Question 1

The type of unemployment that arises during recessions is known as

Accepted Answer

A) the natural rate of unemployment. 
B) cyclical unemployment. 
C) structural unemployment. 
D) frictional unemployment. 
A) the natural rate of unemployment. 
B) cyclical unemployment. 
C) structural unemployment. 
D) frictional unemployment.

Question 2

The percentage of workers whose wages are set by explicit contracts falls.This should

Accepted Answer

A) make it more difficult for the labor market to reach an equilibrium after a change in the demand for labor. 
B) make it easier for the labor market to reach an equilibrium after a change in the demand for labor. 
C) have no impact on the movement of the labor market toward equilibrium after a change in the demand for labor. 
D) cause the labor market to always be at an equilibrium,even if there is a change in the demand for labor. 
A) make it more difficult for the labor market to reach an equilibrium after a change in the demand for labor. 
B) make it easier for the labor market to reach an equilibrium after a change in the demand for labor. 
C) have no impact on the movement of the labor market toward equilibrium after a change in the demand for labor. 
D) cause the labor market to always be at an equilibrium,even if there is a change in the demand for labor.

Question 3

Doug is currently not employed.He places a value of $16 an hour on his time in nonmarket activities.If Doug is offered a job paying $12 an hour,

Accepted Answer

A) he should supply 0 hours in the labor market. 
B) he should supply a positive number of hours in the labor market and allocate no time to nonmarket activities. 
C) he is indifferent between supplying hours to the labor market and using his time in nonmarket activities. 
D) he should supply a positive number of hours in the labor market and to nonmarket activities. 
A) he should supply 0 hours in the labor market. 
B) he should supply a positive number of hours in the labor market and allocate no time to nonmarket activities. 
C) he is indifferent between supplying hours to the labor market and using his time in nonmarket activities. 
D) he should supply a positive number of hours in the labor market and to nonmarket activities.

Question 4

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 5

Classical economists believe that economic policies are ineffective because they don't affect aggregate demand in the economy.

Accepted Answer

A) True 
 B)False

Question 6

If,as a result of imperfect information,firms set their wage rates above the market clearing wage rate,

Accepted Answer

A) unemployment decreases. 
B) there will be a surplus of workers. 
C) there will be a shortage of workers. 
D) there will be equilibrium in the labor market. 
A) unemployment decreases. 
B) there will be a surplus of workers. 
C) there will be a shortage of workers. 
D) there will be equilibrium in the labor market.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

If the Phillips curve is vertical in the long run,then

Accepted Answer

A) there is a trade-off between inflation and unemployment in the long run. 
B) the inflation rate will always be zero in the long run. 
C) the unemployment rate will be zero in the long run. 
D) there is no trade-off between inflation and unemployment in the long run. 
A) there is a trade-off between inflation and unemployment in the long run. 
B) the inflation rate will always be zero in the long run. 
C) the unemployment rate will be zero in the long run. 
D) there is no trade-off between inflation and unemployment in the long run.

Question 9

Frito Lay experienced a 20% drop in its sales.Even though the demand for its product decreased,Frito Lay did not cut the wages of its nonunionized workers.This is an example of

Accepted Answer

A) an explicit contract not to cut wages. 
B) employment-at-will. 
C) poor management. 
D) an implicit or social contract not to cut wages. 
A) an explicit contract not to cut wages. 
B) employment-at-will. 
C) poor management. 
D) an implicit or social contract not to cut wages.

Question 10

Refer to the information provided in Figure 14.2 below to answer the questions that follow.   Figure 14.2
-Refer to Figure 14.2.According to classical economists if the wage rate is

Accepted Answer

A) $15,the wage rate will decline to eliminate the surplus. 
B) $15,the wage rate will increase to eliminate the shortage. 
C) $6,the wage rate will decline to eliminate the surplus. 
D) $15,the wage rate will decline to eliminate the shortage. 
A) $15,the wage rate will decline to eliminate the surplus. 
B) $15,the wage rate will increase to eliminate the shortage. 
C) $6,the wage rate will decline to eliminate the surplus. 
D) $15,the wage rate will decline to eliminate the shortage.

Question 11

Refer to the information provided in Figure 14.4 below to answer the questions that follow.   Figure 14.4
-Refer to Figure 14.4.A minimum wage of $8

Accepted Answer

A) will lead to an excess demand for labor of 20. 
B) will lead to an excess demand for labor of 40. 
C) will lead to an excess demand for labor of 60. 
D) will have no effect because the minimum wage is set below the equilibrium wage and for a minimum wage to have any effect on the labor market it must be above the equilibrium wage. 
A) will lead to an excess demand for labor of 20. 
B) will lead to an excess demand for labor of 40. 
C) will lead to an excess demand for labor of 60. 
D) will have no effect because the minimum wage is set below the equilibrium wage and for a minimum wage to have any effect on the labor market it must be above the equilibrium wage.

