Question 1

According to the Current Population Survey,which of the following is the best example of an unemployed person?

Accepted Answer

A) Any person not working or not working as many hours as he or she would prefer 
B) Any person without a job while looking for work 
C) A person without a job 
D) Any person looking for work 
E) A person who decides to leave the labor force 
A) Any person not working or not working as many hours as he or she would prefer 
B) Any person without a job while looking for work 
C) A person without a job 
D) Any person looking for work 
E) A person who decides to leave the labor force B

Question 2

Which of the following statements is true concerning unemployment among young people in the United States,France,and Spain?

Accepted Answer

A) Spain has the highest level of unemployment of these three countries and the smallest percentage of young people living with their parents. 
B) The United States has the highest level of unemployment of these three countries and the highest percentage of young people living with their parents. 
C) The United States has the highest level of unemployment of these three countries and the smallest percentage of young people living with their parents. 
D) Spain has the lowest level of unemployment of these three countries and the smallest percentage of young people living with their parents. 
E) The United States has the lowest level of unemployment of these three countries and the smallest percentage of young people living with their parents. 
A) Spain has the highest level of unemployment of these three countries and the smallest percentage of young people living with their parents. 
B) The United States has the highest level of unemployment of these three countries and the highest percentage of young people living with their parents. 
C) The United States has the highest level of unemployment of these three countries and the smallest percentage of young people living with their parents. 
D) Spain has the lowest level of unemployment of these three countries and the smallest percentage of young people living with their parents. 
E) The United States has the lowest level of unemployment of these three countries and the smallest percentage of young people living with their parents. E

Question 3

The unemployment rate for young adults is higher in Australia,France,and Spain than it is in the United States.To what extent can these differences be explained by
(A)the job-search approach?
(B)the job-rationing approach?
(C)the basic supply-and-demand model for the labor market?

Accepted Answer

(A) According to the job-search approach,the longer it takes to find a new job,the higher the unemployment rate will be.One factor that affects the length of time it takes to find a new job is the amount of unemployment benefits.The higher the unemployment benefits,the higher the unemployment rate,because job seekers can afford to spend more time searching for a new job.In part,this explains why the unemployment rates are higher in Spain and Australia than they are in the United States-benefits are more generous in Spain and Australia than in the United States.

A second factor that affects the length of time it takes to find a new job is whether those who are unemployed are living with their parents.Unemployed young adults living at home do not have to pay for necessities and therefore are not compelled to take any available job.This extends the length of time it takes to make a match in the labor market.It is more acceptable for young adults to live with their parents in Spain than in the United States.This explains,in part,why the incidence of unemployment among young adults is higher in Spain than in the United States.

(B) According to the job-rationing approach,a minimum-wage law creates unemployment by imposing a price floor.The higher rates of unemployment among young adults in France as compared to the United States are in part attributable to France having higher mandated minimum wages.

(C) The basic supply-and-demand model explains how higher taxes on wage income can lead to higher unemployment because higher taxes reduce the demand for labor.The tax rates on wages are higher in France,and Spain than they are in the United States.Therefore,according to the supply-and-demand model,unemployment should be lower in the United States,as is the case.

Question 4

During the post-World War II period,both the employment-to-population ratio and real wages have been rising.Use the labor demand and supply analysis to explain how this is possible.

Accepted Answer

This can be explained by the demand for

Question 5

The type of unemployment that occurs because technological changes make some jobs obsolete is known as

Accepted Answer

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

Question 6

Frictional unemployment occurs because

Accepted Answer

A) it takes time to find a job. 
B) people have insufficient skills. 
C) of economic booms. 
D) of recessions. 
E) of inflation. 
A) it takes time to find a job. 
B) people have insufficient skills. 
C) of economic booms. 
D) of recessions. 
E) of inflation.

Question 7

An increase in the tax rate on wages results in

Accepted Answer

A) both a lower equilibrium real wage and a lower equilibrium level of employment. 
B) no changes in the equilibrium real wage and the equilibrium level of employment. 
C) both a higher equilibrium real wage and a higher equilibrium level of employment. 
D) a higher equilibrium real wage and a lower equilibrium level of employment. 
E) a lower equilibrium real wage and a higher equilibrium level of employment. 
A) both a lower equilibrium real wage and a lower equilibrium level of employment. 
B) no changes in the equilibrium real wage and the equilibrium level of employment. 
C) both a higher equilibrium real wage and a higher equilibrium level of employment. 
D) a higher equilibrium real wage and a lower equilibrium level of employment. 
E) a lower equilibrium real wage and a higher equilibrium level of employment.

