Deck 6: Measuring the Price Level and Inflation

Question 1

In the United States between 1980 and 2007, employment:

A) was constant, while the over-sixteen population increased.
B) decreased, while the over-sixteen population increased.
C) grew more rapidly than the over-sixteen population.
D) grew at approximately the same rate as the over-sixteen population.

Answer 1

C

Question 2

All of the following describe trends in labor markets EXCEPT:

A) growing wage equality in the United States in recent decades.
B) a slowdown in real wage growth since the 1970s.
C) substantial growth in the level of employment in the United States.
D) over-sixteen population growth rates that fall short of the growth rate of new jobs in the United States.

Answer 2

A

Question 3

All of the following describe trends in labor markets EXCEPT:

A) growing wage inequality in the United States in recent decades.
B) a slowdown in real wage growth since the 1970s.
C) substantial growth in the level of employment in the United States.
D) over-sixteen population growth rates that exceed the growth rate of new jobs in the United States.

Answer 3

D

Question 4

The growth rate of average annual earnings in the United States from 1973 to 1996 was:

A) higher than it was from 1960 to 1973.
B) lower than it was from 1960 to 1973.
C) the same as it was from 1960 to 1973.
D) roughly equal to zero.

Question 5

In the twentieth century, average real wages have risen substantially:

A) only in the United States.
B) in industrial countries excluding the United States.
C) in industrial countries including the United States.
D) in neither the United States nor other industrial countries.

Question 6

The value of the marginal product of labor equals the marginal product of labor times the:

A) real wage.
B) nominal wage.
C) price of output.
D) quantity of labor.

Question 7

The demand for labor depends on ______ and _______.

A) the supply of labor; the marginal product of labor
B) the supply of labor; the price of output produced
C) the rate of price inflation; the price of the output produced
D) the marginal product of labor; the price of output produced

Question 8

One trend in labor markets is:

A) a decrease in average real wages in the United States and other industrial countries.
B) decreasing wage inequality in the United States.
C) weak rates of job creation in the United States since 1980.
D) a slowdown in real wage growth in the United States since 1973.

Question 9

The following table provides information about production at the XYZ-TV Company. $$\begin{array} { | c | c | c | c | } \hline \text { Number of Workers } & \text { TVs Produced } & \text { Marginal Product } & \begin{array} { c } \text { Value of Marginal } \\\text { Product }\end{array} \\\hline 0 & 0 & \cdots & \cdots \\\hline 1 & 35 & 35 & \$ 35,000 \\\hline 2 & 68 & 33 & \$ 33,000 \\\hline 3 & 99 & 31 & \$ 31,000 \\\hline 4 & 128 & 29 & \$ 29,000 \\\hline 5 & 155 & 27 & \$ 27,000 \\\hline\end{array}$$ How many workers will the XYZ-TV Company hire if the going wage for TV production workers is $60,000?

A) 0
B) 4
C) 5
D) More than 5

Question 10

In the last two decades of the twentieth century, the number of people with jobs in the United States:

A) declined more rapidly than the over-sixteen population.
B) declined more slowly than the over-sixteen population.
C) remained approximately constant.
D) grew more rapidly than the over-sixteen population.

Question 11

In the United States the real wages of the least-skilled, least educated workers have ______ and the wages of best-educated, highest skilled workers have ______.

A) increased; increased
B) declined; increased
C) increased; declined
D) declined; remained constant

Question 12

In the United Sates, the average annual rate of growth of real wages was fastest in the period:

A) 1960-1973.
B) 1960-1996.
C) 1960-2001.
D) 1973-1996.

Question 13

According to the principle of diminishing returns to labor, if the amount of capital and other inputs are held constant, employing additional workers:

A) increases output at an increasing rate.
B) increases output at a constant rate.
C) increases output at a decreasing rate.
D) decreases output at an increasing rate.

Question 14

The following table provides information about production at the XYZ-TV Company. $$\begin{array} { | c | c | c | c | } \hline \text { Number of Workers } & \text { TVs Produced } & \text { Marginal Product } & \begin{array} { c } \text { Value of Marginal } \\\text { Product }\end{array} \\\hline 0 & 0 & \cdots & \cdots \\\hline 1 & 35 & 35 & \$ 35,000 \\\hline 2 & 68 & 33 & \$ 33,000 \\\hline 3 & 99 & 31 & \$ 31,000 \\\hline 4 & 128 & 29 & \$ 29,000 \\\hline 5 & 155 & 27 & \$ 27,000 \\\hline\end{array}$$ How many workers will the XYZ-TV Company hire if the going wage for TV production workers is $32,000?

