ECON CHAPTER 7 UNEMPLOYMENT

If the steady-state 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 separation) must be: a.0.08 b.0.125 c.0.22 d.0.435

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: a.0.02 b.0.08 c.0.10 d.0.18

0.18

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: a.1 percent b. 9 percent c.10 percent d.about 11 percent

10 percent

In past nonrecessionary periods, a typical worker in the United States who is covered by unemployment insurance insurance receives _________ percent of his or her former wage for _________ weeks. a. 50;26 b. 50;52 c. 67;26 d. 67;52

50;26

The natural rate of unemployment in the United States since 1950 has averaged between ________ and ________ percent. a.0; 1 b.1; 3 c.5; 6 d.10; 15

5; 6

If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals ________ percent (round to the nearest percent). a.0 b.9 c.10 d.20

9

Unemployment caused by the time it takes workers to search for a job is called __________ unemployment. a.frictional b.structural c.efficiency d.insider

frictional

One reason for unemployment is that: a.it tales time to match workers and jobs b.all jobs are identical c.the labor market d.a laid-off worker can immediately find a new job at the market wage

it takes time to match workers and jobs

Sectoral shifts: a.lead to wage rigidity b.explain the payment of efficiency wages c.depend on the level of the minimum wage d.make frictional employment inevitable

ma

Any policy aimed at lowering the natural rate of unemployment must either ______ the rate of job separation or ______ the rate of job finding. a.reduce; reduce b.increase; increase c.reduce; increase d.increase; reduce

reduce; increase

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: a. f/(f+s) b. (f+s)/f c. s/(s+f) d. (s+f)/s

s/(s+f)

Economists call the changes in the composition of demand among industries and regions: a.insider-outsider conflicts b.sectoral shifts c.moral hazards d.adverse selection

sectoral shifts

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

softening the economic hardship of unemployment

The natural rate of unemployment is: a.the average rate of unemployment around which the economy fluctuates b.about 10 percent of the labor force c.a rate that never changes d.the transition of individuals between employment and unemployment

the average rate of unemployment around which the economy fluctuates

Frictional unemployment is inevitable because: a.different sectors do not shift b.the economy needs to be lubricated c.workers never quit their jobs to change careers d.the demand for different goods always fluctuates

the demand for different goods always fluctuates

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

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

A policy that increases the job-finding rate ________ the natural rate of unemployment. a.will increase b.will decrease c.will not change d.could either increase or decrease

will decrease

Which of the following is an example of frictional unemployment. a.Dave searches for a new job after voluntary moving to San Diego. b.Elaine is willing to work for less than the minimum wage, but employers cannot hire her. c.Bill is qualifies and would like to be an airline pilot's, but airline do not find it profitable to hire him at the wage established by the airline pilot's union. d.Joan is willing yo work at the going wage, but there are no jobs availableterm-20

Dave searches for a new job after voluntary moving to San Diego

A policy that decreases the job separation rate ________ the natural rate of unemployment a.will increase b.will decrease c.will not change d.could either increase or decrease

will decrease

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

never been close to zero

Frictional unemployment is unemployment caused by: a.wage rigidity b.minimum-wage legislation c.the time it takes workers to search for a job d.clashes between the motives of insiders and outsiders

the time it takes workers to search for a job

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

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. a.labor force; labor force b.labor force; unemployed c.employed; labor force d. unemployed; employed

unemployed; employed

The macroeconomic problem that affects individuals is most directly and severely is: a.inflation b.unemployment c.low savings d.low investment

unemployment