Question 1

We don't typically see wages __________ in response to an economic downturn because ____________.

Accepted Answer

A)   rise; they are "sticky," and are slow to respond to shifts in the economy
B)   rise; they cannot rise above the equilibrium in any circumstance
C)   fall; they are "sticky" and are slow to respond to shifts in the economy
D)   fall; they cannot fall below where they were previously set due to inflationE) A) and B)
F) A) and D)

Question 2

We may note that unemployment:

Accepted Answer

A)   exists at any time during the business cycle.
B)   only occurs during times of recession.
C)   is highest during times of economic booms.
D)   tends to increase during times of economic recovery.E) None of the above
F) B) and C)

Question 3

With what measure does cyclical unemployment tend to move?

Accepted Answer

A)   Per capita GDP growth rate
B)   Nominal GDP
C)   Inflation
D)   GDP deflatorE) B) and D)
F) C) and D)

Question 4

When the economy swings back toward the boom part of a business cycle which of the following will generally not occur?

Accepted Answer

A)   Labor demand will increase.
B)   Cyclical unemployment will decrease.
C)   Actual wages will approach the market-clearing level.
D)   Labor supply will decrease.E) A) and C)
F) B) and D)

Question 5

The equilibrium price of labor is called:

Accepted Answer

A)   the wage.
B)   income, plus benefits.
C)   opportunity cost.
D)   the leisure trade-off.E) A) and B)
F) B) and D)

Question 6

Those who oppose minimum wage legislation argue that:

Accepted Answer

A)   setting a wage above the market-clearing equilibrium creates unemployment.
B)   it should be set below the market-clearing equilibrium.
C)   workers deserve a basic standard of living.
D)   the way to get an efficient labor market is for government intervention.E) B) and D)
F) B) and C)

Question 7

There is evidence that the presence of unions in a labor market:

Accepted Answer

A)   can push wages up for non-union wage earners in the same market.
B)   can keep wages low for non-union wage earners in the same market.
C)   has no effect on the wages of non-union wage earners in the same market.
D)   has an identical effect on the wages of union and non-union wage earners in the same market.E) B) and C)
F) A) and C)

Question 8

Supporters of minimum-wage legislation argue that:

Accepted Answer

A)   workers deserve a basic standard of living.
B)   it should be set below the market equilibrium wage.
C)   some workers will become unemployed as a result of the minimum wage.
D)   All of these are true.E) All of the above
F) B) and C)

Question 9

The government office in charge of collecting official employment statistics is the:

Accepted Answer

A)   Bureau of Labor Statistics.
B)   Bureau of Economic Analysis.
C)   Bureau of Industry and Security.
D)   Bureau of the Census.E) None of the above
F) A) and D)

Question 10

The unemployment rate tells us:

Accepted Answer

A)   what percentage of the labor force want to work and can't find a job.
B)   who is being affected by the fluctuations of the economy.
C)   how to solve the problem of unemployment.
D)   what portion of the population is causing the economy to languish.E) A) and C)
F) A) and B)

Question 11

The number of U.S. workers in unions today is:

Accepted Answer

A)   higher than it was in the 1950s.
B)   about 21 %of all wage and salary workers.
C)   just under 15 million Americans.
D)   All of these are true.E) B) and D)
F) None of the above

Question 12

Efficiency wages are:

Accepted Answer

A)   wages deliberately set above the market rate in order to increase productivity.
B)   not a cause of unemployment.
C)   generally a disincentive for an employee to work hard to try to keep their job.
D)   All of these are true.E) A) and D)
F) A) and C)

Question 13

We don't typically see wages __________ in response to an economic upswing because ____________.

Accepted Answer

A)   rise; they are "sticky," and are slow to respond to shifts in the economy
B)   rise; they cannot rise above the equilibrium in any circumstance
C)   fall; they are "sticky," and are slow to respond to shifts in the economy
D)   fall; they cannot fall below where they were previously set due to inflationE) B) and D)
F) B) and C)

Question 14

The labor demand curve:

Accepted Answer

A)   is provided by firms who want to hire workers at each given wage.
B)   is made up of workers who want to work for firms at each given wage.
C)   shows number of workers who are willing and able to work at higher wages.
D)   shows that the number of people who want to work increases as the wage increases.E) A) and D)
F) All of the above

Question 15

Don worked as a machinist all his life, and was recently laid off because his plant closed and the jobs were outsourced to India. There don't seem to be any machinist jobs in the area anymore. Don would be considered:

Accepted Answer

A)   frictionally unemployed.
B)   structurally unemployed.
C)   real-wage unemployed.
D)   Don is a discouraged worker.E) A) and D)
F) A) and C)

Question 16

An economic slow-down would cause the labor:

Accepted Answer

A)   demand curve to shift left.
B)   demand curve to shift right.
C)   supply curve to shift left.
D)   supply curve to shift right.E) All of the above
F) None of the above

Question 17

If you hear that unemployment decreased by 2 percentage points to 6 %in the past year, while the labor force participation rate remained constant, it means:

Accepted Answer

A)   on a net basis, 2 out of every 10 people lost their job in the last year.
B)   on a net basis, 20 out of every 1,000 unemployed persons found a job in the last year.
C)   on a net basis, 2 out of every 100 people lost their job in the past year.
D)   on a net basis, 4 out of every 100 unemployed persons found a job in the last year.E) B) and D)
F) A) and B)

Question 18

During periods of recession unemployment:

Accepted Answer

A)   is more common.
B)   is less common.
C)   is uncorrelated to periods of recession.
D)   rates are the same for all groups of the working population.E) B) and D)
F) C) and D)

Question 19

The trade-offs in the effect of unemployment insurance are:

Accepted Answer

A)   it prolongs the job search, but reduces the number of job searches a person has to make.
B)   it shortens the job search, but lengthens the number of times a person will switch careers.
C)   it is free money and makes people lazy, but without it people would starve.
D)   it reduces incentive to accept a job, but reduces the number of job offers typically made.E) C) and D)
F) A) and B)

Question 20

Unemployment insurance:

Accepted Answer

A)   is offered in all countries.
B)   varies widely across countries.
C)   is most generous in the United States.
D)   has a set minimum in the United States, with some states being more generous.E) A) and C)
F) B) and D)

Exam 9: Unemployment and the Labor Market

The labor demand curve:

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We don't typically see wages __________ in response to an economic downturn because ____________.

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Those who oppose minimum wage legislation argue that:

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Efficiency wages are:

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There is evidence that the presence of unions in a labor market:

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We may note that unemployment:

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When the economy swings back toward the boom part of a business cycle which of the following will generally not occur?

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The number of U.S. workers in unions today is:

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Don worked as a machinist all his life, and was recently laid off because his plant closed and the jobs were outsourced to India. There don't seem to be any machinist jobs in the area anymore. Don would be considered:

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During periods of recession unemployment:

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With what measure does cyclical unemployment tend to move?

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Supporters of minimum-wage legislation argue that:

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The unemployment rate tells us:

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The trade-offs in the effect of unemployment insurance are:

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The equilibrium price of labor is called:

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The government office in charge of collecting official employment statistics is the:

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An economic slow-down would cause the labor:

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Unemployment insurance:

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If you hear that unemployment decreased by 2 percentage points to 6 %in the past year, while the labor force participation rate remained constant, it means:

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We don't typically see wages __________ in response to an economic upswing because ____________.

Correct AnswerverifiedShow Answer

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We don't typically see wages in response to an economic downturn because __.

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We don't typically see wages in response to an economic upswing because __.

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