Question 1

The ________ is the number of unemployed divided by the labor force and the ________ is the labor force divided by the adult population.

Accepted Answer

A) unemployment rate; employment rate 
B) unemployment rate; employment ratio 
C) unemployment ratio; participation rate 
D) discouraged worker ratio; employment rate 
A) unemployment rate; employment rate 
B) unemployment rate; employment ratio 
C) unemployment ratio; participation rate 
D) discouraged worker ratio; employment rate C

Question 2

A person is more likely to increase labor supply in response to an increase in the real wage,the ________ is the income effect and the ________ is the substitution effect.

Accepted Answer

A) larger; larger 
B) larger; smaller 
C) smaller; larger 
D) smaller; smaller 
A) larger; larger 
B) larger; smaller 
C) smaller; larger 
D) smaller; smaller C

Question 3

The type of unemployment for which the net economic costs are most likely to be small is

Accepted Answer

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

Question 4

Cyclical unemployment arises when

Accepted Answer

A) unskilled or low-skilled workers find it difficult to obtain desirable,long-term jobs. 
B) labor must be reallocated from industries that are shrinking to areas that are growing. 
C) workers must search for suitable jobs and firms must search for suitable workers. 
D) output and employment are below full-employment levels. 
A) unskilled or low-skilled workers find it difficult to obtain desirable,long-term jobs. 
B) labor must be reallocated from industries that are shrinking to areas that are growing. 
C) workers must search for suitable jobs and firms must search for suitable workers. 
D) output and employment are below full-employment levels.

Question 5

An increase in the real wage rate will cause

Accepted Answer

A) the labor demand curve to shift to the right. 
B) the labor demand curve to shift to the left. 
C) the quantity of labor demanded to rise. 
D) a movement along the labor demand curve. 
A) the labor demand curve to shift to the right. 
B) the labor demand curve to shift to the left. 
C) the quantity of labor demanded to rise. 
D) a movement along the labor demand curve.

Question 6

A beneficial oil-price shock increases labor demand.What happens to current employment and the real wage rate?

Accepted Answer

A) Both employment and the real wage rate would increase. 
B) Both employment and the real wage rate would decrease. 
C) Employment would increase and the real wage would decrease. 
D) Employment would decrease and the real wage would increase. 
A) Both employment and the real wage rate would increase. 
B) Both employment and the real wage rate would decrease. 
C) Employment would increase and the real wage would decrease. 
D) Employment would decrease and the real wage would increase.

Question 7

Suppose the marginal product of labor in the economy is given by MPN = 200 - 0.5 N,while the supply of labor is 100 + 4w.
(a)Find the market-clearing real wage rate.
(b)What happens if the government imposes a minimum wage of 40? Is there involuntary unemployment?
(c)What happens if the government imposes a minimum wage of 60? Is there involuntary unemployment?

Accepted Answer

(a)The market-clearing real wage rate eq

Question 8

Suppose the economy's production function is Y = A   .   If K = 2000,N = 100,and A = 1,then Y = 246.If K and N both rise by 20%,and A is unchanged,by how much does Y increase?

Accepted Answer

A) 5% 
B) 10% 
C) 15% 
D) 20% 
A) 5% 
B) 10% 
C) 15% 
D) 20%

Question 9

The fact that the production function relating output to labor becomes flatter as we move from left to right means that

Accepted Answer

A) the marginal product of labor is positive. 
B) the marginal product of capital is positive. 
C) there is diminishing marginal productivity of labor. 
D) there is diminishing marginal productivity of capital. 
A) the marginal product of labor is positive. 
B) the marginal product of capital is positive. 
C) there is diminishing marginal productivity of labor. 
D) there is diminishing marginal productivity of capital.

Question 10

According to Okun's law,if output grew 1% and full-employment output rose 3%,what would be the change in the unemployment rate?

Accepted Answer

A) -2 percentage points 
B) -1 percentage point 
C) 1 percentage point 
D) 2 percentage points 
A) -2 percentage points 
B) -1 percentage point 
C) 1 percentage point 
D) 2 percentage points

Question 11

Frictional unemployment arises when

Accepted Answer

A) unskilled or low-skilled workers find it difficult to obtain desirable,long-term jobs. 
B) labor must be reallocated from industries that are shrinking to areas that are growing. 
C) workers must search for suitable jobs and firms must search for suitable workers. 
D) output and employment are below full-employment levels. 
A) unskilled or low-skilled workers find it difficult to obtain desirable,long-term jobs. 
B) labor must be reallocated from industries that are shrinking to areas that are growing. 
C) workers must search for suitable jobs and firms must search for suitable workers. 
D) output and employment are below full-employment levels.