Question 12

Refer to the information provided in Figure 14.3 below to answer the questions that follow.   Figure 14.3
-Refer to Figure 14.3.Assume that the productivity of workers increases as the wage rate increases.The efficiency wage

Accepted Answer

A) would be below $10. 
B) would equal $10. 
C) would be above $10. 
D) could either be above or below $10. 
A) would be below $10. 
B) would equal $10. 
C) would be above $10. 
D) could either be above or below $10.

Question 13

If firms pay wages higher than the market clearing wage,their profits will be reduced.

Accepted Answer

A) True 
 B)False

Question 14

An increase in inflationary expectations shifts the economy's short run Phillips curve to the left.

Accepted Answer

A) True 
 B)False

Question 15

The Phillips curve suggests that if we want to raise the inflation rate,we must accept a higher unemployment rate in return.

Accepted Answer

A) True 
 B)False

Question 16

Efficiency wages may lower employee turnover.

Accepted Answer

A) True 
 B)False

Question 17

If the AD curve shifts from year to year and the AS curve does not,then the short run Phillips curve would be

Accepted Answer

A) downward sloping. 
B) upward sloping. 
C) shifting to the left. 
D) shifting to the right. 
A) downward sloping. 
B) upward sloping. 
C) shifting to the left. 
D) shifting to the right.

Question 18

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 19

Refer to the information provided in Figure 14.8 below to answer the questions that follow.   Figure 14.8
-Refer to Figure 14.8.Expected inflation at Point A ________ expected inflation at Point C.

Accepted Answer

A) is greater than 
B) is less than 
C) equals 
D) cannot be determined from the figure 
A) is greater than 
B) is less than 
C) equals 
D) cannot be determined from the figure

Question 20

Related to the Economics in Practice on p.581: According to the study cited in the Economics in Practice,the ________ someone is unemployed,the ________ it is for that person to get a job.

Accepted Answer

A) longer;easier 
B) longer;harder 
C) less time;harder 
D) The duration of unemployment does not seem to affect the ability of getting a job. 
A) longer;easier 
B) longer;harder 
C) less time;harder 
D) The duration of unemployment does not seem to affect the ability of getting a job.

Exam 14: The Labor Market in the Macroeconomy

The type of unemployment that arises during recessions is known as

The percentage of workers whose wages are set by explicit contracts falls.This should

Doug is currently not employed.He places a value of $16 an hour on his time in nonmarket activities.If Doug is offered a job paying $12 an hour,

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

Classical economists believe that economic policies are ineffective because they don't affect aggregate demand in the economy.

If,as a result of imperfect information,firms set their wage rates above the market clearing wage rate,

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

If the Phillips curve is vertical in the long run,then

Frito Lay experienced a 20% drop in its sales.Even though the demand for its product decreased,Frito Lay did not cut the wages of its nonunionized workers.This is an example of

Refer to the information provided in Figure 14.2 below to answer the questions that follow. Figure 14.2 -Refer to Figure 14.2.According to classical economists if the wage rate is

Refer to the information provided in Figure 14.4 below to answer the questions that follow. Figure 14.4 -Refer to Figure 14.4.A minimum wage of $8

Refer to the information provided in Figure 14.3 below to answer the questions that follow. Figure 14.3 -Refer to Figure 14.3.Assume that the productivity of workers increases as the wage rate increases.The efficiency wage

If firms pay wages higher than the market clearing wage,their profits will be reduced.

An increase in inflationary expectations shifts the economy's short run Phillips curve to the left.

The Phillips curve suggests that if we want to raise the inflation rate,we must accept a higher unemployment rate in return.

Efficiency wages may lower employee turnover.

If the AD curve shifts from year to year and the AS curve does not,then the short run Phillips curve would be

If the economy is at potential output,actual inflation

Refer to the information provided in Figure 14.8 below to answer the questions that follow. Figure 14.8 -Refer to Figure 14.8.Expected inflation at Point A ________ expected inflation at Point C.

Related to the Economics in Practice on p.581: According to the study cited in the Economics in Practice,the ________ someone is unemployed,the ________ it is for that person to get a job.

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand,supply,and Market Equilibrium

Demand and Supply Applications

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

The Money Supply and the Federal Reserve System

Money Demand and the Equilibrium Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Costs 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 and Transitional Economies

Filters

Related to the Economics in Practice on p.581: According to the study cited in the Economics in Practice,the someone is unemployed,the it is for that person to get a job.