Question 1

Disinflation is a drop in the price level.

Accepted Answer

A) True 
 B)False

Question 2

Frictional and structural unemployment are a part of the natural rate of unemployment.

Accepted Answer

A) True 
 B)False

Question 3

Over the past year, Eli has been working very hard. His employer has taken notice and is giving Eli a 6% raise in salary. During this past year, overall prices in the economy have increased by 4%. Given this information, Eli's real wage has:

Accepted Answer

A) stayed constant. 
B) increased by 6%. 
C) increased by 2%. 
D) decreased by 4%. 
A) stayed constant. 
B) increased by 6%. 
C) increased by 2%. 
D) decreased by 4%.

Question 4

Suppose you have estimated the supply curve for the local labor market as Qs = W - 5, where W is the hourly wage and Qs is the quantity of workers willing to work at each wage. You have estimated the demand curve for the local labor market as Qd, = 25 - W, where W is the hourly wage and Qd is the quantity of workers demanded by employers at each wage.
a. Solve for the equilibrium wage and quantity of labor.
b. If the government imposes a minimum wage of $18, what are the size of the labor force, the number of unemployed workers, and the unemployment rate?

Accepted Answer

a. At equilibrium, Qs = Qd. Set 5 + Q =

Question 5

Use the following to answer questions:  
-(Table: Labor Force Data) Look at the table Labor Force Data. Suppose the labor force participation rate is 70%. The number of unemployed adults is:

Accepted Answer

A) 8 million. 
B) 53 million. 
C) 103 million. 
D) 50 million. 
A) 8 million. 
B) 53 million. 
C) 103 million. 
D) 50 million.

Question 6

An effective minimum wage can lead to:

Accepted Answer

A) frictional unemployment. 
B) structural unemployment. 
C) a decrease in wages. 
D) a shortage of workers in that labor market. 
A) frictional unemployment. 
B) structural unemployment. 
C) a decrease in wages. 
D) a shortage of workers in that labor market.

Question 7

Use the following to answer questions:
Figure: The Labor Market  
-(Figure: The Labor Market) Look at the figure The Labor Market. What is the unemployment rate at an efficiency wage of $16?

Accepted Answer

A) 10% 
B) 20% 
C) 27% 
D) 73% 
A) 10% 
B) 20% 
C) 27% 
D) 73%

Question 8

The natural rate of unemployment:

Accepted Answer

A) equals zero. 
B) equals the actual rate of unemployment when cyclical unemployment equals zero. 
C) equals the cyclical plus the actual rate of unemployment. 
D) fluctuates around the actual rate of unemployment. 
A) equals zero. 
B) equals the actual rate of unemployment when cyclical unemployment equals zero. 
C) equals the cyclical plus the actual rate of unemployment. 
D) fluctuates around the actual rate of unemployment.

Question 9

Economists generally agree that sufficiently high minimum wage laws:

Accepted Answer

A) cause unemployment. 
B) help lower the structural unemployment rate. 
C) decrease the labor force participation rate. 
D) make an opportunity for discouraged workers. 
A) cause unemployment. 
B) help lower the structural unemployment rate. 
C) decrease the labor force participation rate. 
D) make an opportunity for discouraged workers.

Question 10

In a particular labor market, the demand for labor is given by W = 20 - (1 / 100)L, and the supply of labor is given by W = 4 + (1 / 100)L, where W is the wage rate, and L is the number of workers. Suppose government decides to impose a minimum wage of $15. The wage will:

Accepted Answer

A) have no effect, since it is below the equilibrium wage. 
B) cause a shortage of workers, since it is above the equilibrium wage. 
C) cause a surplus of workers, since it is above the equilibrium wage. 
D) result in increases in wages for workers who were employed at the equilibrium wage only. 
A) have no effect, since it is below the equilibrium wage. 
B) cause a shortage of workers, since it is above the equilibrium wage. 
C) cause a surplus of workers, since it is above the equilibrium wage. 
D) result in increases in wages for workers who were employed at the equilibrium wage only.

Question 11

Real interest rates can be positive, zero, or negative, but nominal interest rates can only be zero or positive.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following most accurately describes how to calculate the unemployment rate?

