econ ch 7

The earned income tax credit: does not raise labor costs. is not an alternative to raising the minimum wage. reduces the incomes of poor working families. increases the government's tax revenue.

does not raise labor costs.

More frequent holidays for workers in Europe than in the United States contribute to: higher employment-to-population ratios in Europe than in the United States. more hours worked per year by the average employed person in Europe than the average employed person in the United States. fewer hours worked per year by the average employed person in Europe than the average employed person in the United States. lower employment-to-population ratios in Europe than in the United States.

fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

Which of the following rankings (from most severe to least severe) best captures the degree of hardship associated with various types of unemployment? discouraged worker, short term, long term job leavers, involuntary part time, discouraged workers involuntarily part time, job leavers, job losers, job losers, job leavers, marginally attached

job losers, job leavers, marginally attached

Assume that a country experiences a reduction in productivity that shifts the labor demand curve downward and to the left. If the real wage were rigid, this would lead to: no change in the real wage and a fall in unemployment. no change in the real wage and no change in unemployment. a decrease in the real wage. no change in the real wage and a rise in unemployment.

no change in the real wage and a rise in unemployment.

European unemployment rates are positively correlated with each of the following except: the percentage of the previous wage replaced by unemployment insurance. the amount of coordination among employers in bargaining with unions. the length of the period during which unemployment benefits can be collected. the percentage of the labor force that is unionized.

the amount of coordination among employers in bargaining with unions.

In a steady state: no hiring or firings are occurring. the number of people losing jobs exceeds the number of people finding jobs. the number of people finding jobs exceeds the number of people losing jobs. the number of people finding jobs equals the number of people losing jobs.

the number of people finding jobs equals the number of people losing jobs.

All of the following are reasons for frictional unemployment except: geographic mobility takes time. workers have different preferences and abilities. the flow of information is imperfect. unemployed workers accept the first job offer that they receive.

unemployed workers accept the first job offer that they receive.

Examples of "active" labor-market policies include all of the following except: job-training programs unemployment insurance subsidized employment job-search assistance

unemployment insurance

Workers unemployed as a result of wage rigidity are: waiting for a job to become available. not eligible to receive unemployment insurance benefits. actively searching for a job to match their skills. relocating to another part of the country as a result of sectoral shifts.

waiting for a job to become available.

If the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.01 and the fraction of the unemployed who find a job each month is 0.09 (the rate of job findings), then the natural rate of unemployment is: 1 percent. 10 percent. about 11 percent. 9 percent.

10 percent.

Suppose that over the course of a year 100 people are unemployed for 4 weeks each (the short-term unemployed), while 10 people are unemployed for 52 weeks each (the long-term unemployed). Approximately what percentage of the total spells of unemployment were attributable to the long-term unemployed? 9 percent. 43.5 percent. 10 percent. 56.5 percent.

9 percent.

Differences in unemployment rates across demographic groups are most closely correlated with differences in: efficiency wage rates. job-finding rates. job-separation rates. unionization rates.

job-separation rates.

Assume that a country experiences a reduction in productivity that lowers the marginal product of labor for any given level of labor. In this case, the: labor supply curve shifts to the left. labor supply curve shifts to the right. labor demand curve shifts upward and to the right. labor demand curve shifts downward and to the left.

labor demand curve shifts downward and to the left.

Government policies directed at reducing frictional unemployment include: making unemployment insurance 100 percent experience rated. making government part of the union-firm wage bargaining process. increasing the earned income credit. abolishing minimum-wage laws.

making unemployment insurance 100 percent experience rated.

Data on unemployment in the United States show that: members of the labor force over age 55 have the highest unemployment rates. most weeks of unemployment are attributable to the long-term unemployed. most spells of unemployment are long. the duration of unemployment falls during recessions.

most weeks of unemployment are attributable to the long-term unemployed.

When insiders have a much greater impact on the wage-bargaining process than do outsiders, the negotiated wage is likely to be ______ the equilibrium wage. much less than about one-half of almost equal to much greater than

much greater than

The unemployment rate in the United States since 1952 has: remained constant from year to year. equaled the natural rate of unemployment in every year. gravitated toward a steady-state rate of zero. never been close to zero.

never been close to zero.

Paying efficiency wages helps firms reduce the problem of adverse selection by: encouraging unsupervised workers to maintain a high level of productivity. generating additional profits that can be used to pay for more proficient hiring managers. keeping labor unions from organizing workers in the firm. providing an incentive for the best-qualified workers to remain with the firm.

providing an incentive for the best-qualified workers to remain with the firm.

Unemployment insurance increases the amount of frictional unemployment by: inducing workers to accept the first job offer that they receive. softening the economic hardship of unemployment. making workers more frantic in their search for new jobs. making employers more reluctant to lay off workers.

softening the economic hardship of unemployment.

The unemployment resulting when real wages are held above equilibrium is called ______ unemployment, while the unemployment that occurs as workers search for a job that best suits their skills is called ______ unemployment. structural; frictional efficiency; inefficiency efficiency; structural frictional; efficiency

structural; frictional