A) 0
B) 1
C) 2
D) 3

Question 15

The following table provides information about production at the XYZ-TV Company. $$\begin{array} { | c | c | c | c | } \hline \text { Number of Workers } & \text { TVs Produced } & \text { Marginal Product } & \begin{array} { c } \text { Value of Marginal } \\\text { Product }\end{array} \\\hline 0 & 0 & \cdots & \cdots \\\hline 1 & 35 & 35 & \$ 35,000 \\\hline 2 & 68 & 33 & \$ 33,000 \\\hline 3 & 99 & 31 & \$ 31,000 \\\hline 4 & 128 & 29 & \$ 29,000 \\\hline 5 & 155 & 27 & \$ 27,000 \\\hline\end{array}$$ How many workers will the XYZ-TV Company hire if the going wage for TV production workers is $28,000?

A) 1
B) 2
C) 3
D) 4

Question 16

Following the 1960 and 1973 period, average real earnings of workers grew more ______ from 1973 to 1996 and then ______ from 1996 to 2004.

A) slowly; grew more rapidly
B) slowly; slowed even more
C) slowly; grew at about the same rate
D) rapidly; slowed

Question 17

In the market for labor, the price of labor is the:

A) same as price of the product produced by the labor.
B) real wage.
C) marginal product of labor.
D) number of hours employed per year.

Question 18

The marginal product of labor is the additional:

A) wage paid for an additional hour of work.
B) wage paid for an additional worker employed.
C) labor employed to produce one more unit of output.
D) output produced by one more worker.

Question 19

The following table provides information about production at the XYZ-TV Company. $$\begin{array} { | c | c | c | c | } \hline \text { Number of Workers } & \text { TVs Produced } & \text { Marginal Product } & \begin{array} { c } \text { Value of Marginal } \\\text { Product }\end{array} \\\hline 0 & 0 & \cdots & \cdots \\\hline 1 & 35 & 35 & \$ 35,000 \\\hline 2 & 68 & 33 & \$ 33,000 \\\hline 3 & 99 & 31 & \$ 31,000 \\\hline 4 & 128 & 29 & \$ 29,000 \\\hline 5 & 155 & 27 & \$ 27,000 \\\hline\end{array}$$ How many workers will the XYZ-TV Company hire if the going wage for TV production workers is $30,000?

A) 0
B) 1
C) 2
D) 3

Question 20

One trend in labor markets is:

A) a decrease in average real wages in the United States and other industrial countries.
B) decreasing wage inequality in the United States.
C) weak rates of job creation in the United States since 1980.
D) a slowdown in the rate of real wage growth since the early 1970s.

Question 21

Holding other factors constant, if a larger proportion of the population enters the labor force as a result of a growing social acceptance of women working, then the real wages of workers will ______ and employment of workers will _____.

A) increase; increase
B) increase; decrease
C) decrease; not change
D) decrease; increase

Question 22

Holding other factors constant, if computers allow factory workers to manufacture more products per hour, then the real wages of factory workers will ______ and employment of factory workers will _____.

A) increase; increase
B) increase; decrease
C) decrease; not change
D) decrease; increase

Question 23

As the real wage decreases, the quantity of labor demanded ______ and the quantity of labor supplied _______.

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

Question 24

Production data for Joe's Pizza Parlor are as follows. For simplicity assume that labor is the only input. Each pizza sells for $5. $$\begin{array} { | c | c | } \hline \text { Number of Workers } & \text { Pizzas Baked Per Day } \\\hline 0 & 0 \\\hline 1 & 10 \\\hline 2 & 18 \\\hline 3 & 24 \\\hline 4 & 30 \\\hline 5 & 32 \\\hline\end{array}$$ How many workers will Joe hire if he must pay each one $45 a day?

A) 1
B) 2
C) 3
D) 4

Question 25

High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour. $$\begin{array} { | c | c | } \hline \text { Number of Workers } & \text { Chairs Produced Per Hour } \\\hline 0 & 0 \\\hline 1 & 10 \\\hline 2 & 18 \\\hline 3 & 24 \\\hline 4 & 28 \\\hline 5 & 30 \\\hline\end{array}$$ For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $120?

A) 0
B) 3
C) 5
D) More than 5

Question 26

High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour. $$\begin{array} { | c | c | } \hline \text { Number of Workers } & \text { Chairs Produced Per Hour } \\\hline 0 & 0 \\\hline 1 & 10 \\\hline 2 & 18 \\\hline 3 & 24 \\\hline 4 & 28 \\\hline 5 & 30 \\\hline\end{array}$$ For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $70?

