text { per hour) }
\end{array} & \begin{array} { c } 
\text { Quantity of labor supplied } \
\text { (millions of hours } \
\text { per month) }
\end{array} \
\hline 7.15 & 90 & 25 \
7.65 & 70 & 32 \
8.00 & 60 & 60 \
8.50 & 45 & 70 \
9.00 & 20 & 85 \
\hline
\end{array}$$
-The table above gives the labor market for a small foreign economy. A(n) ________ would create ________.

Accepted Answer

A)  minimum wage of $5.00; an increase in job rationing. 
B)  union-negotiated wage of $7.50; unemployment and job rationing. 
C)  efficiency wage of $8.00; unemployment and job rationing. 
D)  efficiency wage of $9.00; an increase in job rationing. 
E)  minimum wage of $9.00; a decrease job search. 
A)  minimum wage of $5.00; an increase in job rationing. 
B)  union-negotiated wage of $7.50; unemployment and job rationing. 
C)  efficiency wage of $8.00; unemployment and job rationing. 
D)  efficiency wage of $9.00; an increase in job rationing. 
E)  minimum wage of $9.00; a decrease job search.

Question 20

For a household, the opportunity cost of not working is the

Accepted Answer

A)  nominal wage rate. 
B)  real wage rate. 
C)  cost of living. 
D)  price level. 
E)  demand for labor. 
A)  nominal wage rate. 
B)  real wage rate. 
C)  cost of living. 
D)  price level. 
E)  demand for labor.

A firm hires labor up to the point where the

The level of real GDP the economy produces at full employment is called

Looking over the last six decades since 1950, how did the average U.S.unemployment rate during the 2000s compare to the other five decades? What was the pattern in these decade-average unemployment rates?

The level of real GDP that the economy produces at full employment is called

Compared to the U.S.production function, the European production function is

-The above figure shows a nation's production function.Point C is

A newspaper headline reads "A New Wave of Workers Enters the Job Market!" This wave of young, new entrants to the labor market is likely to lead to

At full employment, actual equals .

-The figure above shows the U.S.supply of labor curve.An increase in the income tax rate leads to a

A minimum wage set above the equilibrium wage rate

It is estimated that, on the average and without taking account of skill differentials, union wages are

The Keynesian macroeconomic model states that

Which of the following increases frictional and/or structural unemployment? i. more young workers entering the labor force ii. more generous unemployment benefits iii. a structural slump with some industries dying

Hershey Chocolate Factory pays a money wage rate equal to $30 per hour and sells its candy bars for $1.50 each.Hershey Chocolate Factory should hire labor until an additional unit of labor produces ________ candy bars an hour.

The natural unemployment rate is higher if

The production function shows that potential GDP increases when the

When the labor market is in equilibrium, real GDP ________ potential GDP.

To increase workers' incomes, the City of New York's government set a wage below which it is illegal for employers to pay employees.This wage is referred to as the

Real wage rate Quantity of labor demanded (2005 dollars (millions of hours per hour) Quantity of labor supplied (millions of hours per month) 7.15 90 25 7.65 70 32 8.00 60 60 8.50 45 70 9.00 20 85 -The table above gives the labor market for a small foreign economy. A(n) would create .

For a household, the opportunity cost of not working is the

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 8: Potential Gdp and the Natural Unemployment Rate

A firm hires labor up to the point where the

The level of real GDP the economy produces at full employment is called

Looking over the last six decades since 1950, how did the average U.S.unemployment rate during the 2000s compare to the other five decades? What was the pattern in these decade-average unemployment rates?

The level of real GDP that the economy produces at full employment is called

Compared to the U.S.production function, the European production function is

-The above figure shows a nation's production function.Point C is

A newspaper headline reads "A New Wave of Workers Enters the Job Market!" This wave of young, new entrants to the labor market is likely to lead to

At full employment, actual ________ equals ________.

-The figure above shows the U.S.supply of labor curve.An increase in the income tax rate leads to a

A minimum wage set above the equilibrium wage rate

It is estimated that, on the average and without taking account of skill differentials, union wages are

The Keynesian macroeconomic model states that

Which of the following increases frictional and/or structural unemployment? i. more young workers entering the labor force ii. more generous unemployment benefits iii. a structural slump with some industries dying

Hershey Chocolate Factory pays a money wage rate equal to $30 per hour and sells its candy bars for $1.50 each.Hershey Chocolate Factory should hire labor until an additional unit of labor produces ________ candy bars an hour.

The natural unemployment rate is higher if

The production function shows that potential GDP increases when the

When the labor market is in equilibrium, real GDP ________ potential GDP.

To increase workers' incomes, the City of New York's government set a wage below which it is illegal for employers to pay employees.This wage is referred to as the

For a household, the opportunity cost of not working is the

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

At full employment, actual equals .