Question 1

How does the asking wage depend on the unemployment insurance system in the United States?

Accepted Answer

A) The asking wage is constant regardless of the unemployment insurance system. 
B) The asking wage will fall as the unemployed worker gets closer to exhausting his or her UI benefits. 
C) The asking wage is lower while receiving UI benefits than it is when not receiving UI benefits. 
D) The asking wage is lower the more likely it is to receive a job offer. 
E) The asking wage is lower the more skills the unemployed worker has. 
A) The asking wage is constant regardless of the unemployment insurance system. 
B) The asking wage will fall as the unemployed worker gets closer to exhausting his or her UI benefits. 
C) The asking wage is lower while receiving UI benefits than it is when not receiving UI benefits. 
D) The asking wage is lower the more likely it is to receive a job offer. 
E) The asking wage is lower the more skills the unemployed worker has. B

Question 2

In the United States from 1950 to 2005, it is most likely that an unemployed person will

Accepted Answer

A) be re-employed in less than 5 weeks. 
B) be re-employed in 5 to 14 weeks. 
C) be re-employed in 14 to 26 weeks. 
D) be re-employed in more than 26 weeks. 
E) exit the labor force. 
A) be re-employed in less than 5 weeks. 
B) be re-employed in 5 to 14 weeks. 
C) be re-employed in 14 to 26 weeks. 
D) be re-employed in more than 26 weeks. 
E) exit the labor force. A

Question 3

Which one of the following statements regarding the intertemporal substitution hypothesis is false?

Accepted Answer

A) Workers are willing to reduce labor supplied during a recession. 
B) Increases in unemployment may be voluntary as workers collect UI benefits. 
C) Increases in unemployment may be voluntary as workers trade income for leisure during low-wage periods. 
D) Wages and hours of leisure will tend to move together over the course of the life-cycle. 
E) Labor supply responds to changes in the real wage. 
A) Workers are willing to reduce labor supplied during a recession. 
B) Increases in unemployment may be voluntary as workers collect UI benefits. 
C) Increases in unemployment may be voluntary as workers trade income for leisure during low-wage periods. 
D) Wages and hours of leisure will tend to move together over the course of the life-cycle. 
E) Labor supply responds to changes in the real wage. D

Question 4

Compared to a labor market that has no unemployment benefit system, the unemployment insurance system of the United States probably

Accepted Answer

A) leads to shorter spells of unemployment. 
B) increases the unemployment rate. 
C) leads to lower post-unemployment wages. 
D) provides for a lower standard of living while unemployed. 
E) is less costly for firms. 
A) leads to shorter spells of unemployment. 
B) increases the unemployment rate. 
C) leads to lower post-unemployment wages. 
D) provides for a lower standard of living while unemployed. 
E) is less costly for firms.

Question 5

Which of the following would not increase the asking wage?

Accepted Answer

A) The government expands UI benefits from 26 to 52 weeks. 
B) The government increases the maximum weekly unemployment benefit from $500 to $800. 
C) An increase in the unemployment rate. 
D) Having one's spouse receive a pay raise. 
E) The government stops taxing UI benefits. 
A) The government expands UI benefits from 26 to 52 weeks. 
B) The government increases the maximum weekly unemployment benefit from $500 to $800. 
C) An increase in the unemployment rate. 
D) Having one's spouse receive a pay raise. 
E) The government stops taxing UI benefits.

Question 6

An important development during the Great Recession of 2007-2010 was that

Accepted Answer

A) more than 35 percent of all unemployed workers remained unemployed for more than 26 months. 
B) most unemployment spells lasted 13 to 26 weeks. 
C) the unemployment rate increased dramatically, but the average unemployment spell remained constant at about 8 weeks of unemployment. 
D) more than 70 percent of all unemployed workers exited unemployment within 5 weeks; however, most of this movement was due to the unemployed becoming discouraged and exiting the labor force rather than finding a job. 
E) the amount of frictional and seasonal unemployment increased dramatically while the amount of structural unemployment decreased substantially. 
A) more than 35 percent of all unemployed workers remained unemployed for more than 26 months. 
B) most unemployment spells lasted 13 to 26 weeks. 
C) the unemployment rate increased dramatically, but the average unemployment spell remained constant at about 8 weeks of unemployment. 
D) more than 70 percent of all unemployed workers exited unemployment within 5 weeks; however, most of this movement was due to the unemployed becoming discouraged and exiting the labor force rather than finding a job. 
E) the amount of frictional and seasonal unemployment increased dramatically while the amount of structural unemployment decreased substantially.