A) 1
B) 2
C) 3
D) 4

Question 27

If the price of tables sold by All-Oak Table Co. increases from $400 to $500, then the:

A) supply of labor to All-Oak Table Co. increases.
B) supply of labor to All-Oak Table Co. decreases.
C) demand for labor by All-Oak Table Co. decreases.
D) demand for labor by All-Oak Table Co. increases.

Question 28

The minimum payment you are willing to accept to do a job is your:

A) nominal wage.
B) real wage.
C) reservation price.
D) value of marginal product.

Question 29

High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour. $$\begin{array} { | c | c | } \hline \text { Number of Workers } & \text { Chairs Produced Per Hour } \\\hline 0 & 0 \\\hline 1 & 10 \\\hline 2 & 18 \\\hline 3 & 24 \\\hline 4 & 28 \\\hline 5 & 30 \\\hline\end{array}$$ For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $30?

A) 1
B) 2
C) 3
D) 4

Question 30

If the price of TVs produced by the XYZ-TV Company falls from $1,000 to $750 per TV set, then the:

A) supply of labor to the XYZ-TV Company increases.
B) supply of labor to the XYZ-TV Company decreases.
C) demand for labor by the XYZ-TV Company increases.
D) demand for labor by the XYZ-TV Company decreases.

Question 31

If the existence of alternative opportunities makes people become less willing to work in poultry processing plants, then the real wage of unskilled workers in poultry processing plants is predicted to ______ and the employment of unskilled workers in poultry processing plants is predicted to ______.

A) increase; increase
B) increase; decrease
C) increase; not change
D) decrease; decrease

Question 32

Holding other factors constant, if food prices decline relative to the prices of other products, then the real wages of agricultural workers will ______ and employment of agricultural workers will _____.

A) increase; increase
B) increase; decrease
C) decrease; not change
D) decrease; decrease

Question 33

An increase in the price of the output produced by labor will:

A) increase the supply of labor.
B) decrease the supply of labor.
C) increase the demand for labor.
D) decrease the demand for labor.

Question 34

An increase in the size of the working-age population:

A) increases labor demand.
B) decreases labor demand.
C) increases labor supply.
D) decreases labor supply.

Question 35

Production data for Joe's Pizza Parlor are as follows. For simplicity assume that labor is the only input. Each pizza sells for $5. $$\begin{array} { | c | c | } \hline \text { Number of Workers } & \text { Pizzas Baked Per Day } \\\hline 0 & 0 \\\hline 1 & 10 \\\hline 2 & 18 \\\hline 3 & 24 \\\hline 4 & 30 \\\hline 5 & 32 \\\hline\end{array}$$ How many workers will Joe hire if he must pay each one $35 a day?

A) 1
B) 2
C) 3
D) 4

Question 36

Holding other factors constant, if the education and skills of the typical worker in an economy increases, then the real wages of workers will ______ and employment of workers will _____.

A) increase; increase
B) increase; decrease
C) decrease; not change
D) decrease; increase

Question 37

The demand for labor increases when the:

A) real wage increases.
B) real wage decreases.
C) value of the marginal product of labor increases.
D) value of the marginal product of labor decreases.

Question 38

Firms will hire additional workers as long as the wage:

A) is less than the marginal product of labor.
B) equals the marginal product of labor.
C) is greater than the marginal product of labor.
D) is less than the value of the marginal product of labor.

Question 39

The introduction of a new technology that increases the productivity of labor will:

A) increase the supply of labor.
B) decrease the supply of labor.
C) increase the demand for labor.
D) decrease the demand for labor.

Question 40

Holding other factors constant, if oil prices rise relative to the prices of other products, then the real wages of oil workers will ______ and employment of oil workers will _____.

A) increase; increase
B) increase; decrease
C) decrease; not change
D) decrease; increase

Question 41

Holding other factors constant, technological progress ______ the real wage and ______ employment.

A) increases; increases
B) increases; decreases
C) increases; does not change
D) decreases; increases

Question 42

Larger increases in the demand for labor than in the supply of labor explain:

A) the substantial increase in real wages.
B) the slowdown in real wage growth.
C) increasing wage inequality.
D) skill-biased technological change.

