HW4

A "small" economy is one in which the:

domestic interest rate equals the world interest rate.

More frequent holidays for workers in Europe than in the United States contribute to:

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

Compared to long-term unemployment, short-term unemployment is more likely to be:

frictional unemployment.

Unemployment insurance schemes mainly increase:

frictional unemployment.

Short-term unemployment is most likely to be ______ unemployment, while long-term unemployment is mostly likely to be _____ unemployment.

frictional; structural

Many economists believe that the rise in European unemployment from 1960 to 2010 was caused by:

generous unemployment benefits.

The minimum wage:

has its greatest impact on teenage unemployment.

The unemployment insurance system may be desirable because unemployment insurance:

induces workers to reject unattractive job offers.

If the rate of unemployment is neither rising nor falling, then the number of people finding jobs must equal the number of people:

losing or leaving jobs.

Any policy aimed at lowering the natural rate of unemployment must either ______ the rate of job separation or ______ the rate of job finding.

reduce; increase

If the government increases the amount of unemployment insurance that unemployed workers can collect, the amount of frictional unemployment would be expected to:

rise.

Measured unemployment may be lower than actual unemployment because:

some individuals may want a job but have become DISCOURAGED and stopped looking for one.

The natural rate of unemployment is:

the average rate of unemployment around which the economy fluctuates.

Policies to substantially reduce the natural rate of unemployment should be targeted at:

the long-term unemployed

When the real wage is above the level that equilibrates supply and demand:

the quantity of labor supplied EXCEEDS the quantity demanded.

If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals ______ percent (rounded to the nearest percent).

9

All of the following are reasons for frictional unemployment except:

unemployed workers accept the first job offer that they receive.

Examples of "active" labor-market policies include all of the following except:

unemployment insurance

Which of the following is NOT a cause for real wage rigidity?

unemployment insurance

All of the following policies were adopted by the government in an attempt to reduce the natural rate of unemployment except: (Q9)

unemployment insurance. (Q9)

The macroeconomic problem that affects individuals most directly and severely is:

unemployment.

Minimum-wage laws are an example of:

wage rigidity.

A policy that increases the job-finding rate _____ the natural rate of unemployment.

will decrease

Which of the following characteristics made the 2008-2009 recession differ most sharply from previous recessions?

a large spike in the duration of unemployment

Assume that a country experiences a reduction in productivity that shifts the labor demand curve downward and to the left. If the labor market were always in equilibrium, this would lead to:

a lower real wage and no change in unemployment.

In a small open economy, if the world interest rate is r1, then the economy has:

a trade surplus

An increase in the trade deficit of a small open economy could be the result of:

an increase in government spending.

An increase in the trade surplus of a small open economy could be the result of:

an increase in the world interest rate

In 2007 in the United States among labor-force members ages 16 to 19, the highest unemployment rate was for:

black males.

Unions may cause unemployment if:

insiders force real wages higher than the market-clearing level.

When Henry Ford paid his workers $5 per day when the prevailing wage was between $2 and $3 a day:

it raised the efficiency of his workers.

One reason for unemployment is that:

it takes time to match workers and jobs.

A small open economy with perfect capital mobility is characterized by all of the following except that:

its domestic interest rate always exceeds the world interest rate.

The unemployment rate in the United States since 1952 has:

never been close to zero.

Unemployment statistics count discouraged workers, who want jobs but have stopped looking for jobs, as:

no longer in the labor force.

Wage rigidity:

prevents labor demand and labor supply from reaching the equilibrium level.

Permitting a lower minimum wage for teenagers would likely:

raise unemployment among unskilled adults.

Transitions into and out of the labor force:

reduce the amount of frictional unemployment