Question 12

Full-employment output is the level of output that firms in the economy supply when

Accepted Answer

A) taxes are zero. 
B) wages and prices have fully adjusted. 
C) the unemployment rate is zero. 
D) all capital is fully utilized. 
A) taxes are zero. 
B) wages and prices have fully adjusted. 
C) the unemployment rate is zero. 
D) all capital is fully utilized.

Question 13

A winter ice storm has paralyzed the entire east coast,reducing productivity sharply.This supply shock shifts the marginal product of labor curve

Accepted Answer

A) up and to the right,raising the quantity of labor demanded at any given real wage. 
B) down and to the left,reducing the quantity of labor demanded at any given real wage. 
C) up and to the right,reducing the quantity of labor demanded at any given real wage. 
D) down and to the left,raising the quantity of labor demanded at any given real wage. 
A) up and to the right,raising the quantity of labor demanded at any given real wage. 
B) down and to the left,reducing the quantity of labor demanded at any given real wage. 
C) up and to the right,reducing the quantity of labor demanded at any given real wage. 
D) down and to the left,raising the quantity of labor demanded at any given real wage.

Question 14

Suppose that Freedonia has GDP equal to 2000 million,the capital stock is 1700 million,and the number of employees equals 70 million.The production function is Y = A     Total factor productivity of the economy is approximately equal to

Accepted Answer

A) 0)09. 
B) 2)61. 
C) 4)19. 
D) 12.87. 
A) 0)09. 
B) 2)61. 
C) 4)19. 
D) 12.87.

Question 15

The income effect of a higher real wage on the quantity of labor supply is the

Accepted Answer

A) idea that workers feel psychologically wealthier when wages are higher,so they work more. 
B) effect that income must rise when wages rise. 
C) tendency of workers to supply more labor in response to becoming wealthier. 
D) tendency of workers to supply less labor in response to becoming wealthier. 
A) idea that workers feel psychologically wealthier when wages are higher,so they work more. 
B) effect that income must rise when wages rise. 
C) tendency of workers to supply more labor in response to becoming wealthier. 
D) tendency of workers to supply less labor in response to becoming wealthier.

Question 16

An adverse oil-price shock reduces labor demand.What happens to current employment and the real wage rate?

Accepted Answer

A) Both employment and the real wage rate would increase. 
B) Both employment and the real wage rate would decrease. 
C) Employment would increase and the real wage would decrease. 
D) Employment would decrease and the real wage would increase. 
A) Both employment and the real wage rate would increase. 
B) Both employment and the real wage rate would decrease. 
C) Employment would increase and the real wage would decrease. 
D) Employment would decrease and the real wage would increase.

Question 17

In each of the following scenarios,state whether the labor supply curve would shift to the left,to the right,not shift at all,or if the shift is ambiguous because there is more than one effect and they would move the curve in opposite directions.
(a)The stock market rises sharply.
(b)Fewer teenagers work while in school than before.
(c)A large fraction of the population flees the country because of a bird flu epidemic.
(d)The expected future wage declines and the stock market crashes.
(e)The current real wage rate rises.

Accepted Answer

(a)Higher wealth shifts the labor supply

Question 18

In April 2000,the United States had a labor force of 141,230,000,employment of 135,706,000,and there were 67,986,000 people not in the labor force (all numbers rounded to the nearest 1000).
(a)Calculate the unemployment rate.
(b)Calculate the participation rate.
(c)Calculate the employment ratio.

Accepted Answer

(a)Unemployment = labor force - employme

Question 19

How many people are employed if the labor force participation rate is 60%,there are 3 million people unemployed,and there are 30 million people not in the labor force?

Accepted Answer

A) 54 million 
B) 48 million 
C) 42 million 
D) 30 million 
A) 54 million 
B) 48 million 
C) 42 million 
D) 30 million

Question 20

According to Okun's law,if output grew 7% and full-employment output rose 5%,what would be the change in the unemployment rate?

