Question 1

If, for any reason, the wage is held above the competitive equilibrium wage,

Accepted Answer

A)  The quantity of labour supplied will exceed the quantity of labour demanded and there will be unemployment. 
B)  Unions will likely strike and the wage will fall to equilibrium. 
C)  The quantity of labour demanded will exceed the quantity of labour supplied and there will be a labour shortage. 
D)  The quality of workers in the applicant pool will tend to fall. 
A)  The quantity of labour supplied will exceed the quantity of labour demanded and there will be unemployment. 
B)  Unions will likely strike and the wage will fall to equilibrium. 
C)  The quantity of labour demanded will exceed the quantity of labour supplied and there will be a labour shortage. 
D)  The quality of workers in the applicant pool will tend to fall. A

Question 2

The natural rate of unemployment is

Accepted Answer

A)  The normal rate of unemployment around which the actual unemployment rate fluctuates. 
B)  The cyclical unemployment rate plus the structural unemployment rate. 
C)  The same thing as the rate of structural unemployment. 
D)  Excludes frictional unemployment. 
A)  The normal rate of unemployment around which the actual unemployment rate fluctuates. 
B)  The cyclical unemployment rate plus the structural unemployment rate. 
C)  The same thing as the rate of structural unemployment. 
D)  Excludes frictional unemployment. A

Question 3

Why have labour-force participation rates for women in Europe increased while labour-force participation rates for men have decreased?

Accepted Answer

Causes of the increase in the women's labour-force participation rate over the past several decades include new technologies that have reduced the amount of time required to complete routine household tasks, improved birth control, and changing political and social attitudes. Causes of the decline in the men's labour-force participation rate over the past several decades include young men now staying in school longer than their fathers and grandfathers did, older men now retiring earlier and living longer, and more fathers now staying at home to raise their children.

Question 4

Which of the following types of unemployment will exist even if the wage is at the competitive equilibrium?

Accepted Answer

A)  Unemployment due to unions 
B)  Unemployment due to efficiency wages 
C)  Frictional unemployment 
D)  Unemployment due to minimum-wage laws 
A)  Unemployment due to unions 
B)  Unemployment due to efficiency wages 
C)  Frictional unemployment 
D)  Unemployment due to minimum-wage laws

Question 5

Table 1: Statistics from a fictional country ?

$\begin{array}{|l|c|}
\hline & \text { Numbers in millions } \
\hline \text { Total population } & 195.4 \
\hline \text { Adult population } & 139.7 \
\hline \text { Number of unemployed } & 5.7 \
\hline \text { Number of employed } & 92.3 \
\hline
\end{array}$
Refer to table 1. The unemployment rate is

Accepted Answer

A)  3.2 per cent. 
B)  5.7 per cent. 
C)  5.8 per cent. 
D)  6.2 per cent. 
E)  Not enough information is available to answer. 
A)  3.2 per cent. 
B)  5.7 per cent. 
C)  5.8 per cent. 
D)  6.2 per cent. 
E)  Not enough information is available to answer.

Question 6

If unemployment insurance were so generous that it paid laid off workers 95 per cent of their regular salary,

Accepted Answer

A)  Frictional unemployment would fall. 
B)  The official unemployment rate would probably understate true unemployment. 
C)  The official unemployment rate would probably overstate true unemployment. 
D)  There would be no impact on the official unemployment rate. 
E)  None of these answers 
A)  Frictional unemployment would fall. 
B)  The official unemployment rate would probably understate true unemployment. 
C)  The official unemployment rate would probably overstate true unemployment. 
D)  There would be no impact on the official unemployment rate. 
E)  None of these answers

Question 7

Why might a favourable change in the European economy, such as technological improvement or a decrease in the price of imported oil, be associated with an increase in frictional unemployment?

Accepted Answer

Even generally favourable changes will u

Question 8

If wages were always at the competitive equilibrium, there would be absolutely no unemployment.

Accepted Answer

A) True 
 B)False

Question 9

Paying efficiency wages tends to increase worker turnover because workers can get continually higher wages if they change employer often.

