Question 1

Sally stopped looking for work six months ago, so she would not be a part of the labor force.

Accepted Answer

A) True 
 B)False

Question 2

Economists define the labor force to include

Accepted Answer

A)  only people who are working full-time. 
B)  people who are working. 
C)  people who are not working but are actively looking for a job, and people who are working. 
D)  all individuals of work age, regardless of whether they are working or looking for a job. 
A)  only people who are working full-time. 
B)  people who are working. 
C)  people who are not working but are actively looking for a job, and people who are working. 
D)  all individuals of work age, regardless of whether they are working or looking for a job.

Question 3

Lisa is currently not employed. She places a value of $12 an hour on her time in nonmarket activities. If Lisa is offered a job paying $17 an hour

Accepted Answer

A)  she should supply 0 hours in the labor market and allocate all of her time to nonmarket activities. 
B)  she should supply a positive number of hours in the labor market and allocate no time to nonmarket activities. 
C)  she should supply a positive number of hours in the labor market and to nonmarket activities. 
D)  she is indifferent between supplying hours to the labor market and using her time in nonmarket activities. 
A)  she should supply 0 hours in the labor market and allocate all of her time to nonmarket activities. 
B)  she should supply a positive number of hours in the labor market and allocate no time to nonmarket activities. 
C)  she should supply a positive number of hours in the labor market and to nonmarket activities. 
D)  she is indifferent between supplying hours to the labor market and using her time in nonmarket activities.

Question 4

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow.   Figure 28.1
-Refer to Figure 28.1. According to classical economists, if the wage rate is $15 the wage rate will ________ to eliminate the ________.

Accepted Answer

A)  decline; surplus 
B)  decline; shortage 
C)  increase; surplus 
D)  increase; shortage 
A)  decline; surplus 
B)  decline; shortage 
C)  increase; surplus 
D)  increase; shortage

Question 5

Refer to the information provided in Figure 28.4 below to answer the question(s) that follow.   Figure 28.4
-Refer to Figure 28.4. The demand for labor rises from D' to D. If firms had entered into explicit contracts with workers that set wages for 3 years, then the wage rate will ________ and employment will ________.

Accepted Answer

A)  remain at $8; rise to 400 million 
B)  remain at $10; fall to 200 million 
C)  rise to $10; remain at 200 million 
D)  rise to $10; rise to 300 million 
A)  remain at $8; rise to 400 million 
B)  remain at $10; fall to 200 million 
C)  rise to $10; remain at 200 million 
D)  rise to $10; rise to 300 million

Question 6

A decrease in the productivity of workers shifts the labor ________ curve to the ________.

Accepted Answer

A)  supply; left 
B)  supply; right 
C)  demand; right 
D)  demand; left 
A)  supply; left 
B)  supply; right 
C)  demand; right 
D)  demand; left

Question 7

Refer to the information provided in Figure 28.7 below to answer the question(s) that follow.   Figure 28.7
-Refer to Figure 28.7. If the economy is at Point A, an increase in money supply will move the economy to Point ________ in the short run.

Accepted Answer

A)  E 
B)  B 
C)  C 
D)  D 
A)  E 
B)  B 
C)  C 
D)  D

Question 8

Refer to the information provided in Figure 28.3 below to answer the question(s) that follow.   Figure 28.3
-Refer to Figure 28.3. In an attempt to increase worker productivity, this firm would pay wages ________ per hour.

Accepted Answer

A) of $10 B) > $10 C) of $8 D) < $8 A) of $10 B) > $10 C) of $8 D) < $8

Question 9

In the recession of 2008-2009, the unemployment rate rose to over 10 percent.

Accepted Answer

A) True 
 B)False

Question 10

If you hear a person saying "I lost my job at a call center because my employer has outsourced all customer service to India," you should conclude that this person is ________ unemployed.

Accepted Answer

A)  cyclically 
B)  structurally 
C)  frictionally 
D)  seasonally 
A)  cyclically 
B)  structurally 
C)  frictionally 
D)  seasonally

Question 11

A definition of unemployment that ________ economists would use is "Anyone who is willing to work at the current market wage, but has not yet been able to find employment."

Accepted Answer

A)  Marxist 
B)  Keynesian 
C)  classical 
D)  monetarist 
A)  Marxist 
B)  Keynesian 
C)  classical 
D)  monetarist

Question 12

Suppose the wage rate in the labor market is $15 and the demand for labor decreases. If wages are sticky

Accepted Answer

A)  unemployment decreases. 
B)  unemployment increases. 
C)  unemployment stays the same. 
D)  wages decrease to eliminate the surplus. 
A)  unemployment decreases. 
B)  unemployment increases. 
C)  unemployment stays the same. 
D)  wages decrease to eliminate the surplus.

Question 13

Employment contracts that stipulate workers' wages, usually for a period of 1 to 3 years, are known as

Accepted Answer

A)  social contracts. 
B)  implicit contracts. 
C)  explicit contracts. 
D)  none of the above. 
A)  social contracts. 
B)  implicit contracts. 
C)  explicit contracts. 
D)  none of the above.

Question 14

According to ________ economists, the only types of unemployment that exist in an economy are structural and frictional unemployment.

