Question 1

All of the following represent an increase in non-labor income except for:

Accepted Answer

A) A decrease in the income tax rate. 
B) Receiving higher dividends from a stock portfolio. 
C) An increase in a spouse's wage. 
D) Receiving an inheritance from a long-lost uncle who recently passed away. 
E) Having one's property tax bill fall by $1,000. 
A) A decrease in the income tax rate. 
B) Receiving higher dividends from a stock portfolio. 
C) An increase in a spouse's wage. 
D) Receiving an inheritance from a long-lost uncle who recently passed away. 
E) Having one's property tax bill fall by $1,000.

Question 2

Which one of the following conclusions is not supported by the intertemporal substitution hypothesis?

Accepted Answer

A) The profile of hours of work over the life cycle will have roughly the same shape as the age-earnings profile. 
B) Hours of work over the life cycle will be inversely related to wages over the life cycle. 
C) Hours of work increase as the wage rises and decline as the wage falls. 
D) An unemployed person might choose to become a discouraged worker during a low-wage recession with an eye toward returning to the labor market when wages increase. 
E) A high wage worker may choose to work 60+ hours a week during her peak wage years in order to retire at a younger age later in life. 
A) The profile of hours of work over the life cycle will have roughly the same shape as the age-earnings profile. 
B) Hours of work over the life cycle will be inversely related to wages over the life cycle. 
C) Hours of work increase as the wage rises and decline as the wage falls. 
D) An unemployed person might choose to become a discouraged worker during a low-wage recession with an eye toward returning to the labor market when wages increase. 
E) A high wage worker may choose to work 60+ hours a week during her peak wage years in order to retire at a younger age later in life.

Question 3

According to the income effect, an increase in the wage rate will lead the worker to

Accepted Answer

A) work more hours if leisure is a normal good. 
B) work fewer hours if leisure is a normal good. 
C) work fewer hours if leisure is an inferior good. 
D) work more hours and leisure more hours. 
E) not change hours worked. 
A) work more hours if leisure is a normal good. 
B) work fewer hours if leisure is a normal good. 
C) work fewer hours if leisure is an inferior good. 
D) work more hours and leisure more hours. 
E) not change hours worked.

Question 4

When the tax rate on wages falls (so that the take-home wage or effective wage increases), the budget line

Accepted Answer

A) rotates out along the consumption axis. 
B) shifts out, parallel to the old budget line. 
C) rotates in along the leisure axis. 
D) shifts in, parallel to the old budget line. 
E) rotates out along the leisure axis. 
A) rotates out along the consumption axis. 
B) shifts out, parallel to the old budget line. 
C) rotates in along the leisure axis. 
D) shifts in, parallel to the old budget line. 
E) rotates out along the leisure axis.

Question 5

Of the 500,000 people (age 16+) in a particular country, 300,000 people are in the labor force. Of these, 240,000 are employed and 60,000 are unemployed. Of the 200,000 workers not in the labor force, 20,000 want jobs but have given up looking for one. What is the unemployment rate if discouraged workers (i.e., the hidden unemployed) are counted as being unemployed?

Accepted Answer

A) 10% 
B) 20% 
C) 25% 
D) 48% 
E) 60% 
A) 10% 
B) 20% 
C) 25% 
D) 48% 
E) 60%

Question 6

What would a person do if the market wage is less than his or her reservation wage?

Accepted Answer

A) The person will enter the labor market. 
B) The person will work as much as possible. 
C) The person will work more hours as the wage falls further. 
D) The person will be unemployed. 
E) The person will not participate in the labor force. 
A) The person will enter the labor market. 
B) The person will work as much as possible. 
C) The person will work more hours as the wage falls further. 
D) The person will be unemployed. 
E) The person will not participate in the labor force.

Question 7

How does the labor force participation rate of women compare to that of men?

Accepted Answer

A) The labor force participation rates between the two groups is about the same. 
B) Men participate less than women at all ages. 
C) Women participate less than men at all ages. 
D) Women participate less than men when young (20-34 years-old) but at the same rate as men in later years (35-54 years-old). 
E) Men participate less than women when young (20-34 years-old) but at the same rate as women in later years (35-54 years-old). 
A) The labor force participation rates between the two groups is about the same. 
B) Men participate less than women at all ages. 
C) Women participate less than men at all ages. 
D) Women participate less than men when young (20-34 years-old) but at the same rate as men in later years (35-54 years-old). 
E) Men participate less than women when young (20-34 years-old) but at the same rate as women in later years (35-54 years-old).

Question 8

Roughly what was the female labor force participation in the United States in 2010?

Accepted Answer

A) 33% 
B) 50% 
C) 60% 
D) 70% 
E) 85% 
A) 33% 
B) 50% 
C) 60% 
D) 70% 
E) 85%

Question 9

An increase in non-labor income while holding the wage rate constant

Accepted Answer

A) rotates the budget line out along the consumption axis. 
B) rotates the budget line out along the leisure axis. 
C) rotates the budget line in along the leisure axis. 
D) rotates the budget line in along the consumption axis. 
E) shifts the budget line up (in the direction of the consumption axis) while maintaining the same slope. 
A) rotates the budget line out along the consumption axis. 
B) rotates the budget line out along the leisure axis. 
C) rotates the budget line in along the leisure axis. 
D) rotates the budget line in along the consumption axis. 
E) shifts the budget line up (in the direction of the consumption axis) while maintaining the same slope.

Question 10

The Earned Income Tax Credit is a federal program that

Accepted Answer

A) increases the wages of minorities. 
B) provides cash assistance to the non-working poor. 
C) provides cash assistance to firms that hire single mothers living in poverty. 
D) increases wages for the working poor. 
E) provides in-kind assistance to minimum wage workers. 
A) increases the wages of minorities. 
B) provides cash assistance to the non-working poor. 
C) provides cash assistance to firms that hire single mothers living in poverty. 
D) increases wages for the working poor. 
E) provides in-kind assistance to minimum wage workers.

All of the following represent an increase in non-labor income except for:

Which one of the following conclusions is not supported by the intertemporal substitution hypothesis?

According to the income effect, an increase in the wage rate will lead the worker to

When the tax rate on wages falls (so that the take-home wage or effective wage increases), the budget line

What would a person do if the market wage is less than his or her reservation wage?

How does the labor force participation rate of women compare to that of men?

Roughly what was the female labor force participation in the United States in 2010?

An increase in non-labor income while holding the wage rate constant

The Earned Income Tax Credit is a federal program that

Introduction to Labor Economics

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

Exam 2: Labor Supply

All of the following represent an increase in non-labor income except for:

Which one of the following conclusions is not supported by the intertemporal substitution hypothesis?

According to the income effect, an increase in the wage rate will lead the worker to

When the tax rate on wages falls (so that the take-home wage or effective wage increases), the budget line

What would a person do if the market wage is less than his or her reservation wage?

How does the labor force participation rate of women compare to that of men?

Roughly what was the female labor force participation in the United States in 2010?

An increase in non-labor income while holding the wage rate constant

The Earned Income Tax Credit is a federal program that

Introduction to Labor Economics

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters