Chapter 5 intermediate Macro

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

encouraging unsupervised workers to maintain a high level of productivity.

When insiders have no impact on the wage-bargaining process than do outsiders, the negotiated wage is likely to be ______ the equilibrium wage.

equal to

The unemployment insurance system may be desirable because unemployment insurance:

induces workers to reject unattractive job offers.

When outsiders have a greater role than do insiders in the wage-bargaining process, the negotiated wage is likely to be ______ the equilibrium wage.

much closer to

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

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

sectoral shifts.

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

structural; frictional

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 0.35, then the fraction of employed workers who lose their jobs each month (the rate of job separations) must be:

0.05.

If the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.06 and the fraction of the unemployed who find a job each month is 0.34 (the rate of job findings), then the natural rate of unemployment is:

15 percent.

Frictional unemployment is unemployment caused by:

the time it takes workers to search for a job.

All of the following are reasons for frictional unemployment except:

unemployed workers accept the first job offer that they receive.

If wage rigidity holds the real wage above the equilibrium level, a decrease in the demand for labor will ______ the number unemployed

increase

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

According to efficiency-wage theories, firms benefit by paying higher-than-equilibrium wages because worker _____ increases.

productivity

Paying efficiency wages helps firms reduce the problem of adverse selection by:

providing an incentive for the best-qualified workers to remain with the firm.

Efficiency-wage theories suggest that a firm may pay workers more than the market-clearing wage for all of the following reasons except to:

reduce the firm's wage bill.

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

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 wage rigidity holds the real wage above the equilibrium level, a decrease in the supply of labor will ______ the number unemployed.

decrease

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:

no change in the real wage and a rise in unemployment.