Question 1

Those who believe that the wage rate does not adjust quickly to clear the labor market are likely to believe that the aggregate supply curve is vertical.

Accepted Answer

A) True 
 B)False

Question 2

Efficiency wages generally increase worker morale.

Accepted Answer

A) True 
 B)False

Question 3

Classical economists believe that economic policies are ineffective because they don't affect aggregate demand in the economy.

Accepted Answer

A) True 
 B)False

Question 4

What definition of unemployment would you expect classical economists to use?

Accepted Answer

A)  anyone who is actively seeking work 
B)  anyone who is willing to work if the market wage increases 
C)  anyone who is willing to work at the current market wage, but has not yet been able to find employment 
D)  anyone who is currently not working 
A)  anyone who is actively seeking work 
B)  anyone who is willing to work if the market wage increases 
C)  anyone who is willing to work at the current market wage, but has not yet been able to find employment 
D)  anyone who is currently not working

Question 5

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 increases as the wage rate increases. 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 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 wage rate $15, there is a ________ of labor equal to ________ million people.

Accepted Answer

A)  surplus; 150 
B)  shortage; 150 
C)  shortage; 120 
D)  surplus; 120 
A)  surplus; 150 
B)  shortage; 150 
C)  shortage; 120 
D)  surplus; 120

Question 7

The type of unemployment that is due to changes in the structure of the economy is

Accepted Answer

A)  adjustable unemployment. 
B)  structural unemployment. 
C)  frictional unemployment. 
D)  cyclical unemployment. 
A)  adjustable unemployment. 
B)  structural unemployment. 
C)  frictional unemployment. 
D)  cyclical unemployment.

Question 8

The Phillips curve suggests that if we want to raise the inflation rate, we must accept a higher unemployment rate in return.

Accepted Answer

A) True 
 B)False

Question 9

Employment tends to rise when

Accepted Answer

A)  aggregate output falls. 
B)  unemployment rises. 
C)  aggregate output rises. 
D)  labor productivity falls. 
A)  aggregate output falls. 
B)  unemployment rises. 
C)  aggregate output rises. 
D)  labor productivity falls.

Question 10

Which of the following is not a reason why firms pay efficiency wages?

Accepted Answer

A)  to reduce turnovers 
B)  to abide by minimum wage laws 
C)  to improve morale 
D)  to reduce shirking of work 
A)  to reduce turnovers 
B)  to abide by minimum wage laws 
C)  to improve morale 
D)  to reduce shirking of work

Question 11

If the aggregate supply is ________, an increase in the price level does not change the unemployment rate.

Accepted Answer

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

Question 12

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, a decrease in money supply will move the economy to Point ________ in the short run.

Accepted Answer

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

Question 13

If aggregate demand increases and expectations regarding inflation remain constant,

Accepted Answer

A)  the economy moves along the short-run Phillips curve. 
B)  the short-run Phillips curve shifts to the right. 
C)  the short-run Phillips curve shifts to the left. 
D)  the long-run Phillips curve shifts to the right. 
A)  the economy moves along the short-run Phillips curve. 
B)  the short-run Phillips curve shifts to the right. 
C)  the short-run Phillips curve shifts to the left. 
D)  the long-run Phillips curve shifts to the right.

Question 14

If productivity increases as wages increase and firms pay a wage ________ the market clearing wage, then a potential benefit these firms may receive is a(n) ________ in employee turnover.

Accepted Answer

A)  below; increase 
B)  below; reduction 
C)  above; increase 
D)  above; reduction 
A)  below; increase 
B)  below; reduction 
C)  above; increase 
D)  above; reduction

Question 15

The classical view of the labor market holds that unemployment in the economy consists of frictional and structural unemployment.

Accepted Answer

A) True 
 B)False

Question 16

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 rises from D' to D. If firms had entered into explicit contracts with workers that set wages for 3 years, then the wage rate will ________ and employment will ________.

Accepted Answer

A)  remain at $8; rise to 400 million 
B)  remain at $10; fall to 200 million 
C)  rise to $10; remain at 200 million 
D)  rise to $10; rise to 300 million 
A)  remain at $8; rise to 400 million 
B)  remain at $10; fall to 200 million 
C)  rise to $10; remain at 200 million 
D)  rise to $10; rise to 300 million

Question 17

If the actual unemployment rate is below NAIRU, the change in the inflation rate will be positive.

Accepted Answer

A) True 
 B)False

Question 18

The economy experiences both a ________ price level and ________ unemployment when aggregate supply increases with aggregate demand stable.

Accepted Answer

A)  falling; falling 
B)  falling; rising 
C)  rising; rising 
D)  rising; falling 
A)  falling; falling 
B)  falling; rising 
C)  rising; rising 
D)  rising; falling

Question 19

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 C, and then from Point C to Point D?

Accepted Answer

A)  a contractionary fiscal policy followed by a leftward shift in the AS curve 
B)  a contractionary fiscal policy followed by a rightward shift in the AS curve 
C)  an expansionary fiscal policy followed by a leftward shift in the AS curve 
D)  an expansionary fiscal policy followed by a rightward shift in the AS curve 
A)  a contractionary fiscal policy followed by a leftward shift in the AS curve 
B)  a contractionary fiscal policy followed by a rightward shift in the AS curve 
C)  an expansionary fiscal policy followed by a leftward shift in the AS curve 
D)  an expansionary fiscal policy followed by a rightward shift in the AS curve

Question 20

Other things equal, the unemployment rate falls if

Accepted Answer

A)  the demand for labor decreases. 
B)  aggregate output decreases. 
C)  the supply of labor decreases. 
D)  aggregate demand decreases. 
A)  the demand for labor decreases. 
B)  aggregate output decreases. 
C)  the supply of labor decreases. 
D)  aggregate demand decreases.

Exam 13: The Labor Market in the Macroeconomy

Those who believe that the wage rate does not adjust quickly to clear the labor market are likely to believe that the aggregate supply curve is vertical.

Efficiency wages generally increase worker morale.

Classical economists believe that economic policies are ineffective because they don't affect aggregate demand in the economy.

What definition of unemployment would you expect classical economists to use?

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 increases as the wage rate increases. The efficiency wage

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 $15, there is a ________ of labor equal to ________ million people.

The type of unemployment that is due to changes in the structure of the economy is

The Phillips curve suggests that if we want to raise the inflation rate, we must accept a higher unemployment rate in return.

Employment tends to rise when

Which of the following is not a reason why firms pay efficiency wages?

If the aggregate supply is ________, an increase in the price level does not change the unemployment 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. If the economy is at Point A, a decrease in money supply will move the economy to Point ________ in the short run.

If aggregate demand increases and expectations regarding inflation remain constant,

If productivity increases as wages increase and firms pay a wage ________ the market clearing wage, then a potential benefit these firms may receive is a(n) ________ in employee turnover.

The classical view of the labor market holds that unemployment in the economy consists of frictional and structural unemployment.

If the actual unemployment rate is below NAIRU, the change in the inflation rate will be positive.

The economy experiences both a ________ price level and ________ unemployment when aggregate supply increases with aggregate demand stable.

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 C, and then from Point C to Point D?

Other things equal, the unemployment rate falls if

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 wage rate $15, there is a of labor equal to million people.

If productivity increases as wages increase and firms pay a wage the market clearing wage, then a potential benefit these firms may receive is a(n) in employee turnover.

The economy experiences both a price level and unemployment when aggregate supply increases with aggregate demand stable.