Ch8 Unemployment And Employment Test Bank Answers - Principles of Macroeconomics -Complete Test Bank by Taylor. DOCX document preview.
Chapter 8
Unemployment and Employment
Multiple Choice
1. Which of the following statements is about the 2008-09 recession?
a. | During that period, job losses in the United States were minimal and the unemployment rate fell. |
b. | During that period, job losses in the United States were minimal, but the unemployment rate rose. |
c. | During that period, job losses in the United States were large, but the unemployment rate fell. |
d. | During that period, job losses in the United States were large and the unemployment rate rose. |
e. | By the end of the 2008-09 recession, payroll employment increased in the United States. |
OBJ: factual
SEC: 0. Unemployment and Employment
TOP: Unemployment
MSC: Bloom's: Knowledge
2. Which of the following groups will likely have an average unemployment rate that will be significantly lower than the average unemployment rate of the general population?
a. | College graduates |
b. | Teenagers in working age |
c. | Teenagers without college education |
d. | All of the above |
e. | None of the above |
OBJ: factual
SEC: 0. Unemployment and Employment
TOP: Unemployment
MSC: Bloom's: Knowledge
3. Which of the following statements is ?
a. | Unemployment rates vary across groups of individuals of different gender, age, race, and education. |
b. | Unemployment rates vary across countries. |
c. | The United States in a recession may have a lower unemployment rate than other economies that are booming. |
d. | At any given month the unemployment rate is the same in every country. |
e. | The United States in a recession may have a higher unemployment rate than other economies that are booming. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployment Rate
MSC: Bloom's: Knowledge
4. The Current Population Survey is conducted by the
a. | Council of Economic Advisers. |
b. | Federal Reserve Board. |
c. | U.S. Census Bureau. |
d. | U.S. Department of Commerce. |
e. | Department of Labor. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Current Population Survey
MSC: Bloom's: Knowledge
5. The Current Population Survey is a survey of
a. | 1 million households in the United States. |
b. | all households in the United States. |
c. | unemployed individuals. |
d. | 60,000 households in the United States. |
e. | the whole U.S. population. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Current Population Survey
MSC: Bloom's: Knowledge
6. Which of the following best explains the meaning of the term labor force?
a. | All people 16 years of age and over who are employed |
b. | All people between the ages of 16 and 65 |
c. | The population that is 16 years of age or over |
d. | Any individual who has a job |
e. | All people 16 years of age and over who are counted as employed or unemployed |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Force
MSC: Bloom's: Knowledge
7. According to the Current Population Survey, which of the following is the best example of an unemployed person?
a. | Any person not working or not working as many hours as he or she would prefer |
b. | Any person without a job while looking for work |
c. | A person without a job |
d. | Any person looking for work |
e. | A person who decides to leave the labor force |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
8. Suppose an individual is working at home without pay. That person would be counted as
a. | employed. |
b. | unemployed. |
c. | Not enough information is given. |
d. | not in the labor force. |
e. | self-employed. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Force
MSC: Bloom's: Analysis | AACSB: Analytic
9. At the end of 2016, the working-age population in the United States was approximately
a. | 320 million people. |
b. | 139 million people. |
c. | 239 million people. |
d. | 154 million people. |
e. | 65 million people. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Force MSC: Bloom's: Knowledge
10. Which of the following examples best describes a discouraged worker?
a. | A 25-year-old who, after not being able to find a legitimate job after searching for two years, makes his living selling drugs |
b. | An incarcerated 17-year-old |
c. | A college student who does not have time to work |
d. | A 65-year-old individual who moves to Florida after retirement |
e. | A 55-year-old who, after being laid off from a full-time job, is only able to find a job employing her for 15 hours a week |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Discouraged Workers
MSC: Bloom's: Analysis | AACSB: Analytic
11. A 21-year-old student looks for a job in the fall, and when she cannot find a suitable job after a few weeks, she gives up her search. This student is
a. | in the labor force because she is over age 16. |
b. | a disgruntled worker. |
c. | not in the working-age population. |
d. | counted as unemployed. |
e. | neither employed nor unemployed. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Discouraged Workers
MSC: Bloom's: Analysis | AACSB: Analytic
12. The most difficult part of measuring the amount of unemployment is
a. | defining and measuring the working-age population. |
b. | defining and measuring who is employed. |
c. | defining and measuring who is in the labor force. |
d. | deciding who to include in the Current Population Survey. |
e. | None of these |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Force
MSC: Bloom's: Knowledge | AACSB: Analytic
13. The official definition of a part-time worker is any individual working
a. | between 1 and 10 hours per week. |
b. | between 1 and 34 hours per week. |
c. | between 1 and 25 hours per week. |
d. | between 1 and 20 hours per week. |
e. | between 1 and 40 hours per week. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Part-Time Work
MSC: Bloom's: Knowledge | AACSB: Analytic
14. Joe works at a local newspaper 20 hours a week as a columnist and spends 20 hours a week writing his first novel, which he hopes to get published someday. Joe is
a. | employed part-time. |
b. | not in the labor force. |
c. | employed full-time. |
d. | a discouraged worker. |
e. | unemployed. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Part-Time Worker
MSC: Bloom's: Application | AACSB: Analytic
15. Which of the following best describes a group of people who, according to the U.S. Current Population Survey, are more likely to work part-time?
a. | Accountants |
b. | Women with young children |
c. | University professors |
d. | Border Patrol agents |
e. | All of these |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Women in Labor Force; Unemployment Rate
MSC: Bloom's: Analysis
16. Which of the following statements is ?
a. | The fraction of women working part-time is greater than men, but men and women are just as likely to work part-time for reasons of personal choice. |
b. | The fraction of men working part-time is greater than women, and women give personal choice as a reason for working part-time more frequently than men. |
c. | The fraction of women working part-time is greater than men, and women give personal choice as a reason for working part-time more frequently than men. |
d. | The fraction of men working part-time is greater than women, and men give personal choice as a reason for working part-time more frequently than women. |
e. | The fraction of women working part-time is greater than men, but men give personal choice as a reason for working part-time more frequently than women. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Part-Time Work
MSC: Bloom's: Analysis | AACSB: Analytic
17. To be counted as unemployed a person must be
a. | actively looking for work. |
b. | All of these |
c. | working less than one hour per week. |
d. | 16 or older. |
e. | in the labor force. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployed Worker Definition
MSC: Bloom's: Knowledge
18. To be counted as unemployed a person must be
a. | All of these |
b. | actively looking for work. |
c. | 14 or older. |
d. | working less than five hours per week. |
e. | a discouraged worker. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployed Worker Definition
MSC: Bloom's: Knowledge
19. To be counted as unemployed a person must
a. | be looking for work for at least two weeks. |
b. | have had a job sometime in the past. |
c. | be looking for work for at least a week. |
d. | be actively looking for work. |
e. | be a discouraged worker. |
/
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployed Worker Definition
MSC: Bloom's: Knowledge
/
20. According to the Current Population Survey, if a person is not counted as employed, then he or she is unemployed.
Moderate
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Who Is Unemployed
MSC: Bloom's: Knowledge
21. Housewives are generally not counted as part of the labor force.
Moderate
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: The Labor Force
MSC: Bloom's: Knowledge | AACSB: Analytic
22. Discouraged workers are not part of the labor force.
Basic
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Discouraged Workers
MSC: Bloom's: Knowledge
23. Defining and measuring the labor force is the most difficult part of measuring unemployment.
Basic
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Measuring the Labor Force
MSC: Bloom's: Knowledge
24. An individual who only works 11 months out of a year is classified as a part-time worker.
Basic
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Part-Time Work
MSC: Bloom's: Knowledge
25. Roughly, the percentage of U.S. workers that is employed part-time is about 1 percent.
Basic
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Measuring Unemployment; Part-Time Work
MSC: Bloom's: Knowledge
26. A student who is not looking for work will be considered part of the labor force but not unemployed.
Moderate
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Force; Measuring Unemployment
MSC: Bloom's: Knowledge
27. The average number of hours of work per worker each week is 40 hours.
Basic
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Part-Time Worker
MSC: Bloom's: Knowledge
28. The average number of hours worked per week has increased as a result of more people working part-time.
Moderate
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Part-Time Work
MSC: Bloom's: Knowledge | AACSB: Analytic
Multiple Choice
29. Of the unemployment rate, the employment-to-population ratio, and the labor force participation rate, which of the three is(are) unaffected by the discouraged worker phenomenon?