Question 7

The sectoral shifts hypothesis claims that

Accepted Answer

A) cyclical unemployment will always exceed frictional unemployment. 
B) frictional unemployment will cause workers to extend their temporary lay-offs. 
C) most unemployed workers will return to their previous job because the firm knows the skills of the worker. 
D) there will always be a pool of unemployed workers who find jobs quickly (i.e., the frictionally unemployed). 
E) there will always be a pool of unemployed workers who experience long spells of unemployment because their skills do not match those that employers are looking for (i.e., the structurally unemployed). 
A) cyclical unemployment will always exceed frictional unemployment. 
B) frictional unemployment will cause workers to extend their temporary lay-offs. 
C) most unemployed workers will return to their previous job because the firm knows the skills of the worker. 
D) there will always be a pool of unemployed workers who find jobs quickly (i.e., the frictionally unemployed). 
E) there will always be a pool of unemployed workers who experience long spells of unemployment because their skills do not match those that employers are looking for (i.e., the structurally unemployed).

Question 8

Consider an economy with a labor force of 200 million people-180 million are employed while 20 million are unemployed. Each period, 45% of the unemployed population finds a job. If the economy is in a steady-state of unemployment, what percent of the employed population lose their job each period?

Accepted Answer

A) 5% 
B) 10% 
C) 15% 
D) 20% 
E) 25% 
A) 5% 
B) 10% 
C) 15% 
D) 20% 
E) 25%

Question 9

Consider an economy with a labor force of 100 million people. Each period, 60% of the unemployed population find a job while 15% of the employed population lose their job. What is the steady-state unemployment rate in the economy?

Accepted Answer

A) 5% 
B) 10% 
C) 15% 
D) 20% 
E) 60% 
A) 5% 
B) 10% 
C) 15% 
D) 20% 
E) 60%

Question 10

Which is not a likely explanation as to why unemployment rates are higher in Europe than in the United States?

Accepted Answer

A) Most European countries offer more generous unemployment insurance benefits than in the United States. 
B) Most European countries have stronger employment protection restrictions than in the United States. 
C) There is more wage rigidity in Europe than in the United States. 
D) Europeans are less productive than Americans. 
E) Most European countries offer unemployment benefits for longer than they are available in the United States. 
A) Most European countries offer more generous unemployment insurance benefits than in the United States. 
B) Most European countries have stronger employment protection restrictions than in the United States. 
C) There is more wage rigidity in Europe than in the United States. 
D) Europeans are less productive than Americans. 
E) Most European countries offer unemployment benefits for longer than they are available in the United States.

Question 11

Which of the following is best considered an implicit contract?

Accepted Answer

A) A union contract that specifies hourly wages and fringe benefits. 
B) A union contract that specifies how overtime wages will be calculated. 
C) An informal agreement between a firm and its employees to reduce hours of work for everyone a little bit during an economic contraction in order to prevent firing anyone. 
D) A firm offering health insurance to all of its workers in order to abide by the Affordable Care Act. 
E) A historical agreement between a firm and its employees that the firm pays workers based on a combination of age, experience, and education. 
A) A union contract that specifies hourly wages and fringe benefits. 
B) A union contract that specifies how overtime wages will be calculated. 
C) An informal agreement between a firm and its employees to reduce hours of work for everyone a little bit during an economic contraction in order to prevent firing anyone. 
D) A firm offering health insurance to all of its workers in order to abide by the Affordable Care Act. 
E) A historical agreement between a firm and its employees that the firm pays workers based on a combination of age, experience, and education.

Question 12

Centerville has 200 unemployed people. Of these 200 people, 35 are unemployed for two weeks before finding a new job, 55 are unemployed for four weeks before finding a new job, 30 are unemployed for six weeks before finding a new job, 15 are unemployed for ten weeks before finding a new job, and 65 are unemployed for fifteen weeks before finding a new job. Approximately what is the average spell of unemployment in Centerville?

