Question 1

A new policy is implemented that guarantees every adult an annual income of $10,000 whether they work or not. This will most likely shift the

Accepted Answer

A)  labor demand curve to the right. 
B)  labor supply curve to the left. 
C)  labor supply curve to the right. 
D)  labor demand curve to the left. 
A)  labor demand curve to the right. 
B)  labor supply curve to the left. 
C)  labor supply curve to the right. 
D)  labor demand curve to the left.

Question 2

A vertical aggregate supply curve implies a vertical Phillips curve.

Accepted Answer

A) True 
 B)False

Question 3

Economists who argue that the AS curve is vertical in the long run at potential output also argue that in the long run, the ________ is vertical at the natural rate of unemployment.

Accepted Answer

A)  Phillips curve 
B)  aggregate demand curve 
C)  aggregate expenditures curve 
D)  production possibility curve 
A)  Phillips curve 
B)  aggregate demand curve 
C)  aggregate expenditures curve 
D)  production possibility curve

Question 4

Which of the following may shift the labor supply curve?

Accepted Answer

A)  an increase in the wage rate 
B)  an increase in the value people place on their time 
C)  an increase in the price of the output of the firm 
D)  an increase in the corporate tax rate 
A)  an increase in the wage rate 
B)  an increase in the value people place on their time 
C)  an increase in the price of the output of the firm 
D)  an increase in the corporate tax rate

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. Which of the following can change the equilibrium wage rate from $9 to $6?

Accepted Answer

A)  The value people put on their leisure time increases. 
B)  The value of what firms produce increases. 
C)  The productivity of workers decreases. 
D)  The productivity of workers increases. 
A)  The value people put on their leisure time increases. 
B)  The value of what firms produce increases. 
C)  The productivity of workers decreases. 
D)  The productivity of workers increases.

Question 6

If the quantity of labor demanded and the quantity of labor supplied are brought into equilibrium by rising and falling wage rates, there should be no persistent unemployment and the unemployment rate should be zero.

Accepted Answer

A) True 
 B)False

Question 7

Structural unemployment

Accepted Answer

A)  arises from the time it takes employers to find appropriate employees. 
B)  is most likely to arise from a recession. 
C)  is less severe during economic downturns. 
D)  is most likely to arise as a result of technological changes. 
A)  arises from the time it takes employers to find appropriate employees. 
B)  is most likely to arise from a recession. 
C)  is less severe during economic downturns. 
D)  is most likely to arise as a result of technological changes.

Question 8

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 $9, there is a ________ of labor equal to ________ million people.

Accepted Answer

A)  surplus; 210 
B)  shortage; 210 
C)  surplus; 120 
D)  None of the above are correct. 
A)  surplus; 210 
B)  shortage; 210 
C)  surplus; 120 
D)  None of the above are correct.

Question 9

Frictional and structural unemployment usually decrease during recessions.

Accepted Answer

A) True 
 B)False

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. The expected inflation rate is 6% if the economy is

Accepted Answer

A)  on SRPC1. 
B)  on SRPC2. 
C)  on SRPC3. 
D)  above SRPC2. 
A)  on SRPC1. 
B)  on SRPC2. 
C)  on SRPC3. 
D)  above SRPC2.

Question 11

Refer to the information provided in Figure 13.2 below to answer the questions that follow.   Figure 13.2
-Refer to Figure 13.2. If this firm pays the efficient wage of $11,

Accepted Answer

A)  the firm's demand for labor will increase until $11 is also the equilibrium wage. 
B)  the supply of labor will decrease until $11 is also the equilibrium wage. 
C)  there will be an excess supply of labor of 2,000. 
D)  there will be an excess supply of labor of 3,000. 
A)  the firm's demand for labor will increase until $11 is also the equilibrium wage. 
B)  the supply of labor will decrease until $11 is also the equilibrium wage. 
C)  there will be an excess supply of labor of 2,000. 
D)  there will be an excess supply of labor of 3,000.

Question 12

Refer to the information provided in Figure 13.2 below to answer the questions that follow.   Figure 13.2
-Refer to Figure 13.2. Assume that the productivity of workers decreases as the wage rate decreases. The efficiency wage

Accepted Answer

A)  would be below $10. 
B)  would equal $10. 
C)  would be above $10. 
D)  could either be above or below $10. 
A)  would be below $10. 
B)  would equal $10. 
C)  would be above $10. 
D)  could either be above or below $10.

Question 13

Classical economists believe that a reason the aggregate supply curve is ________ is because people who are not working are those who have chosen not to work at the prevailing wage rate.