a. | Only the unemployment rate |
b. | Both the unemployment rate and the employment-to-population ratio |
c. | Only the employment-to-population ratio |
d. | Only the labor force participation rate |
e. | Both the unemployment rate and the labor force participation rate |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Market Indicators
MSC: Bloom's: Analysis | AACSB: Analytic
30. If more women decide to enter the labor market,
a. | the unemployment rate will immediately decrease. |
b. | the labor force participation rate will immediately increase. |
c. | the labor force participation rate will immediately decrease. |
d. | the employment-to-population ratio will immediately increase. |
e. | the employment-to-population rate will immediately decrease. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Female Participation Rate
MSC: Bloom's: Knowledge
31. Which of the following statements about the U.S. employment statistics is not ?
a. | Since the 1950s, a growing number of women are part of the labor force. |
b. | In 1956, about 37 percent of women were part of the labor force. |
c. | In 2016, almost 60 percent of women were part of the labor force. |
d. | There was a significant increase in the participation of women in the labor force in the decade between 1996 and 2016. |
e. | All of these are true facts. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Measuring Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
32. Which of the following is ?
a. | The employment-to-population ratio has decreased over the past 30 years. |
b. | The labor force participation rate has decreased over the past 30 years. |
c. | The employment-to-population ratio has increased over the past 30 years. |
d. | The labor force participation rate, the unemployment rate, and the employment-to-population ratio have all increased over the past 30 years. |
e. | The unemployment rate has increased over the past 30 years. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Market Indicators
MSC: Bloom's: Knowledge
33. Which indicators of conditions in the labor market are sensitive to measurement errors of the labor force?
a. | The unemployment rate and the labor force participation rate |
b. | None of these |
c. | The employment-to-population ratio and the labor force participation rate |
d. | The employment-to-population ratio and the unemployment rate |
e. | The employment-to-population ratio, the unemployment rate, and the labor force participation rate |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Market Indicators
MSC: Bloom's: Knowledge
34. Which of the following statements is the only one that could possibly be about the figure below?
a. | Series X is the labor force participation rate, and series Y is the employment-to-population ratio. |
b. | Series X is the employment-to-population ratio, and series Y is the labor force participation rate. |
c. | Series X is the labor force participation rate, and series Y is the unemployment rate. |
d. | Series X is the employment-to-population ratio, and series Y is the unemployment rate. |
e. | Series X is the unemployment rate, and series Y is the labor force participation rate. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Employment-to-Population Ratio and Labor Force Participation Rate
MSC: Bloom's: Analysis | AACSB: Analytic
35. If the working-age population is 100 million, the labor force is 85 million, and the number employed is 74.8 million, what is the unemployment rate?
a. | 5 percent |
b. | 10.2 percent |
c. | 12 percent |
d. | 15.6 percent |
e. | 16.8 percent |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployment Rate
MSC: Bloom's: Application | AACSB: Analytic
36. During a recession, people may drop out of the labor force because they are unable to find a job. All else being equal, this causes
a. | no change in the unemployment rate. |
b. | the unemployment rate to increase. |
c. | the unemployment rate to decrease. |
d. | a decrease in the working-age population. |
e. | an increase in the employment-to-population ratio. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployment Rate
MSC: Bloom's: Analysis | AACSB: Analytic
/
37. The unemployment rate, the labor force participation rate, and the employment-to-population ratio have the same measurement difficulties that the labor force does.
Moderate
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Market Indicators
MSC: Bloom's: Knowledge | AACSB: Analytic
38. There has been a significant increase in the participation of women in the labor force in the decade between 1996 and 2010.
Moderate
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Women in Labor Force; Measuring Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
39. The employment-to-population ratio in the United States has increased in the 30 years from about 57 percent in 1970 to over 60 percent in 2016.
Moderate
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Employment-to-Population Ratio
MSC: Bloom's: Knowledge | AACSB: Analytic
40. The rate of female participation in the labor force has multiplied 10-fold since the 1950s.
Basic
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Female Participation Rate
MSC: Bloom's: Knowledge
41. The employment-to-population ratio is the highest it has been in U.S. history.
Moderate
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Employment-to-Population Ratio
MSC: Bloom's: Knowledge | AACSB: Analytic
42. If the number of discouraged workers increases, the unemployment rate will decrease.
Moderate
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployment Rate
MSC: Bloom's: Analysis | AACSB: Analytic
43. If people have more children, the labor force participation rate will increase when the children enter the work force.
Challenging
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Force Participation Rate
MSC: Bloom's: Analysis | AACSB: Analytic
44. If people have more children, the unemployment rate will increase when the children enter the work force.
Moderate
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployment Rate
MSC: Bloom's: Analysis | AACSB: Analytic
Multiple Choice
45. Which of the following is the best measure of labor input?
a. | The employment-to-population ratio |
b. | The unemployment rate |
c. | The labor force participation rate |
d. | The employed labor force |
e. | Aggregate hours |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Input
MSC: Bloom's: Knowledge
46. An increase in the employment-to-population ratio would
a. | cause the labor force participation rate to increase. |
b. | cause aggregate hours to decrease. |
c. | cause aggregate hours to increase. |
d. | cause the labor force participation rate to decrease. |
e. | have no effect on aggregate hours. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Hours
MSC: Bloom's: Knowledge | AACSB: Analytic
47. Which of the following would cause aggregate hours to increase?
a. | An increase in the employment-to-population ratio |
b. | A decrease in the employment-to-population ratio |
c. | A decrease in the number of hours worked per employed worker |
d. | A decrease in the working-age population |
e. | An increase in the number of part-time workers |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Hours
MSC: Bloom's: Knowledge
48. The growth of aggregate labor hours in the United States is slowing down. What has been cited as one of the main reasons explaining this slowdown?
a. | Technological changes |
b. | A slowdown in the growth of the working-age population itself |
c. | Globalization trends |
d. | All of the above |
e. | None of the above |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Labor Hours; Measuring Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
49. If both hours worked per employee and the number of employed workers stay constant while the working-age population increases,
a. | the unemployment rate will decrease. |
b. | aggregate hours will decline. |
c. | the unemployment rate will increase. |
d. | aggregate hours will not change. |
e. | aggregate hours will increase. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Hours
MSC: Bloom's: Analysis | AACSB: Analytic
50. If the working-age population increases while the employed labor force stays constant, then aggregate hours are most likely to
a. | decline. |
b. | stay constant. |
c. | increase. |
d. e. | not enough information is given. increase then decline. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Hours
MSC: Bloom's: Analysis | AACSB: Analytic
Exhibit 20-1
Working-Age | Labor | Employed Labor | Average Annual |
Population | Force | Force | Hours per Employee |
195 million | 140 million | 130 million | 1,800 hours |
51. According to the data in Exhibit 20-1, the employment-to-population ratio is
a. | 67 percent. |
b. | 62 percent. |
c. | 72 percent. |
d. | 93 percent. |
e. | 51 percent. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Employment-to-Population Ratio
MSC: Bloom's: Application | AACSB: Analytic
52. According to the data in Exhibit 20-1, aggregate hours equal
a. | 252 billion. |
b. | 351 billion. |
c. | 234 million. |
d. | 252 million. |
e. | 234 billion. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Hours
MSC: Bloom's: Application | AACSB: Analytic
53. According to the data in Exhibit 20-1, the unemployment rate is
a. | 2.9 percent. |
b. | 33 percent. |
c. | 7.1 percent. |
d. | 3.3 percent. |
e. | 29 percent. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployment Rate
MSC: Bloom's: Application | AACSB: Analytic
54. According to the data in Exhibit 20-1, if economic conditions change such that the unemployment rate declines to 4.5 percent, what is the new value of aggregate hours?
a. | 211 billion hours per year |
b. | 205 billion hours per year |
c. | Aggregate hours will be unaffected. |
d. | 241 billion hours per year |
e. | 220 billion hours per year |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Effect of Unemployment on the Labor Input
MSC: Bloom's: Application | AACSB: Analytic
55. The growth rate of aggregate hours in the United States is
a. | slowing because the working-age population is growing more slowly. |
b. | slowing because people are working fewer hours. |
c. | slowing because the working-age population is growing more rapidly. |
d. | increasing because people are working more hours. |
e. | increasing because the working-age population is growing more rapidly. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Hours
MSC: Bloom's: Knowledge
/
56. The employed labor force is a good measure of the labor input to production.
Basic
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Input
MSC: Bloom's: Knowledge
57. The rate of growth of aggregate hours was higher in the 1970s and 1980s than it was in the 1990s.
Moderate
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Hours
MSC: Bloom's: Knowledge | AACSB: Analytic
58. If the number of people working part-time increases, aggregate hours will fall.
Moderate
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Hours
MSC: Bloom's: Analysis | AACSB: Analytic
59. The growth of aggregate labor hours in the U.S. is slowing down, increasing by less than one percent per year between 2005 and 2015.
Moderate
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Labor Hours; Measuring Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
60. The main reason for the current decline in the growth rate of aggregate hours is that the growth rate of the working-age population is declining.
Basic
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Hours
MSC: Bloom's: Knowledge
61. If the number of people working part-time increases and there is no change in the number of people employed, then aggregate hours will fall.
