Question 1

Cyclical unemployment

Accepted Answer

A)  arises from recessions. 
B)  is due to changes in the structure of the economy. 
C)  arises from the time it takes employers to find appropriate employees. 
D)  is due to seasonal changes. 
A)  arises from recessions. 
B)  is due to changes in the structure of the economy. 
C)  arises from the time it takes employers to find appropriate employees. 
D)  is due to seasonal changes.

Question 2

Suppose the wage rate in the labor market is $20 and the demand for labor increases. If wages are sticky

Accepted Answer

A)  unemployment decreases. 
B)  unemployment increases. 
C)  unemployment stays the same. 
D)  wages decrease to eliminate the surplus. 
A)  unemployment decreases. 
B)  unemployment increases. 
C)  unemployment stays the same. 
D)  wages decrease to eliminate the surplus.

Question 3

Refer to the information provided in Figure 13.4 below to answer the questions that follow.   Figure 13.4
-Refer to Figure 13.4. 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 4

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 5

Efficiency wages may lower employee turnover.

Accepted Answer

A) True 
 B)False

Question 6

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 natural unemployment rate equals 6%, the unemployment rate at U2 could be

Accepted Answer

A)  4%. 
B)  5%. 
C)  6%. 
D)  7%. 
A)  4%. 
B)  5%. 
C)  6%. 
D)  7%.

Question 7

If firms set wages too high, the result is unemployment.

Accepted Answer

A) True 
 B)False

Question 8

Economists who argue that the AS curve is vertical in the long run at potential GDP also argue that the Phillips curve in the long run is

Accepted Answer

A)  vertical at the natural rate of unemployment. 
B)  upward sloping. 
C)  downward sloping. 
D)  horizontal at the natural rate of inflation. 
A)  vertical at the natural rate of unemployment. 
B)  upward sloping. 
C)  downward sloping. 
D)  horizontal at the natural rate of inflation.

Question 9

Refer to the information provided in Figure 13.5 below to answer the questions that follow.   Figure 13.5
-Refer to Figure 13.5. 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 10

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 at Point A, the cost of raw material increased dramatically, and the aggregate demand did not change, the economy could move to Point

Accepted Answer

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

Question 11

If the Phillips curve is ________ in the long run, there is no trade-off between inflation and unemployment in the long run.

Accepted Answer

A)  negatively sloped 
B)  concave 
C)  convex 
D)  vertical 
A)  negatively sloped 
B)  concave 
C)  convex 
D)  vertical

Question 12

Sally stopped looking for work six months ago, so she would not be a part of the labor force.

Accepted Answer

A) True 
 B)False

Question 13

The labor force includes those people with a job and

Accepted Answer

A)  those people who are looking for work. 
B)  those people training for a job. 
C)  those people who formerly worked and are now retired. 
D)  homemakers. 
A)  those people who are looking for work. 
B)  those people training for a job. 
C)  those people who formerly worked and are now retired. 
D)  homemakers.

Question 14

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 SRPC1, 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 15

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 16

Suppose the wage rate in the labor market is $8 and more people entered the labor force, which of the following statements is correct?

Accepted Answer

A)  If wages are flexible, then wages will increase. 
B)  If wages are sticky, the unemployment rate increases. 
C)  If wages are sticky, the unemployment rate stays the same. 
D)  If wages are flexible, the unemployment rate increases. 
A)  If wages are flexible, then wages will increase. 
B)  If wages are sticky, the unemployment rate increases. 
C)  If wages are sticky, the unemployment rate stays the same. 
D)  If wages are flexible, the unemployment rate increases.

Question 17

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 18

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 19

The social contract explanation for the existence of downwardly sticky wages focuses on

Accepted Answer

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

Question 20

Employment contracts that stipulate workers' wages, usually for a period of 1 to 3 years, are known as

Accepted Answer

A)  social contracts. 
B)  implicit contracts. 
C)  explicit contracts. 
D)  none of the above 
A)  social contracts. 
B)  implicit contracts. 
C)  explicit contracts. 
D)  none of the above

Exam 13: The Labor Market in the Macroeconomy

Cyclical unemployment

Suppose the wage rate in the labor market is $20 and the demand for labor increases. If wages are sticky

Refer to the information provided in Figure 13.4 below to answer the questions that follow. Figure 13.4 -Refer to Figure 13.4. 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

The economy experiences both inflation and unemployment when

Efficiency wages may lower employee turnover.

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 natural unemployment rate equals 6%, the unemployment rate at U2 could be

If firms set wages too high, the result is unemployment.

Economists who argue that the AS curve is vertical in the long run at potential GDP also argue that the Phillips curve in the long run is

Refer to the information provided in Figure 13.5 below to answer the questions that follow. Figure 13.5 -Refer to Figure 13.5. If aggregate demand shifts while aggregate supply is stable, the relationship between the price level and the unemployment rate is represented in Panel

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 at Point A, the cost of raw material increased dramatically, and the aggregate demand did not change, the economy could move to Point

If the Phillips curve is ________ in the long run, there is no trade-off between inflation and unemployment in the long run.

Sally stopped looking for work six months ago, so she would not be a part of the labor force.

The labor force includes those people with a job 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. If the economy is on SRPC1, then the expected inflation rate is

Other things equal, the unemployment rate rises if

Suppose the wage rate in the labor market is $8 and more people entered the labor force, which of the following statements is correct?

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.

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

The social contract explanation for the existence of downwardly sticky wages focuses on

Employment contracts that stipulate workers' wages, usually for a period of 1 to 3 years, are known as

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. If the natural unemployment rate equals 6%, the unemployment rate at U₂ could be

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 SRPC₁, then the expected inflation rate is