Question 1

Firms might pay efficiency wages above the equilibrium wage for all of the following reasons EXCEPT

Accepted Answer

A) to reduce employee shirking. 
B) to improve employee morale. 
C) to reduce employee turnover. 
D) to reduce taxes. 
A) to reduce employee shirking. 
B) to improve employee morale. 
C) to reduce employee turnover. 
D) to reduce taxes.

Question 2

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

Accepted Answer

A) unemployment increases. 
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 increases. 
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 3

Which of the following may shift the labor supply curve?

Accepted Answer

A) an increase in worker productivity 
B) a decrease in the value people place on their time 
C) an increase in the price of the output of the firm 
D) an increase in the corporate tax rate 
A) an increase in worker productivity 
B) a decrease in the value people place on their time 
C) an increase in the price of the output of the firm 
D) an increase in the corporate tax rate

Question 4

If the measured unemployment rate is 8% and the natural unemployment rate is 3%,then

Accepted Answer

A) frictional unemployment is 5%. 
B) cyclical unemployment is 5%. 
C) frictional unemployment is 11%. 
D) structural unemployment is 11%. 
A) frictional unemployment is 5%. 
B) cyclical unemployment is 5%. 
C) frictional unemployment is 11%. 
D) structural unemployment is 11%.

Question 5

An unspoken agreement between workers and firms that the firm will not cut wages is known as

Accepted Answer

A) an implicit or social contract. 
B) an explicit contract. 
C) a relative-wage contract. 
D) employment-at-will. 
A) an implicit or social contract. 
B) an explicit contract. 
C) a relative-wage contract. 
D) employment-at-will.

Question 6

The Phillips curve depicts the relationship between

Accepted Answer

A) output and the price level. 
B) aggregate demand and aggregate expenditures. 
C) inflation and unemployment. 
D) money supply and interest rates. 
A) output and the price level. 
B) aggregate demand and aggregate expenditures. 
C) inflation and unemployment. 
D) money supply and interest rates.

Question 7

Refer to the information provided in Figure 14.3 below to answer the questions that follow.   Figure 14.3
-Refer to Figure 14.3.If this firm pays the efficient wage of $11,

Accepted Answer

A) the firm's demand for labor will increase until $11 is also the equilibrium wage. 
B) the supply of labor will decrease until $11 is also the equilibrium wage. 
C) there will be an excess supply of labor of 2,000. 
D) there will be an excess supply of labor of 3,000. 
A) the firm's demand for labor will increase until $11 is also the equilibrium wage. 
B) the supply of labor will decrease until $11 is also the equilibrium wage. 
C) there will be an excess supply of labor of 2,000. 
D) there will be an excess supply of labor of 3,000.

Question 8

If the actual unemployment rate is below NAIRU,the change in the inflation rate will be positive.

Accepted Answer

A) True 
 B)False

Question 9

If unemployment is below the natural rate of unemployment,then output is below potential output.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the information provided in Figure 14.1 below to answer the questions that follow.   Figure 14.1
-Refer to Figure 14.1.Suppose there is a decrease in the fertility rate and this causes some men and women to place a lower value on their time spent in nonmarket activities.This will cause

Accepted Answer

A) the labor supply curve to shift to the left of S. 
B) the labor supply curve to shift to the right of S. 
C) the labor demand curve to shift from D to D'. 
D) the labor demand curve to shift from D' to D. 
A) the labor supply curve to shift to the left of S. 
B) the labor supply curve to shift to the right of S. 
C) the labor demand curve to shift from D to D'. 
D) the labor demand curve to shift from D' to D.

Question 11

Related to the Economics in Practice on p.580: If extending the duration of unemployment benefits does discourage unemployed workers from looking for jobs,then ceteris paribus,

Accepted Answer

A) the unemployment rate will increase. 
B) the unemployment rate will decrease. 
C) the number of discouraged workers will increase. 
D) the natural rate of unemployment will decrease. 
A) the unemployment rate will increase. 
B) the unemployment rate will decrease. 
C) the number of discouraged workers will increase. 
D) the natural rate of unemployment will decrease.

Question 12

If inflationary expectations decrease,the Phillips curve will

Accepted Answer

A) shift to the right. 
B) shift to the left. 
C) become vertical. 
D) become upward sloping. 
A) shift to the right. 
B) shift to the left. 
C) become vertical. 
D) become upward sloping.

Question 13

Frictional unemployment is the type that arises due to recessions.

