Question 1

Which of the following statements most closely describes the variation in unemployment rates across countries in Europe?

Accepted Answer

A)  Countries with higher rates of unionization tend to have higher unemployment rates, but this is partially mitigated if wage negotiations are coordinated among employers.
B)  Countries with higher rates of unionization tend to have higher unemployment rates and this tendency is exacerbated if wage negotiations are coordinated among employers.
C)  Countries with more generous unemployment insurance benefits tend to have higher unemployment rates, but this is partially mitigated if the benefits are offered for a longer period of time.
D)  Countries with more generous unemployment insurance tend to have lower unemployment rates, but this effect is completely offset if benefits are offered for a longer period of time.

Question 2

One efficiency-wage theory implies that firms pay high wages because:

Accepted Answer

A)  this practice increases the problem of moral hazard.
B)  in wealthy countries, it is important to pay workers high wages to improve their health.
C)  the more a firm pays its workers, the greater their incentive to stay with the firm.
D)  paying high wages promotes adverse selection.

Question 3

Efficiency-wage theories suggest that a firm may pay workers more than the market-clearing wage for all of the following reasons except to:

Accepted Answer

A)  reduce labor turnover.
B)  improve the quality of the firm's labor force.
C)  increase worker effort.
D)  reduce the firm's wage bill.

Question 4

Public policy to increase the job finding rate include and public policy to decrease the job separation rate include .

Accepted Answer

A)  government employment agencies; higher unemployment insurance benefits
B)  job training programs; 100 percent experience rated unemployment insurance
C)  higher minimum wage laws; payment of unemployment benefits for longer periods
D)  higher efficiency wages; partial experience rated unemployment insurance

Question 5

Paying efficiency wages helps firms reduce the problem of moral hazard by:

Accepted Answer

A)  generating additional profits that can be used to improve working conditions.
B)  keeping labor unions from organizing workers in the firm.
C)  encouraging unsupervised workers to maintain a high level of productivity.
D)  providing an incentive for the best-qualified workers to remain with the firm.

Question 6

Assume that a country experiences a reduction in productivity that lowers the marginal product of labor for any given level of labor. In this case, the:

Accepted Answer

A)  labor supply curve shifts to the right.
B)  labor supply curve shifts to the left.
C)  labor demand curve shifts upward and to the right.
D)  labor demand curve shifts downward and to the left.

Question 7

In a steady state:

Accepted Answer

A)  no hiring or firings are occurring.
B)  the number of people finding jobs equals the number of people losing jobs.
C)  the number of people finding jobs exceeds the number of people losing jobs.
D)  the number of people losing jobs exceeds the number of people finding jobs.

Question 8

Assume that a country experiences a reduction in productivity that shifts the labor demand curve downward and to the left. If the labor market were always in equilibrium, this would lead to:

Accepted Answer

A)  a lower real wage and a rise in unemployment.
B)  a lower real wage and no change in unemployment.
C)  a lower real wage and less unemployment.
D)  no change in real wage or in unemployment.

Question 9

The unemployment resulting from wage rigidity and job rationing is called unemployment.

Accepted Answer

A)  frictional
B)  structural
C)  minimum-wage
D)  insider

Question 10

According to Blanchard, Europeans are more likely to use increases in real wages resulting from technological progress to increase and Americans are more likely to use these ,
Increases in real wages to increase .

Accepted Answer

A)  hours of work; hours of leisure
B)  consumption of goods and services; hours of leisure
C)  hours of leisure; consumption of goods and services
D)  unemployment insurance benefits; efficiency wages

Question 11

Unions contribute to structural unemployment when collective bargaining results in wages:

Accepted Answer

A)  above the equilibrium level.
B)  below the minimum wage.
C)  below the equilibrium level.
D)  above the level of unemployment compensation.

Question 12

Which of the following is the best example of structural unemployment?

Accepted Answer

A)  Tim is looking for a job with flexible hours, but has not been offered one yet.
B)  Vickie lost her job as a graphic artist at a movie studio because she did not have training in computer-generated animation.
C)  Kirby is seeking a job as an airline pilot, but the high union wages in the industry have limited the number of jobs available.
D)  Fatima lost her job at packing plant, but has not looked very intensively for a new job because she still has 2 months of unemployment insurance benefits left.

Question 13

When insiders have a much greater impact on the wage bargaining process than do outsiders, the negotiated wage is likely to be the equilibrium wage.

Accepted Answer

A)  much greater than
B)  much less than
C)  almost equal to
D)  about one-half of

Question 14

According to efficiency-wage theories, firms benefit by paying higher-than-equilibrium wages because worker increases.

Accepted Answer

A)  productivity
B)  turnover
C)  unionization
D)  shirking

Question 15

All of the following are reasons for frictional unemployment except:

Accepted Answer

A)  workers have different preferences and abilities.
B)  unemployed workers accept the first job offer that they receive.
C)  the flow of information is imperfect.
D)  geographic mobility takes time.

Question 16

The earned income tax credit:

Accepted Answer

A)  increases the government's tax revenue.
B)  reduces the incomes of poor working families.
C)  does not raise labor costs.
D)  is not an alternative to raising the minimum wage.

Question 17

Short-term unemployment is most likely to be unemployment while long-term unemployment is mostly to be unemployment.