Question 43

Macroland produces dishes and glassware. Before trade, a set of dishes sells for $100 and a set of glasses sells for $50. When Macroland opens to trade, foreign demand for domestically produced china is strong, raising the price of a set of dishes to $125. But foreign competition reduces the demand for domestically produced glasses, so that they now sell for $25 a set. Assuming workers cannot move between industries, the wages of workers producing dishes will ______ and the wages of workers producing glasses will ____.

A) increase; increase
B) increase; not change
C) increase; decrease
D) decrease; increase

Question 44

The slowdown in the growth of real wages in the United States since 1973 is consistent with a concurrent:

A) slowdown in productivity gains.
B) slowdown in the growth of the working age population.
C) slowdown in immigration into the country.
D) speedup in the rate of inflation.

Question 45

A war destroys much of the capital stock in the country of Omega. As a result, holding other factors constant, the real wage in Omega will ______ and employment in Omega will ______.

A) increase; increase
B) increase; decrease
C) increase; not change
D) decrease; decrease

Question 46

Increasing wage inequality results when international trade leads to ______ wages for workers in exporting industries and ______ wages for workers in importing industries.

A) higher; higher
B) higher; lower
C) lower; no change in
D) lower; higher

Question 47

Globalization ______ the wages of workers in the exporting industries and ______ the wages of workers in the import-competing industries.

A) raises; raises
B) raises; lowers
C) raises; does not change
D) lowers; raises

Question 48

The two most important factors contributing to increased productivity in industrialized countries in the twentieth century were:

A) higher relative prices and a larger labor supply.
B) higher relative prices and technological progress.
C) technological progress and increases in the capital stock.
D) technological progress and increases in the labor supply.

Question 49

Slower growth in labor demand in combination with increases in labor supply explains ____________ accompanied by __________.

A) a slowdown in real wage growth; a decline in employment
B) a slowdown in real wage growth; rapid employment growth
C) a slowdown in real wage growth; increasing wage inequality
D) accelerated real wage growth; a decline in employment

Question 50

Initially, workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, so domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, wages in the shoe industry ______ and wages in the computer industry ______.

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

Question 51

As a result of a war in the country of Omega, refugees flee to the country of Alpha to seek employment. Holding other factors constant, the influx of refugees will ______ the real wage in Alpha and ______ employment in Alpha.

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

Question 52

Slower real wage growth since the 1970s accompanied by rapid job growth can be explained by:

A) skill-biased technological change.
B) globalization.
C) a productivity slowdown accompanied by an increase in the labor supply.
D) a productivity slowdown accompanied by a decrease in the labor supply.

Question 53

Long-term increases in productivity that have increased the demand for labor and the real wages of labor have resulted primarily from ______ and _____.

A) technological progress; a modernized capital stock
B) technological progress; an increased labor supply
C) a modernized capital stock; skill-biased technological change
D) a modernized capital stock; an increased labor supply

Question 54

An increase in the demand for workers producing computers for export versus producing agricultural products that can be imported more cheaply from abroad is an example of how increasing wage inequality can result from:

A) the diminishing marginal product of labor.
B) the diminishing marginal product of capital.
C) increasing reservation prices.
D) globalization.

Question 55

Factors increasing the labor supply and thereby contributing to the slowdown in real-wage growth that began in the 1970s include ______ and _____.

A) skill-biased technological change; globalization
B) increased labor force participation by women; the coming-of-age of the baby-boom generation
C) technological progress; diminishing returns to labor
D) increasing wage inequality; globalization

Question 56

In recent decades, slower growth in the demand for labor accompanied by an accelerated growth in the supply of labor in the U.S. explains:

A) slower real wage growth and double-digit rates of unemployment.
B) slower real wage growth and increasing wage inequality.
C) slower real wage growth and an increase in the number of people with jobs.
D) increasing wage inequality and double-digit rates unemployment.

Question 57

Initially, workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, so domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, the demand for labor in the shoe industry ______ and the demand for labor in the computer industry ______.

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

Question 58

Holding other factors constant, an increase in the capital stock ______ the real wage and ______ employment.

A) increases; increases
B) increases; decreases
C) increases; does not change
D) decreases; increases

Question 59

Two explanations for increasing wage inequality are ______ and ________.

A) technological progress; a modernized capital stock
B) increased labor supply; a slowdown in productivity growth
C) increased worker mobility; transition aid
D) globalization; skill-biased technological change

Question 60

Real wages increased in industrialized countries in the twentieth century because the demand for labor:

A) increased more rapidly than the supply of labor increased.
B) increased more slowly than the supply of labor increased.
C) increased, while the supply of labor decreased.
D) decreased, while the supply of labor increased.

Question 61

Who from among the following would be counted as unemployed?

