ECON Chapter-7

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 month (the rate of job separations) must be:

0.08.

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:

decrease in the real wage.

Paying efficiency wages helps firms reduce the problem of moral hazard by:

encouraging unsupervised workers to maintain a high level of productivity.

The minimum wage:

has its greatest impact on teenage unemployment.

Which of the following hypotheses is consistent with fewer hours worked per year in Europe than in the United States?

higher tax rates in Europe than in the United States

Across countries of Europe, greater spending on unemployment insurance tends to _____ unemployment and more "active" labor-market policies tend to _____ unemployment.

increase; decrease

Earlier retirement in Europe than in the United States contributes to:

lower employment-to-population ratios in Europe than in the United States.

Sectoral shifts:

make frictional employment inevitable.

Transitions into and out of the labor force:

make unemployment statistics difficult to interpret.

Government policies directed at reducing frictional unemployment include:

making unemployment insurance 100 percent experience rated.

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.

If the underground economy is larger in Europe than in the United States, then the difference in the _____ number of hours worked between Europe and the United States may be smaller than the difference in the _____ numbers of hours worked.

actual; measured

Entry into and exit from the labor force are important to the determination of the unemployment rate because:

almost one-half of all spells of unemployment end in the unemployed person's withdrawal from the labor market.

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

will decrease

Discouraged workers are counted as:

out of the labor force.

Permitting a lower minimum wage for teenagers would likely:

raise unemployment among unskilled adults.

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

The generosity of unemployment insurance benefits is measured by:

the replacement rate and the duration of benefits.

The recent reduced demand for unskilled workers relative to skilled workers has led to ______ for unskilled workers in Europe compared to ______ for unskilled workers in the United States.

unemployment; lower wages

Workers unemployed as a result of wage rigidity are:

waiting for a job to become available.