Moderate
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Aggregate Hours
MSC: Bloom's: Analysis | AACSB: Analytic
Multiple Choice
62. The natural unemployment rate is the unemployment rate
a. | when the economy is in a recession. |
b. | when real and potential GDP are equal. |
c. | when the economy is in a boom. |
d. | related to the business cycle. |
e. | when real and nominal GDP are equal. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment MSC: Bloom's: Knowledge | AACSB: Analytic
63. Cyclical unemployment can best be described as the
a. | increase in unemployment when the economy is in a boom. |
b. | increase in unemployment when the economy is in a recession. |
c. | amount of unemployment when real and potential GDP are equal. |
d. | increase in unemployment above the natural rate during and in the aftermath of recessions. |
e. | amount of unemployment when real and nominal GDP are equal. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Cyclical Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
64. The natural unemployment rate is caused by a combination of
a. | frictional and structural unemployment. |
b. | cyclical and real unemployment. |
c. | cyclical and natural unemployment. |
d. | real and natural unemployment. |
e. | real and nominal unemployment. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Frictional and Structural Unemployment
MSC: Bloom's: Knowledge
65. Frictional unemployment occurs because
a. | it takes time to find a job. |
b. | people have insufficient skills. |
c. | of economic booms. |
d. | of recessions. |
e. | of inflation. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Frictional Unemployment
MSC: Bloom's: Knowledge
66. Structural unemployment occurs because
a. | of inflation. |
b. | people have insufficient skills. |
c. | of recessions. |
d. | it takes time to find a job. |
e. | of economic booms. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Structural Unemployment
MSC: Bloom's: Knowledge
67. The unemployment rate in the absence of cyclical increases or decreases in the economy is known as
a. | the natural rate of unemployment. |
b. | the anticyclical employment rate. |
c. | the structural rate of unemployment. |
d. | the absence unemployment rate. |
e. | None of these |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge
68. The term natural in the phrase natural unemployment rate implies
a. | that the unemployment rate is as low as it can be when it is at the natural rate. |
b. | that unemployment is at an ideal rate when it is at the natural rate. |
c. | the unemployment rate that prevails when real GDP equals potential GDP. |
d. | that the unemployment rate is at the highest rate it can be when it is at the natural rate. |
e. | that the unemployment rate is at the rate it would be at if there were no minimum wage laws. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
69. The natural unemployment rate
a. | can be precisely estimated at any given time. |
b. | declined in the 1970s. |
c. | has declined since 2000. |
d. | has remained constant since the 1950s. |
e. | is increasing as the labor force ages. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge
70. Which of the following is not in agreement with the definition of frictional unemployment?
a. | It occurs when new workers enter the labor force and must look for work. |
b. | It can also occur in the time when workers change jobs. |
c. | It is most commonly short-lived. |
d. | It appears because of the natural friction between bosses and their employees. |
e. | All of these are part of the definition of frictional unemployment. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Frictional and Structural Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
71. The type of unemployment that occurs because technological changes make some jobs obsolete is known as
a. | structural unemployment. |
b. | cyclical unemployment. |
c. | technological unemployment. |
d. | frictional unemployment. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Frictional and Structural Unemployment
MSC: Bloom's: Knowledge
72. Which of the following might cause the natural unemployment rate to increase?
a. | Unemployment insurance being abolished |
b. | A recession in the economy |
c. | More young people entering the work force |
d. | An increase in migration to other countries |
e. | People having fewer children |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
73. Economists agree that the natural rate of unemployment increased during the 1970s. Which of the following has been attributed as a likely reason for this phenomenon?
a. | The high influx of foreign workers during that time |
b. | The dramatic changes in the economy due to the so-called "green revolution" |
c. | The influx of young baby boom workers into the labor force at that time |
d. | The Vietnam War |
e. | The increase in interest rates by the Fed |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
74. Which of the following statements about the natural rate of unemployment is ?
a. | The natural rate of unemployment declined during the 1970s. |
b. | An aging labor force causes the natural rate of unemployment to decline. |
c. | Economists are able to precisely calculate the natural rate of unemployment. |
d. | The natural rate of unemployment has remained constant over the past 30 years. |
e. | The term natural in natural rate of unemployment is meant to imply that this is the unemployment rate that the economy should always try to strive for. |
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
75. Which of the following might cause the natural unemployment rate to decrease?
a. | More young people entering the work force |
b. | An increase in unemployment insurance payments |
c. | A decrease in the number of people migrating to other countries |
d. | Less young people entering the work force |
e. | People having more children |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Analysis | AACSB: Analytic
/
76. The natural unemployment rate is another name for the average rate of unemployment in the economy.
Basic
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge
77. Cyclical unemployment refers to that kind of unemployment that is related to the short-term cyclical fluctuations of the economy.
Basic
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Cyclical Unemployment
MSC: Bloom's: Knowledge
78. Frictional unemployment is defined as the increase in the unemployment rate during a recession.
Basic
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Frictional Unemployment
MSC: Bloom's: Knowledge
79. Structural unemployment is defined as unemployment that is more long term in nature.
Basic
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Structural Unemployment
MSC: Bloom's: Knowledge
80. The natural rate of unemployment is equal to zero when the economy is at full capacity.
Moderate
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
81. The natural unemployment rate has been constant over the past 40 years.
Moderate
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
82. As the labor force ages, the natural unemployment rate is likely to increase.
Moderate
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Analysis | AACSB: Analytic
Short Answer
83. What is meant by frictional and structural unemployment?
OBJ: factual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Frictional and Structural Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
84. Why is it difficult to determine who is and who isn't in the labor force? What consequence does this have, if any, for the labor market indicators?
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Labor Force
MSC: Bloom's: Analysis | AACSB: Analytic
85. Why is there unemployment when real GDP equals potential GDP?
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
86. Use the information in the table below.
Working-Age | Employed Labor | |
Population | Labor Force | Force |
178 million | 115 million | 107 million |
(A) | What is the unemployment rate? |
(B) | What is the labor force participation rate? |
(C) | What is the employment-to-population ratio? |
(D) | What would aggregate hours equal if average hours per employee equaled 1,815 hours per year? |
(A) |
| |
(B) |
| |
(C) |
| |
(D) | Aggregate hours | = average weekly hours per employee employed labor force |
= 1,815 107 = 194.2 billion | ||
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployment Rate
MSC: Bloom's: Application | AACSB: Analytic
87. Answer the questions below:
(A) | Suppose an economy has 25,000 people who are not working but are looking and available for work, and 75,000 people who are working. What is the unemployment rate? |
(B) | Now suppose 10,000 of the people looking for work get discouraged and give up their searches. What happens to the unemployment rate? Would you interpret this as good news for the economy or bad? Explain. |
(A) | The unemployment rate is the number unemployed divided by the labor force, or 25 percent. |
(B) | The 10,000 who get discouraged are no longer in the labor force. The new labor force is 90,000. The new number of people looking for work is 15,000. The new unemployment rate is 17 percent. The unemployment rate fell. We tend to think lower unemployment is good, but in this case it is caused by the discouraged worker problem. Presumably these people would like jobs but just got tired of looking. There is no increase in the number of jobs or the income or output of the 10,000 people. This is not good news. |
OBJ: conceptual
SEC: 1. Unemployment and Other Labor Market Indicators
TOP: Unemployment
MSC: Bloom's: Analysis | AACSB: Analytic
Multiple Choice
88. People are counted as being unemployed because they are
a. | job losers, job leavers, or discouraged workers. |
b. | job leavers, discouraged workers, reentrants, or new entrants. |
c. | job losers, job leavers, reentrants, or new entrants. |
d. | job losers, reentrants, new entrants, or discouraged workers. |
e. | job losers, part-time workers, or discouraged workers. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Reasons for Being Unemployed
MSC: Bloom's: Knowledge
89. People who look for work for the first time are considered
a. | job losers. |
b. | job re-entrants. |
c. | new job entrants. |
d. | job leavers. |
e. | not in the labor force. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Reasons for Being Unemployed
MSC: Bloom's: Knowledge
90. Which of the following was the approximate unemployment rate of the United States by the end of 2016?
a. | 1 percent. |
b. | 2.3 percent |
c. | 4.7 percent. |
d. | 8.9 percent. |
e. | 24.1 percent. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Unemployment Rate
MSC: Bloom's: Knowledge
91. Most unemployment is accounted for by
a. | new entrants. |
b. | reentrants. |
c. | job leavers. |
d. | job losers. |
e. | discouraged workers. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Nature of Unemployment
MSC: Bloom's: Knowledge
92. Which of the following is not a category that was proposed in the textbook to divide the 4.5 percent of unemployed people in the American economy?
