Econ Chapter 7 (1-50)

The earned income tax credit:

does not raise labor costs

Unemployment cause by the time it takes workers to search for a job is called _____ unemployment:

frictional

In the case of unions, the conflict of interest between different groups of workers results in in insiders wanting _____, while outsiders want _____.

high wages; more hirings

If wage rigidity holds the real wage above the equilibrium level, an increase in the supply of labor will _____ the number unemployed.

increase.

The unemployment insurance system may be desirable because unemployment insurance:

induces workers to reject unattractive job offers.

Sectoral shifts:

make frictional employment inevitable.

Government policies directed at reducing frictional unemployment include:

making unemployment insurance 100 percent experience rated

ALL of the following statements about minimum-wage workers in the US are correct EXCEPT:

minimum-wage workers are more likely to be male.

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 greater than

When there is structural unemployment, the real wage is:

rigid at a leve above the market-clearing level.

Economists call the changes in composition of demand among industries and regions:

sectoral shifts.

Unemployment insurance increases the amount of frictional unemployment by:

softening the economic hardship of unemployment.

The unemployment resulting from wage rigidity and job rationing is called _____ unemployment.

structural

The unemployment resulting when real wages are held above equilibrium is called _____ unemployment, while the unemployment that occurs as workers search for ajob that best suits their skills is called _____ unemployment.

structural; frictional

The natural rate of unemployment is:

the average rate of unemployment around which the economy fluctuates

If the steady-state rate of unemployment equals 0.125 and the fraction of unemployed workers who find jobs each month (the rate of job findings) is 0.56, then the fraction of employed workers who lose their jobs each moths (the rate of job separations) must be:

0.08

If the steady-state rate of unemployment equals 0.10 and the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.02, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be:

0.18

Economists who have studied minimum-wage laws in the United States find that a 10 percent increase in the minimum wage increases teenage unemployment by about:

1 to 3 percent.

In past nonrecessionary periods, a typical worker in the United States who is covered by unemployment insurance receives _____ percent of his or her former wages for _____ weeks.

50; 26

The natural rate of unemployment in the US since 1950 has averaged between _____ and _____ percent.

5; 6

In a steady state:

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

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

the quantity of labor supplied exceeds the quantity demanded.

Frictional unemployment is unemployment cause by:

the time it takes workers to search for a job.

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.

In the model of the steady-state unemployment rate with a fixed labor force, the rate of job finding equals the percentage of the _____ who find a job each month, while the rate of job separation equals the percentage of the _____ who lose their job each month.

unemployed; employed

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

unemployment

ALL of the following policies were adopted by the government in an attempt to reduce the natural rate of unemployment EXCEPT:

unemployment insurance.

Workers unemployed as a result of wage rigidity are:

waiting for a job to become available.

A policy that decreases the job separation rate _____ the natural rate of unemployment:

will decrease

A policy that increase the job-finding rate _____ the natural rate of unemployment:

will decrease

According to studies of individual unemployed workers, these workers are most likely to find a job:

within a few weeks of their unemployment insurance running out.

Which of the following is an example of frictional unemployment?

Dave searches for a new job after voluntarily moving to San Diego.

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:

10 Percent

The percentage of workers who belong to unions in the US is approximately:

13 percent

The minimum wage:

has its greatest impact on teenage unemployment.

If s is the rate of job separation, f is the rate of job finding, and both rates are constant, then the unemployment rate is approximately:

s/(s+f)

Frictional unemployment is inevitable because:

the demand for different goods always fluctuates

Which of the following is the best example of structural unemployment?

Kirby is seeking a job as an airline pilot, but the high union wages in the industry have limited the number of jobs available.

ALL of the following are causes of structural unemployment EXCEPT:

Unemployment insurance.

Unions contribute to structural unemployment when collective bargaining results in wages:

above the equilibrium level.

If wage rigidity holds the real wage above the equilibrium level, an increase in the demand of labor will _____ the number unemployed.

decrease

One reason for unemployment is that:

it takes time to match workers and jobs.

Public policy to increase the job finding rate include _____ and public policy to decrease the job separation rate include _____ .

job training programs; 100 percent experience rated unemployment insurance

The unemployment rate in the United States since 1952 has:

never been close to zero

Firms currently have incentives to temporarily lay off workers because firms typically are charged for _____ of workers' unemployment benefits.

only a part of

Most current unemployment-insurance programs are:

partially experience rated.

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

Wage rigidly:

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

Permitting a lower minimum wage for teenages would likely:

raise unemployment among unskilled adults.