Accepted Answer

A) True 
 B)False

Question 10

A husband who chooses to stay home and take care of the household is

Accepted Answer

A)  Employed. 
B)  Not in the labour force. 
C)  A discouraged worker. 
D)  Unemployed. 
A)  Employed. 
B)  Not in the labour force. 
C)  A discouraged worker. 
D)  Unemployed.

Question 11

What is the theory of efficiency wages? Provide four reasons that employers might pay efficiency wages.

Accepted Answer

According to the theory of efficiency wa

Question 12

Table 2. The figures in the table below are taken from the statistics office in a fictional country called Exland. $\begin{array}{|l|r|}
\hline \text { Number of workers employed } & 8,400 \
\hline \text { Frictional unemployment } & 250 \
\hline \text { Structural unemployment } & 350 \
\hline \text { Cyclical unemployment } & 600 \
\hline \text { Discouraged workers } & 400 \
\hline \text { Adult population } & 12,000 \
\hline
\end{array}$
Refer to table 2. What is the unemployment rate in Exland?

Accepted Answer

A)  12.5 per cent. 
B)  15 per cent. 
C)  16 per cent. 
D)  24 per cent. 
A)  12.5 per cent. 
B)  15 per cent. 
C)  16 per cent. 
D)  24 per cent.

Question 13

The amount of unemployment that the economy normally experiences is known as

Accepted Answer

A)  The natural rate of unemployment. 
B)  Cyclical unemployment. 
C)  Efficiency wage unemployment. 
D)  Frictional unemployment. 
A)  The natural rate of unemployment. 
B)  Cyclical unemployment. 
C)  Efficiency wage unemployment. 
D)  Frictional unemployment.

Question 14

Table 1: Statistics from a fictional country ?
$\begin{array}{|l|c|}
\hline & \text { Numbers in millions } \
\hline \text { Total population } & 195.4 \
\hline \text { Adult population } & 139.7 \
\hline \text { Number of unemployed } & 5.7 \
\hline \text { Number of employed } & 92.3 \
\hline
\end{array}$

Refer to table 1. The labour force is

Accepted Answer

A)  92.3 million. 
B)  98.0 million. 
C)  134.0 million. 
D)  139.7 million. 
E)  None of these answers. 
A)  92.3 million. 
B)  98.0 million. 
C)  134.0 million. 
D)  139.7 million. 
E)  None of these answers.

Question 15

Efficiency wages are

Accepted Answer

A)  Lower than market wages paid by employers to increase profitability. 
B)  Higher than market wages paid by employers to increase productivity. 
C)  Government-determined minimum wages set to protect workers from unfair employers. 
D)  Negotiated by unions when officials are interested in trimming work forces. 
A)  Lower than market wages paid by employers to increase profitability. 
B)  Higher than market wages paid by employers to increase productivity. 
C)  Government-determined minimum wages set to protect workers from unfair employers. 
D)  Negotiated by unions when officials are interested in trimming work forces.

Question 16

A minimum wage law tends to

Accepted Answer

A)  Help all teenagers because they receive a higher wage than they would otherwise. 
B)  Have no impact on unemployment as long as it is set above the competitive equilibrium wage. 
C)  Create more unemployment in high-skill job markets than in low-skill job markets. 
D)  Create more unemployment in low-skill job markets than in high-skill job markets. 
A)  Help all teenagers because they receive a higher wage than they would otherwise. 
B)  Have no impact on unemployment as long as it is set above the competitive equilibrium wage. 
C)  Create more unemployment in high-skill job markets than in low-skill job markets. 
D)  Create more unemployment in low-skill job markets than in high-skill job markets.

Question 17

To negotiate a higher wage rate, a union cannot

Accepted Answer

A)  Start with a strike and then work to reach a contract to end the strike. 
B)  Negotiate in good faith and expect to hold its bargaining power. 
C)  Expect to maintain the same level of employment. 
D)  Offer a supply curve of labour that is horizontal. 
A)  Start with a strike and then work to reach a contract to end the strike. 
B)  Negotiate in good faith and expect to hold its bargaining power. 
C)  Expect to maintain the same level of employment. 
D)  Offer a supply curve of labour that is horizontal.

