Question 1

The economy experiences both inflation and unemployment when

Accepted Answer

A) aggregate demand decreases and aggregate supply increases. 
B) aggregate supply decreases and aggregate demand remains unchanged. 
C) aggregate demand decreases and aggregate supply remains unchanged. 
D) aggregate demand increases and aggregate supply decreases. 
A) aggregate demand decreases and aggregate supply increases. 
B) aggregate supply decreases and aggregate demand remains unchanged. 
C) aggregate demand decreases and aggregate supply remains unchanged. 
D) aggregate demand increases and aggregate supply decreases.

Question 2

If aggregate supply increases and aggregate demand remains unchanged,

Accepted Answer

A) there will be a positive relationship between the price level and the level of aggregate output. 
B) there will be a negative relationship between the price level and the level of aggregate output. 
C) there will be no systematic relationship between the price level and the level of aggregate output. 
D) the price level will remain unchanged,but aggregate output will decrease. 
A) there will be a positive relationship between the price level and the level of aggregate output. 
B) there will be a negative relationship between the price level and the level of aggregate output. 
C) there will be no systematic relationship between the price level and the level of aggregate output. 
D) the price level will remain unchanged,but aggregate output will decrease.

Question 3

Only when the unemployment rate is equal to the nonaccelerating inflation rate of unemployment (NAIRU)is the price level changing at a constant rate.

Accepted Answer

A) True 
 B)False

Question 4

Other things equal,the unemployment rate rises if

Accepted Answer

A) the demand for labor increases. 
B) aggregate output increases. 
C) the supply of labor increases. 
D) aggregate demand increases. 
A) the demand for labor increases. 
B) aggregate output increases. 
C) the supply of labor increases. 
D) aggregate demand increases.

Question 5

If aggregate supply changes when aggregate demand is stable,then the Phillips curve is negatively sloped.

Accepted Answer

A) True 
 B)False

Question 6

If you hear a person saying "I lost my job at the GM plant because car manufacturing is slow due to a slowdown in the economy," 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 7

The relative-wage explanation for the existence of downwardly sticky wages emphasizes

Accepted Answer

A) unspoken agreements between workers and firms that firms will not cut wages. 
B) the incentive that firms may have to hold wages above the market clearing rate. 
C) employment contracts that stipulate workers' wages,usually for a period of one to three years. 
D) the contention that workers in one industry may be unwilling to accept a wage cut,unless they know that workers in other firms and industries are receiving similar cuts. 
A) unspoken agreements between workers and firms that firms will not cut wages. 
B) the incentive that firms may have to hold wages above the market clearing rate. 
C) employment contracts that stipulate workers' wages,usually for a period of one to three years. 
D) the contention that workers in one industry may be unwilling to accept a wage cut,unless they know that workers in other firms and industries are receiving similar cuts.

Question 8

The unemployment rate is

Accepted Answer

A) the number unemployed divided by the labor force. 
B) the number unemployed divided by the number employed. 
C) the number unemployed divided by the population. 
D) the difference between the population and the number employed divided by the population. 
A) the number unemployed divided by the labor force. 
B) the number unemployed divided by the number employed. 
C) the number unemployed divided by the population. 
D) the difference between the population and the number employed divided by the population.

Question 9

The measured unemployment rate can be pushed below the natural rate,but

Accepted Answer

A) only in the long run and only if the price level is constant. 
B) only in the long run and not without inflation. 
C) only in the short run and only if the price level is constant. 
D) only in the short run and not without inflation. 
A) only in the long run and only if the price level is constant. 
B) only in the long run and not without inflation. 
C) only in the short run and only if the price level is constant. 
D) only in the short run and not without inflation.

Question 10

John is contemplating whether he should take a job offered to him.John should

Accepted Answer

A) not take the job if the value of his leisure is less than the wage rate the job pays. 
B) not take the job if the value of his leisure is greater than the wage rate the job pays. 
C) not take the job if taking the job implies he will enjoy less leisure. 
D) take the job if taking the job implies he will enjoy more leisure. 
A) not take the job if the value of his leisure is less than the wage rate the job pays. 
B) not take the job if the value of his leisure is greater than the wage rate the job pays. 
C) not take the job if taking the job implies he will enjoy less leisure. 
D) take the job if taking the job implies he will enjoy more leisure.

Question 11

Those who believe that the wage rate does not adjust quickly to clear the labor market are likely to believe that the aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 12

An increase in the productivity of workers shifts the labor ________ curve to the ________.

