Question 1

It is said that some frictional unemployment is inevitable. What is the reason that some frictional unemployment is inevitable?

Accepted Answer

The demand for any good keeps on changin...

Question 2

In an economy, if 5 percent of the employed lose their job every month (s = 0.05) while 15 percent of the unemployed find a job every month (f = 0.15), what is the steady rate of unemployment of the economy?

Accepted Answer

Steady-rate of unemployment = ...

Question 3

Paying efficiency wages helps firms reduce the problem of adverse selection by:

Accepted Answer

A)   generating additional profits that can be used to pay for more proficient hiring managers.
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.E) B) and C)
F) A) and B) D

Question 4

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.E) None of the above
F) B) and D)

Question 5

If a country has a higher unionization rate, will that lead to a higher unemployment rate also?

Accepted Answer

Unions ensure that most of the employees are able to keep their jobs and get higher wages, but due to this, the number of jobs available declines as employers are reluctant to increase the number of employees, so the unemployment rate will be higher.

Question 6

Which of the following is an example of frictional unemployment?

Accepted Answer

A)   Dave searches for a new job after voluntarily moving to San Diego.
B)   Elaine is willing to work for less than the minimum wage, but employers cannot hire her.
C)   Bill is qualified and would like to be an airline pilot, but airlines do not find it profitable to hire him at the wage established by the airline pilot's union.
D)   Joan is willing to work at the going wage, but there are no jobs available.E) A) and B)
F) None of the above

Question 7

Earlier retirement in Europe than in the United States contributes to:

Accepted Answer

A)   higher employment-to-population ratios in Europe than in the United States.
B)   lower employment-to-population ratios in Europe than in the United States.
C)   more hours worked per year by the average employed person in Europe than the average employed person in the United States.
D)   fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.E) A) and D)
F) All of the above

Question 8

Differences in unemployment rates across demographic groups are most closely correlated with differences in:

Accepted Answer

A)   job-finding rates.
B)   job-separation rates.
C)   unionization rates.
D)   efficiency wage rates.E) All of the above
F) A) and C)

Question 9

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 unempl oyment would there be in this economy each year?
d. Of all the "months" of unemployment, how many are accounted for by the workers unemployed ayear at a time?

Accepted Answer

a. 39 million b. 92....

Question 10

Transitions into and out of the labor force:

Accepted Answer

A)   rarely occur.
B)   do not affect unemployment statistics.
C)   make unemployment statistics difficult to interpret.
D)   reduce the amount of frictional unemployment.E) A) and B)
F) None of the above

Question 11

If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals ______ percent (rounded to the nearest percent) .

Accepted Answer

A)   0
B)   9
C)   10
D)   20E) C) and D)
F) A) and D)

Question 12

Government policies directed at reducing frictional unemployment include:

Accepted Answer

A)   abolishing minimum-wage laws.
B)   making unemployment insurance 100 percent experience rated.
C)   increasing the earned income credit.
D)   making government part of the union-firm wage bargaining process.E) C) and D)
F) A) and D) B

Question 13

In the model of the steady-state unemployment rate with a fixed labor force, the rate of job finding equals the percentage of the ______ who find a job each month, while the rate of job separation equals the percentage of the ______ who lose their job each month.

Accepted Answer

A)   labor force; labor force
B)   labor force; unemployed
C)   employed; labor force
D)   unemployed; employedE) A) and C)
F) None of the above

Question 14

In past non-recessionary periods, a typical worker in the United States who is covered by unemployment insurance receives ______ percent of his or her former wages for ______ weeks.

Accepted Answer

A)   50; 26
B)   50; 52
C)   67; 26
D)   67; 52E) A) and B)
F) A) and C)

Question 15

Economist Robert Barro attributes the increase in the duration of unemployment to ______, while economist Paul Krugman attributes the increased duration to _____.

Accepted Answer

A)   increased immigration of low-wage workers; tax cuts given to high-wage workers
B)   contractionary monetary policy; expansionary fiscal policy
C)   high marginal tax rates on the wealthy; high marginal tax rates on low-wage workers
D)   expanded unemployment-insurance coverage; insufficient consumer demandE) All of the above
F) None of the above

Question 16

Which of the following hypotheses is consistent with fewer hours worked per year in Europe than in the United States?