Question 18

Table 2. The figures in the table below are taken from the statistics office in a fictional country called Exland. $\begin{array}{|l|r|}
\hline \text { Number of workers employed } & 8,400 \
\hline \text { Frictional unemployment } & 250 \
\hline \text { Structural unemployment } & 350 \
\hline \text { Cyclical unemployment } & 600 \
\hline \text { Discouraged workers } & 400 \
\hline \text { Adult population } & 12,000 \
\hline
\end{array}$
Refer to table 2. How large is the labour force in Exland?

Accepted Answer

A)  7,550. 
B)  8,000. 
C)  8,400. 
D)  9,600 
A)  7,550. 
B)  8,000. 
C)  8,400. 
D)  9,600

Question 19

Table 1: Statistics from a fictional country ?

$\begin{array}{|l|c|}
\hline & \text { Numbers in millions } \
\hline \text { Total population } & 195.4 \
\hline \text { Adult population } & 139.7 \
\hline \text { Number of unemployed } & 5.7 \
\hline \text { Number of employed } & 92.3 \
\hline
\end{array}$
Refer to table 1. The labour force participation rate is

Accepted Answer

A)  47.1 per cent. 
B)  50.2 per cent. 
C)  65.9 per cent. 
D)  70.2 per cent. 
E)  None of these answers. 
A)  47.1 per cent. 
B)  50.2 per cent. 
C)  65.9 per cent. 
D)  70.2 per cent. 
E)  None of these answers.

Question 20

Markus is a low-skilled worker who washes dishes in a local restaurant. He is worried about a proposed increase in the minimum wage because price

Accepted Answer

A)  Floors tend to create shortages. 
B)  Ceilings tend to create shortages. 
C)  Floors tend to reduce quantity demanded. 
D)  Ceilings tend to reduce quantity demanded. 
A)  Floors tend to create shortages. 
B)  Ceilings tend to create shortages. 
C)  Floors tend to reduce quantity demanded. 
D)  Ceilings tend to reduce quantity demanded.

Exam 23: Unemployment

If, for any reason, the wage is held above the competitive equilibrium wage,

The natural rate of unemployment is

Why have labour-force participation rates for women in Europe increased while labour-force participation rates for men have decreased?

Which of the following types of unemployment will exist even if the wage is at the competitive equilibrium?

Table 1: Statistics from a fictional country ? Numbers in millions Total population 195.4 Adult population 139.7 Number of unemployed 5.7 Number of employed 92.3 Refer to table 1. The unemployment rate is

If unemployment insurance were so generous that it paid laid off workers 95 per cent of their regular salary,

Why might a favourable change in the European economy, such as technological improvement or a decrease in the price of imported oil, be associated with an increase in frictional unemployment?

If wages were always at the competitive equilibrium, there would be absolutely no unemployment.

Paying efficiency wages tends to increase worker turnover because workers can get continually higher wages if they change employer often.

A husband who chooses to stay home and take care of the household is

What is the theory of efficiency wages? Provide four reasons that employers might pay efficiency wages.

The amount of unemployment that the economy normally experiences is known as

Table 1: Statistics from a fictional country ? Numbers in millions Total population 195.4 Adult population 139.7 Number of unemployed 5.7 Number of employed 92.3 Refer to table 1. The labour force is

Efficiency wages are

A minimum wage law tends to

To negotiate a higher wage rate, a union cannot

Table 1: Statistics from a fictional country ? Numbers in millions Total population 195.4 Adult population 139.7 Number of unemployed 5.7 Number of employed 92.3 Refer to table 1. The labour force participation rate is

Markus is a low-skilled worker who washes dishes in a local restaurant. He is worried about a proposed increase in the minimum wage because price

What Is Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Elasticity and Its Applications

Background to Demand: Consumer Choices

Background to Supply: Firms in Competitive Markets

Consumers, Producers and the Efficiency of Markets

Supply, Demand and Government Policies

The Tax System

Public Goods, Common Resources and Merit Goods

Market Failure and Externalities

Information and Behavioural Economics

Firms Production Decisions

Market Structures I: Monopoly

Market Structures Ii: Monopolistic Competition

Market Structures Iii: Oligopoly

The Economics of Factor Markets

Income Inequality and Poverty

Interdependence and the Gains From Trade

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Basic Tools of Finance

Issues in Financial Markets

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Supply-Side Policies

Common Currency Areas and European Monetary Union

The Financial Crisis and Sovereign Debt

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