Question 1

How does Statistics Canada define the unemployment rate?

Accepted Answer

A)  as the percentage of those unemployed relative to the percentage employed 
B)  as the percentage of the labour force that is unemployed 
C)  as the percentage of the adult population that is unemployed 
D)  as the percentage of the labour force without full-time employment

Question 2

What do the laws governing the activity of labour unions achieve?

Accepted Answer

A)  They prevent unions from acting as cartels. 
B)  They allow workers joining a unionized firm to choose not to join the union. 
C)  They allow workers the right to representation and collective bargaining. 
D)  They limit the number of unionized organizations.

Question 3

The government operates programs for job training and job information intended to reduce unemployment. Which statement best describes how economists feel about such programs?

Accepted Answer

A)  Most economists agree that such programs are of no use. 
B)  Most economists agree that such programs work very well. 
C)  Some economists claim that the government can do these things no better than firms, and individuals could do them for themselves. 
D)  Some economists believe that the private sector has no role in the process of job search.

Question 4

In 1914, Henry Ford began paying his workers $5 per day, about twice the going wage. As a result, turnover and absenteeism fell, and productivity and profits rose.

Accepted Answer

A) True 
 B)False

Question 5

Consider the following labour data compiled by a government agency:
June 2019
July 2019
June to July 2019
July 2018 to July 2019
Seasonally adjusted
in thousands
in thousands
change in thousands
Both sexes, 15 years and over
Population
30 466.3
30 508.7
42.4
449.9
Labour force
20 531.5
20 541.0
9.5
340.0
Employment
18 908.8
18898.6
-10.2
443.1
Unemployment
1 622.7
1 642.3
19.6
-93.1
a. Between July 2018 and July 2019, employment has increased by 443,100 workers, but the labour force increased by only 340,000 workers. Explain the difference in these numbers. Is it possible that the increase in labour force is greater than the increase in employment?
b. During the same period, employment increased by 443,100 workers, but unemployment decreased by only 93,100. Are these data plausible? How could this difference be explained?

Accepted Answer

The answer of Consider the following labour data compiled by...

Question 6

What does the theory of efficiency wages explain?

Accepted Answer

A)  why setting wages at the equilibrium level may increase unemployment 
B)  why it may be in the best interest of firms to offer wages that are above the equilibrium level 
C)  why the most efficient way to pay workers is to pay them according to their skills 
D)  why it is efficient for firms to set wages at the equilibrium level

Question 7

Unemployment due to job search is best classified as cyclical unemployment.

Accepted Answer

A) True 
 B)False

Question 8

Suppose the summer labour market for construction workers in the city of Red Deer is described by the equations LD = 500 - 10w and LS = -100 + 10w, where L is the number of workers and w is hourly wage.
a) Draw the labour supply and demand curves.
b) Find the equilibrium wage and employment.
c) How much is the unemployment rate in equilibrium?
d) Suppose that 50 less workers are needed in winter in equilibrium compared to the summer equilibrium employment. Calculate the winter equilibrium wage, and show in a graph the winter labour market model compared to the summer one.

Accepted Answer

The answer of Suppose the summer labour market for construction...

Question 9

-Refer to Table 9-1. What is the adult male population in Bolivar?

Accepted Answer

A)  85 million 
B)  90 million 
C)  130 million 
D)  135 million

Question 10

Prime Minister Bigego is running for re-election against Finance Minister Pander. Bigego proclaims that more people are working now than when he took office. Pander says that the unemployment rate is higher now than when Bigego took office. What can you conclude?

Accepted Answer

A)  Both of them could be telling the truth if the labour-force participation rate and the labour force both grew. 
B)  Both of them could be telling the truth if the labour-force participation rate and the labour force both fell. 
C)  Both of them could be telling the truth if the labour force grew slower than employment. 
D)  Both of them could be telling the truth if the labour force grew faster than employment.

Question 11

Suppose the market for landscape workers in Kitchener, Ontario, can be described by the following labour demand and supply equations: LD = 340 - 10w and LS = 100 + 20w.
a) Calculate the equilibrium wage and employment in this market.
b) Suppose the local government passes a bill requiring all employers in this industry to provide bottled water to each worker to protect them from hot weather. This has been estimated to cost employers $1 per worker per hour. This way, workers do not need to purchase water by themselves, so that the bill effectively increases the wage by $1 per hour. What are the new labour demand and supply equations?
c) Calculate the new equilibrium wage and employment. Draw a graph to show the change.

