Question 1

Figure 28-5  
-Refer to Figure 28-5. If the minimum wage is set at $125, then

Accepted Answer

A)  the quantity of labor demanded will equal 20. 
B)  the quantity of labor supplied will equal 35. 
C)  the surplus of labor will equal 25. 
D)  unemployment will equal 10. 
A)  the quantity of labor demanded will equal 20. 
B)  the quantity of labor supplied will equal 35. 
C)  the surplus of labor will equal 25. 
D)  unemployment will equal 10.

Question 2

The Bureau of Labor Statistics reported in 2005 that there were 59.98 million people over age 25 whose highest level of education was a high school degree or equivalent, 36.40 million of whom were employed and 1.93 million of whom were unemployed. What were the labor-force participation rate and the unemployment rate for this group?

Accepted Answer

A)  60.7% and 3.2% 
B)  60.7% and 5.0% 
C)  63.9% and 3.2% 
D)  63.9% and 5.0% 
A)  60.7% and 3.2% 
B)  60.7% and 5.0% 
C)  63.9% and 3.2% 
D)  63.9% and 5.0%

Question 3

When a union raises the wage above the equilibrium level, it reduces the quantity of labor supplied and raises the quantity of labor demanded, resulting in unemployment.

Accepted Answer

A) True 
 B)False

Question 4

The normal rate of unemployment around which the unemployment rate fluctuates is called cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 5

Job search

Accepted Answer

A)  is one reason economies always experience some unemployment. 
B)  is the process of matching workers with appropriate jobs. 
C)  would not be a problem if all workers and all jobs were the same. 
D)  All of the above are correct. 
A)  is one reason economies always experience some unemployment. 
B)  is the process of matching workers with appropriate jobs. 
C)  would not be a problem if all workers and all jobs were the same. 
D)  All of the above are correct.

Question 6

The Bureau of Labor Statistics divides the adult population into four categories: employed, underemployed, unemployed, and not in the labor force.

Accepted Answer

A) True 
 B)False

Question 7

Susan is a plant manager in charge of a factory in a relatively poor country. Even though market wages are low, she decides to raise the wages of her workers. Her decision

Accepted Answer

A)  might increase profits if it means that the wage is high enough for her workers to eat a nutritious diet that makes them more productive. 
B)  will help eliminate the excess supply of labor. 
C)  may cause her workers to reduce the effort they expend at their jobs. 
D)  All of the above are correct. 
A)  might increase profits if it means that the wage is high enough for her workers to eat a nutritious diet that makes them more productive. 
B)  will help eliminate the excess supply of labor. 
C)  may cause her workers to reduce the effort they expend at their jobs. 
D)  All of the above are correct.

Question 8

Table 28-6  
-Refer to Table 28-6. What is the U-5 measure of labor underutilization?

Accepted Answer

A)  7.5% 
B)  7.9% 
C)  8.1% 
D)  26% 
A)  7.5% 
B)  7.9% 
C)  8.1% 
D)  26%

Question 9

Sheamous loses his job and decides to sit on the beach rather than look for work during the next few months. Other things the same, the unemployment rate

Accepted Answer

A)  increases, and the labor-force participation rate decreases. 
B)  increases, and the labor-force participation rate is unaffected. 
C)  is unaffected, and the labor-force participation rate decreases. 
D)  and the labor-force participation rate are both unaffected. 
A)  increases, and the labor-force participation rate decreases. 
B)  increases, and the labor-force participation rate is unaffected. 
C)  is unaffected, and the labor-force participation rate decreases. 
D)  and the labor-force participation rate are both unaffected.

Question 10

Minimum-wage laws and unions are similar to each other but different from efficiency wages in that minimum-wage law and unions

Accepted Answer

A)  cause unemployment, but efficiency wages do not. 
B)  cause the quantity of labor supplied to exceed the quantity of labor demanded, but efficiency wages do not. 
C)  cause wages to be above the equilibrium level. 
D)  prevent firms from lowering wages in the presence of a surplus of workers. 
A)  cause unemployment, but efficiency wages do not. 
B)  cause the quantity of labor supplied to exceed the quantity of labor demanded, but efficiency wages do not. 
C)  cause wages to be above the equilibrium level. 
D)  prevent firms from lowering wages in the presence of a surplus of workers.