Accepted Answer

A)   fewer mandated holidays in Europe than in the United States
B)   higher employment-to-population ratios in Europe than in the United States
C)   higher tax rates in Europe than in the United States
D)   a smaller underground economy in Europe than in the United StatesE) A) and C)
F) A) and B)

Question 17

The unemployment insurance system may be desirable because unemployment insurance:

Accepted Answer

A)   raises the natural rate of unemployment.
B)   reduces the rate of job finding.
C)   increases workers' uncertainty about their incomes.
D)   induces workers to reject unattractive job offers.E) B) and D)
F) A) and C)

Question 18

Changes in economic policies will frequently have an impact on the unemployment rate. Explain whether each of the policy changes described is likely to: (1) affect frictional or structural unemployment and (2) increase or decrease the measured unemployment rate. a. The government reduces the number of weeks of unemployment insurance that unemployed workers can receive.
b. The government raises the minimum wage.
c. The government increases spending on job-training programs.

Accepted Answer

a. Frictional unemployment is likely to ...

Question 19

If the rate of separation is 0.02 and the rate of job finding is 0.08 but the current unemployment rate is 0.10, then the current unemployment rate is ______ the equilibrium rate, and in the next period it will move ______ the equilibrium rate.

Accepted Answer

A)   above; toward
B)   above; away from
C)   below; toward
D)   below; away fromE) None of the above
F) A) and B)

Question 20

In the case of unions, the conflict of interest between different groups of workers results in insiders wanting ______, while outsiders want ______.

Accepted Answer

A)   more hirings; high wages
B)   high wages; more hirings
C)   high wages; fewer hirings
D)   fewer hirings; high wagesE) A) and C)
F) A) and B)

Exam 7: Unemployment and the Labor Market

It is said that some frictional unemployment is inevitable. What is the reason that some frictional unemployment is inevitable?

Correct Answer
verified
The demand for any good keeps on changin...
View Answer

In an economy, if 5 percent of the employed lose their job every month (s = 0.05) while 15 percent of the unemployed find a job every month (f = 0.15), what is the steady rate of unemployment of the economy?

Correct Answer
verified
Steady-rate of unemployment = ...
View Answer

Paying efficiency wages helps firms reduce the problem of adverse selection by:

Correct Answer
verified
D

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

If a country has a higher unionization rate, will that lead to a higher unemployment rate also?

Correct Answer
verified
Unions ensure that most of the employees are able to keep their jobs and get higher wages, but due to this, the number of jobs available declines as employers are reluctant to increase the number of employees, so the unemployment rate will be higher.

Which of the following is an example of frictional unemployment?

Correct Answer
verified

Earlier retirement in Europe than in the United States contributes to:

Correct Answer
verified

Differences in unemployment rates across demographic groups are most closely correlated with differences in:

Correct Answer
verified

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

Transitions into and out of the labor force:

Correct Answer
verified

If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals ______ percent (rounded to the nearest percent) .

Correct Answer
verified

Government policies directed at reducing frictional unemployment include:

Correct Answer
verified
B

In the model of the steady-state unemployment rate with a fixed labor force, the rate of job finding equals the percentage of the who find a job each month, while the rate of job separation equals the percentage of the who lose their job each month.

Correct Answer
verified

In past non-recessionary periods, a typical worker in the United States who is covered by unemployment insurance receives percent of his or her former wages for weeks.

Correct Answer
verified

Economist Robert Barro attributes the increase in the duration of unemployment to __, while economist Paul Krugman attributes the increased duration to _.

Correct Answer
verified

Which of the following hypotheses is consistent with fewer hours worked per year in Europe than in the United States?

Correct Answer
verified

The unemployment insurance system may be desirable because unemployment insurance:

Correct Answer
verified

Correct Answer
verified
a. Frictional unemployment is likely to ...
View Answer

If the rate of separation is 0.02 and the rate of job finding is 0.08 but the current unemployment rate is 0.10, then the current unemployment rate is the equilibrium rate, and in the next period it will move the equilibrium rate.