Accepted Answer

A) 2 weeks 
B) 5 weeks 
C) 8 weeks 
D) 11 weeks 
E) 14 weeks 
A) 2 weeks 
B) 5 weeks 
C) 8 weeks 
D) 11 weeks 
E) 14 weeks

Question 13

What is the best description of unemployment insurance benefits in the United States?

Accepted Answer

A) All unemployed workers receive the same benefit regardless of what their previous job was. 
B) All unemployed workers receive the same wage-adjusted benefit regardless of what state they live in. 
C) Unemployment benefits are based on family size and age. 
D) Unemployment benefits are greater for low-wage workers than for high-wage workers. 
E) Unemployment benefits are a greater percentage of previous earnings for low-wage workers than for high-wage workers. 
A) All unemployed workers receive the same benefit regardless of what their previous job was. 
B) All unemployed workers receive the same wage-adjusted benefit regardless of what state they live in. 
C) Unemployment benefits are based on family size and age. 
D) Unemployment benefits are greater for low-wage workers than for high-wage workers. 
E) Unemployment benefits are a greater percentage of previous earnings for low-wage workers than for high-wage workers.

Question 14

The United States funds its unemployment compensation system by

Accepted Answer

A) taxing all firms at the same rate. 
B) taxing older, larger firms at a higher rate than younger, smaller firms. 
C) taxing firms more when they have a history of causing more layoffs, up to a point. 
D) taxing firms more when they have greater profits so that they can afford the additional taxes. 
E) taxing non-union firms more than union firms, because union firms pay higher wages on average. 
A) taxing all firms at the same rate. 
B) taxing older, larger firms at a higher rate than younger, smaller firms. 
C) taxing firms more when they have a history of causing more layoffs, up to a point. 
D) taxing firms more when they have greater profits so that they can afford the additional taxes. 
E) taxing non-union firms more than union firms, because union firms pay higher wages on average.

Question 15

Anna works on a farm every spring during planting season and every fall during the harvest season. The farm fails to employ Anna during the summer or the winter. What type of unemployment does Anna experience?

Accepted Answer

A) Frictional unemployment 
B) Seasonal unemployment 
C) Cyclical unemployment 
D) Structural unemployment 
E) Natural unemployment 
A) Frictional unemployment 
B) Seasonal unemployment 
C) Cyclical unemployment 
D) Structural unemployment 
E) Natural unemployment

Question 16

The short-run Phillips curve is __________, while the long-run Phillips curve is vertical at the __________.

Accepted Answer

A) downward sloping; real wage 
B) downward sloping; natural rate of unemployment 
C) upward sloping; minimum wage 
D) upward sloping; average nominal wage rate 
E) horizontal; origin 
A) downward sloping; real wage 
B) downward sloping; natural rate of unemployment 
C) upward sloping; minimum wage 
D) upward sloping; average nominal wage rate 
E) horizontal; origin

Question 17

From 1980 through 2005, unemployment rates have been _________ in Europe relative to in United States.

Accepted Answer

A) higher 
B) lower 
C) about the same 
D) unpredictable 
E) adjusting 
A) higher 
B) lower 
C) about the same 
D) unpredictable 
E) adjusting

Question 18

What is the general relationship between race and unemployment rates in the United States?

Accepted Answer

A) Whites have the lowest rate of unemployment; Hispanics have the highest rate of unemployment. 
B) Whites have the lowest rate of unemployment; blacks have the highest rate of unemployment. 
C) Hispanics have the lowest rate of unemployment; whites have the highest rate of unemployment. 
D) Hispanics have the lowest rate of unemployment; blacks have the highest rate of unemployment. 
E) Blacks have the lowest rate of unemployment; Hispanics have the highest rate of unemployment. 
A) Whites have the lowest rate of unemployment; Hispanics have the highest rate of unemployment. 
B) Whites have the lowest rate of unemployment; blacks have the highest rate of unemployment. 
C) Hispanics have the lowest rate of unemployment; whites have the highest rate of unemployment. 
D) Hispanics have the lowest rate of unemployment; blacks have the highest rate of unemployment. 
E) Blacks have the lowest rate of unemployment; Hispanics have the highest rate of unemployment.

Question 19

Which age group experiences the highest rates of unemployment in the United States?

