Exam 13: The Labor Market in the Macroeconomy

As the unemployment rate declines in response to the economy moving closer and closer to capacity output, the aggregate price level rises at a decreasing rate.

Refer to the information provided in Figure 13.7 below to answer the questions that follow. Figure 13.7 -Refer to Figure 13.7. Which combinations of events could move the economy from Point A to Point B, and then from Point B to Point E?

13.3 Explaining the Existence of Unemployment -When a firm pays higher wages for its workers to improve workers' productivity, the firm pays

Refer to the information provided in Figure 13.8 below to answer the questions that follow. Figure 13.8 -Refer to Figure 13.8. Expected inflation equals 6%

If aggregate supply decreases and aggregate demand remains unchanged

Employment tends to fall when aggregate output falls.

If the economy is at potential output, actual inflation

If aggregate supply increases and aggregate demand remains unchanged,

Refer to the information provided in Figure 13.8 below to answer the questions that follow. Figure 13.8 -Refer to Figure 13.8. Expected inflation at Point B equals

If firms pay wages higher than the market clearing wage, their profits will be reduced.

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

Refer to the information provided in Figure 13.4 below to answer the questions that follow. Figure 13.4 -Refer to Figure 13.4. If the demand for labor falls from D to D' and wages are sticky on the downward side, there will be unemployment of ________ million.

Even though explicit contracts may lead to layoffs during recessions, explicit contracts may still be efficient because such contracts

Suppose that due to an increase in the price of steel, Chrysler had to raise prices on its automobiles, and as a result its sales declined. Due to the decline in sales, Chrysler chose to lay off some employees rather than cut employee wages because of an unspoken agreement between its employees and Chrysler executives that wages would not be reduced. This example is consistent with the

Refer to the information provided in Figure 13.8 below to answer the questions that follow. Figure 13.8 -Refer to Figure 13.8. Expected inflation at Point C equals

Refer to the information provided in Figure 13.7 below to answer the questions that follow. Figure 13.7 -Refer to Figure 13.7. Suppose the economy is initially at Point A. A contractionary fiscal policy moves the economy to Point ________ in the short run.

The relationship between inflation and unemployment is depicted by the

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

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

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