Accepted Answer

A)  horizontal 
B)  vertical 
C)  positively sloped 
D)  negatively sloped 
A)  horizontal 
B)  vertical 
C)  positively sloped 
D)  negatively sloped

Question 14

Refer to the information provided in Figure 13.3 below to answer the questions that follow.   Figure 13.3
-Refer to Figure 13.3. A minimum wage of $8

Accepted Answer

A)  will lead to an excess demand for labor of 20. 
B)  will lead to an excess demand for labor of 40. 
C)  will lead to an excess demand for labor of 60. 
D)  will have no effect because the minimum wage is set below the equilibrium wage and for a minimum wage to have any effect on the labor market it must be above the equilibrium wage. 
A)  will lead to an excess demand for labor of 20. 
B)  will lead to an excess demand for labor of 40. 
C)  will lead to an excess demand for labor of 60. 
D)  will have no effect because the minimum wage is set below the equilibrium wage and for a minimum wage to have any effect on the labor market it must be above the equilibrium wage.

Question 15

If the aggregate supply is vertical, an (a) ________ in the price level ________ unemployment rate.

Accepted Answer

A)  decrease; increases 
B)  increase; doesn't change 
C)  decrease; decreases 
D)  increase; increases 
A)  decrease; increases 
B)  increase; doesn't change 
C)  decrease; decreases 
D)  increase; increases

Question 16

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 17

If aggregate demand decreases while aggregate supply is stable, income will ________ and the unemployment rate will ________.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease

Question 18

Efficiency wage theory suggests that firms may hold wages ________ the market clearing rate because they believe that the productivity of workers ________ with the wage rate.

Accepted Answer

A)  above; increases 
B)  above; decreases 
C)  below; increases 
D)  below; decreases 
A)  above; increases 
B)  above; decreases 
C)  below; increases 
D)  below; decreases

Question 19

The classical view of the labor market is basically consistent with the assumption of a vertical (or almost vertical) ________ curve.

Accepted Answer

A)  production possibility 
B)  aggregate expenditures 
C)  aggregate demand 
D)  aggregate supply 
A)  production possibility 
B)  aggregate expenditures 
C)  aggregate demand 
D)  aggregate supply

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 13: The Labor Market in the Macroeconomy

A new policy is implemented that guarantees every adult an annual income of $10,000 whether they work or not. This will most likely shift the

A vertical aggregate supply curve implies a vertical Phillips curve.

Economists who argue that the AS curve is vertical in the long run at potential output also argue that in the long run, the ________ is vertical at the natural rate of unemployment.

Which of the following may shift the labor supply curve?

Refer to the information provided in Figure 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1. Which of the following can change the equilibrium wage rate from $9 to $6?

If the quantity of labor demanded and the quantity of labor supplied are brought into equilibrium by rising and falling wage rates, there should be no persistent unemployment and the unemployment rate should be zero.

Structural unemployment

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 $9, there is a ________ of labor equal to ________ million people.

Frictional and structural unemployment usually decrease during recessions.

Refer to the information provided in Figure 13.7 below to answer the questions that follow. Figure 13.7 -Refer to Figure 13.7. The expected inflation rate is 6% if the economy is

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2. If this firm pays the efficient wage of $11,

Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2 -Refer to Figure 13.2. Assume that the productivity of workers decreases as the wage rate decreases. The efficiency wage

Classical economists believe that a reason the aggregate supply curve is ________ is because people who are not working are those who have chosen not to work at the prevailing wage rate.

Refer to the information provided in Figure 13.3 below to answer the questions that follow. Figure 13.3 -Refer to Figure 13.3. A minimum wage of $8

If the aggregate supply is vertical, an (a) ________ in the price level ________ unemployment rate.

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

If aggregate demand decreases while aggregate supply is stable, income will ________ and the unemployment rate will ________.

Efficiency wage theory suggests that firms may hold wages ________ the market clearing rate because they believe that the productivity of workers ________ with the wage rate.

The classical view of the labor market is basically consistent with the assumption of a vertical (or almost vertical) ________ curve.

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

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 13.1 below to answer the questions that follow. Figure 13.1 -Refer to Figure 13.1. At a wage rate of $9, there is a of labor equal to million people.

If the aggregate supply is vertical, an (a) in the price level unemployment rate.

If aggregate demand decreases while aggregate supply is stable, income will and the unemployment rate will .

Efficiency wage theory suggests that firms may hold wages the market clearing rate because they believe that the productivity of workers with the wage rate.