Eco Unit 4 Study Guide

Firms pay efficiency wages because: A. it reduces the risk of losing the best workers. B. it is required by law. C. they don't have to offer health insurance if they pay efficiency wages. D. it reduces the employee's income tax liability. E. they are contractually required to do so.

A

For most of U.S. modern economic history, when the unemployment rate is _____, real GDP growth is _____. A. falling; rising B. falling; falling C. rising; unchanged D. rising; rising E. falling; unchanged

A

If 99 million people are working and 1 million are unemployed but actively seeking work, then the unemployment rate is ________. A. 1% B. 5% C. 10% D. 100% E. 15%

A

If the actual unemployment rate is 7% and the natural rate of unemployment is 5%, then the cyclical unemployment rate is: A. 2%. B. 5%. C. 7%. D. 9%. E. 12%

A

Last month Brent lost his job at the auto parts factory because his factory, like many others, relocated to Asia. Brent continues to look for similar factory jobs in his town, but has found no openings. Brent is best classified as: A. structurally unemployed. B. frictionally unemployed. C. a discouraged worker. D. out of the labor force. E. seasonally unemployed.

A

People who are in the process of changing jobs are accounted for in the category of: A. frictional unemployment. B. involuntary unemployment. C. structural unemployment. D. cyclical unemployment. E. underemployed.

A

Periods of recession are likely to be marked by: A. increasing rates of unemployment. B. decreasing rates of unemployment C. increasing employment. D. unchanged rates of employment. E. unchanged rates of unemployment.

A

Structural unemployment is: A. unemployment that results when there are more people seeking jobs than there are jobs available at the current wage rate. B. unemployment experienced by those entering the labor force for the first time. C. zero when the economy is in full employment. D. caused by short run economic fluctuations. E. the result of jobs that are predictably lost during certain parts of the calendar year.

A

Structural unemployment means there are: A. more people seeking work than there are jobs in a particular industry. B. more jobs than workers in a particular industry. C. wages that are too low in a particular industry. D. people just entering the labor force. E. more people going back to school than are applying for jobs

A

The country of Livonia has an adult population of 100 million. Sixty percent of Livonia's population are employed, but 10% of the people are unemployed. The Labor Force Participation Rate in Livonia is: A. 70%. B. 60%. C. 7%. D. 10%. E. 50%.

A

The unemployment rate is defined as: A. the percent of the labor force that is unemployed. B. the number of people unemployed. C. the ratio of the labor force to the number of people unemployed. D. the average length of time someone is unemployed. E. the percent of the population that is unemployed

A

Unemployment rates tend to decrease when: A. there is an expansion in the economy. B. discouraged workers become active job seekers. C. underemployed workers become unemployed. D. a contraction in the economy occurs. E. the business cycle is approaching the trough

A

Use Scenario 12-1. Suppose the number of workers who had given up looking for work start looking for work. What happens to the unemployment rate? A. The unemployment rate will increase because these workers are now classified as unemployed. B. The unemployment rate will decrease because these workers are now classified as unemployed. C. The unemployment rate is unaffected by this change. D. It is uncertain what will happen to the unemployment rate. E. The unemployment rate will increase because these workers are now classified as employed.

A

Use the "Effect of Minimum Wage" Figure 13-2. Suppose the labor market is in equilibrium at E when the government introduces a minimum wage of WF. Structural unemployment will equal: A. QS - QD. B. QE - QD. C. QS - QE. D. zero. E. WF - WE

A

Use the "Minimum Wage" Figure 13-1. With a binding minimum wage of P3, the quantity of labor demanded would be: A. Q1. B. Q2. C. Q3. D. Q4. E. zero.

A

Which of the following equations describes the calculation of the natural unemployment rate? A. Natural unemployment = Frictional unemployment + Structural unemployment B. Natural unemployment = Cyclical unemployment + Structural unemployment C. Natural unemployment = Frictional unemployment + Cyclical unemployment D. Natural unemployment = Frictional unemployment + Structural unemployment + Cyclical unemployment E. Natural unemployment = Actual unemployment - Structural unemployment

A

Which of the following would describe a person who is counted as unemployed by the government? I. Stan does not have a job but is actively seeking employment. II. Beverly has a part-time job but would prefer a full-time job. III. Moesha does not have a job because she recently retired. A. I only. B. II only. C. III only. D. I and II only. E. I, II and III

A

Which pair of policies is likely to have the effect of reducing the natural rate of unemployment? A. Job training and employment subsidies. B. High minimum wages and generous unemployment benefits. C. Job training and higher minimum wages. D. Employment subsidies and policies designed to strengthen labor unions. E. High minimum wages and policies designed to strengthen labor unions.

