Question 1

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 2

An increase in the value people place on their actual time spent working will shift the labor ________ curve to the ________.

Accepted Answer

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

Question 3

Refer to the information provided in Figure 13.1 below to answer the questions that follow.   Figure 13.1
-Refer to Figure 13.1. At wage rate $6, there is a ________ of labor equal to ________ million people.

Accepted Answer

A)  shortage; 180 
B)  shortage; 60 
C)  surplus; 180 
D)  surplus; 60 
A)  shortage; 180 
B)  shortage; 60 
C)  surplus; 180 
D)  surplus; 60

Question 4

If the wage rate in the labor market is $17 and the productivity of workers decreases, which of the following statements is incorrect?

Accepted Answer

A)  The labor demand curve shifts to the left. 
B)  If wages are flexible, there will be a decrease 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 left. 
B)  If wages are flexible, there will be a decrease 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 5

Refer to the information provided in Figure 13.1 below to answer the questions that follow.   Figure 13.1
-Refer to Figure 13.1. According to classical economists, if the wage rate is $15 the wage rate will ________ to eliminate the ________.

Accepted Answer

A)  decline; surplus 
B)  decline; shortage 
C)  increase; surplus 
D)  increase; shortage 
A)  decline; surplus 
B)  decline; shortage 
C)  increase; surplus 
D)  increase; shortage

Question 6

Refer to the information provided in Figure 13.4 below to answer the questions that follow.   Figure 13.4
-Refer to Figure 13.4. The demand for labor falls from D to D'. If firms enter into social, or implicit, contracts with workers not to cut wages, then the wage rate will remain at $10 and

Accepted Answer

A)  employment will fall to 150 million. 
B)  employment will fall to 200 million. 
C)  employment will remain at 300 million. 
D)  labor supply will decrease to restore the market to equilibrium. 
A)  employment will fall to 150 million. 
B)  employment will fall to 200 million. 
C)  employment will remain at 300 million. 
D)  labor supply will decrease to restore the market to equilibrium.

Question 7

Refer to the information provided in Figure 13.7 below to answer the questions that follow.   Figure 13.7
-Refer to Figure 13.7. An contractionary monetary policy followed by a rightward shift in the AS curve could move the economy from Point A to Point ________, and then to Point ________.

Accepted Answer

A)  D; C 
B)  B; E 
C)  C; D 
D)  E; B 
A)  D; C 
B)  B; E 
C)  C; D 
D)  E; B

Question 8

Suppose that airline workers are laid off during a recession because of an unspoken agreement between airline workers and airline executives that wages will not be reduced. This example is consistent with the

Accepted Answer

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

Question 9

Explicit contracts generally stipulate workers' wages for a period of

Accepted Answer

A)  1 to 3 years. 
B)  3 to 5 years. 
C)  90 days. 
D)  no more than 1 year. 
A)  1 to 3 years. 
B)  3 to 5 years. 
C)  90 days. 
D)  no more than 1 year.

Question 10

When ________, the price level falls, inventories increase and firms respond by reducing output and employment.

Accepted Answer

A)  aggregate demand increases 
B)  aggregate demand decreases 
C)  aggregate supply decreases 
D)  aggregate supply increases 
A)  aggregate demand increases 
B)  aggregate demand decreases 
C)  aggregate supply decreases 
D)  aggregate supply increases

Question 11

If aggregate demand changes while aggregate supply is stable, output and the unemployment rate are

Accepted Answer

A)  positively related. 
B)  not related in the short run. 
C)  not related neither in the long run nor in the short run. 
D)  negatively related. 
A)  positively related. 
B)  not related in the short run. 
C)  not related neither in the long run nor in the short run. 
D)  negatively related.

Question 12

Suppose that cruise ship employees are laid off during a period of significant decrease in demand for cruise vacations because they have a 3-year contract which has locked their wages into place. This example is consistent with the

Accepted Answer

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

Question 13

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 14

The shape of the short run aggregate supply curve is impacted by changes in the

Accepted Answer

A)  money market. 
B)  labor market. 
C)  goods market. 
D)  financial market. 
A)  money market. 
B)  labor market. 
C)  goods market. 
D)  financial market.

Question 15

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 16

In the long run, the Phillips curve will be vertical at the natural rate of unemployment if

Accepted Answer

A)  the long-run aggregate demand curve is vertical at potential output. 
B)  the long-run aggregate demand curve is horizontal at the natural rate of inflation. 
C)  the long-run aggregate supply curve is vertical at potential output. 
D)  the long-run supply curve is horizontal at the natural rate of inflation. 
A)  the long-run aggregate demand curve is vertical at potential output. 
B)  the long-run aggregate demand curve is horizontal at the natural rate of inflation. 
C)  the long-run aggregate supply curve is vertical at potential output. 
D)  the long-run supply curve is horizontal at the natural rate of inflation.

Question 17

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 18

The theory which holds that productivity of workers increases with the wage rate is the

Accepted Answer

A)  nominal wage theory. 
B)  living wage theory. 
C)  minimum wage theory. 
D)  efficiency wage theory. 
A)  nominal wage theory. 
B)  living wage theory. 
C)  minimum wage theory. 
D)  efficiency wage theory.

Question 19

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 20

If a person is not employed but is looking for work, she is in the labor force.

Accepted Answer

A) True 
 B)False

Exam 13: The Labor Market in the Macroeconomy

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

An increase in the value people place on their actual time spent working will shift the labor ________ curve to the ________.

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1. At wage rate $6, there is a ________ of labor equal to ________ million people.

If the wage rate in the labor market is $17 and the productivity of workers decreases, which of the following statements is incorrect?

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1. According to classical economists, if the wage rate is $15 the wage rate will ________ to eliminate the ________.

Refer to the information provided in Figure 13.4 below to answer the questions that follow. Figure 13.4 -Refer to Figure 13.4. The demand for labor falls from D to D'. If firms enter into social, or implicit, contracts with workers not to cut wages, then the wage rate will remain at $10 and

Refer to the information provided in Figure 13.7 below to answer the questions that follow. Figure 13.7 -Refer to Figure 13.7. An contractionary monetary policy followed by a rightward shift in the AS curve could move the economy from Point A to Point ________, and then to Point ________.

Suppose that airline workers are laid off during a recession because of an unspoken agreement between airline workers and airline executives that wages will not be reduced. This example is consistent with the

Explicit contracts generally stipulate workers' wages for a period of

When ________, the price level falls, inventories increase and firms respond by reducing output and employment.

If aggregate demand changes while aggregate supply is stable, output and the unemployment rate are

Suppose that cruise ship employees are laid off during a period of significant decrease in demand for cruise vacations because they have a 3-year contract which has locked their wages into place. This example is consistent with the

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

The shape of the short run aggregate supply curve is impacted by changes in the

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,

In the long run, the Phillips curve will be vertical at the natural rate of unemployment if

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

The theory which holds that productivity of workers increases with the wage rate is the

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?

If a person is not employed but is looking for work, she is in the labor force.

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

Money, the Federal Reserve, and the Interest Rate

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

Policy Effects and Cost 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 Economies

Critical Thinking About Research

Filters

An increase in the value people place on their actual time spent working will shift the labor curve to the .

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1. At wage rate $6, there is a of labor equal to million people.

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1. According to classical economists, if the wage rate is $15 the wage rate will to eliminate the .

Refer to the information provided in Figure 13.7 below to answer the questions that follow. Figure 13.7 -Refer to Figure 13.7. An contractionary monetary policy followed by a rightward shift in the AS curve could move the economy from Point A to Point , and then to Point .