Question 8

Economists agree that the natural rate of unemployment increased during the 1970s.Which of the following has been attributed as a likely reason for this phenomenon?

Accepted Answer

A) The high influx of foreign workers during that time 
B) The dramatic changes in the economy due to the so-called "green revolution" 
C) The influx of young baby boom workers into the labor force at that time 
D) The Vietnam War 
E) The increase in interest rates by the Fed 
A) The high influx of foreign workers during that time 
B) The dramatic changes in the economy due to the so-called "green revolution" 
C) The influx of young baby boom workers into the labor force at that time 
D) The Vietnam War 
E) The increase in interest rates by the Fed

Question 9

According to the supply and demand model,

Accepted Answer

A) higher minimum wages have no effect on unemployment for young people with low skills. 
B) higher minimum wages will reduce unemployment among young people with low skills. 
C) minimum wages should not differ across countries. 
D) the higher the market wage is relative to the minimum wage,the higher the unemployment rate is among young people with low skills. 
E) the lower the market wage is relative to the minimum wage,the higher the unemployment wage is among young people. 
A) higher minimum wages have no effect on unemployment for young people with low skills. 
B) higher minimum wages will reduce unemployment among young people with low skills. 
C) minimum wages should not differ across countries. 
D) the higher the market wage is relative to the minimum wage,the higher the unemployment rate is among young people with low skills. 
E) the lower the market wage is relative to the minimum wage,the higher the unemployment wage is among young people.

Question 10

A small percentage of unemployment is due to job leavers.

Accepted Answer

A) True 
 B)False

Question 11

During a recession,people may drop out of the labor force because they are unable to find a job.All else being equal,this causes

Accepted Answer

A) no change in the unemployment rate. 
B) the unemployment rate to increase. 
C) the unemployment rate to decrease. 
D) a decrease in the working-age population. 
E) an increase in the employment-to-population ratio. 
A) no change in the unemployment rate. 
B) the unemployment rate to increase. 
C) the unemployment rate to decrease. 
D) a decrease in the working-age population. 
E) an increase in the employment-to-population ratio.

Question 12

Which of the following explanations argues that the labor market is never in a state of rest?

Accepted Answer

A) The stochastic-worker explanation 
B) The job-search explanation 
C) The minimum-wage explanation 
D) The efficiency-wage explanation 
E) The insider-outsider explanation 
A) The stochastic-worker explanation 
B) The job-search explanation 
C) The minimum-wage explanation 
D) The efficiency-wage explanation 
E) The insider-outsider explanation

Question 13

The Current Population Survey is conducted by the

Accepted Answer

A) Council of Economic Advisers. 
B) Federal Reserve Board. 
C) U.S.Census Bureau. 
D) U.S.Department of Commerce. 
E) Department of Labor. 
A) Council of Economic Advisers. 
B) Federal Reserve Board. 
C) U.S.Census Bureau. 
D) U.S.Department of Commerce. 
E) Department of Labor.

Question 14

Roughly,the percentage of U.S.workers that is employed part-time is about 1 percent.

Accepted Answer

A) True 
 B)False

Question 15

Suppose the government decides to set up a website to link prospective employers and employees.Employers can post jobs and employees can then send resumes.
(A)How would this affect unemployment?
(B)How would this affect frictional and structural unemployment?
(C)How would this affect the natural unemployment rate?
(D)Suppose as a by-product of the service,the government is able to pool data on the skill level and experience of employees and the desired skill level and experience demanded by employers.Why would this information be valuable? How could it be used to reduce unemployment?

Accepted Answer

(A) Unemployment would go down if the we

Question 16

Since World War II,the real wage has increased while the employment-to-population ratio has increased.This is consistent with

Accepted Answer

A) a rightward shift of the labor supply curve and a movement along the labor demand curve. 
B) a leftward shift of the labor demand curve and a movement along the labor supply curve. 
C) a rightward shift of the labor demand curve and a movement along the labor supply curve. 
D) a leftward shift of the labor supply curve and a movement along the labor demand curve. 
E) both the labor demand and the labor supply curves shifting to the left. 
A) a rightward shift of the labor supply curve and a movement along the labor demand curve. 
B) a leftward shift of the labor demand curve and a movement along the labor supply curve. 
C) a rightward shift of the labor demand curve and a movement along the labor supply curve. 
D) a leftward shift of the labor supply curve and a movement along the labor demand curve. 
E) both the labor demand and the labor supply curves shifting to the left.