A

Assuming that there are 100 million people in the total population with a labor force of 50 million and 47 million of those workers are employed, the unemployment rate is: A. 3%. B. 6%. C. 8%. D. 10%. E. 15%

B

Efficiency wages are: A. market equilibrium wages. B. set above equilibrium wages to act as an incentive for better performance. C. set below the equilibrium wage to increase firm profits. D. set by the government to reduce poverty. E. required by union contracts and encourage firms to hire more workers at this wage.

B

If a worker becomes unemployed due to an increase in the minimum wage, that worker is: A. frictionally unemployed. B. structurally unemployed. C. cyclically unemployed. D. engaged in job search. E. minimally unemployed.

B

If the labor force is 100 million persons and 5 million are unemployed but actively seeking work, then the unemployment rate is ________. A. 1% B. 5% C. 10% D. 95% E. 15%.

B

If the rate of unemployment is 10% and the labor force is 130 million, the number of unemployed workers is: A. 10%. B. 13 million. C. 10 million. D. 130 million. E. 130,000.

B

In general, expansions are characterized by: A. increasing rates of unemployment. B. decreasing rates of unemployment C. decreasing employment. D. unchanged rates of employment. E. unchanged rates of unemployment.

B

Jim has a part-time job and would prefer to have a full-time job, but has been unable to find full-time work. Jim's labor market status is classified as: A. a discouraged worker. B. an underemployed worker. C. an unemployed worker. D. out of the labor force. E. semi-retired worker.

B

Last week Stephanie quit her job as a copy-writer at an advertising agency. She has spent the past few days browsing the help-wanted ads, but hasn't found anything that matches her skills. Stephanie is best classified as: A. structurally unemployed. B. frictionally unemployed. C. a discouraged worker. D. out of the labor force. E. cyclically unemployed.

B

The labor force is considered to be: A. all those employed. B. those who are employed plus those who are unemployed. C. the population of the nation. D. those not frictionally unemployed plus all others employed. E. the population of the nation above the age of 16.

B

The official unemployment rate reported by the government may tend to understate the amount of unemployment by: A. including discouraged workers in the calculations. B. excluding discouraged workers who are not actively seeking employment. C. including employed people over 65 in the calculations. D. excluding teenagers from the calculations. E. excluding the full-time students.

B

The presence of discouraged workers in the economy tends to: A. raise the official unemployment rate. B. lower the official unemployment rate. C. lower the number of people who are frictionally unemployed. D. increase the number of people who are structurally unemployed. E. have no impact on the official unemployment rate.

B

The rate of unemployment that exists when the economy is at full employment is: A. zero. B. the natural rate of unemployment. C. the structural rate of unemployment. D. less than the full employment rate of unemployment. E. the cyclical rate of unemployment.

B

To be classified as unemployed, a worker must: A. be working less than full time (40 hours a week). B. not have a job and must be actively looking for work. C. not be looking for a job and must not have a job. D. be a discouraged worker. E. be receiving unemployment benefits and other welfare payments.

B

To be counted as unemployed, one must: A. have had a job previously. B. be out of work and be actively looking for a job. C. have had a job before and be actively looking for work. D. actively looking for a job and have at least a high-school degree or its equivalent E. be out of work and not a full-time student.

B

Unemployment rates tend to: A. be the same across geographic areas. B. vary depending upon age groups and ethnicities. C. increase when an expansion in the economy occurs. D. stay the same only when there is cyclical unemployment. E. fall during economic recessions.

B

Unemployment that results when there are more people seeking jobs in a labor market than there are jobs available is considered: A. frictional unemployment. B. structural unemployment. C. cyclical unemployment. D. natural unemployment. E. seasonal unemployment

B

Use Scenario 12-2. For this group, if the discouraged workers became active job searchers, then the: A. unemployment rate would fall. B. unemployment rate and the labor force participation rate would rise. C. labor force participation rate would fall. D. unemployment rate and the labor force participation rates would both fall. E. unemployment rate would rise, but the labor force participation rate would fall.