Correct Answer
verified

In the case of unions, the conflict of interest between different groups of workers results in insiders wanting , while outsiders want .

Correct Answer
verified

Exam 7: Unemployment and the Labor Market

It is said that some frictional unemployment is inevitable. What is the reason that some frictional unemployment is inevitable?

Correct AnswerverifiedThe demand for any good keeps on changin...View AnswerShow Answer

In an economy, if 5 percent of the employed lose their job every month (s = 0.05) while 15 percent of the unemployed find a job every month (f = 0.15), what is the steady rate of unemployment of the economy?

Correct AnswerverifiedSteady-rate of unemployment = ...View AnswerShow Answer

Paying efficiency wages helps firms reduce the problem of adverse selection by:

Correct AnswerverifiedD

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

If a country has a higher unionization rate, will that lead to a higher unemployment rate also?

Correct AnswerverifiedUnions ensure that most of the employees are able to keep their jobs and get higher wages, but due to this, the number of jobs available declines as employers are reluctant to increase the number of employees, so the unemployment rate will be higher.

Which of the following is an example of frictional unemployment?

Correct AnswerverifiedShow Answer

Earlier retirement in Europe than in the United States contributes to:

Correct AnswerverifiedShow Answer

Differences in unemployment rates across demographic groups are most closely correlated with differences in:

Correct AnswerverifiedShow Answer

Correct Answerverifieda. 39 million b. 92....View AnswerShow Answer

Transitions into and out of the labor force:

Correct AnswerverifiedShow Answer

If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals ______ percent (rounded to the nearest percent) .

Correct AnswerverifiedShow Answer

Government policies directed at reducing frictional unemployment include:

Correct AnswerverifiedB

In the model of the steady-state unemployment rate with a fixed labor force, the rate of job finding equals the percentage of the ______ who find a job each month, while the rate of job separation equals the percentage of the ______ who lose their job each month.

Correct AnswerverifiedShow Answer

In past non-recessionary periods, a typical worker in the United States who is covered by unemployment insurance receives ______ percent of his or her former wages for ______ weeks.

Correct AnswerverifiedShow Answer

Economist Robert Barro attributes the increase in the duration of unemployment to ______, while economist Paul Krugman attributes the increased duration to _____.

Correct AnswerverifiedShow Answer

Which of the following hypotheses is consistent with fewer hours worked per year in Europe than in the United States?

Correct AnswerverifiedShow Answer

The unemployment insurance system may be desirable because unemployment insurance:

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Frictional unemployment is likely to ...View AnswerShow Answer

If the rate of separation is 0.02 and the rate of job finding is 0.08 but the current unemployment rate is 0.10, then the current unemployment rate is ______ the equilibrium rate, and in the next period it will move ______ the equilibrium rate.

Correct AnswerverifiedShow Answer

In the case of unions, the conflict of interest between different groups of workers results in insiders wanting ______, while outsiders want ______.

Correct AnswerverifiedShow Answer

Correct Answer
verified
The demand for any good keeps on changin...
View Answer

Correct Answer
verified
Steady-rate of unemployment = ...
View Answer

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified
Unions ensure that most of the employees are able to keep their jobs and get higher wages, but due to this, the number of jobs available declines as employers are reluctant to increase the number of employees, so the unemployment rate will be higher.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

In the model of the steady-state unemployment rate with a fixed labor force, the rate of job finding equals the percentage of the who find a job each month, while the rate of job separation equals the percentage of the who lose their job each month.

Correct Answer
verified

In past non-recessionary periods, a typical worker in the United States who is covered by unemployment insurance receives percent of his or her former wages for weeks.

Correct Answer
verified

Economist Robert Barro attributes the increase in the duration of unemployment to __, while economist Paul Krugman attributes the increased duration to _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. Frictional unemployment is likely to ...
View Answer

If the rate of separation is 0.02 and the rate of job finding is 0.08 but the current unemployment rate is 0.10, then the current unemployment rate is the equilibrium rate, and in the next period it will move the equilibrium rate.

Correct Answer
verified

In the case of unions, the conflict of interest between different groups of workers results in insiders wanting , while outsiders want .

Correct Answer
verified