Question 1

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 2

Suppose that workers in the food service industry go on strike during an economic downturn because they are unwilling to accept a cut in their wages unless they know that workers in other industries are receiving similar wage cuts. This example is consistent with the

Accepted Answer

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

Question 3

At the natural rate of unemployment, frictional unemployment is zero.

Accepted Answer

A) True 
 B)False

Question 4

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 expansionary fiscal policy followed by a leftward 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 5

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 6

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 a wage rate of $________, there is a shortage of labor equal to ________ million people.

Accepted Answer

A)  6; 60 
B)  6; 180 
C)  15; 150 
D)  15; 120 
A)  6; 60 
B)  6; 180 
C)  15; 150 
D)  15; 120

Question 7

If the unemployment rate rises above the natural rate of unemployment in the short run, the inflation rate will rise.

Accepted Answer

A) True 
 B)False

Question 8

When ________, the price level rises, inventories decrease and firms respond by increasing 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 9

The ________ unemployment rate can be pushed below the ________ rate, but only in the short run and not without inflation.

Accepted Answer

A)  frictional; structural 
B)  cyclical; frictional 
C)  natural; cyclical 
D)  measured; natural 
A)  frictional; structural 
B)  cyclical; frictional 
C)  natural; cyclical 
D)  measured; natural

Question 10

If cost-of-living adjustments are written into labor contracts, wage raises are higher the greater the inflation rate.

Accepted Answer

A) True 
 B)False

Question 11

Refer to the information provided in Figure 13.6 below to answer the questions that follow.   Figure 13.6
-Refer to Figure 13.6. If unemployment is on the x-axis, which panel represents the long-run Phillips curve?

Accepted Answer

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

Question 12

Refer to the information provided in Figure 13.6 below to answer the questions that follow.   Figure 13.6
-Refer to Figure 13.6. Panel A represents the typical shape of the

Accepted Answer

A)  short-run Phillips curve. 
B)  long-run Phillips curve. 
C)  short-run aggregate supply curve. 
D)  long-run aggregate supply curve. 
A)  short-run Phillips curve. 
B)  long-run Phillips curve. 
C)  short-run aggregate supply curve. 
D)  long-run aggregate supply curve.

Question 13

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 14

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 15

The fact that the Phillips curve broke down during the 1970s means that aggregate demand has no effect on inflation.

Accepted Answer

A) True 
 B)False

Question 16

The economy experiences both a falling price level and falling unemployment when

Accepted Answer

A)  aggregate supply increases with aggregate demand stable. 
B)  aggregate demand increases with aggregate supply stable. 
C)  aggregate supply decreases with aggregate demand stable. 
D)  aggregate demand decrease with aggregate supply stable. 
A)  aggregate supply increases with aggregate demand stable. 
B)  aggregate demand increases with aggregate supply stable. 
C)  aggregate supply decreases with aggregate demand stable. 
D)  aggregate demand decrease with aggregate supply stable.

Question 17

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 18

At the natural rate of unemployment, structural unemployment is zero.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Refer to the information provided in Figure 13.7 below to answer the questions that follow.   Figure 13.7
-Refer to Figure 13.7. 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

Exam 13: The Labor Market in the Macroeconomy

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

Suppose that workers in the food service industry go on strike during an economic downturn because they are unwilling to accept a cut in their wages unless they know that workers in other industries are receiving similar wage cuts. This example is consistent with the

At the natural rate of unemployment, frictional unemployment is zero.

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 expansionary fiscal policy followed by a leftward shift in the AS curve could move the economy from Point A to Point ________, and then to Point ________.

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

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 a wage rate of $________, there is a shortage of labor equal to ________ million people.

If the unemployment rate rises above the natural rate of unemployment in the short run, the inflation rate will rise.

When ________, the price level rises, inventories decrease and firms respond by increasing output and employment.

The ________ unemployment rate can be pushed below the ________ rate, but only in the short run and not without inflation.

If cost-of-living adjustments are written into labor contracts, wage raises are higher the greater the inflation rate.

Refer to the information provided in Figure 13.6 below to answer the questions that follow. Figure 13.6 -Refer to Figure 13.6. If unemployment is on the x-axis, which panel represents the long-run Phillips curve?

Refer to the information provided in Figure 13.6 below to answer the questions that follow. Figure 13.6 -Refer to Figure 13.6. Panel A represents the typical shape of the

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

The unemployment rate is

The fact that the Phillips curve broke down during the 1970s means that aggregate demand has no effect on inflation.

The economy experiences both a falling price level and falling unemployment when

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.

At the natural rate of unemployment, structural unemployment is zero.

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

Refer to the information provided in Figure 13.7 below to answer the questions that follow. Figure 13.7 -Refer to Figure 13.7. If the economy is on SRPC2, 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

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

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 expansionary fiscal policy followed by a leftward shift in the AS curve could move the economy from Point A to Point , and then to Point .

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 a wage rate of $, there is a shortage of labor equal to million people.

The unemployment rate can be pushed below the rate, but only in the short run and not without inflation.

Refer to the information provided in Figure 13.7 below to answer the questions that follow. Figure 13.7 -Refer to Figure 13.7. If the economy is on SRPC₂, then the expected inflation rate is