Accepted Answer

A) -4 percentage points 
B) -1 percentage point 
C) 1 percentage point 
D) 4 percentage points 
A) -4 percentage points 
B) -1 percentage point 
C) 1 percentage point 
D) 4 percentage points

The is the number of unemployed divided by the labor force and the is the labor force divided by the adult population.

A person is more likely to increase labor supply in response to an increase in the real wage,the is the income effect and the is the substitution effect.

The type of unemployment for which the net economic costs are most likely to be small is

Cyclical unemployment arises when

An increase in the real wage rate will cause

A beneficial oil-price shock increases labor demand.What happens to current employment and the real wage rate?

Suppose the economy's production function is Y = A . If K = 2000,N = 100,and A = 1,then Y = 246.If K and N both rise by 20%,and A is unchanged,by how much does Y increase?

The fact that the production function relating output to labor becomes flatter as we move from left to right means that

According to Okun's law,if output grew 1% and full-employment output rose 3%,what would be the change in the unemployment rate?

Frictional unemployment arises when

Full-employment output is the level of output that firms in the economy supply when

A winter ice storm has paralyzed the entire east coast,reducing productivity sharply.This supply shock shifts the marginal product of labor curve

Suppose that Freedonia has GDP equal to 2000 million,the capital stock is 1700 million,and the number of employees equals 70 million.The production function is Y = A Total factor productivity of the economy is approximately equal to

The income effect of a higher real wage on the quantity of labor supply is the

An adverse oil-price shock reduces labor demand.What happens to current employment and the real wage rate?

In April 2000,the United States had a labor force of 141,230,000,employment of 135,706,000,and there were 67,986,000 people not in the labor force (all numbers rounded to the nearest 1000). (a)Calculate the unemployment rate. (b)Calculate the participation rate. (c)Calculate the employment ratio.

How many people are employed if the labor force participation rate is 60%,there are 3 million people unemployed,and there are 30 million people not in the labor force?

According to Okun's law,if output grew 7% and full-employment output rose 5%,what would be the change in the unemployment rate?

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Consumption, Saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, Money, and Prices

Business Cycles

The IS-LM/AD-AS Model

Classical Business Cycle Analysis

Keynesianism: The Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates,Business Cycles,and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Exam 3: Productivity, Output, and Employment

The ________ is the number of unemployed divided by the labor force and the ________ is the labor force divided by the adult population.

A person is more likely to increase labor supply in response to an increase in the real wage,the ________ is the income effect and the ________ is the substitution effect.

The type of unemployment for which the net economic costs are most likely to be small is

Cyclical unemployment arises when

An increase in the real wage rate will cause

A beneficial oil-price shock increases labor demand.What happens to current employment and the real wage rate?

Suppose the economy's production function is Y = A . If K = 2000,N = 100,and A = 1,then Y = 246.If K and N both rise by 20%,and A is unchanged,by how much does Y increase?

The fact that the production function relating output to labor becomes flatter as we move from left to right means that

According to Okun's law,if output grew 1% and full-employment output rose 3%,what would be the change in the unemployment rate?

Frictional unemployment arises when

Full-employment output is the level of output that firms in the economy supply when

A winter ice storm has paralyzed the entire east coast,reducing productivity sharply.This supply shock shifts the marginal product of labor curve

Suppose that Freedonia has GDP equal to 2000 million,the capital stock is 1700 million,and the number of employees equals 70 million.The production function is Y = A Total factor productivity of the economy is approximately equal to

The income effect of a higher real wage on the quantity of labor supply is the

An adverse oil-price shock reduces labor demand.What happens to current employment and the real wage rate?

In April 2000,the United States had a labor force of 141,230,000,employment of 135,706,000,and there were 67,986,000 people not in the labor force (all numbers rounded to the nearest 1000). (a)Calculate the unemployment rate. (b)Calculate the participation rate. (c)Calculate the employment ratio.

How many people are employed if the labor force participation rate is 60%,there are 3 million people unemployed,and there are 30 million people not in the labor force?

According to Okun's law,if output grew 7% and full-employment output rose 5%,what would be the change in the unemployment rate?

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Consumption, Saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, Money, and Prices

Business Cycles

The IS-LM/AD-AS Model

Classical Business Cycle Analysis

Keynesianism: The Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates,Business Cycles,and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

The is the number of unemployed divided by the labor force and the is the labor force divided by the adult population.

A person is more likely to increase labor supply in response to an increase in the real wage,the is the income effect and the is the substitution effect.