Question 11

Table 28-11
2010 Labor Data for Tajnia  
-Refer to Table 28-11. The labor force of Tajnia in 2010 is 12,250.

Accepted Answer

A) True 
 B)False

Question 12

Efficiency wages create structural unemployment.

Accepted Answer

A) True 
 B)False

Question 13

Efficiency wages

Accepted Answer

A)  may increase productivity. 
B)  will increase unemployment. 
C)  may improve worker health. 
D)  All of the above are correct. 
A)  may increase productivity. 
B)  will increase unemployment. 
C)  may improve worker health. 
D)  All of the above are correct.

Question 14

According to the theory of efficiency wages, it may be profitable for firms to keep wages high even in the presence of a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 15

Measuring unemployment is the job of the Bureau of Labor Statistics.

Accepted Answer

A) True 
 B)False

Question 16

Unemployment insurance

Accepted Answer

A)  reduces search effort which raises unemployment. 
B)  reduces search effort which lowers unemployment. 
C)  increases search effort which raises unemployment. 
D)  increases search effort which decreases unemployment. 
A)  reduces search effort which raises unemployment. 
B)  reduces search effort which lowers unemployment. 
C)  increases search effort which raises unemployment. 
D)  increases search effort which decreases unemployment.

Question 17

The adult population must equal the sum of the employed, the unemployed, and those not in the labor force.

Accepted Answer

A) True 
 B)False

Question 18

When a union raises the wage above the equilibrium level, it

Accepted Answer

A)  reduces both the quantity of labor supplied and the quantity of labor demanded. 
B)  reduces the quantity of labor supplied and raises the quantity of labor demanded. 
C)  raises the quantity of labor supplied and reduces the quantity of labor demanded. 
D)  raises both the quantity of labor supplied and the quantity of labor demanded. 
A)  reduces both the quantity of labor supplied and the quantity of labor demanded. 
B)  reduces the quantity of labor supplied and raises the quantity of labor demanded. 
C)  raises the quantity of labor supplied and reduces the quantity of labor demanded. 
D)  raises both the quantity of labor supplied and the quantity of labor demanded.

Question 19

Figure 28-6  
-Refer to Figure 28-6. What type of unemployment is measured by the differences between lines A and B?

Accepted Answer

cyclical u

Question 20

Noah is an unpaid stay-at-home father who is not currently searching for paid work. Pete is a full-time student who is not looking for a job. Who is included in the labor force by the Bureau of Labor Statistics?

Accepted Answer

A)  only Noah 
B)  only Pete 
C)  both Noah and Pete 
D)  neither Noah nor Pete 
A)  only Noah 
B)  only Pete 
C)  both Noah and Pete 
D)  neither Noah nor Pete

Exam 28: Unemployment

Figure 28-5 -Refer to Figure 28-5. If the minimum wage is set at $125, then

When a union raises the wage above the equilibrium level, it reduces the quantity of labor supplied and raises the quantity of labor demanded, resulting in unemployment.

The normal rate of unemployment around which the unemployment rate fluctuates is called cyclical unemployment.

Job search

The Bureau of Labor Statistics divides the adult population into four categories: employed, underemployed, unemployed, and not in the labor force.

Susan is a plant manager in charge of a factory in a relatively poor country. Even though market wages are low, she decides to raise the wages of her workers. Her decision

Table 28-6 -Refer to Table 28-6. What is the U-5 measure of labor underutilization?

Sheamous loses his job and decides to sit on the beach rather than look for work during the next few months. Other things the same, the unemployment rate

Minimum-wage laws and unions are similar to each other but different from efficiency wages in that minimum-wage law and unions

Table 28-11 2010 Labor Data for Tajnia -Refer to Table 28-11. The labor force of Tajnia in 2010 is 12,250.

Efficiency wages create structural unemployment.

Efficiency wages

According to the theory of efficiency wages, it may be profitable for firms to keep wages high even in the presence of a surplus of labor.

Measuring unemployment is the job of the Bureau of Labor Statistics.

Unemployment insurance

The adult population must equal the sum of the employed, the unemployed, and those not in the labor force.

When a union raises the wage above the equilibrium level, it

Figure 28-6 -Refer to Figure 28-6. What type of unemployment is measured by the differences between lines A and B?

Noah is an unpaid stay-at-home father who is not currently searching for paid work. Pete is a full-time student who is not looking for a job. Who is included in the labor force by the Bureau of Labor Statistics?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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