a. | Job losers |
b. | Job leavers |
c. | New entrants |
d. | All of the above are categories used to divide the unemployment rate. |
e. | None of the above are categories used to divide the unemployment rate. |
OBJ: conceptual
SEC: 2. The Nature of Unemployment
TOP: Unemployment Rate
MSC: Bloom's: Knowledge
93. Which of the following statements is ?
a. | The likelihood of losing a job declines during a boom. |
b. | Job vacancies and unemployment exist at the same time. |
c. | The only component of unemployment that is related to the business cycle is job losers. |
d. | The likelihood of losing a job increases during a recession. |
e. | People lose their jobs only during recessions. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Job Losers MSC: Bloom's: Knowledge
94. Economist Joseph Schumpeter called the process of new and better jobs replacing some existing jobs as
a. | natural market intervention. |
b. | structural market dynamism. |
c. | perfect competition. |
d. | creative destruction. |
e. | static labor market change. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Creative Destruction
MSC: Bloom's: Knowledge
95. Creative destruction occurs when
a. | more jobs are created than destroyed. |
b. | an individual loses a job. |
c. | the forces causing the destruction of certain types of jobs result in the creation of better types of jobs. |
d. | service sector jobs replace manufacturing jobs. |
e. | a job involving creativity is replaced by mass production. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Creative Destruction
MSC: Bloom's: Knowledge
96. Students entering the labor force for the first time in June each year cause
a. | no change in unemployment. |
b. | a cyclical increase in unemployment. |
c. | a cyclical decrease in unemployment. |
d. | a seasonal decrease in unemployment. |
e. | a seasonal increase in unemployment. |
OBJ: conceptual
SEC: 2. The Nature of Unemployment
TOP: Seasonal Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
/
97. A person who quits a job is not counted as unemployed.
Basic
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Reasons People Are Unemployed
MSC: Bloom's: Knowledge
98. A person who quits a job is no longer counted as part of the labor force.
Moderate
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Reasons People Are Unemployed
MSC: Bloom's: Knowledge
99. During a recession, you would expect there to be fewer job leavers.
Basic
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Job Leavers MSC: Bloom's: Knowledge
100. A small percentage of unemployment is due to job leavers.
Moderate
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Job Leavers
MSC: Bloom's: Knowledge
101. Job losers are not considered to be part of the labor force or unemployed.
Moderate
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Job losers
MSC: Bloom's: Knowledge
102. If more jobs are destroyed than created, the unemployment rate is likely to increase.
Moderate
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Job Losers
MSC: Bloom's: Analysis | AACSB: Analytic
103. On average, half of all unemployed workers are unemployed because they lost their job.
Moderate
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Job Losers
MSC: Bloom's: Knowledge | AACSB: Analytic
104. Usually on the first Friday of each month, the U.S. Department of Labor releases information about employment and unemployment in the previous month.
Basic
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Unemployment Each Month
MSC: Bloom's: Knowledge
105. The unemployment rate reported in the newspaper is usually adjusted so it doesn't include seasonal fluctuations.
Basic
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Seasonal Unemployment
MSC: Bloom's: Knowledge
Multiple Choice
106. On average, more than half of the unemployed workers stay unemployed for
a. | less than two days. |
b. | less than one week. |
c. | less than 26 weeks. |
d. | between 5 weeks and 26 weeks. |
e. | more than 26 weeks. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Unemployment Duration
MSC: Bloom's: Knowledge | AACSB: Analytic
107. On average, the percentage of unemployed workers unemployed for more than six months is approximately
a. | 50 percent. |
b. | 17 percent. |
c. | 5 percent. |
d. | 3 percent. |
e. | 35 percent. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Long-Term Unemployment
MSC: Bloom's: Knowledge
108. Suppose there are 128 million people in the labor force, and 119 million of them have jobs. How many people in the labor force are likely to be counted as long-term unemployed?
a. | 4.5 million |
b. | 1.5 million |
c. | 3.15 million |
d. | 0.45 million |
e. | 19.2 million |
OBJ: conceptual
SEC: 2. The Nature of Unemployment
TOP: Long-Term Unemployment
MSC: Bloom's: Application | AACSB: Analytic
109. Frictional unemployment best describes those unemployed
a. | more than 5 weeks but less than 6 months. |
b. | for more than 6 months. |
c. | for less than 5 weeks. |
d. | for more than 5 weeks. |
e. | for less than a week. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Frictional Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
/
110. A goal for any market economy is to eradicate very-short-term unemployment.
Moderate
OBJ: conceptual
SEC: 2. The Nature of Unemployment
TOP: Short-Term Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
111. Unemployment for more than six months is classified as long-term unemployment.
Basic
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Long-Term Unemployment
MSC: Bloom's: Knowledge
112. Long-term unemployment is not very sensitive to the business cycle.
Moderate
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Long-Term Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
Multiple Choice
113. Which of the following groups is likely to experience the highest rate of unemployment?
a. | Adult men |
b. | Adult women |
c. | White teenagers |
d. | Black teenagers |
e. | The unemployment rate is the same for all of these groups. |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Unemployment for Different Groups
MSC: Bloom's: Knowledge
114. Which of the following groups of people was least likely to be unemployed in 2016?
a. | All males |
b. | All females |
c. | All females 20 years and older |
d. | All males 20 years and older |
e. | All teens 16-19 |
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Unemployment for Different Groups
MSC: Bloom's: Knowledge
/
115. The incidence of unemployment is the same for all demographic groups.
Basic
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Unemployment for Different Groups
MSC: Bloom's: Knowledge
116. The unemployment rate among black teenagers is much greater than the overall unemployment rate.
Basic
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Unemployment for Different Groups
MSC: Bloom's: Knowledge
117. When the overall unemployment rate declines, the unemployment rate for all of the different demographic groups will tend to decline as well.
Moderate
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Unemployment for Different Groups
MSC: Bloom's: Knowledge | AACSB: Analytic
Short Answer
118. Explain why it is possible for job vacancies and unemployment to exist at the same time.
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Job Vacancies
MSC: Bloom's: Analysis | AACSB: Analytic
119. Why is there very little change in unemployment due to job leavers during a recession?
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Job Leavers
MSC: Bloom's: Knowledge | AACSB: Analytic
120. Does unemployment affect different demographic groups equally? Explain.
OBJ: factual
SEC: 2. The Nature of Unemployment
TOP: Unemployment for Different Groups
MSC: Bloom's: Knowledge | AACSB: Analytic
121. Should policymakers worry more about structural unemployment or frictional unemployment?
OBJ: conceptual
SEC: 2. The Nature of Unemployment
TOP: Nature of Unemployment
MSC: Bloom's: Evaluation | AACSB: Analytic
122. The Internet has made some types of job searches a little bit easier because a number of websites post job vacancies. How is this likely to affect frictional unemployment, structural unemployment, cyclical unemployment, and the natural unemployment rate?
OBJ: conceptual
SEC: 2. The Nature of Unemployment
TOP: Nature of Unemployment
MSC: Bloom's: Analysis | AACSB: Analytic
123. Based on the historic average, how many individuals were unemployed for more than six months?
Working-Age | Employed Labor | |
Population | Labor Force | Force |
194 million | 128 million | 119 million |
OBJ: conceptual
SEC: 2. The Nature of Unemployment
TOP: Long-Term Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
Multiple Choice
124. The relative price of labor is known as the
a. | wage. |
b. | real wage. |
c. | relative wage. |
d. | nominal wage. |
e. | equilibrium wage. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: The Real Wage
MSC: Bloom's: Knowledge
125. Greater labor force participation for households at higher real wage rates is one reason that
a. | the demand for labor curve is upward-sloping. |
b. | the supply of labor curve is downward-sloping. |
c. | the demand for labor curve is downward-sloping. |
d. | the supply of labor curve is upward-sloping. |
e. | the demand for labor curve has shifted to the right. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Labor Supply
MSC: Bloom's: Knowledge | AACSB: Analytic
126. All else being equal, suppose the nominal wage rate and the price level both fall by 10 percent. As a result,
a. | the quantity of labor demanded increases. |
b. | the quantity of labor demanded does not change because there is no change in the real wage. |
c. | people are worse off and there is more unemployment. |
d. | the quantity of labor demanded decreases. |
e. | people are better off and there is less unemployment. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Demand and Real Wage
MSC: Bloom's: Analysis | AACSB: Analytic
127. Which of the following statements is about real wages?
a. | Real wages increase as long as nominal wages decrease. |
b. | Real wages increase as long as nominal wages increase. |
c. | If prices rise faster than nominal wages, real wages will increase. |
d. | If prices rise faster than nominal wages, real wages will decrease. |
e. | Real wages increase as long as inflation increases. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Real Wage
MSC: Bloom's: Analysis | AACSB: Analytic
128. Suppose there is a decline in the price level. This means that
a. | the real wage decreases, and firms are willing to hire more people. |
b. | the real wage is unaffected by the inflation rate. |
c. | the real wage increases, and firms are willing to hire more people. |
d. | the real wage decreases, and firms are willing to hire fewer people. |
e. | the real wage increases, and firms are willing to hire fewer people. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Demand and Real Wage
MSC: Bloom's: Analysis | AACSB: Analytic
129. To calculate the relative price of labor, one needs to know
a. | only the reciprocal of the price level. |
b. | both the nominal wage and the price level. |
c. | the nominal market wage relative to wages paid elsewhere. |
d. | only the nominal market wage. |
e. | both the price of consumer goods and the price of the product being produced. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: The Real Wage
MSC: Bloom's: Knowledge
130. According to the labor supply curve, as the real wage rises,
a. | employers are willing to provide fewer jobs. |
b. | workers are willing to provide more labor. |
c. | employers are willing to provide more jobs. |
d. | workers are willing to provide less labor. |
e. | employers will not change the number of jobs they provide. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Supply
MSC: Bloom's: Knowledge
131. According to the labor demand curve, as the real wage rises,
a. | workers are willing to provide more labor. |
b. | employers are willing to provide more jobs. |
c. | workers are willing to provide less labor. |
d. | employers are willing to provide fewer jobs. |
e. | employers will not change the number of jobs they provide. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Demand
MSC: Bloom's: Knowledge
/
132. A lower real wage gives firms an incentive to hire more labor.
Basic
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Labor Demand
MSC: Bloom's: Knowledge
133. An increase in the price level has no effect on labor supply.
Moderate
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Supply
MSC: Bloom's: Analysis | AACSB: Analytic
134. According to the labor supply schedule, if the price level increases, people will be willing to work more hours because they will need to earn more money to pay for the higher-priced goods.
