Question 1

Explicit contracts help explain the existence of sticky wages.

Accepted Answer

A) True 
 B)False

Question 2

In the classical view of the labor market, it is implied that unemployment does not exist.

Accepted Answer

A) True 
 B)False

Question 3

If inflation expectations change, a contractionary fiscal policy causes

Accepted Answer

A)  the long-run Phillips curve to shift. 
B)  the short-run Phillips curve to shift. 
C)  the short-run Phillips curve to remain constant. 
D)  a movement along the short-run Phillips curve. 
A)  the long-run Phillips curve to shift. 
B)  the short-run Phillips curve to shift. 
C)  the short-run Phillips curve to remain constant. 
D)  a movement along the short-run Phillips curve.

Question 4

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 $12

Accepted Answer

A)  will lead to unemployment of 10. 
B)  will lead to unemployment of 20. 
C)  will lead to unemployment of 40. 
D)  will have no effect because the minimum wage is set above the equilibrium wage and for a minimum wage to have any effect on the labor market it must be below the equilibrium wage. 
A)  will lead to unemployment of 10. 
B)  will lead to unemployment of 20. 
C)  will lead to unemployment of 40. 
D)  will have no effect because the minimum wage is set above the equilibrium wage and for a minimum wage to have any effect on the labor market it must be below the equilibrium wage.

Question 5

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 4%, the unemployment rate at U0 could be

Accepted Answer

A)  3%. 
B)  4%. 
C)  5%. 
D)  6%. 
A)  3%. 
B)  4%. 
C)  5%. 
D)  6%.

Question 6

Frictional unemployment is the type that arises due to recessions.

Accepted Answer

A) True 
 B)False

Question 7

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 ________ will lead to unemployment of 40.

Accepted Answer

A)  $8 
B)  $10 
C)  $12 
D)  > $12 
A)  $8 
B)  $10 
C)  $12 
D)  > $12

Question 8

If the ________ curve shifts from year to year and the ________ curve does not, then the short run Phillips curve would be downward sloping.

Accepted Answer

A)  aggregate demand; aggregate supply 
B)  aggregate supply; aggregate demand 
C)  employment; inflation 
D)  inflation; employment 
A)  aggregate demand; aggregate supply 
B)  aggregate supply; aggregate demand 
C)  employment; inflation 
D)  inflation; employment

Question 9

A firm may benefit by paying workers ________ than the market clearing wage because the higher wages may lead to ________ worker morale.

Accepted Answer

A)  less; improved 
B)  less; declining 
C)  more; improved 
D)  more; declining 
A)  less; improved 
B)  less; declining 
C)  more; improved 
D)  more; declining

Question 10

The government raises the marginal income tax rates so that after-tax wages are decreased. This most likely will shift the labor

Accepted Answer

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

Question 11

Structural 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 12

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

Accepted Answer

A)  unemployment decreases. 
B)  there will be a surplus of workers. 
C)  there will be a shortage of workers. 
D)  there will be equilibrium in the labor market. 
A)  unemployment decreases. 
B)  there will be a surplus of workers. 
C)  there will be a shortage of workers. 
D)  there will be equilibrium in the labor market.

Question 13

According to the classical theory, an expansionary monetary policy ________ the price level and ________ output in the long run.

Accepted Answer

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

Question 14

If a policy is implemented that reduces unemployment benefits by 50 percent and reduces by 50 percent the time the unemployed can collect these benefits, then this would most likely shift the

Accepted Answer

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

Question 15

The government lowers the marginal income tax rates so that after-tax wages are increased. This most likely will shift the labor

Accepted Answer

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

Question 16

In the recession of 2008-2009, the unemployment rate rose to over 10 percent.

Accepted Answer

A) True 
 B)False

Question 17

In the long run, the Phillips curve will be ________ at the natural rate of unemployment if the long-run aggregate supply curve is vertical at potential output.

Accepted Answer

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

Question 18

According to the classical economists, those who are not working

Accepted Answer

A)  have chosen not to work at the market wage. 
B)  are too productive to be hired at the current wage. 
C)  are unable to find a job at the current wage rate. 
D)  have given up looking for a job, but would accept a job at the current wage if one were offered to them. 
A)  have chosen not to work at the market wage. 
B)  are too productive to be hired at the current wage. 
C)  are unable to find a job at the current wage rate. 
D)  have given up looking for a job, but would accept a job at the current wage if one were offered to them.

Question 19

Cost of living adjustments in labor contracts offer no protection to workers from unexpected inflation.

Accepted Answer

A) True 
 B)False

Question 20

Suppose the equilibrium wage rate in the labor market is $10 and the demand for labor increases. If wages are sticky, there will be a

Accepted Answer

A)  surplus of labor and the wage rate declines. 
B)  shortage of labor and the wage rate increases. 
C)  shortage of labor and the wage rate stays the same. 
D)  surplus of labor and the wage rate increases. 
A)  surplus of labor and the wage rate declines. 
B)  shortage of labor and the wage rate increases. 
C)  shortage of labor and the wage rate stays the same. 
D)  surplus of labor and the wage rate increases.

Exam 13: The Labor Market in the Macroeconomy

Explicit contracts help explain the existence of sticky wages.

In the classical view of the labor market, it is implied that unemployment does not exist.

If inflation expectations change, a contractionary fiscal policy causes

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 $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 natural unemployment rate equals 4%, the unemployment rate at U0 could be

Frictional unemployment is the type that arises due to recessions.

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 ________ will lead to unemployment of 40.

If the ________ curve shifts from year to year and the ________ curve does not, then the short run Phillips curve would be downward sloping.

A firm may benefit by paying workers ________ than the market clearing wage because the higher wages may lead to ________ worker morale.

The government raises the marginal income tax rates so that after-tax wages are decreased. This most likely will shift the labor

Structural unemployment

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

According to the classical theory, an expansionary monetary policy ________ the price level and ________ output in the long run.

If a policy is implemented that reduces unemployment benefits by 50 percent and reduces by 50 percent the time the unemployed can collect these benefits, then this would most likely shift the

The government lowers the marginal income tax rates so that after-tax wages are increased. This most likely will shift the labor

In the recession of 2008-2009, the unemployment rate rose to over 10 percent.

In the long run, the Phillips curve will be ________ at the natural rate of unemployment if the long-run aggregate supply curve is vertical at potential output.

According to the classical economists, those who are not working

Cost of living adjustments in labor contracts offer no protection to workers from unexpected inflation.

Suppose the equilibrium wage rate in the labor market is $10 and the demand for labor increases. If wages are sticky, there will be a

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 4%, the unemployment rate at U₀ could be

If the curve shifts from year to year and the curve does not, then the short run Phillips curve would be downward sloping.

A firm may benefit by paying workers than the market clearing wage because the higher wages may lead to worker morale.

According to the classical theory, an expansionary monetary policy the price level and output in the long run.