A) A person with a part-time job who wants and is looking for a full-time job.
B) All of these people would be counted as unemployed.
C) A person who is willing to work and has looked for a job in the last week.
D) A person who is willing to work but has not looked for a job in two months.

Question 62

Technological change that affects the marginal products of high-skilled and low-skilled workers differently is called ______ technological change.

A) capital-labor
B) skill-biased
C) marginal-productivity
D) high-low

Question 63

Skill-biased technological change increases wage inequality by altering the ______ high-skilled workers relative to low-skilled workers.

A) reservation price of
B) mobility of
C) supply of
D) demand for

Question 64

The introduction of word processing software that increases the demand for workers with computer skills relative to those without such skills is an example of:

A) increasing reservation prices.
B) skill-biased technological change.
C) the diminishing marginal product of labor.
D) globalization.

Question 65

Most economists generally argue ______ trying to block technological advances because these technological advances ______.

A) in favor of; cause the economy to grow to rapidly
B) in favor of; increase wage inequality
C) against; are necessary for improved standards of living
D) against; promote wage equality

Question 66

Skill-biased technological has different effects on the marginal products of ______ workers and ______ workers.

A) male; female
B) union; nonunion
C) government; private-sector
D) highly trained; low-skilled

Question 67

Who from among the following would be classified as out of the labor force?

A) A person with a part-time job who wants and is looking for a full-time job.
B) None of these people would be classified as out of the labor force.
C) A person who is willing to work and has looked for a job in the last week.
D) A person who is willing to work but has not looked for a job in two months.

Question 68

If the Luddites had succeeded in ______ the introduction of labor-saving machinery, economic growth in Great Britain may have been ______.

A) blocking; slower
B) blocking; more rapid
C) promoting; slower
D) promoting; more rapid

Question 69

Globalization and skill-biased technological change have contributed to:

A) the long-term growth in real wages.
B) the slowdown in productivity since 1973.
C) increasing wage inequality.
D) high rates of employment in Western Europe.

Question 70

The increase in wage inequality resulting from globalization can be reversed through:

A) revoking the principle of comparative advantage.
B) increases in worker mobility.
C) decreases in worker mobility.
D) making markets more competitive.

Question 71

A Luddite is:

A) someone who opposes the introduction of new technologies.
B) a worker whose real wage rises as a result of globalization.
C) a fictional character from American folk history.
D) a consumer who refuses to buy imported goods, even if they are cheaper.

Question 72

Each person who is 16 years or older is considered to be in one of the following categories:

A) employed, unemployed, or discouraged worker.
B) part-time worker, full-time worker, or unemployed.
C) part-time worker, full-time worker, or out of the labor force.
D) employed, unemployed, or out of the labor force.

Question 73

Who from among the following would be classified as employed?

A) Brenda Smith, an 18 year old full-time college student.
B) Mario Faubert, a NHL hockey player at home sick with the flu.
C) Jack Little, a 21 year old new college graduate actively looking for his first job.
D) Sarah Lopez, a retired public school teacher.

Question 74

The unemployment rate equals the number of people:

A) unemployed.
B) unemployed divided by the number employed.
C) unemployed divided by the labor force.
D) unemployed plus discouraged workers divided by the labor force.

Question 75

Who from among the following would be classified as out of the labor force?

A) Brenda Smith, an 18 year old college student employed part-time at a fast food restaurant.
B) Mario Faubert, a NHL hockey player at home sick with the flu.
C) Jack Little, a 21 year old new college graduate actively looking for his first job.
D) Amanda Pie, a full-time homemaker.

Question 76

From an economic perspective, the best response to increased wage inequality is to:

A) block future technological change.
B) stop all international trade.
C) provide transition aid to disadvantaged workers.
D) make skill-biased technological change illegal.

Question 77

The labor force equals the number of people:

A) employed.
B) aged 16 years and older.
C) both employed and unemployed.
D) employed, unemployed and discouraged.

Question 78

A person 16 years or older who does not work, but is actively looking for work, is officially classified as:

A) employed.
B) unemployed.
C) chronically unemployed.
D) out of the labor force.

Question 79

Globalization can increase wage inequality in the United States if international competition is primarily in industries requiring ______ workers.

A) many
B) few
C) highly-skilled
D) low-skilled

Question 80

Which of the following events would increase the unemployment rate, if nothing else changed?

A) Unemployed workers leave the labor force.
B) Employed workers leave the labor force.
C) Workers from outside the labor force become employed.
D) Unemployed workers become employed.