Moderate
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Labor Supply
MSC: Bloom's: Analysis | AACSB: Analytic
Multiple Choice
135. Since World War II, the real wage has increased while the employment-to-population ratio has increased. This is consistent with
a. | a rightward shift of the labor supply curve and a movement along the labor demand curve. |
b. | a leftward shift of the labor demand curve and a movement along the labor supply curve. |
c. | a rightward shift of the labor demand curve and a movement along the labor supply curve. |
d. | a leftward shift of the labor supply curve and a movement along the labor demand curve. |
e. | both the labor demand and the labor supply curves shifting to the left. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Explaining Long-Term Trends in Labor Input
MSC: Bloom's: Analysis | AACSB: Analytic
136. Which of the following best explains how employment can increase at the same time as the real wage is decreasing?
a. | The labor supply and demand curves both shift to the right; however, the shift in the labor demand curve is greater than the shift in the labor supply curve. |
b. | The labor supply and demand curves both shift to the left; however, the shift in the labor supply curve is greater than the shift in the labor demand curve. |
c. | A rightward shift of the labor demand curve and a movement along the labor supply curve occur. |
d. | The labor supply and demand curves both shift to the right; however, the shift in the labor supply curve is greater than the shift in the labor demand curve. |
e. | The labor supply and demand curves both shift to the left; however, the shift in the labor demand curve is greater than the shift in the labor supply curve. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Explaining Long-Term Trends in Labor Input
MSC: Bloom's: Analysis | AACSB: Analytic
137. The large increase in the percentage of women in the labor force is best described by
a. | a rightward shift of the labor supply curve. |
b. | an upward movement along the labor supply curve. |
c. | a rightward shift of the labor demand and labor supply curves. |
d. | an upward movement along the labor demand curve. |
e. | a rightward shift of the labor demand curve. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Labor Supply
MSC: Bloom's: Analysis | AACSB: Analytic
138. Ceteris paribus, a rightward shift in the labor supply curve would cause
a. | both the real wage and the amount of labor employed to decrease. |
b. | the real wage to increase and the amount of labor employed to decline. |
c. | neither the real wage nor the amount employed to change. |
d. | both the real wage and the amount employed to increase. |
e. | the real wage to decrease and the amount of labor employed to increase. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Explaining Long-Term Trends in Labor Input
MSC: Bloom's: Analysis | AACSB: Analytic
139. Ceteris paribus, a leftward shift in the labor demand curve would cause
a. | the real wage to increase and the amount of labor employed to decline. |
b. | both the real wage and the amount employed to increase. |
c. | the real wage to decrease and the amount of labor employed to increase. |
d. | both the real wage and the amount employed to decrease. |
e. | neither the real wage nor the amount employed to change. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Explaining Long-Term Trends in Labor Input
MSC: Bloom's: Application | AACSB: Analytic
140. Suppose there is a large increase in the number of workers migrating to a particular country. For that particular country, this is likely to
a. | cause a leftward shift of the labor demand curve as the supply of workers increases and firms can pay lower wages. |
b. | cause a rightward shift of the labor demand and labor supply curves as more workers are willing to work and firms can pay lower wages. |
c. | cause a rightward shift of the labor supply curve as more workers are willing to work at any given wage. |
d. | cause a rightward shift of the labor demand curve as the supply of workers increases and firms can pay lower wages. |
e. | cause an upward movement along the labor supply curve as more workers are available for work. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Supply
MSC: Bloom's: Analysis | AACSB: Analytic
141. The labor-supply-and-demand model predicts that during an economic expansion
a. | there will be an increase in the real wage and an increase in employment. |
b. | there will be a decrease in the real wage and an increase in employment. |
c. | there will be an increase in the real wage and a decrease in employment. |
d. | there will be a decrease in the real wage and a decrease in employment. |
e. | there will be no change in the real wage but employment will increase. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor-Supply-and-Demand Model
MSC: Bloom's: Analysis | AACSB: Analytic
/
142. According to the labor-supply-and-demand model if the economy enters a recession then the demand for labor shifts to the left.
Moderate
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Labor-Supply-and-Demand Model
MSC: Bloom's: Analysis | AACSB: Analytic
143. If the labor market is at the intersection of supply and demand then the unemployment rate is equal to the natural rate of unemployment.
Moderate
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Labor-Supply-and-Demand Model
MSC: Bloom's: Analysis | AACSB: Analytic
144. If more jobs are created than destroyed on average, then according to the labor-supply-and-demand model, the labor demand curve will shift to the right.
Moderate
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Explaining Employment
MSC: Bloom's: Analysis | AACSB: Analytic
145. If more jobs are created than destroyed on average, then according to the labor-supply-and-demand model, more people are employed, and the real wage will increase.
Challenging
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Explaining Employment
MSC: Bloom's: Analysis | AACSB: Analytic
Multiple Choice
146. Which of the following is not adequately explained by the labor-supply-and-demand model?
a. | The increase in the employed labor force during economic expansions |
b. | The effect of lower wages on the incentive for firms to hire more people |
c. | Why there is always some unemployment |
d. | Why real wages rise during economic expansions |
e. | The effect of higher wages on the incentive for people to work more hours |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Unemployment
MSC: Bloom's: Analysis | AACSB: Analytic
147. According to the job-rationing explanation of unemployment,
a. | the amount employed depends on the supply of labor. |
b. | the actual wage is less than the equilibrium wage. |
c. | the amount employed depends on the demand for labor. |
d. | the demand for labor is greater than the equilibrium amount. |
e. | the supply of labor is less than the demand for labor. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Job Rationing
MSC: Bloom's: Knowledge | AACSB: Analytic
148. According to the job-rationing explanation of unemployment,
a. | there is an excess supply of labor at the prevailing wage. |
b. | the prevailing wage is higher than the equilibrium wage. |
c. | the amount employed depends on the demand for labor at the prevailing wage. |
d. | All of these |
e. | None of these |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Job Rationing
MSC: Bloom's: Knowledge
149. According to the job-rationing explanation of unemployment, if there is unemployment,
a. | the number of people employed will increase to the equilibrium level. |
b. | the real wage will increase to the equilibrium level. |
c. | the real wage will not fall to the equilibrium level. |
d. | the real wage will fall to the equilibrium level. |
e. | the number of people employed will decline to the equilibrium level. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Job Rationing
MSC: Bloom's: Knowledge | AACSB: Analytic
150. A minimum wage
a. | prevents the real wage from increasing to its equilibrium amount. |
b. | prevents employment from increasing to its equilibrium level. |
c. | cannot have any effect on employment. |
d. | prevents employment from declining to its equilibrium level. |
e. | guarantees that the labor market will be at equilibrium. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Minimum Wage
MSC: Bloom's: Knowledge | AACSB: Analytic
151. If a worker is paid the efficiency wage,
a. | unemployment is equal to the natural rate. |
b. | the wage is below the equilibrium level. |
c. | there is an excess supply of labor. |
d. | the wage is equal to the equilibrium level. |
e. | there is an excess demand for labor. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Job Rationing
MSC: Bloom's: Knowledge | AACSB: Analytic
152. Why would a firm elect to pay the efficiency wage?
a. | To reduce job turnover |
b. | All of these |
c. | They are required to do so by law. |
d. | Firms have an incentive to pay the lowest wage possible. |
e. | This is the only wage people are willing to work for. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Efficiency Wage Theory
MSC: Bloom's: Knowledge
153. Suppose a labor union is able to effectively negotiate higher wages for its members and is able to prevent the firm from hiring new workers at a lower wage. The best explanation for this is
a. | the minimum-wage explanation. |
b. | the job-search explanation. |
c. | the discouraged-worker explanation. |
d. | the insider-outsider explanation. |
e. | the efficiency-wage explanation. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Insider versus Outsiders
MSC: Bloom's: Knowledge
154. The minimum-wage, insider-outsider, and the efficiency-wage explanations all seek to explain
a. | the increase in the employment-to-population ratio over the past 40 years. |
b. | the trend in real wages over the past 40 years. |
c. | why the labor market is always in a state of flux. |
d. | why the real wage is above the equilibrium real wage. |
e. | why there is a persistent excess demand for labor. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Job Rationing
MSC: Bloom's: Knowledge | AACSB: Analytic
155. Which of the following explanations argues that laws requiring that wages be kept above a given amount prevent unemployed workers from being hired?