B

Use Table 12-2. The labor force is: A. 33 million. B. 32 million. C. 31 million. D. 22 million. E. 30 million

B

Which of the following is an example of an unemployed worker? A. Julio, a statistician who lost his job in a forecasting firm and now does consulting work part time. B. Jennifer, an accountant who spends her days at home reading the New York Times and mailing her resume to accounting firms. C. Ana Maria, a business major who received a job offer during her senior year but has yet to start working. D. Ulysses, a high school dropout who joined the Army. E. Freddy, recent a college graduate who is traveling in Europe for the next three months.

B

Which of the following is likely to lead to a large number of discouraged workers? A. When the economy is expanding. B. When the availability of jobs falls. C. When the economy is experiencing inflation. D. When the economy is experiencing deflation. E. When real GDP is rapidly increasing.

B

A worker classified as frictionally unemployed is one who is: A. let go during a recession. B. discouraged and drops out of the labor force. C. voluntarily looking for work, somewhere a job exists that demands his or her skills. D. works part-time but would prefer to work full-time. E. let go because her employer has decided to move the factory to another country.

C

Donna was laid off by her employer at the beginning of 2008. She looked for a job for three months, but could not find anything suitable. She then decided to volunteer for a soup kitchen. Donna is considered to be A. unemployed. B. underemployed. C. a discouraged worker. D. a part time worker. E. employed.

C

During a recession: A. unemployment and the growth rate of real GDP both decrease. B. unemployment decreases and the growth rate of real GDP increases. C. unemployment increases and the growth rate of real GDP decreases. D. there is no relationship between unemployment and the growth rate of real GDP. E. unemployment increases and the growth rate of real GDP increases.

C

Efficiency wages encourage: A. workers to look for a better job. B. potential workers to remain out of the labor force. C. workers to retain their current job. D. workers to get more job training. E. lower levels of unemployment

C

Employment in the labor force is defined as: A. the total labor force. B. the total population of working age. C. the total number of persons actively working. D. the total number of persons not unemployed. E. the total population of working minus the number of persons unemployed.

C

If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who were looking for a job but have given up, and 5 million people unemployed and seeking employment, then its labor force is: A. 150 million. B. 145 million. C. 140 million. D. 135 million. E. 200 million

C

If a country has a working-age population of 200 million, 135 million people with jobs, 10 million people who were looking for a job but have given up, and 5 million people unemployed and seeking employment, then its number of discouraged workers is: A. 25 million. B. 15 million. C. 10 million. D. 5 million. E. 20 million

C

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is: A. 4%. B. 7.5%. C. 10%. D. 67.5%. E. 30%

C

If the labor force totals 100 million persons and 90 million are actively working, then the unemployment rate is ________. A. 1% B. 5% C. 10% D. 90% E. 11%

C

In calculating the unemployment rate, discouraged workers are: A. included in the employment statistics. B. included in the labor force. C. not included in the labor force. D. excluded, and treated as underemployed. E. included and treated as underemployed.

C

In the absence of minimum wages, efficiency wages, or labor unions, a decline in the demand for labor would likely result in which of the following if wages are flexible? A. Higher levels of employment. B. No changes in employment. C. A lower level of employment but likely no change in the unemployment rate. D. A lower level of employment and a higher unemployment rate. E. A lower level of employment and a lower unemployment rate.

C

Sally works twenty hours a week for an accounting firm. She would like to work forty hours a week and expects that she will in the future. Sally is a(n): A. discouraged worker B. unemployed worker C. underemployed worker D. full time worker E. marginally unemployed worker

C

The natural rate of unemployment is: A. the rate of unemployment that exists during recessions. B. equal to the sum of frictional and cyclical unemployment. C. equal to the sum of frictional and structural unemployment. D. cyclical unemployment less frictional unemployment. E. equal to the actual rate of unemployment less frictional unemployment.

C

The natural rate of unemployment would: A. increase if a larger percentage of the labor force were over 25 years old. B. increase if union membership fell. C. increase if unemployment benefits were increased. D. decrease if the average age of workers fell. E. decrease if the government removed successful job training programs.

C

The percentage of the labor force that is unemployed is the: A. labor force. B. employment ratio. C. unemployment rate. D. natural employment rate. E. labor force participate rate.