Question 17

The natural unemployment rate is caused by a combination of

Accepted Answer

A) frictional and structural unemployment. 
B) cyclical and real unemployment. 
C) cyclical and natural unemployment. 
D) real and natural unemployment. 
E) real and nominal unemployment. 
A) frictional and structural unemployment. 
B) cyclical and real unemployment. 
C) cyclical and natural unemployment. 
D) real and natural unemployment. 
E) real and nominal unemployment.

Question 18

According to the labor supply schedule,if the price level increases,people will be willing to work more hours because they will need to earn more money to pay for the higher-priced goods.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is true?

Accepted Answer

A) The fraction of women working part-time is greater than men,but men and women are just as likely to work part-time for reasons of personal choice. 
B) The fraction of men working part-time is greater than women,and women give personal choice as a reason for working part-time more frequently than men. 
C) The fraction of women working part-time is greater than men,and women give personal choice as a reason for working part-time more frequently than men. 
D) The fraction of men working part-time is greater than women,and men give personal choice as a reason for working part-time more frequently than women. 
E) The fraction of women working part-time is greater than men,but men give personal choice as a reason for working part-time more frequently than women. 
A) The fraction of women working part-time is greater than men,but men and women are just as likely to work part-time for reasons of personal choice. 
B) The fraction of men working part-time is greater than women,and women give personal choice as a reason for working part-time more frequently than men. 
C) The fraction of women working part-time is greater than men,and women give personal choice as a reason for working part-time more frequently than men. 
D) The fraction of men working part-time is greater than women,and men give personal choice as a reason for working part-time more frequently than women. 
E) The fraction of women working part-time is greater than men,but men give personal choice as a reason for working part-time more frequently than women.

Question 20

Suppose there is a decline in the price level.This means that

Accepted Answer

A) the real wage decreases,and firms are willing to hire more people. 
B) the real wage is unaffected by the inflation rate. 
C) the real wage increases,and firms are willing to hire more people. 
D) the real wage decreases,and firms are willing to hire fewer people. 
E) the real wage increases,and firms are willing to hire fewer people. 
A) the real wage decreases,and firms are willing to hire more people. 
B) the real wage is unaffected by the inflation rate. 
C) the real wage increases,and firms are willing to hire more people. 
D) the real wage decreases,and firms are willing to hire fewer people. 
E) the real wage increases,and firms are willing to hire fewer people.

Exam 20: Unemployment and Employment

According to the Current Population Survey,which of the following is the best example of an unemployed person?

Which of the following statements is true concerning unemployment among young people in the United States,France,and Spain?

The unemployment rate for young adults is higher in Australia,France,and Spain than it is in the United States.To what extent can these differences be explained by (A)the job-search approach? (B)the job-rationing approach? (C)the basic supply-and-demand model for the labor market?

During the post-World War II period,both the employment-to-population ratio and real wages have been rising.Use the labor demand and supply analysis to explain how this is possible.

The type of unemployment that occurs because technological changes make some jobs obsolete is known as

Frictional unemployment occurs because

An increase in the tax rate on wages results in

Economists agree that the natural rate of unemployment increased during the 1970s.Which of the following has been attributed as a likely reason for this phenomenon?

According to the supply and demand model,

A small percentage of unemployment is due to job leavers.

During a recession,people may drop out of the labor force because they are unable to find a job.All else being equal,this causes

Which of the following explanations argues that the labor market is never in a state of rest?

The Current Population Survey is conducted by the

Roughly,the percentage of U.S.workers that is employed part-time is about 1 percent.

Since World War II,the real wage has increased while the employment-to-population ratio has increased.This is consistent with

The natural unemployment rate is caused by a combination of

According to the labor supply schedule,if the price level increases,people will be willing to work more hours because they will need to earn more money to pay for the higher-priced goods.

Which of the following statements is true?

Suppose there is a decline in the price level.This means that

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, transfers, and Income Distribution

Public Goods, externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, income, and Spending of Nations

The Spending Allocation Model

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth and Globalization

International Trade

International Finance

Reading,understanding,and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Present Discounted Value

The Miracle of Compound Growth

Deriving the Growth Accounting Formula

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

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