Question 1

Which of the following may shift the labor demand curve?

Accepted Answer

A) an increase in the value of leisure 
B) a decrease in the value of leisure 
C) more people entering the labor force 
D) an increase in the value of output that firms produce 
A) an increase in the value of leisure 
B) a decrease in the value of leisure 
C) more people entering the labor force 
D) an increase in the value of output that firms produce

Question 2

Economists who argue that the AS curve is vertical in the long run at potential GDP also argue that the Phillips curve in the long run is

Accepted Answer

A) vertical at the natural rate of unemployment. 
B) upward sloping. 
C) downward sloping. 
D) horizontal at the natural rate of inflation. 
A) vertical at the natural rate of unemployment. 
B) upward sloping. 
C) downward sloping. 
D) horizontal at the natural rate of inflation.

Question 3

Suppose the wage rate in the labor market is $8 and more people entered the labor force,which of the following statements is CORRECT?

Accepted Answer

A) If wages are flexible,then wages will increase. 
B) If wages are sticky,the unemployment rate increases. 
C) If wages are sticky,the unemployment rate stays the same. 
D) If wages are flexible,the unemployment rate increases. 
A) If wages are flexible,then wages will increase. 
B) If wages are sticky,the unemployment rate increases. 
C) If wages are sticky,the unemployment rate stays the same. 
D) If wages are flexible,the unemployment rate increases.

Question 4

If a new governmental policy increases unemployment benefits,we would expect the labor ________ curve to shift to the ________.

Accepted Answer

A) supply;right 
B) demand;right 
C) supply;left 
D) demand;left 
A) supply;right 
B) demand;right 
C) supply;left 
D) demand;left

Question 5

Intel Corporation,a major manufacturer of microchips,saw the demand for its product drop by 25%.Even though the demand for its product decreased,Intel did not cut the wages of its nonunionized workers.This is an example of

Accepted Answer

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

Question 6

What sequence of events results from an increase in aggregate demand?

Accepted Answer

A) The price level falls,inventories decline,firms respond by increasing output and employment. 
B) The price level falls,inventories increase,firms respond by reducing output and employment. 
C) The price level rises,inventories decline,firms respond by increasing output and employment. 
D) The price level rises,inventories increase,firms respond by increasing output and employment. 
A) The price level falls,inventories decline,firms respond by increasing output and employment. 
B) The price level falls,inventories increase,firms respond by reducing output and employment. 
C) The price level rises,inventories decline,firms respond by increasing output and employment. 
D) The price level rises,inventories increase,firms respond by increasing output and employment.

Question 7

If the aggregate supply is vertical,an (a)________ in the price level ________ unemployment rate.

Accepted Answer

A) decrease;increases 
B) increase;doesn't change 
C) decrease;decreases 
D) increase;increases 
A) decrease;increases 
B) increase;doesn't change 
C) decrease;decreases 
D) increase;increases

Question 8

One of the tenets of the classical view of the labor market is that the wage adjustments that are necessary to clear the labor market

Accepted Answer

A) occur very infrequently. 
B) occur quickly. 
C) don't occur. 
D) occur slowly. 
A) occur very infrequently. 
B) occur quickly. 
C) don't occur. 
D) occur slowly.

Question 9

Suppose the wage rate in the labor market is $15 and the productivity of workers increases,which of the following statements is INCORRECT?

Accepted Answer

A) The labor demand curve shifts to the right. 
B) If wages are flexible,there will be an increase in wages. 
C) If wages are sticky,there will be a shortage in the labor market. 
D) If wages are sticky,there will be a surplus in the labor market. 
A) The labor demand curve shifts to the right. 
B) If wages are flexible,there will be an increase in wages. 
C) If wages are sticky,there will be a shortage in the labor market. 
D) If wages are sticky,there will be a surplus in the labor market.

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.Which of the following can change the equilibrium wage rate from $9 to $6?

Accepted Answer

A) The value people put on their leisure time increases. 
B) The value of what firms produce increases. 
C) The productivity of workers decreases. 
D) The productivity of workers increases. 
A) The value people put on their leisure time increases. 
B) The value of what firms produce increases. 
C) The productivity of workers decreases. 
D) The productivity of workers increases.

Question 11

Efficiency wages are an explanation for the existence of unemployment.

Accepted Answer

A) True 
 B)False

Question 12

There is no systematic relationship between the price level and the level of aggregate output when

Accepted Answer

A) aggregate demand is negatively sloped. 
B) aggregate demand is changing,but aggregate supply is not. 
C) both aggregate supply and aggregate demand are changing simultaneously. 
D) aggregate supply is changing,but aggregate demand is not. 
A) aggregate demand is negatively sloped. 
B) aggregate demand is changing,but aggregate supply is not. 
C) both aggregate supply and aggregate demand are changing simultaneously. 
D) aggregate supply is changing,but aggregate demand is not.

Question 13

Lisa is currently not employed.She places a value of $12 an hour on her time in nonmarket activities.If Lisa is offered a job paying $17 an hour,

Accepted Answer

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

Question 14

Changes in the price level don't affect the unemployment rate if

Accepted Answer

A) the economy is operating below capacity. 
B) the economy is operating at capacity. 
C) the aggregate supply curve is flat. 
D) the aggregate demand curve is steep. 
A) the economy is operating below capacity. 
B) the economy is operating at capacity. 
C) the aggregate supply curve is flat. 
D) the aggregate demand curve is steep.