C

Unemployment that occurs because it takes workers and employees time to find each other is called: A. cyclical unemployment B. structural unemployment C. frictional unemployment D. discouraged unemployment E. natural unemployment

C

Use Table 12-1. According to the accompanying table, the unemployment rate for this economy is: A. 2.9%. B. 4.8%. C. 5.0%. D. 5.3%. E. 10%.

C

Use Table 12-3. What is the unemployment rate in Madtucky? A. 64% B. 48% C. 17% D. 6% E. 1%

C

Use Table 12-4. Total population will be: A. 486 million. B. 253 million. C. 278 million. D. 283 million. E. 408 million.

C

Use the "Effect of Minimum Wage" Figure 13-2. Suppose the labor market is in equilibrium at E when the government introduces a minimum wage of WF. One problem that may arise is that the quantity of labor supplied would ______, resulting in structural unemployment. A. decrease to QD B. stay at QE C. increase to QS D. stay at WE E. decrease to zero.

C

Use the "Minimum Wage" Figure 13-1. A binding minimum wage would be: A. P1. B. P2. C. P3. D. zero. E. Q4.

C

Use the "Minimum Wage" Figure 13-1. When the government introduces the binding minimum wage of P3, the quantity of labor demanded falls by: A. Q4 - Q1. B. Q3 - Q2. C. Q2 - Q1. D. Q4 - Q2. E. zero.

C

Which of the following most accurately describes how to calculate the unemployment rate? A. (unemployed/population) * 100 B. (unemployed/employed. * 100 C. (unemployed/labor force. * 100 D. [(unemployed - employed)/labor force] * 100 E. [(unemployed+employed/employed)] * 100

C

You are a college student who is not working or looking for work. You are: A. counted as unemployed. B. counted as a member of the labor force but not employed. C. not counted as part of the labor force. D. counted as employed. E. counted as marginally unemployed.

C

According to the government, a person who is not working and is not looking for work is: A. unemployed. B. underemployed. C. a member of the labor force not working. D. not counted in the unemployment statistics. E. under the age of 16.

D

An example of frictional unemployment is a(n): A. autoworker who is temporarily laid off from an automobile company due to a decline in sales. B. geologist who is permanently laid off from an oil company due to a new technological advance. C. worker at a fast-food restaurant who quits work and attends college full time. D. real estate agent who leaves a job in Texas and searches for a similar, higher paying job in California. E. autoworker who not working because he is currently on strike from his job at the production factory.

D

Cyclical unemployment is characterized as: A. unemployment that occurs when people are between jobs. B. a situation when there are not good matches between available jobs and the skills people have. C. the normal unemployment around which the actual unemployment rate fluctuates. D. the deviation in the actual rate of unemployment away from the natural rate. E. unemployment that occurs when people go back to school for retraining.

D

Discouraged workers are those individuals: A. who are getting paid too little. B. who do not like their jobs. C. who are working part time but are looking for a full-time job. D. who have given up looking for a job. E. who are employed but extremely dissatisfied with their jobs.

D

If a country has a working-age population of 200 million, 120 million people with jobs, and 30 million people unemployed and seeking employment, then its unemployment rate is: A. 5%. B. 7.5%. C. 15%. D. 20%. E. 30%

D

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its labor force is: A. 335 million. B. 200 million. C. 155 million. D. 150 million. E. 135 million.

D

If actual unemployment is 6.2% and the natural rate of unemployment is 4%, cyclical unemployment is: A. 6.2%. B. 10.2%. C. 4%. D. 2.2%. E. 3.2%

D

In general, for the U. S. economy, the relationship between unemployment and real economic growth is: A. positive. B. direct. C. neutral. D. negative. E. non-existent.

D

Sam, who is 55 years old and has been a steel worker for 30 years, is unemployed because the steel plant in his town closed and moved to Mexico. Sam is experiencing: A. cyclical unemployment. B. permanent unemployment. C. frictional unemployment. D. structural unemployment. E. operational unemployment.

D

Structural unemployment consists of people who are unemployed due to: A. temporary changes in jobs. B. an excess in the quantity of labor demanded over the quantity of labor supplied. C. the time it takes for employers and workers to find each other. D. more people seeking jobs in a labor market than there are jobs available at the current wage rate. E. downturns in the business cycle

D

The labor force is defined as: A. the total persons employed. B. the total population. C. the total of the population of working age. D. the total of the persons employed and unemployed. E. the total of the population of working age minus those voluntarily not seeking to work.