Accepted Answer

A) 16 to 24 years-old. 
B) 25 to 34 years-old. 
C) 35 to 44 years-old. 
D) 45 to 54 years-old. 
E) 55 to 64 years-old. 
A) 16 to 24 years-old. 
B) 25 to 34 years-old. 
C) 35 to 44 years-old. 
D) 45 to 54 years-old. 
E) 55 to 64 years-old.

Question 20

Why is frictional unemployment considered to be productive?

Accepted Answer

A) Search activities of workers and firms resulting in frictional unemployment improve the allocation of resources. 
B) Firms do not hire a worker until they find the most educated worker. 
C) There are more potential workers seeking jobs than there are jobs for workers when there is frictional unemployment. 
D) The demand for highly-skilled workers exceeds the supply of highly-skilled workers when there is frictional unemployment. 
E) Frictional unemployment leads to a decrease in the unemployment rate. 
A) Search activities of workers and firms resulting in frictional unemployment improve the allocation of resources. 
B) Firms do not hire a worker until they find the most educated worker. 
C) There are more potential workers seeking jobs than there are jobs for workers when there is frictional unemployment. 
D) The demand for highly-skilled workers exceeds the supply of highly-skilled workers when there is frictional unemployment. 
E) Frictional unemployment leads to a decrease in the unemployment rate.

How does the asking wage depend on the unemployment insurance system in the United States?

In the United States from 1950 to 2005, it is most likely that an unemployed person will

Which one of the following statements regarding the intertemporal substitution hypothesis is false?

Compared to a labor market that has no unemployment benefit system, the unemployment insurance system of the United States probably

Which of the following would not increase the asking wage?

An important development during the Great Recession of 2007-2010 was that

The sectoral shifts hypothesis claims that

Consider an economy with a labor force of 200 million people-180 million are employed while 20 million are unemployed. Each period, 45% of the unemployed population finds a job. If the economy is in a steady-state of unemployment, what percent of the employed population lose their job each period?

Consider an economy with a labor force of 100 million people. Each period, 60% of the unemployed population find a job while 15% of the employed population lose their job. What is the steady-state unemployment rate in the economy?

Which is not a likely explanation as to why unemployment rates are higher in Europe than in the United States?

Which of the following is best considered an implicit contract?

What is the best description of unemployment insurance benefits in the United States?

The United States funds its unemployment compensation system by

Anna works on a farm every spring during planting season and every fall during the harvest season. The farm fails to employ Anna during the summer or the winter. What type of unemployment does Anna experience?

The short-run Phillips curve is , while the long-run Phillips curve is vertical at the .

From 1980 through 2005, unemployment rates have been _________ in Europe relative to in United States.

What is the general relationship between race and unemployment rates in the United States?

Which age group experiences the highest rates of unemployment in the United States?

Why is frictional unemployment considered to be productive?

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Filters

Exam 12: Unemployment

How does the asking wage depend on the unemployment insurance system in the United States?

In the United States from 1950 to 2005, it is most likely that an unemployed person will

Which one of the following statements regarding the intertemporal substitution hypothesis is false?

Compared to a labor market that has no unemployment benefit system, the unemployment insurance system of the United States probably

Which of the following would not increase the asking wage?

An important development during the Great Recession of 2007-2010 was that

The sectoral shifts hypothesis claims that

Consider an economy with a labor force of 200 million people-180 million are employed while 20 million are unemployed. Each period, 45% of the unemployed population finds a job. If the economy is in a steady-state of unemployment, what percent of the employed population lose their job each period?

Consider an economy with a labor force of 100 million people. Each period, 60% of the unemployed population find a job while 15% of the employed population lose their job. What is the steady-state unemployment rate in the economy?

Which is not a likely explanation as to why unemployment rates are higher in Europe than in the United States?

Which of the following is best considered an implicit contract?

What is the best description of unemployment insurance benefits in the United States?

The United States funds its unemployment compensation system by

Anna works on a farm every spring during planting season and every fall during the harvest season. The farm fails to employ Anna during the summer or the winter. What type of unemployment does Anna experience?

The short-run Phillips curve is __________, while the long-run Phillips curve is vertical at the __________.

From 1980 through 2005, unemployment rates have been _________ in Europe relative to in United States.

What is the general relationship between race and unemployment rates in the United States?

Which age group experiences the highest rates of unemployment in the United States?

Why is frictional unemployment considered to be productive?

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Filters

The short-run Phillips curve is , while the long-run Phillips curve is vertical at the .