Macro Chapter 8 Questions

Periods of unusually low production in an economy result in ________ unemployment.

cyclical

The extra unemployment that occurs during periods of recessions is called ________ unemployment.

cyclical

Two explanations for increasing wage inequality are ________ and ________.

globalization; skill-biased technological change

Based on the labor market diagram below, if the minimum wage is increased from $10 to $12 per hour, the numbered of unemployed workers will increase by ________ workers.

13

Based on the figure, if a union contract requires that the wage workers are paid be raised from $25 to $30 per hour, the number of unemployed workers will increase by ________ workers.

18

Based on the figure, if a union contract requires that workers be paid $25 per hour, there will be ________ unemployed workers.

21

Which of the following is an example of structural unemployment?

Dora lost her job when the textile factory closed. She does not have skills to work in another industry and has been unemployed for over a year.

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

a slowdown in real wage growth; rapid employment growth

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

against; are necessary for improved standards of living

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 ________.

declined; increased

Compared to the 1960 and 1973 period, average real earnings of workers ________ from 1973 to 1995 and then ________ from 2007 to 2016.

declined; slowed again

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.

decrease; increase

Features of the labor market that are likely to cause structural unemployment include all of the following except:

differences in the skills and experience of workers.

Heterogeneity and the dynamic nature of labor markets are the principal causes of ________ unemployment.

frictional

Short-term unemployment that is associated with the process of matching workers with jobs is called ________ unemployment.

frictional

The costs of unemployment are lowest (and perhaps even negative) for ________ unemployment.

frictional

Martha did not like her job as a receptionist, so she quit and is looking for one that better suits her artistic talents. Ting Pei would like to work, but employers are not willing to hire him because he does not speak English. Martha is ________ unemployed and Ting Pei is ________ unemployed.

frictionally; structurally

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:

globalization.

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

higher-skilled; lower-skilled

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

increase the demand for labor.

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

increases in worker mobility

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

increases labor supply.

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

increases; decreases

Assume that the union wage already exceeds the market-clearing wage. If the union wage is increased, holding other factors constant, then the number unemployed ________ and the number employed ________.

increases; decreases

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

increases; increases

Globalization and skill-biased technological change have contributed to:

increasing wage inequality.

Frictional unemployment may be economically beneficial if:

it leads to a better match between worker and job.

Compared to Western Europe, over the last three decades unemployment in the United States is ________ and the rate of job creation is ________.

lower; faster

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

price of output.

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

provide transition aid to disadvantaged workers.

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

raises; lowers

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

real wage.

Frictional unemployment is

short-term unemployment that is associated with the process of matching workers with jobs.

Long-term chronic unemployment that results even when the economy is producing at a normal rate is called ________ unemployment.

structural

Long-term increases in productivity that have increased the demand for labor, and raised real wages, have resulted primarily from ________ and ________.

technological progress; a modernized capital stock

Cyclical unemployment is:

the extra unemployment that occurs during periods of recession.

Structural unemployment will decrease when

the minimum wage is decreased.

Structural unemployment occurs because

there are long-term mismatches between workers skills and jobs available.

Government assistance to workers whose employment prospects have worsened is called:

transition aid.