a. | The insider-outsider explanation |
b. | The job-search explanation |
c. | The efficiency-wage explanation |
d. | The discouraged-worker explanation |
e. | The minimum-wage explanation |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Minimum Wage
MSC: Bloom's: Knowledge
156. Which of the following explanations argues that, in order to prevent shirking and lower job turnovers, the real wage will be purposely kept above the equilibrium wage resulting in unemployment?
a. | The efficiency-wage explanation |
b. | The job-search explanation |
c. | The insider-outsider explanation |
d. | The minimum-wage explanation |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Efficiency Wage
MSC: Bloom's: Knowledge
157. Which of the following explanations argues that the labor market is never in a state of rest?
a. | The stochastic-worker explanation |
b. | The job-search explanation |
c. | The minimum-wage explanation |
d. | The efficiency-wage explanation |
e. | The insider-outsider explanation |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Job Search Explanation
MSC: Bloom's: Knowledge
158. According to the job-search explanation of unemployment,
a. | the equilibrium level of unemployment is constant. |
b. | the demand for labor is fixed. |
c. | the equilibrium amount of employment constantly fluctuates. |
d. | the supply of labor is fixed. |
e. | the unemployment rate should tend toward zero. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Job Search Explanation
MSC: Bloom's: Knowledge
159. Which of the following will cause the natural unemployment rate to decline?
a. | Reducing unemployment compensation |
b. | Increasing welfare payments |
c. | Increasing the bargaining strength of labor |
d. | Increasing unemployment compensation |
e. | Increasing the minimum wage |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Unemployment Compensation
MSC: Bloom's: Knowledge
160. Which of the following will cause unemployment from job search to decline?
a. | Improving communications about the labor market |
b. | Increasing unemployment compensation |
c. | Lowering the minimum wage |
d. | Increasing the minimum wage |
e. | Increasing the bargaining strength of labor |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Job Search and Information
MSC: Bloom's: Knowledge | AACSB: Analytic
/
161. Job rationing and job search are competing explanations of why unemployment exists.
Moderate
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Why There Is Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
162. The insider-outsider explanation of job rationing is more likely to apply in firms without union representation.
Moderate
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Insider versus Outsiders
MSC: Bloom's: Analysis | AACSB: Analytic
163. In the insider-outsider theory of unemployment, those already employed can prevent firms from hiring unemployed workers willing to work at a lower wage.
Basic
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Insider versus Outsiders
MSC: Bloom's: Knowledge
164. The efficiency-wage theory best explains high teenage unemployment.
Basic
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Minimum Wage
MSC: Bloom's: Knowledge
165. There will be more job turnover and shirking if workers are paid the efficiency wage instead of the equilibrium wage.
Basic
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Efficiency Wage
MSC: Bloom's: Knowledge
166. According to the job-rationing theory of unemployment, the number of workers employed equals the amount of labor supplied by households.
Basic
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Job Rationing
MSC: Bloom's: Knowledge
167. Creative destruction results in stochastic equilibrium in the labor market.
Moderate
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Stochastic Equilibrium
MSC: Bloom's: Knowledge | AACSB: Analytic
168. In the job-search theory, people are unemployed because more jobs are destroyed than are created.
Moderate
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Job Search
MSC: Bloom's: Analysis | AACSB: Analytic
169. Lowering the minimum wage will reduce unemployment by decreasing the amount of time it takes to search for a job.
Moderate
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Job Search
MSC: Bloom's: Analysis | AACSB: Analytic
170. Lowering unemployment compensation paid to laid-off workers will reduce unemployment by decreasing the amount of time workers are permitted to search for a job.
Moderate
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Job Search
MSC: Bloom's: Analysis | AACSB: Analytic
Short Answer
171. Studies have shown that the labor supply of women is more sensitive to changes in the real wage than the labor supply of men. The figure below shows two different labor supply curves (labeled Labor supply 1 and Labor supply 2), one for women and one for men. Which of these two labor supply curves best illustrates the labor supply of women? Why?
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Female Labor Force Participation
MSC: Bloom's: Application | AACSB: Analytic
172. During the post-World War II period, both the employment-to-population ratio and real wages have been rising. Use the labor demand and supply analysis to explain how this is possible.
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Employment Trends
MSC: Bloom's: Analysis | AACSB: Analytic
173. Why does greater unemployment compensation cause higher unemployment rates?
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Unemployment Compensation
MSC: Bloom's: Analysis | AACSB: Analytic
174. What type of policies will reduce frictional unemployment due to job search?
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Job Search
MSC: Bloom's: Knowledge | AACSB: Analytic
175. Using the supply-and-demand-for-labor analysis, explain why a firm that seeks to reduce job shirking and labor turnover may end up rationing jobs and creating unemployment.
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Efficiency Wage
MSC: Bloom's: Application | AACSB: Analytic
176. Suppose that the wage is $10 per hour. At this wage, firms are willing to hire 100 million people, and 125 million people are willing to work. Identify the number of people employed and unemployed, and illustrate on a labor-supply-and-demand diagram. What would cause the wage to remain at $10?
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Supply and Demand
MSC: Bloom's: Application | AACSB: Analytic
177. Suppose the wage is $15 per hour. At this wage, firms are willing to hire 200 million people, and 220 million people are willing to work.
(A) | Identify the number of people employed and unemployed, and illustrate on a labor-supply-and-demand diagram. |
(B) | Suppose a number of people leave the labor force because of early retirement and a reduction in the number of two-career families. In this case, the number of people willing to work at each wage is reduced by 20 million people. Explain what happens to the number of people employed and the number of people unemployed. What do you think will happen to the wage? |
(A) | There are 200 million people employed because this is how many people firms want to hire at the current wage. There are 20 million people unemployed. |
| |
(B) | The number of people employed remains at 200 million because this is how many people firms want to hire, and there are 200 million people who are willing to work. There are no unemployed people. The wage is not likely to change unless there is a new minimum-wage law, firms decide to pay higher efficiency wages, or insiders negotiate higher wages. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Supply and Demand
MSC: Bloom's: Application | AACSB: Analytic
Multiple Choice
178. Which of the following is ?
a. | Unemployment rates for young people are similar in the United States and Europe. |
b. | Unemployment rates for young people have always been lower in the United States than in Europe. |
c. | Unemployment rates for young people have always been higher in the United States than in Europe. |
d. | Unemployment rates for young people have been lower in the United States than in Europe over the past 20 years. |
e. | Unemployment among young people is not a problem in Europe. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Unemployment among Young People
MSC: Bloom's: Knowledge
179. Which of the following is ?
a. | Unemployment rates for young people in the United States are sometimes higher, sometimes lower, and sometimes the same as those for older people, depending on the cyclical fluctuations in the economy. |
b. | Unemployment rates for young people in the United States are the same as those for older people. |
c. | Unemployment rates for young people in the United States are lower than those for older people. |
d. | Unemployment rates for young people in the United States are higher than those for older people. |
e. | Unemployment among young people is not a problem in the United States. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Unemployment among Young People
MSC: Bloom's: Knowledge
180. Why are unemployment rates for young people so high?
a. | Young people are more likely to be discouraged workers. |
b. | Young people change jobs more frequently. |
c. | Young people are too educated. |
d. | Young people have too much training. |
e. | Jobs that employ young people are more likely to be destroyed. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Unemployment among Young People
MSC: Bloom's: Knowledge
181. The difference in the unemployment rates among young people in different countries is due to
a. | how deep the recessions are in different countries. |
b. | how prolonged the economic expansions are in different countries. |
c. | how sensitive unemployment is to the business cycle in different countries. |
d. | differences in the natural unemployment rate. |
e. | whether the countries have market-type economies. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Differences in Unemployment among Young People in Different Countries
MSC: Bloom's: Knowledge
182. The natural unemployment rate is based on
a. | rationing and job-search explanations. |
b. | cyclical unemployment. |
c. | seasonal unemployment. |
d. | the discouraged-worker effect. |
e. | the belief that the free market works. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge
183. Higher unemployment caused by higher unemployment compensation can be explained by
a. | the insider-outsider theory. |
b. | the discouraged-worker theory. |
c. | the minimum-wage theory. |
d. | the job-search theory. |
e. | the efficiency-wage theory. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Job Search Explanation
MSC: Bloom's: Knowledge
184. Differences in unemployment rates among young people across countries reflect differences in cyclical activity.
Basic
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Unemployment among Young People
MSC: Bloom's: Knowledge
185. Which of the following statements is concerning unemployment among young people in the United States, France, and Spain?
a. | Spain has the highest level of unemployment of these three countries and the smallest percentage of young people living with their parents. |
b. | The United States has the highest level of unemployment of these three countries and the highest percentage of young people living with their parents. |
c. | The United States has the highest level of unemployment of these three countries and the smallest percentage of young people living with their parents. |
d. | Spain has the lowest level of unemployment of these three countries and the smallest percentage of young people living with their parents. |
e. | The United States has the lowest level of unemployment of these three countries and the smallest percentage of young people living with their parents. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Differences in Lifestyles
MSC: Bloom's: Knowledge
/
186. For the United States, France, and Spain there is a positive correlation between the percentage of young people living with their parents and the unemployment rate among young people.