Accepted Answer

A) True 
 B)False

Question 14

Martin is not employed.The value Martin places on his leisure time is $30 an hour.Martin looks for a job and all the offers he has are for less than $30 an hour.Martin should supply

Accepted Answer

A) exactly 40 hours per week in the labor market. 
B) between 0 and 20 hours per week in the labor market. 
C) between 20 and 40 hours per week in the labor market. 
D) 0 hours in the labor market. 
A) exactly 40 hours per week in the labor market. 
B) between 0 and 20 hours per week in the labor market. 
C) between 20 and 40 hours per week in the labor market. 
D) 0 hours in the labor market.

Question 15

Refer to the information provided in Figure 14.8 below to answer the questions that follow.   Figure 14.8
-Refer to Figure 14.8.Along SRPC2,expected inflation equals

Accepted Answer

A) 4%. 
B) 5%. 
C) 6%. 
D) cannot be determined from the figure 
A) 4%. 
B) 5%. 
C) 6%. 
D) cannot be determined from the figure

Question 16

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 SRPC2,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

Question 17

Those who believe that wages adjust quickly to clear the labor market also believe that

Accepted Answer

A) the AS curve is upward sloping. 
B) the AD curve is steep. 
C) the AD curve is flat. 
D) the AS curve is vertical. 
A) the AS curve is upward sloping. 
B) the AD curve is steep. 
C) the AD curve is flat. 
D) the AS curve is vertical.

Question 18

If you hear a person saying "I lost my job because I was replaced by a machine," you should conclude that this person is ________ unemployed.

Accepted Answer

A) cyclically 
B) structurally 
C) frictionally 
D) seasonally 
A) cyclically 
B) structurally 
C) frictionally 
D) seasonally

Question 19

If the AS curve shifts from year to year,but the AD curve does not,then the Phillips curve would show

Accepted Answer

A) a positive relationship between the inflation and unemployment rates. 
B) a negative relationship between the inflation and unemployment rates. 
C) no particular relationship between the inflation and unemployment rates. 
D) a constant trade-off between the inflation and unemployment rates. 
A) a positive relationship between the inflation and unemployment rates. 
B) a negative relationship between the inflation and unemployment rates. 
C) no particular relationship between the inflation and unemployment rates. 
D) a constant trade-off between the inflation and unemployment rates.

Question 20

When a firm pays higher wages for its workers to improve workers' productivity,the firm pays

Accepted Answer

A) sticky wages. 
B) flexible wages. 
C) efficiency wages. 
D) minimum wages. 
A) sticky wages. 
B) flexible wages. 
C) efficiency wages. 
D) minimum wages.

Exam 14: The Labor Market in the Macroeconomy

Firms might pay efficiency wages above the equilibrium wage for all of the following reasons EXCEPT

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

Which of the following may shift the labor supply curve?

If the measured unemployment rate is 8% and the natural unemployment rate is 3%,then

An unspoken agreement between workers and firms that the firm will not cut wages is known as

The Phillips curve depicts the relationship between

Refer to the information provided in Figure 14.3 below to answer the questions that follow. Figure 14.3 -Refer to Figure 14.3.If this firm pays the efficient wage of $11,

If the actual unemployment rate is below NAIRU,the change in the inflation rate will be positive.

If unemployment is below the natural rate of unemployment,then output is below potential output.

Refer to the information provided in Figure 14.1 below to answer the questions that follow. Figure 14.1 -Refer to Figure 14.1.Suppose there is a decrease in the fertility rate and this causes some men and women to place a lower value on their time spent in nonmarket activities.This will cause

Related to the Economics in Practice on p.580: If extending the duration of unemployment benefits does discourage unemployed workers from looking for jobs,then ceteris paribus,

If inflationary expectations decrease,the Phillips curve will

Frictional unemployment is the type that arises due to recessions.

Martin is not employed.The value Martin places on his leisure time is $30 an hour.Martin looks for a job and all the offers he has are for less than $30 an hour.Martin should supply

Refer to the information provided in Figure 14.8 below to answer the questions that follow. Figure 14.8 -Refer to Figure 14.8.Along SRPC2,expected inflation equals

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 SRPC2,then the expected inflation rate is

Those who believe that wages adjust quickly to clear the labor market also believe that

If you hear a person saying "I lost my job because I was replaced by a machine," you should conclude that this person is ________ unemployed.

If the AS curve shifts from year to year,but the AD curve does not,then the Phillips curve would show

When a firm pays higher wages for its workers to improve workers' productivity,the firm pays

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

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