Accepted Answer

The answer of Suppose the market for landscape workers in...

Question 12

What is cyclical unemployment closely associated with?

Accepted Answer

A)  long-term economic growth 
B)  short-run ups and downs of the economy 
C)  fluctuations in the natural rate of unemployment 
D)  seasonal fluctuations in spending

Question 13

-Refer to Table 9-1. What is the adult female population in Bolivar?

Accepted Answer

A)  40 million 
B)  70 million 
C)  100 million 
D)  105 million

Question 14

What is most likely to happen when someone becomes unemployed?

Accepted Answer

A)  It is likely that the person will be unemployed a long time and that most of the unemployed he or she joins have been unemployed a long time. 
B)  It is likely that the person will be unemployed for a long time, even though most of the unemployed he or she joins have been unemployed for a short time. 
C)  It is likely that the person will be unemployed for a short time, even though most of the unemployed he or she joins have been unemployed for a long time. 
D)  It is likely that the person will be unemployed for a short time, and that most of the unemployed he or she joins have been unemployed for a short time.

Question 15

How is a college student who is not working or looking for a job counted?

Accepted Answer

A)  as neither employed nor part of the labour force 
B)  as unemployed and in the labour force 
C)  as unemployed, but not in the labour force 
D)  as employed and in the labour force

Question 16

-Refer to Table 9-1. What is the adult female labour-force participation rate in Bolivar?

Accepted Answer

A)  4.76 percent 
B)  33.33 percent 
C)  61.90 percent 
D)  66.67 percent

Question 17

In a year when net employment growth is zero, approximately how many employees are moving from failing to growing firms?

Accepted Answer

A)  1 million 
B)  1.85 million 
C)  2 million 
D)  2.85 million

Question 18

-Refer to Table 9-1. What is the adult female labour force in Bolivar?

Accepted Answer

A)  40 million 
B)  70 million 
C)  100 million 
D)  105 million

Question 19

April is the CEO of a toy company that hires non-union labour. According to the theory of efficiency wages, if she decides to pay her workers more than the competitive equilibrium wage, what is most likely to happen?

Accepted Answer

A)  The profits of her firm may increase. 
B)  The higher wages will induce her workers to shirk their responsibilities. 
C)  The turnover of her workers may increase. 
D)  She will face a shortage of quality workers.

Question 20

Which cause of unemployment is NOT associated with an excess supply of labour?

Accepted Answer

A)  minimum-wage laws 
B)  unions 
C)  job search 
D)  efficiency wages

Exam 9: Unemployment and Its Natural Rate

How does Statistics Canada define the unemployment rate?

What do the laws governing the activity of labour unions achieve?

The government operates programs for job training and job information intended to reduce unemployment. Which statement best describes how economists feel about such programs?

In 1914, Henry Ford began paying his workers $5 per day, about twice the going wage. As a result, turnover and absenteeism fell, and productivity and profits rose.

What does the theory of efficiency wages explain?

Unemployment due to job search is best classified as cyclical unemployment.

-Refer to Table 9-1. What is the adult male population in Bolivar?

Prime Minister Bigego is running for re-election against Finance Minister Pander. Bigego proclaims that more people are working now than when he took office. Pander says that the unemployment rate is higher now than when Bigego took office. What can you conclude?

What is cyclical unemployment closely associated with?

-Refer to Table 9-1. What is the adult female population in Bolivar?

What is most likely to happen when someone becomes unemployed?

How is a college student who is not working or looking for a job counted?

-Refer to Table 9-1. What is the adult female labour-force participation rate in Bolivar?

In a year when net employment growth is zero, approximately how many employees are moving from failing to growing firms?

-Refer to Table 9-1. What is the adult female labour force in Bolivar?

April is the CEO of a toy company that hires non-union labour. According to the theory of efficiency wages, if she decides to pay her workers more than the competitive equilibrium wage, what is most likely to happen?

Which cause of unemployment is NOT associated with an excess supply of labour?