CH 7

Suppose that over the course of a year 100 people are unemployed for 4 weeks each (the short-term unemployed), while 10 people are unemployed for 52 weeks each (the long-term unemployed). Approximately what percentage of the total spells of unemployment were attributable to the long-term unemployed? A) 9 percent B) 10 percent C) 43.5 percent D) 56.5 percent

A) 9 percent

Unions contribute to structural unemployment when collective bargaining results in wages: A) above the equilibrium level. B) below the minimum wage. C) below the equilibrium level. D) above the level of unemployment compensation.

A) above the equilibrium level

As the relative demand for unskilled workers falls, wages for unskilled workers ______, and unemployment compensation becomes a ______ attractive option. A) fall; more B) fall; less C) rise; more D) rise; less

A) fall; more

Data on unemployment in the United States show that: A) most spells of unemployment are long. B) most weeks of unemployment are attributable to the long-term unemployed. C) members of the labor force over age 55 have the highest unemployment rates. D) the duration of unemployment falls during recessions.

B) most weeks of unemployment are attributable to the long-term

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: A) no change in the real wage and a rise in unemployment. B) no change in the real wage and no change in unemployment. C) no change in the real wage and a fall in unemployment. D) a decrease in the real wage.

a

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

a. frictional

One reason for unemployment is that: A) it takes time to match workers and jobs. B) all jobs are identical. C) the labor market is always in equilibrium. D) a laid-off worker can immediately find a new job at the market wage.

a. it takes time to match workers and jobs.

the natural rate of unemployment in the US since 1950 has averaged between _____ and ______ percent. a. 0;1 b. 1;3 c. 5;6 d. 10;15

c. 5;6

the earned income tax credit a. increases the government's tax revenue b. reduces the incomes of poor working families c. does not raise labor costs d. is not an alternative to raising the minimum wage

c. does not raise labor costs

when there is structural unemployment, the real wage is: a. rigid at a level below the market-clearing level b. rigid at the market-clearing level c. rigid at a level above the market-clearing level d. flexible

c. rigid at a level above the market-clearing level

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.

d. 0.18

the minimum wage: a. is usually about 75 percent of the average wage earned in manufacturing b. raises the wages of highly skilled workers c. encourages master workers to take on apprentices d. has its greatest impact on teenage unemployment

d. has its greatest impact on teenage unemployment

Which of the following rankings (from most severe to least severe) best captures the degree of hardship associated with various types of unemployment? a. discouraged workers, short term, long term b. involuntarily part-time, job leavers, job losers c. job losers, job leavers, marginally attached d. job leavers, involuntarily part-time, discouraging workers

d. job leavers, involuntarily part time, discouraging workers

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.

d. softening the economic hardship of unemployment.

Transitions into and out of the labor force: A) rarely occur. B) do not affect unemployment statistics. C) make the interpretation of unemployment statistics complicated. D) reduce the amount of frictional unemployment.

A) rarely occur.

Efficiency-wage theories suggest that a firm may pay workers more than the market-clearing wage for all of the following reasons except to: A) reduce labor turnover. B) improve the quality of the firm's labor force. C) increase worker effort. D) reduce the firm's wage bill.

A) reduce labor turnover.

When the real wage is above the level that equilibrates supply and demand: A) the quantity of labor supplied exceeds the quantity demanded. B) the quantity of labor demanded exceeds the quantity supplied. C) there is no unemployment. D) the labor market clears.

A) the quantity of labor supplied exceeds the quantity demanded.

Assume that a country experiences a reduction in productivity that shifts the labor demand curve downward and to the left. If the labor market were always in equilibrium, this would lead to: A) a lower real wage and a rise in unemployment. B) a lower real wage and no change in unemployment. C) a lower real wage and less unemployment. D) no change in real wage or in unemployment.

B) a lower real wage and no change in unemployment.

Public policy to increase the job finding rate includes _____, and public policy to decrease the job separation rate includes _____. A) government employment agencies; higher unemployment insurance benefits B) government employment agencies; 100 percent experience-rated unemployment insurance C) higher minimum wage laws; payment of unemployment benefits for longer periods D) higher efficiency wages; partially experience-rated unemployment insurance

B) government employment agencies; 100 percent experience-rated

Much of the difference in unemployment rates across Europe is attributable to differences in: A) short-term unemployment. B) long-term unemployment. C) frictional unemployment. D) the natural rate of unemployment.

B) long-term unemployment.

Paying efficiency wages helps firms reduce the problem of moral hazard by: A) generating additional profits that can be used to improve working conditions. B) matching the wages each worker is paid to the number of units of output each worker produces. C) encouraging unsupervised workers to maintain a high level of productivity. D) providing an incentive for the best-qualified workers to remain with the firm.

C) encouraging unsupervised workers to maintain a high level of productivity.

According to Olivier Blanchard, Europeans are more likely to use increases in real wages resulting from technological progress to increase ______, and Americans are more likely to use these increases in real wages to increase ______. A) hours of work; hours of leisure B) consumption of goods and services; hours of leisure C) hours of leisure; consumption of goods and services D) unemployment insurance benefits; efficiency wages

C) hours of leisure; consumption of goods and services

When outsiders have a greater role than doing insiders in the wage-bargaining process, the negotiated wage is likely to be ______ the equilibrium wage. A) much greater than B) much less than C) much closer to D) about twice

C) much closer to

Examples of active? labor-market policies include all of the following except: A) job-search assistance B) subsidized employment C) unemployment insurance D) job-training programs

C) unemployment insurance

All of the following are causes of structural unemployment except: A) minimum-wage laws. B) the monopoly power of unions. C) unemployment insurance. D) efficiency wages.

C) unemployment insurance.

Entry into and exit from the labor force are important to the determination of the unemployment rate because: A) more than one-half of the unemployed have only recently entered the labor force. B) most of the unemployed are young workers still looking for their first job. C) discouraged workers are counted as part of the labor force. D) almost one-half of all spells of unemployment end in the unemployed person's withdrawal from the labor market.

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

More frequent holidays for workers in Europe than in the United States contribute to: A) higher employment-to-population ratios in Europe than in the United States. B) lower employment-to-population ratios in Europe than in the United States. C) more hours worked per year by the average employed person in Europe than the average employed person in the United States. D) fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

D) fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

Short-term unemployment is most likely to be ______ unemployment, while long-term unemployment is mostly likely to be _____ unemployment. A) structural; frictional B) structural; the natural rate of C) the natural rate of; frictional D) frictional; structural

D) frictional; structural

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

b will decrease

Firms currently have incentives to temporarily lay off workers because firms typically are charged for ______ of workers' unemployment benefits. a. all b. only a part c. none d. twice the cost

b, only a part

In 2007 in the United States among labor force members ages 16-19, the highest unemployment rate was for: a. black females b. black males c. white females d. white males

b. black males

in recent years, Europe has experienced _____ unemployment than the United States, and employed Europeans work _____ hours than employed Americans. a. more;more b. more; fewer c. less; fewer d. less; more

b. more; fewer

Economists call the changes in the composition of demand among industries and regions: A) insider outsider conflicts. B) sectoral shifts. C) moral hazard. D) adverse selection.

b. sectoral shifts.

In a steady state: A) no hiring or firings 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.

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