Accepted Answer

A)  structural; frictional
B)  structural; the natural rate of
C)  the natural rate of; frictional
D)  frictional; structural

Question 18

Assume that a society consists of two types of workers. For type A, 3 million workers lose their jobs each year, and each one takes a year to find a new one. For type B, 36 million workers lose their jobs each year (3 million per month), and each takes one month to find a new job. Thus, at any given time, 6 million are unemployed in this economy.
a. How many "spells" of unemployment occur each year in this economy?
b. What percentage of the "spells" are only one month long?
c. If you take all the workers unemployed each year and multiply each by the length of his or her unemployment "spell," how many "months" of unemployment would there be in this economy each year?
d. Of all the "months" of unemployment, how many are accounted for by the workers unemployed a year at a time?

Accepted Answer

a. 39 million
b. 92....

Question 19

Economists who have studied minimum-wage laws in the United States find that a 10 percent increase in the minimum wage increases teenage unemployment by about:

Accepted Answer

A)  10 to 30 percent.
B)  5 percent.
C)  1 to 3 percent.
D)  0 percent.

Question 20

European unemployment rates are positively correlated with each of the following except:

Accepted Answer

A)  the percentage of the previous wage replaced by unemployment insurance.
B)  the percentage of the labor force that is unionized.
C)  the length of the period during which unemployment benefits can be collected.
D)  the amount of coordination among employers in bargaining with unions.

Exam 6: Unemployment

European unemployment rates are positively correlated with each of the following except:

Correct Answer
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Efficiency-wage theories suggest that a firm may pay workers more than the market-clearing wage for all of the following reasons except to:

Correct Answer
verified

One efficiency-wage theory implies that firms pay high wages because:

Correct Answer
verified

Paying efficiency wages helps firms reduce the problem of moral hazard by:

Correct Answer
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The earned income tax credit:

Correct Answer
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Which of the following is the best example of structural unemployment?

Correct Answer
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Short-term unemployment is most likely to be unemployment while long-term unemployment is mostly to be unemployment.

Correct Answer
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Which of the following statements most closely describes the variation in unemployment rates across countries in Europe?

Correct Answer
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Correct Answer
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a. 39 million
b. 92....
View Answer

According to efficiency-wage theories, firms benefit by paying higher-than-equilibrium wages because worker increases.

Correct Answer
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The unemployment resulting from wage rigidity and job rationing is called unemployment.

Correct Answer
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Assume that a country experiences a reduction in productivity that lowers the marginal product of labor for any given level of labor. In this case, the:

Correct Answer
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All of the following are reasons for frictional unemployment except:

Correct Answer
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Public policy to increase the job finding rate include and public policy to decrease the job separation rate include .

Correct Answer
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Economists who have studied minimum-wage laws in the United States find that a 10 percent increase in the minimum wage increases teenage unemployment by about:

Correct Answer
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In a steady state:

Correct Answer
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Assume that a country experiences a reduction in productivity that shifts the labor demand curve downward and to the left. If the labor market were always in equilibrium, this would lead to:

Correct Answer
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When insiders have a much greater impact on the wage bargaining process than do outsiders, the negotiated wage is likely to be the equilibrium wage.

Correct Answer
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According to Blanchard, Europeans are more likely to use increases in real wages resulting from technological progress to increase and Americans are more likely to use these , Increases in real wages to increase .

Correct Answer
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Unions contribute to structural unemployment when collective bargaining results in wages:

Correct Answer
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Exam 6: Unemployment

European unemployment rates are positively correlated with each of the following except:

Correct AnswerverifiedShow Answer

Efficiency-wage theories suggest that a firm may pay workers more than the market-clearing wage for all of the following reasons except to:

Correct AnswerverifiedShow Answer

One efficiency-wage theory implies that firms pay high wages because:

Correct AnswerverifiedShow Answer

Paying efficiency wages helps firms reduce the problem of moral hazard by:

Correct AnswerverifiedShow Answer

The earned income tax credit:

Correct AnswerverifiedShow Answer

Which of the following is the best example of structural unemployment?

Correct AnswerverifiedShow Answer

Short-term unemployment is most likely to be unemployment while long-term unemployment is mostly to be unemployment.

Correct AnswerverifiedShow Answer

Which of the following statements most closely describes the variation in unemployment rates across countries in Europe?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. 39 millionb. 92....View AnswerShow Answer

According to efficiency-wage theories, firms benefit by paying higher-than-equilibrium wages because worker increases.

Correct AnswerverifiedShow Answer

The unemployment resulting from wage rigidity and job rationing is called unemployment.

Correct AnswerverifiedShow Answer

Assume that a country experiences a reduction in productivity that lowers the marginal product of labor for any given level of labor. In this case, the:

Correct AnswerverifiedShow Answer

All of the following are reasons for frictional unemployment except:

Correct AnswerverifiedShow Answer

Public policy to increase the job finding rate include and public policy to decrease the job separation rate include .

Correct AnswerverifiedShow Answer

Economists who have studied minimum-wage laws in the United States find that a 10 percent increase in the minimum wage increases teenage unemployment by about:

Correct AnswerverifiedShow Answer

In a steady state:

Correct AnswerverifiedShow Answer

Assume that a country experiences a reduction in productivity that shifts the labor demand curve downward and to the left. If the labor market were always in equilibrium, this would lead to:

Correct AnswerverifiedShow Answer

When insiders have a much greater impact on the wage bargaining process than do outsiders, the negotiated wage is likely to be the equilibrium wage.

Correct AnswerverifiedShow Answer

According to Blanchard, Europeans are more likely to use increases in real wages resulting from technological progress to increase and Americans are more likely to use these , Increases in real wages to increase .

Correct AnswerverifiedShow Answer

Unions contribute to structural unemployment when collective bargaining results in wages:

Correct AnswerverifiedShow Answer

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a. 39 million
b. 92....
View Answer

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