Basic
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Differences in Lifestyles
MSC: Bloom's: Knowledge
187. Countries with a higher percentage of young adults living at home with their parents tend to have lower unemployment rates for young adults.
Basic
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Unemployment among Young People
MSC: Bloom's: Knowledge
Multiple Choice
188. According to the labor supply and demand model,
a. | higher minimum wages have no effect on unemployment for young people with low skills. |
b. | higher minimum wages will reduce unemployment among young people with low skills. |
c. | minimum wages should not differ across countries. |
d. | the higher the market wage is relative to the minimum wage, the higher the unemployment rate is among young people with low skills. |
e. | the lower the market wage is relative to the minimum wage, the higher the unemployment wage is among young people. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Differences in Minimum Wage
MSC: Bloom's: Knowledge
189. Which of the following supports the contention that the differences in the minimum wage can explain differences in unemployment rates among young people across countries?
a. | The minimum wage as a percentage of the average wage is lower in the United States than in France. |
b. | The minimum wage as a percentage of the average wage is lower in France than it is in the United States. |
c. | The minimum wage as a percentage of the average wage is lower in the United States than in Spain. |
d. | The minimum wage as a percentage of the average wage is lower in Spain than it is in the United States. |
e. | The minimum wage as a percentage of the average wage is lower in Spain than it is in the United States or France. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Differences in Minimum Wage
MSC: Bloom's: Knowledge
190. According to the textbook, Spain's low minimum wage as a percentage of the average wage
a. | is strong evidence in support of the theory that high minimum wages cause unemployment among the young to rise. |
b. | can be explained by the idea that the tradition of living at home is so strong in Spain that it offsets the effect of the low minimum wage. |
c. | shows why differences in minimum wages across countries is a valid explanation for why the unemployment rate among young people varies. |
d. | shows why lifestyle is not a valid explanation for why the unemployment rate among young people varies. |
e. | demonstrates that Spain does not have an unemployment problem among its young. |
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Differences in Minimum Wage
MSC: Bloom's: Knowledge | AACSB: Analytic
/
191. Among the United States, France, and Spain, the United States has the second lowest minimum wage (as a fraction of the average wage) and the lowest unemployment rate among young adults.
Basic
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Differences in Minimum Wage
MSC: Bloom's: Knowledge
192. Among the United States, France, and Spain, Spain has both the highest minimum wage (as a fraction of the average wage) and the highest unemployment rate among young adults.
Basic
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Differences in Minimum Wage
MSC: Bloom's: Knowledge
193. Minimum-wage laws are the only valid explanation for why so many young people are unemployed.
Basic
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Differences in Minimum Wage
MSC: Bloom's: Knowledge
Multiple Choice
194. A higher tax rate on wages
a. | shifts the labor demand curve down to the left. |
b. | shifts the labor demand curve up to the right. |
c. | does not shift the labor demand or the labor supply curve. |
d. | shifts the labor supply curve down to the right. |
e. | shifts the labor demand curve up to the right and the labor supply curve up to the left. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Differences in Taxes
MSC: Bloom's: Analysis | AACSB: Analytic
195. An increase in the tax rate on wages will likely result in
a. | both a lower equilibrium real wage and a lower equilibrium level of employment. |
b. | no changes in the equilibrium real wage and the equilibrium level of employment. |
c. | both a higher equilibrium real wage and a higher equilibrium level of employment. |
d. | a higher equilibrium real wage and a lower equilibrium level of employment. |
e. | a lower equilibrium real wage and a higher equilibrium level of employment. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Differences in Taxes
MSC: Bloom's: Analysis | AACSB: Analytic
196. Which of the following statements is ?
a. | Tax rates on labor income are higher in Spain than they are in the United States, and France. Spain's unemployment rate among young adults is the highest of these three countries. |
b. | Though the unemployment rate among young adults is higher in Spain than in France, the tax rate on wage income is higher in France than in Spain. |
c. | Though the unemployment rate among young adults is higher in France than in Spain, the tax rate on wage income is higher in Spain than in France. |
d. | Though the unemployment rate among young adults is higher in France than in the United States, the tax rate on wage income is higher in the United States than in France. |
e. | Though the unemployment rate among young adults is higher in Spain than in the United States, the tax rate on wage income is higher in the United States than in Spain. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Unemployment among Young People
MSC: Bloom's: Knowledge | AACSB: Analytic
197. Which of the following statements is ?
a. | To understand why the unemployment rate among young adults is higher in France than in Spain, some other factor such as lifestyle differences needs to be taken into consideration. |
b. | To understand why the unemployment rate among young adults is higher in Spain than in France, some other factor such as taxes on wage income needs to be taken into consideration. |
c. | To understand why the unemployment rate among young adults is higher in France than in Spain, some other factor such as taxes on wage income needs to be taken into consideration. |
d. | To understand why the unemployment rate among young adults is higher in Spain than in France, some other factor such as differences in minimum wages needs to be taken into consideration. |
e. | To understand why the unemployment rate among young adults is higher in Spain than in France, some other factor such as lifestyle differences needs to be taken into consideration. |
OBJ: conceptual
TOP: Differences in Taxes
MSC: Bloom's: Analysis | AACSB: Analytic
/
198. Higher taxes in a country will tend to reduce labor demand and increase unemployment.
Basic
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Unemployment among Young People
MSC: Bloom's: Knowledge
Multiple Choice
199. Differences in unemployment rates among young adults in the United States, France, and Spain will likely persist because
a. | the differences in unemployment rates in these countries are caused by cyclical factors. |
b. | there is no valid economic explanation for why these differences in unemployment rates persist. |
c. | the unemployment rate among young adults is not an important macroeconomic problem. |
d. | policies to alleviate this problem involve substantial costs to workers, the firms that hire them, and the politicians who would propose these policies. |
e. | high unemployment rates among young adults is socially desirable. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Unemployment among Young People
MSC: Bloom's: Analysis | AACSB: Analytic
/
200. Countries can reduce unemployment among young people without cost by reducing the minimum wage for young people or reducing unemployment compensation.
Basic
OBJ: factual
SEC: 3. Modeling the Labor Market
TOP: Unemployment among Young People
MSC: Bloom's: Knowledge
Short Answer
201. The unemployment rate for young adults is higher in France and Spain than it is in the United States. Why do economists attribute this to differences in the natural unemployment rate and not to cyclical factors?
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Differences in Unemployment among Young People in Different Countries
MSC: Bloom's: Knowledge | AACSB: Analytic
202. The unemployment rate for young adults is higher in France and Spain than it is in the United States. To what extent can these differences be explained by
(A) | the job-search approach? |
(B) | the job-rationing approach? |
(C) | the basic supply-and-demand model for the labor market? |
(A) | According to the job-search approach, the longer it takes to find a new job, the higher the unemployment rate will be. One factor that affects the length of time it takes to find a new job is the amount of unemployment benefits. The higher the unemployment benefits, the higher the unemployment rate, because job seekers can afford to spend more time searching for a new job. In part, this explains why the unemployment rates are higher in Spain and France than they are in the United Statesbenefits are more generous in Spain and France than in the United States. |
A second factor that affects the length of time it takes to find a new job is whether those who are unemployed are living with their parents. Unemployed young adults living at home do not have to pay for necessities and therefore are not compelled to take any available job. This extends the length of time it takes to make a match in the labor market. It is more acceptable for young adults to live with their parents in Spain than in the United States. This explains, in part, why the incidence of unemployment among young adults is higher in Spain and France than in the United States. | |
(B) | According to the job-rationing approach, a minimum-wage law creates unemployment by imposing a price floor. The higher rates of unemployment among young adults in France as compared to the United States are in part attributable to France having higher mandated minimum wages. |
(C) | The basic supply-and-demand model explains how higher taxes on wage income can lead to higher unemployment because higher taxes reduce the demand for labor. The tax rates on wages are higher in France, and Spain than they are in the United States. Therefore, according to the supply-and-demand model, unemployment should be lower in the United States, as is the case. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Differences in Unemployment among Young People in Different Countries
MSC: Bloom's: Knowledge | AACSB: Analytic
203. The unemployment rates for young adults are higher in France, and Spain than in the United States. Why are these differences in unemployment rates likely to persist?
