Exam 7: Economic Growth I: Capital Accumulation and Population Growth

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?

As the relative demand for unskilled workers falls, wages for unskilled workers and unemployment compensation becomes a attractive option.

Much of the difference in unemployment rates across Europe is attributable to differences in:

Workers unemployed as a result of wage rigidity are:

Wage rigidity:

Assume that the real wage in an economy is held above equilibrium. a. Graphically illustrate how an increase in the supply of labor will change the number of unemployed workers. Be sure to label the axes and the quantities of labor hired before and after the technological progress. b. Explain in words what happens to the number of unemployed as a result of this change.

Economists call the changes in the composition of demand among industries and regions:

Data on unemployment in the United States show that:

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.

Policies to substantially reduce the natural rate of unemployment should be targeted at:

When the real wage is above the level that equilibrates supply and demand:

A spell of unemployment begins when a person leaves his or her job or:

The minimum wage:

Transitions into and out of the labor force:

According to studies of individual unemployed workers, these workers are most likely to find a job:

The natural rate of unemployment in the United States since 1950 has averaged between and percent.

The percentage of workers who belong to unions in the United States is approximately:

Consider two countries: Flexiland and Stuckland. The labor force in each country consists of 100,000 workers. In Flexiland a different 500 workers are unemployed each month. In Stuckland the same 500 workers are unemployed for the entire year. Compare and contrast the unemployment situation in the two countries by explaining: a. the unemployment rate, b. the number of spells of unemployment, c. the average duration of each unemployment spell, and d. whether the unemployment is more likely to be frictional or structural.

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

Explain how paying efficiency wages can help employers overcome both moral hazard and adverse selection problems in employment.