Accepted Answer

A)  classical 
B)  Keynesian 
C)  monetarist 
D)  Marxist 
A)  classical 
B)  Keynesian 
C)  monetarist 
D)  Marxist

Question 15

The unemployment rate and the level of aggregate output are negatively related.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the information provided in Figure 28.7 below to answer the question(s) that follow.   Figure 28.7
-Refer to Figure 28.7. An expansionary fiscal policy followed by a leftward shift in the AS curve could move the economy from Point A to Point ________, and then to Point ________.

Accepted Answer

A)  D; C 
B)  B; E 
C)  C; D 
D)  E; B 
A)  D; C 
B)  B; E 
C)  C; D 
D)  E; B

Question 17

If the wage rate in the labor market is $12 and more previously unemployed people exited the labor force, which of the following statements is correct?

Accepted Answer

A)  If wages are flexible, then wages will decrease. 
B)  If wages are sticky, the unemployment rate decreases. 
C)  If wages are sticky, the unemployment rate stays the same. 
D)  If wages are flexible, the unemployment rate increases. 
A)  If wages are flexible, then wages will decrease. 
B)  If wages are sticky, the unemployment rate decreases. 
C)  If wages are sticky, the unemployment rate stays the same. 
D)  If wages are flexible, the unemployment rate increases.

Question 18

Refer to the information provided in Figure 28.3 below to answer the question(s) that follow.   Figure 28.3
-Refer to Figure 28.3. A minimum wage of $8

Accepted Answer

A)  will lead to an excess demand for labor of 20. 
B)  will lead to an excess demand for labor of 40. 
C)  will lead to an excess demand for labor of 60. 
D)  will have no effect because the minimum wage is set below the equilibrium wage and for a minimum wage to have any effect on the labor market it must be above the equilibrium wage. 
A)  will lead to an excess demand for labor of 20. 
B)  will lead to an excess demand for labor of 40. 
C)  will lead to an excess demand for labor of 60. 
D)  will have no effect because the minimum wage is set below the equilibrium wage and for a minimum wage to have any effect on the labor market it must be above the equilibrium wage.

Question 19

Economists who argue that the AS curve is vertical in the long run at potential output also argue that in the long run, the ________ is vertical at the natural rate of unemployment.

Accepted Answer

A)  Phillips curve 
B)  aggregate demand curve 
C)  aggregate expenditures curve 
D)  production possibility curve 
A)  Phillips curve 
B)  aggregate demand curve 
C)  aggregate expenditures curve 
D)  production possibility curve

Question 20

The Phillips curve depicts the relationship between

Accepted Answer

A)  output and the price level. 
B)  aggregate demand and aggregate expenditures. 
C)  inflation and unemployment. 
D)  money supply and interest rates. 
A)  output and the price level. 
B)  aggregate demand and aggregate expenditures. 
C)  inflation and unemployment. 
D)  money supply and interest rates.

Exam 28: The Labor Market in the Macroeconomy

Sally stopped looking for work six months ago, so she would not be a part of the labor force.

Economists define the labor force to include

Lisa is currently not employed. She places a value of $12 an hour on her time in nonmarket activities. If Lisa is offered a job paying $17 an hour

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. According to classical economists, if the wage rate is $15 the wage rate will ________ to eliminate the ________.

A decrease in the productivity of workers shifts the labor ________ curve to the ________.

Refer to the information provided in Figure 28.7 below to answer the question(s) that follow. Figure 28.7 -Refer to Figure 28.7. If the economy is at Point A, an increase in money supply will move the economy to Point ________ in the short run.

Refer to the information provided in Figure 28.3 below to answer the question(s) that follow. Figure 28.3 -Refer to Figure 28.3. In an attempt to increase worker productivity, this firm would pay wages ________ per hour.

In the recession of 2008-2009, the unemployment rate rose to over 10 percent.

If you hear a person saying "I lost my job at a call center because my employer has outsourced all customer service to India," you should conclude that this person is ________ unemployed.

A definition of unemployment that ________ economists would use is "Anyone who is willing to work at the current market wage, but has not yet been able to find employment."

Suppose the wage rate in the labor market is $15 and the demand for labor decreases. If wages are sticky

Employment contracts that stipulate workers' wages, usually for a period of 1 to 3 years, are known as

According to ________ economists, the only types of unemployment that exist in an economy are structural and frictional unemployment.

The unemployment rate and the level of aggregate output are negatively related.

Refer to the information provided in Figure 28.7 below to answer the question(s) that follow. Figure 28.7 -Refer to Figure 28.7. An expansionary fiscal policy followed by a leftward shift in the AS curve could move the economy from Point A to Point ________, and then to Point ________.

If the wage rate in the labor market is $12 and more previously unemployed people exited the labor force, which of the following statements is correct?

Refer to the information provided in Figure 28.3 below to answer the question(s) that follow. Figure 28.3 -Refer to Figure 28.3. A minimum wage of $8

Economists who argue that the AS curve is vertical in the long run at potential output also argue that in the long run, the ________ is vertical at the natural rate of unemployment.

The Phillips curve depicts the relationship between

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: The Labor and Land Markets

Input Demand: The Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: The Economics of Taxation

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Refer to the information provided in Figure 28.1 below to answer the question(s) that follow. Figure 28.1 -Refer to Figure 28.1. According to classical economists, if the wage rate is $15 the wage rate will to eliminate the .

A decrease in the productivity of workers shifts the labor curve to the .

Refer to the information provided in Figure 28.7 below to answer the question(s) that follow. Figure 28.7 -Refer to Figure 28.7. An expansionary fiscal policy followed by a leftward shift in the AS curve could move the economy from Point A to Point , and then to Point .