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Differences in Unemployment among Young People in Different Countries
MSC: Bloom's: Knowledge | AACSB: Analytic
204. Which of the following people would be unemployed according to official statistics? Why?
(A) | A person who makes pottery for art fairs while seeking a permanent position as an art professor |
(B) | A high school teacher who takes summers off |
(C) | A person who always travels for pleasure |
(D) | A person who volunteers 20 hours per week at the local hospital |
(E) | A person who sells illegal drugs while looking for work as a construction worker |
(F) | A person who works for an accounting agency from her home |
(G) | A person who works for an accounting agency from her home and is also seeking a new job |
(H) | A wife who spends five hours per week working at her husband's business. She is not paid, and she spends the rest of her time at home |
(I) | A man who lost his job a year ago, would take a job if one became available, but hasn't looked for a job in the past three months |
(A) | Unemployed. Seeking employment. |
(B) | Employed. Will return to work. |
(C) | Out of the labor force. Not seeking employment. |
(D) | Out of the labor force. Not seeking employment. |
(E) | Unemployed. Seeking employment. |
(F) | Employed. |
(G) | Employed. |
(H) | Not in the labor force. |
(I) | Not in the labor force. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Who Is Employed
MSC: Bloom's: Analysis | AACSB: Analytic
205. The following table shows the demand and supply of skilled labor at different hourly wages.
(A) | Draw the supply and demand of labor schedules. |
(B) | What are the wage and quantity of labor at equilibrium? |
(C) | Suppose employers agree not to pay wages less than $10 per hour. What would be the new quantity of labor in the market? Who would gain and who would lose from this agreement? |
(D) | Suppose a unified group of current workers negotiates with management and reaches an agreement whereby management cannot pay any worker less than $11 per hour. What will happen to employment? Will all current workers be happy with this agreement? |
(A) | The supply and demand for labor is shown in the following diagram. |
| |
(B) | The equilibrium wage and quantity are $8 and 122 employees, respectively. |
(C) | If the wage is set at $10 per hour, 94 employees will be hired. This is illustrated in the following diagram. The jobholders (insiders) gain from this agreement. The losers are the additional 65 (150 94) individuals who would have been willing to work at the lower equilibrium wage (outsiders). |
| |
(D) | At $11 per hour, the demand for labor is only 80, so there will be a reduction in employment from the equilibrium level of 122. Forty-two people will not be happy with this new agreement. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Demand and Supply
MSC: Bloom's: Application | AACSB: Analytic
206. The government wants to reduce the unemployment rate for young people. The four programs it is considering are:
i. | Reduce the minimum wage. |
ii. | Offer firms a subsidy for every young worker hired. |
iii. | Provide subsidized housing to young people in their first year on the job. |
iv. | Stipulate that unemployment benefits will be an increasing function of the number of years a person has been working, subject to some maximum amount. |
Explain how each of these programs would affect unemployment for young people. How would you decide which one to choose?
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Unemployment Rate
MSC: Bloom's: Analysis | AACSB: Analytic
207. Suppose the government decides to set up a website to link prospective employers and employees. Employers can post jobs and employees can then send resumes.
(A) | How would this affect unemployment? |
(B) | How would this affect frictional and structural unemployment? |
(C) | How would this affect the natural unemployment rate? |
(D) | Suppose as a by-product of the service, the government is able to pool data on the skill level and experience of employees and the desired skill level and experience demanded by employers. Why would this information be valuable? How could it be used to reduce unemployment? |
(A) | Unemployment would go down if the website helped people find jobs more quickly. |
(B) | Frictional unemployment would fall. Structural unemployment would likely be unaffected. |
(C) | The natural unemployment rate would fall if frictional and/or structural unemployment fell. |
(D) | This information would help identify which skills employees were lacking. If training programs were aimed at improving these skills, structural unemployment could be reduced. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Types of Unemployment
MSC: Bloom's: Analysis | AACSB: Analytic
208. Explain why each of the following businesses would have an incentive to pay the efficiency wage.
(A) | A garden service that owns five trucks that it sends to households who purchase the service |
(B) | A fast-food restaurant |
(C) | A warehouse that uses a complicated computer system to track its inventory |
(A) | The owner of the business cannot be in five places at one time, so there may be shirking on the part of the employees. Paying a higher wage may reduce the amount of shirking. |
(B) | Fast-food restaurants may experience a lot of turnover under normal circumstances as young, unskilled workers come and go. A higher wage may reduce turnover. |
(C) | This business may have high training costs. A higher wage might reduce turnover and losses associated with having to keep training new workers. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Efficiency Wage
MSC: Bloom's: Analysis | AACSB: Analytic
209. Suppose that, in an attempt to reduce unemployment among unskilled workers and in particular young workers, the government introduces a "training" wage that is below the minimum wage and that can be used to hire new, unskilled workers. This wage would be paid for a period of up to six months, at which time the wage would have to be increased to at least the minimum level. Explain how this would reduce unemployment. Do you think unskilled workers would favor such a policy?
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Minimum Wage
MSC: Bloom's: Analysis | AACSB: Analytic
210. Name three policies a government could adopt to reduce the natural unemployment rate. Who would benefit and who would lose from each policy?
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Natural Rate of Unemployment
MSC: Bloom's: Knowledge | AACSB: Analytic
211. Suppose that, in the year 2016, the U.S. working-age population is 300 million people, the total labor force is 240 million, and the unemployment rate is 6 percent.
(A) | How many people are unemployed? |
(B) | What is the labor force participation rate in the year 2016? |
(C) | What is the employment-to-population ratio? |
(A) | The number of people unemployed is .06 240 million = 14.4 million people. |
(B) | The labor force participation rate is |
(C) | The employed labor force is (1 .06) 240 million = 225.6 million people. |
The employment-to-population ratio is |
.
.OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Market Indicators
MSC: Bloom's: Application | AACSB: Analytic
213. Answer the questions below:
(A) | Fill in the table below, which gives historical data for a particular country. | ||||||||||||||||||||
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(B) | Calculate the employment-to-population ratio for 2005. | ||||||||||||||||||||
(C) | Suppose the employment-to-population ratio for 2006 were the same as in 2005, what would total employment be in 2006, assuming the same 109.7 million for the working-age population? |
(A) |
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(B) | The employment-to-population ratio in 2005 was | ||||||||||||||||||||
(C) | In this case, the employed labor force in 2006 would have been .567 200.5 million = 113.7 million people instead of 126.7 million. This means there would have been 13 million fewer people working. |
.OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Market Indicators
MSC: Bloom's: Application | AACSB: Analytic
214. Answer the questions below:
(A) | Fill in the table below showing how many people were employed at the midpoint of each decade. | ||||||||||||||||||||
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(B) | Suppose the projection for the working-age population in the year 2025 is 153 million. If the unemployment rate and the labor force participation rate are the same in 2025 as they are in 2005, how much employment will there be? | ||||||||||||||||||||
(C) | Using the same projection of 153 million for working-age population in 2025, calculate the employment with an unemployment rate of 7.2 percent and a labor force participation rate of 60 percent. Do the same for a labor force participation rate of 70 percent. Which of these estimates do you think is more realistic? Why? |
(A) |
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(B) | The unemployment rate and the labor force participation rate were 5.6 and 67 percent, respectively, in 2005. Assuming these rates are the same in 2025 and the working-age population will be 153 million, the size of the employed labor force will be (1 .056) .67 153 = 96.8 million people. | ||||||||||||||||||||
(C) | If the labor force participation rate is 60 percent, the size of the employed labor force will equal (1 .072) .60 153 = 85.2 million people. | ||||||||||||||||||||
If the labor force participation rate is 70 percent, the size of the employed labor force will equal (1 .072) .70 153 = 99.4 million people. | |||||||||||||||||||||
It seems more realistic to assume a labor force participation rate of 70 percent instead of 60 percent. The last time the labor force participation rate equaled 60 percent was in the late 1960s. Since then, there has been a major demographic shift in the labor force, namely, the apparently permanent increases in the female participation rate. |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Market Indicators
MSC: Bloom's: Application | AACSB: Analytic
215. Various projections have been made about the size of the labor force in a country in 2025. These projections are contingent on estimates of the participation rates of various demographic groups and estimates for net immigration. Based on the scenario in the table below, calculate total employment and the employment-to-population ratio.
Year | Unemployment rate | Labor force participation rate | Working-age population (millions) | Total employment (millions) | Employment-to-population ratio |
2005 | 5.6% | 66.6% | 198.6 |
|
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2025 | 5.6% | 68.7% | 223.0 |
|
|
Year | Unemployment rate | Labor force participation rate | Working-age population (millions) | Total employment (millions) | Employment-to-population ratio |
2005 | 5.6% | 66.6% | 198.6 | 124.9 | 62.9% |
2025 | 5.6% | 68.7% | 223.0 | 144.6 | 64.9% |
OBJ: conceptual
SEC: 3. Modeling the Labor Market
TOP: Labor Market Indicators
MSC: Bloom's: Application | AACSB: Analytic