Accepted Answer

A) (Unemployed / population) × 100 
B) (Unemployed / employed) × 100 
C) (Unemployed / labor force) × 100 
D) [(Unemployed - employed) / labor force] × 100 
A) (Unemployed / population) × 100 
B) (Unemployed / employed) × 100 
C) (Unemployed / labor force) × 100 
D) [(Unemployed - employed) / labor force] × 100

Question 13

Use the following to answer questions :
Figure: The Effect of a Minimum Wage  
-(Figure: The Effect of a Minimum Wage) Look at the figure The Effect of a Minimum Wage. Suppose the labor market is in equilibrium at E when the government imposes a minimum wage of WF. The quantity of labor supplied may_____, resulting in structural unemployment.

Accepted Answer

A) decrease to QD 
B) stay at QE 
C) increase to QS 
D) stay at WE 
A) decrease to QD 
B) stay at QE 
C) increase to QS 
D) stay at WE

Question 14

When labor unions successfully bargain for wage rates that are _____ than the equilibrium wage rate, they may cause _____.

Accepted Answer

A) lower; frictional unemployment. 
B) equal to; shortages in that labor market. 
C) higher than; an increase in structural unemployment. 
D) higher than; shortages in that labor market. 
A) lower; frictional unemployment. 
B) equal to; shortages in that labor market. 
C) higher than; an increase in structural unemployment. 
D) higher than; shortages in that labor market.

Disinflation is a drop in the price level.

Frictional and structural unemployment are a part of the natural rate of unemployment.

Over the past year, Eli has been working very hard. His employer has taken notice and is giving Eli a 6% raise in salary. During this past year, overall prices in the economy have increased by 4%. Given this information, Eli's real wage has:

Use the following to answer questions: -(Table: Labor Force Data) Look at the table Labor Force Data. Suppose the labor force participation rate is 70%. The number of unemployed adults is:

An effective minimum wage can lead to:

Use the following to answer questions: Figure: The Labor Market -(Figure: The Labor Market) Look at the figure The Labor Market. What is the unemployment rate at an efficiency wage of $16?

The natural rate of unemployment:

Economists generally agree that sufficiently high minimum wage laws:

In a particular labor market, the demand for labor is given by W = 20 - (1 / 100)L, and the supply of labor is given by W = 4 + (1 / 100)L, where W is the wage rate, and L is the number of workers. Suppose government decides to impose a minimum wage of $15. The wage will:

Real interest rates can be positive, zero, or negative, but nominal interest rates can only be zero or positive.

Which of the following most accurately describes how to calculate the unemployment rate?

When labor unions successfully bargain for wage rates that are _ than the equilibrium wage rate, they may cause _.

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 8: Unemployment and Inflation

Disinflation is a drop in the price level.

Frictional and structural unemployment are a part of the natural rate of unemployment.

Over the past year, Eli has been working very hard. His employer has taken notice and is giving Eli a 6% raise in salary. During this past year, overall prices in the economy have increased by 4%. Given this information, Eli's real wage has:

Use the following to answer questions: -(Table: Labor Force Data) Look at the table Labor Force Data. Suppose the labor force participation rate is 70%. The number of unemployed adults is:

An effective minimum wage can lead to:

Use the following to answer questions: Figure: The Labor Market -(Figure: The Labor Market) Look at the figure The Labor Market. What is the unemployment rate at an efficiency wage of $16?

The natural rate of unemployment:

Economists generally agree that sufficiently high minimum wage laws:

In a particular labor market, the demand for labor is given by W = 20 - (1 / 100)L, and the supply of labor is given by W = 4 + (1 / 100)L, where W is the wage rate, and L is the number of workers. Suppose government decides to impose a minimum wage of $15. The wage will:

Real interest rates can be positive, zero, or negative, but nominal interest rates can only be zero or positive.

Which of the following most accurately describes how to calculate the unemployment rate?

When labor unions successfully bargain for wage rates that are _____ than the equilibrium wage rate, they may cause _____.

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

When labor unions successfully bargain for wage rates that are _ than the equilibrium wage rate, they may cause _.