Question 15

Minimum wage laws contribute to a higher unemployment rate by

Accepted Answer

A) raising wages above the market clearing level in some labor markets. 
B) pushing wages below the market clearing level in some labor markets. 
C) raising wages above the market clearing level in all labor markets. 
D) pushing wages below the market clearing level in all labor markets. 
A) raising wages above the market clearing level in some labor markets. 
B) pushing wages below the market clearing level in some labor markets. 
C) raising wages above the market clearing level in all labor markets. 
D) pushing wages below the market clearing level in all labor markets.

Question 16

If firms start offering more employment benefits,such as more stock options and a better dental plan,we would expect the labor ________ curve to shift to the ________.

Accepted Answer

A) demand;right 
B) demand;left 
C) supply;right 
D) supply;left 
A) demand;right 
B) demand;left 
C) supply;right 
D) supply;left

Question 17

Refer to the information provided in Figure 14.7 below to answer the questions that follow.   Figure 14.7
-Refer to Figure 14.7.If the natural unemployment rate equals 6%,the unemployment rate at U2 could be

Accepted Answer

A) 4%. 
B) 5%. 
C) 6%. 
D) 7%. 
A) 4%. 
B) 5%. 
C) 6%. 
D) 7%.

Question 18

The classical view of the labor market is basically consistent with the assumption of ________ aggregate supply curve.

Accepted Answer

A) a horizontal (or almost horizontal) 
B) a downward-sloping 
C) an upward-sloping 
D) a vertical (or almost vertical) 
A) a horizontal (or almost horizontal) 
B) a downward-sloping 
C) an upward-sloping 
D) a vertical (or almost vertical)

Question 19

Workers in the textile industry are laid off during a recession because they are unwilling to accept a wage cut,unless they know that workers in other industries are receiving similar cuts.This example is consistent with the

Accepted Answer

A) relative-wage explanation of unemployment. 
B) explicit contract explanation of unemployment. 
C) social contract explanation of unemployment. 
D) efficiency wage explanation of unemployment. 
A) relative-wage explanation of unemployment. 
B) explicit contract explanation of unemployment. 
C) social contract explanation of unemployment. 
D) efficiency wage explanation of unemployment.

Question 20

Refer to the information provided in Figure 14.7 below to answer the questions that follow.   Figure 14.7
-Refer to Figure 14.7.If the economy is on SRPC1,then the expected inflation rate is

Accepted Answer

A) 4% 
B) 5% 
C) 6% 
D) none of the above 
A) 4% 
B) 5% 
C) 6% 
D) none of the above

Exam 14: The Labor Market in the Macroeconomy

Which of the following may shift the labor demand curve?

Economists who argue that the AS curve is vertical in the long run at potential GDP also argue that the Phillips curve in the long run is

Suppose the wage rate in the labor market is $8 and more people entered the labor force,which of the following statements is CORRECT?

If a new governmental policy increases unemployment benefits,we would expect the labor ________ curve to shift to the ________.

Intel Corporation,a major manufacturer of microchips,saw the demand for its product drop by 25%.Even though the demand for its product decreased,Intel did not cut the wages of its nonunionized workers.This is an example of

What sequence of events results from an increase in aggregate demand?

If the aggregate supply is vertical,an (a)________ in the price level ________ unemployment rate.

One of the tenets of the classical view of the labor market is that the wage adjustments that are necessary to clear the labor market

Suppose the wage rate in the labor market is $15 and the productivity of workers increases,which of the following statements is INCORRECT?

Refer to the information provided in Figure 14.2 below to answer the questions that follow. Figure 14.2 -Refer to Figure 14.2.Which of the following can change the equilibrium wage rate from $9 to $6?

Efficiency wages are an explanation for the existence of unemployment.

There is no systematic relationship between the price level and the level of aggregate output when

Lisa is currently not employed.She places a value of $12 an hour on her time in nonmarket activities.If Lisa is offered a job paying $17 an hour,

Changes in the price level don't affect the unemployment rate if

Minimum wage laws contribute to a higher unemployment rate by

If firms start offering more employment benefits,such as more stock options and a better dental plan,we would expect the labor ________ curve to shift to the ________.

Refer to the information provided in Figure 14.7 below to answer the questions that follow. Figure 14.7 -Refer to Figure 14.7.If the natural unemployment rate equals 6%,the unemployment rate at U2 could be

The classical view of the labor market is basically consistent with the assumption of ________ aggregate supply curve.

Workers in the textile industry are laid off during a recession because they are unwilling to accept a wage cut,unless they know that workers in other industries are receiving similar cuts.This example is consistent with the

Refer to the information provided in Figure 14.7 below to answer the questions that follow. Figure 14.7 -Refer to Figure 14.7.If the economy is on SRPC1,then the expected inflation rate is

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

If a new governmental policy increases unemployment benefits,we would expect the labor curve to shift to the .

If the aggregate supply is vertical,an (a) in the price level unemployment rate.

If firms start offering more employment benefits,such as more stock options and a better dental plan,we would expect the labor curve to shift to the .