Question 1

The type of unemployment that is due to changes in the structure of the economy is

Accepted Answer

A)  adjustable unemployment. 
B)  structural unemployment. 
C)  frictional unemployment. 
D)  cyclical unemployment. 
A)  adjustable unemployment. 
B)  structural unemployment. 
C)  frictional unemployment. 
D)  cyclical unemployment.

Question 2

If inflationary expectations decrease, the Phillips curve will

Accepted Answer

A)  shift to the right. 
B)  shift to the left. 
C)  become vertical. 
D)  become upward sloping. 
A)  shift to the right. 
B)  shift to the left. 
C)  become vertical. 
D)  become upward sloping.

Question 3

Employment tends to fall when aggregate output falls.

Accepted Answer

A) True 
 B)False

Question 4

Refer to the information provided in Figure 28.6 below to answer the question(s) that follow.   Figure 28.6
-Refer to Figure 28.6. Which panel represents the short-run Phillips curve?

Accepted Answer

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

Question 5

The shape of the short run aggregate supply curve is impacted by changes in the

Accepted Answer

A)  money market. 
B)  labor market. 
C)  goods market. 
D)  financial market. 
A)  money market. 
B)  labor market. 
C)  goods market. 
D)  financial market.

Question 6

If the economy is at potential output, actual inflation

Accepted Answer

A)  is greater than expected inflation. 
B)  equals expected inflation. 
C)  is less than expected inflation. 
D)  equals the natural rate of unemployment. 
A)  is greater than expected inflation. 
B)  equals expected inflation. 
C)  is less than expected inflation. 
D)  equals the natural rate of unemployment.

Question 7

Suppose the wage rate in the labor market is $8 and more people entered the labor force, which of the following statements is correct?

Accepted Answer

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

Question 8

The unemployment rate will never be zero because the economy is dynamic and always changing.

Accepted Answer

A) True 
 B)False

Question 9

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. Suppose there is a decrease in the fertility rate and this causes some men and women to place a lower value on their time spent in nonmarket activities. This will cause

Accepted Answer

A)  the labor supply curve to shift to the left of S. 
B)  the labor supply curve to shift to the right of S. 
C)  the labor demand curve to shift from D to D'. 
D)  the labor demand curve to shift from D' to D. 
A)  the labor supply curve to shift to the left of S. 
B)  the labor supply curve to shift to the right of S. 
C)  the labor demand curve to shift from D to D'. 
D)  the labor demand curve to shift from D' to D.

Question 10

Cyclical unemployment

Accepted Answer

A)  arises from recessions. 
B)  is due to changes in the structure of the economy. 
C)  arises from the time it takes employers to find appropriate employees. 
D)  is due to seasonal changes. 
A)  arises from recessions. 
B)  is due to changes in the structure of the economy. 
C)  arises from the time it takes employers to find appropriate employees. 
D)  is due to seasonal changes.

Question 11

Structural unemployment

Accepted Answer

A)  arises from recessions. 
B)  is due to changes in the structure of the economy. 
C)  arises from the time it takes employers to find appropriate employees. 
D)  is due to seasonal changes. 
A)  arises from recessions. 
B)  is due to changes in the structure of the economy. 
C)  arises from the time it takes employers to find appropriate employees. 
D)  is due to seasonal changes.

Question 12

Which of the following is not a reason why firms pay efficiency wages?

Accepted Answer

A)  to reduce turnovers 
B)  to abide by minimum wage laws 
C)  to improve morale 
D)  to reduce shirking of work 
A)  to reduce turnovers 
B)  to abide by minimum wage laws 
C)  to improve morale 
D)  to reduce shirking of work

Question 13

Refer to the information provided in Figure 28.8 below to answer the question(s) that follow.   Figure 28.8
-Refer to Figure 28.8. Along SRPC1, expected inflation equals

Accepted Answer

A)  6%. 
B)  5%. 
C)  4%. 
D)  cannot be determined from the figure. 
A)  6%. 
B)  5%. 
C)  4%. 
D)  cannot be determined from the figure.

Question 14

When ________, the price level falls, inventories increase and firms respond by reducing output and employment.

Accepted Answer

A)  aggregate demand increases 
B)  aggregate demand decreases 
C)  aggregate supply decreases 
D)  aggregate supply increases 
A)  aggregate demand increases 
B)  aggregate demand decreases 
C)  aggregate supply decreases 
D)  aggregate supply increases

Question 15

The ________ explanation for the existence of downwardly sticky wages emphasizes the contention that workers in one industry may be unwilling to accept a wage cut, unless they know that workers in other firms and industries are receiving similar cuts.

