Hw 10

For a given labor force, an increase in real GDP implies a decrease in unemployment.

True

If the population of the united states is 260 million, the labor force is 130 million, and 120 million workers are employed,

7.7

Which of the following is an example of structural unemployment

A geologist who is permanently laid off from an oil company due to a new technological advance

The long run in macroeconomics is a period in which wages and prices are flexible and there is full market adjustment

True

If more people find jobs, the unemployment will definitely fall

False

The Philips curve implies a positive relationship between inflation and unemployment

False

The long-run Phillips curve shows an inverse relation between inflation and unemployment

False

Which of the following is a source of wage stickiness

Fixed wage contracts, minimum wage laws, workers and firms want to avoid complexity of negotiating contracts frequently

Which of the following is true of the economy in the long run?

In the long run, real GDP eventually moves to potential because all wages and prices are assumed to be flexible. The economy can achieve its natural level of employment and potential output at any price level, there is no cyclical unemployment

What's meant by the NAIRU (Natural Rate of Unemployment)?

It is the full-employment unemployment rate, it is the unemployment rate at which there is only frictional and structural unemployment, it is the unemployment rate at which the labor market has fully adjusted

What does the phrase "jobless recovery" refer to?

It refers to a recovery from a recession which does not produce strong growth in employment

What do economists mean by the term "sticky wage"?

It refers to a wage that is slow to adjust to its equilibrium level, creating sustained periods of shortage or surplus in the labor market

Which of the following individuals would not be included in the labor force

Kit, who has retired and is not looking for work

Unemployment that results from a mismatch between worker qualifications and the characteristics employers require is called

Structural

A number of semi-skilled workers in an industry find themselves out of work when improvements in technology render their jobs obsolete. These workers experience

Structural unemployment

Consider the following: A country's frictional unemployment rate is 3%, the natural unemployment rate is 5.5%, and the cyclical unemployment rate is 2.45. Calculate the structural unemployment rate and the unemployment rate

Structural unemployment rate = 2.5%; the unemployment rate =7.9%

Which of the following is a source of frictional unemployment

The time it takes to search for jobs that best matches one's skills

According to classical marginal productivity, workers are paid

The value of their marginal product

An unemployed person is

a person without a job who is actively seeking and available for work

According to Okun's law

an increase in real GDP growth above trend, will lower unemployment

What determines the level of output in the long-run classical model?

capital, labor, productivity

The vertical long-run aggregate supply curve implies that shifts in aggregate

change prices only

The natural level of employment occurs if there is no

cyclical unemployment

The natural rate of unemployment

equals the sum of frictional and structural unemployment

Which of the following reduces the duration of frictional unemployment?

establishing unemployment agencies which give out information about job vancancies

People who are in the process of changing jobs are counted as

frictionally unemployed

The natural rate of unemployment

includes frictional and structural unemployment, is the unemployment rate that exists when the quantity of labor demanded is equal to the quantity of labor supplied

What determines prices and inflation in the long-run classical model?

money supply

Which of the following would tend to increase the natural rate of unemployment

more college graduates entering the labor force

According to the Bureau of Labor Statistics, a person who is not working and is not looking for work is

not a member of the labor force

Cyclical unemployment

occurs only during a recession

Wage and price stickiness

prevents the economy from producing its potential level of real GDP

Suppose that product prices start rising but nominal wages do not. In that case,

real wages will fall and firms will want to produce more because doing so will be profitable.

What determines the real interest rate in the long-run classical model?

savings and investment

The long-run aggregate supply curve is upward sloping rather than vertical in the short run due to

sticky wages

Structural unemployment exists because

technological changes make the skills of the workers incompatible with the skills used on the job

Welfare reforms enacted in 1996 put more pressure on welfare recipients to look for work. The new law mandated cutting off benefits

the natural rate of unemployment and the unemployment rate are likely to increase

In the long run, unemployment will be at the natural state. This implies that

there is no relationship between unemployment and inflation and consequently, the Phillips curve is vertical

The labor force is made up of

those who are employed plus those who are unemployed

In general, the duration of job search will be shorter if

unemployment compensation benefits decrease