Accepted Answer

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

Question 13

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 B 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 14

Suppose that air traffic controllers,whose wages have been locked into place by a two-year contract,are laid off during a recession.This example is consistent with the

Accepted Answer

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

Question 15

Refer to the information provided in Figure 14.5 below to answer the questions that follow.   Figure 14.5
-Refer to Figure 14.5.If aggregate demand shifts while aggregate supply is stable,the relationship between the price level and the unemployment rate is represented in Panel

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 16

The United States began to pull out of a recession in the spring of 1991.Unemployment fell,but inflation did not increase.What was the most likely cause of this?

Accepted Answer

A) Aggregate supply was increasing at a faster rate than aggregate demand. 
B) Both aggregate demand and aggregate supply were decreasing. 
C) Aggregate demand was increasing but aggregate supply was decreasing. 
D) Aggregate demand was increasing at a faster rate than aggregate supply. 
A) Aggregate supply was increasing at a faster rate than aggregate demand. 
B) Both aggregate demand and aggregate supply were decreasing. 
C) Aggregate demand was increasing but aggregate supply was decreasing. 
D) Aggregate demand was increasing at a faster rate than aggregate supply.

Question 17

The type of unemployment that is most likely to arise as a result of technological changes is

Accepted Answer

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

Question 18

A firm may benefit by paying workers more than the market clearing wage because the higher wages may lead to all of the following EXCEPT

Accepted Answer

A) lower worker turnover. 
B) improved worker morale. 
C) reduced shirking of work. 
D) reduced taxes. 
A) lower worker turnover. 
B) improved worker morale. 
C) reduced shirking of work. 
D) reduced taxes.

Question 19

Suppose the equilibrium wage rate in the labor market is $10 and the demand for labor increases.If wages are sticky,there will be a

Accepted Answer

A) surplus of labor and the wage rate declines. 
B) shortage of labor and the wage rate increases. 
C) shortage of labor and the wage rate stays the same. 
D) surplus of labor and the wage rate increases. 
A) surplus of labor and the wage rate declines. 
B) shortage of labor and the wage rate increases. 
C) shortage of labor and the wage rate stays the same. 
D) surplus of labor and the wage rate increases.

Question 20

If a country has a population of 400 million,160 million people employed and 40 million people looking for work,then its unemployment rate is

Accepted Answer

A) 10%. 
B) 20%. 
C) 25%. 
D) 40%. 
A) 10%. 
B) 20%. 
C) 25%. 
D) 40%.

Exam 14: The Labor Market in the Macroeconomy

The economy experiences both inflation and unemployment when

If aggregate supply increases and aggregate demand remains unchanged,

Only when the unemployment rate is equal to the nonaccelerating inflation rate of unemployment (NAIRU)is the price level changing at a constant rate.

Other things equal,the unemployment rate rises if

If aggregate supply changes when aggregate demand is stable,then the Phillips curve is negatively sloped.

If you hear a person saying "I lost my job at the GM plant because car manufacturing is slow due to a slowdown in the economy," you should conclude that this person is ________ unemployed.

The relative-wage explanation for the existence of downwardly sticky wages emphasizes

The unemployment rate is

The measured unemployment rate can be pushed below the natural rate,but

John is contemplating whether he should take a job offered to him.John should

Those who believe that the wage rate does not adjust quickly to clear the labor market are likely to believe that the aggregate supply curve is vertical.

An increase in the productivity of workers shifts the labor ________ curve to the ________.

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 B equals

Suppose that air traffic controllers,whose wages have been locked into place by a two-year contract,are laid off during a recession.This example is consistent with the

Refer to the information provided in Figure 14.5 below to answer the questions that follow. Figure 14.5 -Refer to Figure 14.5.If aggregate demand shifts while aggregate supply is stable,the relationship between the price level and the unemployment rate is represented in Panel

The United States began to pull out of a recession in the spring of 1991.Unemployment fell,but inflation did not increase.What was the most likely cause of this?

The type of unemployment that is most likely to arise as a result of technological changes is

A firm may benefit by paying workers more than the market clearing wage because the higher wages may lead to all of the following EXCEPT

Suppose the equilibrium wage rate in the labor market is $10 and the demand for labor increases.If wages are sticky,there will be a

If a country has a population of 400 million,160 million people employed and 40 million people looking for work,then its unemployment 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

An increase in the productivity of workers shifts the labor curve to the .