Accepted Answer

A)  nominal-wage 
B)  minimum-wage 
C)  living-wage 
D)  relative-wage 
A)  nominal-wage 
B)  minimum-wage 
C)  living-wage 
D)  relative-wage

Question 16

The theory which holds that productivity of workers increases with the wage rate is the

Accepted Answer

A)  nominal wage theory. 
B)  living wage theory. 
C)  minimum wage theory. 
D)  efficiency wage theory. 
A)  nominal wage theory. 
B)  living wage theory. 
C)  minimum wage theory. 
D)  efficiency wage theory.

Question 17

Refer to the information provided in Figure 28.8 below to answer the question(s) that follow.   Figure 28.8
-Refer to Figure 28.8. Along SRPC3, expected inflation equals

Accepted Answer

A)  4%. 
B)  5%. 
C)  6%. 
D)  cannot be determined from the figure. 
A)  4%. 
B)  5%. 
C)  6%. 
D)  cannot be determined from the figure.

Question 18

According to classical economists, excessive unemployment does not persist in the economy because

Accepted Answer

A)  wages will always adjust to ensure equilibrium in the labor market. 
B)  the labor demand does not change in the economy. 
C)  the labor supply does not change in the economy. 
D)  interest rates always change to insure equilibrium in the money market. 
A)  wages will always adjust to ensure equilibrium in the labor market. 
B)  the labor demand does not change in the economy. 
C)  the labor supply does not change in the economy. 
D)  interest rates always change to insure equilibrium in the money market.

Question 19

Someone who has decided that her time is more valuable in nonmarket activities than it is when spent working is considered unemployed.

Accepted Answer

A) True 
 B)False

Question 20

If aggregate demand changes while aggregate supply is stable, output and the unemployment rate are

Accepted Answer

A)  positively related. 
B)  not related in the short run. 
C)  not related neither in the long run nor in the short run. 
D)  negatively related. 
A)  positively related. 
B)  not related in the short run. 
C)  not related neither in the long run nor in the short run. 
D)  negatively related.

Exam 28: The Labor Market in the Macroeconomy

The type of unemployment that is due to changes in the structure of the economy is

If inflationary expectations decrease, the Phillips curve will

Employment tends to fall when aggregate output falls.

Refer to the information provided in Figure 28.6 below to answer the question(s) that follow. Figure 28.6 -Refer to Figure 28.6. Which panel represents the short-run Phillips curve?

The shape of the short run aggregate supply curve is impacted by changes in the

If the economy is at potential output, actual inflation

Suppose the wage rate in the labor market is $8 and more people entered the labor force, which of the following statements is correct?

The unemployment rate will never be zero because the economy is dynamic and always changing.

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. Suppose there is a decrease in the fertility rate and this causes some men and women to place a lower value on their time spent in nonmarket activities. This will cause

Cyclical unemployment

Structural unemployment

Which of the following is not a reason why firms pay efficiency wages?

Refer to the information provided in Figure 28.8 below to answer the question(s) that follow. Figure 28.8 -Refer to Figure 28.8. Along SRPC1, expected inflation equals

When ________, the price level falls, inventories increase and firms respond by reducing output and employment.

The ________ explanation for the existence of downwardly sticky wages emphasizes the contention that workers in one industry may be unwilling to accept a wage cut, unless they know that workers in other firms and industries are receiving similar cuts.

The theory which holds that productivity of workers increases with the wage rate is the

Refer to the information provided in Figure 28.8 below to answer the question(s) that follow. Figure 28.8 -Refer to Figure 28.8. Along SRPC3, expected inflation equals

According to classical economists, excessive unemployment does not persist in the economy because

Someone who has decided that her time is more valuable in nonmarket activities than it is when spent working is considered unemployed.

If aggregate demand changes while aggregate supply is stable, output and the unemployment rate are

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 28.8 below to answer the question(s) that follow. Figure 28.8 -Refer to Figure 28.8. Along SRPC₁, expected inflation equals

Refer to the information provided in Figure 28.8 below to answer the question(s) that follow. Figure 28.8 -Refer to Figure 28.8. Along SRPC₃, expected inflation equals