D

The natural rate of employment is achieved when: A. the actual rate of unemployment is equal to zero. B. the natural rate of unemployment is equal to the frictional rate of unemployment. C. the quantity of labor supplied is equal to the quantity of labor demanded. D. there is no cyclical unemployment. E. there is no cyclical unemployment and no frictional unemployment.

D

The unemployment rate is the total number of individuals classified as ______ divided by the total _____: A. ot employed; population. B. not employed; population of those over age 16. C. unemployed; number of those looking for work. D. unemployed; number of those in the labor force. E. unemployed; number of those employed.

D

Use the "Minimum Wage" Figure 13-1. With a binding minimum wage of P3, the quantity of labor supplied would be: A. Q1. B. Q2. C. Q3. D. Q4. E. zero.

D

When a recent college graduate with a major in Economics attends a job fair, it is an example of : A. structural unemployment. B. seasonal unemployment. C. cyclical unemployment. D. frictional unemployment. E. operational underemployment

D

When the demand for labor is falling and employers have committed to high wages, ______ unemployment will result. A. frictional B. cyclical C. permanent D. structural E. natural

D

Which one of the following is correct? A. Unemployment Rate = (Unemployed/Employed) *100 B. Unemployment Rate = (Unemployed/Population) *100 C. Unemployment Rate = (Employed/Labor Force)*100 D. Unemployment Rate = (Unemployed/Labor Force) *100 E. Unemployment Rate = (Employed/Unemployed) *100

D

An example of structural unemployment is a(n): A. autoworker who is temporarily laid off from an automobile company due to a decline in sales. B. lifeguard who loses his job at the beach at the end of each summer. C. worker at a fast-food restaurant who quits work and attends college. D. real estate agent who leaves a job in Texas and searches for a similar, higher paying job in California. E. geologist who is permanently laid off from an oil company due to an increase in wages won by labor unions.

E

Anna recently moved to Boston in order for her husband Joe to begin a new job as an economics professor at Harvard. Anna is an experienced surgeon who is currently interviewing with several different hospitals in Boston. Anna is currently: A. seasonally unemployed. B. structurally unemployed. C. cyclically unemployed. D. counted as employed since she is likely to receive a job offer soon. E. frictionally unemployed.

E

To be classified as unemployed, a person must be: A. not working. B. not working due to retirement or disability. C. not working or working part-time when he or she wishes to be working full time. D. not working and actively looking for a job in the last four weeks or discouraged and not actually looking for a job. E. not working and actively looking for a job in the last four weeks.

E

Use Scenario 12-1. What is the unemployment rate in Youville? A. 7.14% B. 4.25% C. 11.11% D. 2% E. 10%

E

Use Scenario 12-2. For this group, the labor force participation rate is: A. 30%. B. 60%. C. 70%. D. 80%. E. 50%

E

Use Scenario 12-2. For this group, the unemployment rate is: A. 10%. B. 30%. C. 5%. D. 50%. E. 20%.

E

Use Table 12-3. How many people are in the labor force? A. 6900 B. 9400 C. 7400 D. 6500 E. 6000

E

Use the "Effect of Minimum Wage" Figure 13-2. Suppose that after some time with a minimum wage of WF, the government abolishes the minimum wage. Employment would: A. decrease to QE. B. increase to QS. C. stay at QE. D. decrease to zero. E. increase to QE.

E

Use the "Minimum Wage" Figure 13-1. The binding minimum wage of P3 leads to unemployment of: A. Q3 - Q1. B. Q3 - Q2. C. zero. D. Q4 - Q2. E. Q4 - Q1.

E

The labor force is equal to the: A. sum of the employed and the unemployed. B. population minus the number of employed. C. sum of the employed and the underemployed. D. number of people working in the economy. E. number of people in the economy above the age of 16.

A

A survey reveals that on a small island 40 adults have jobs, 10 other adults are looking for jobs, and 30 are neither working nor looking for work. The unemployment rate on the island is: A. 12.5%. B. 20.0%. C. 25.0%. D. 50.0%. E. 75.0%.

B

If the actual unemployment rate is 7% and the cyclical unemployment rate is 2%, then the natural rate of unemployment is: A. 2%. B. 5%. C. 7%. D. 9%. E. 3.5%

B

In order to be officially unemployed, a person must be: A. looking for work in the past 4 weeks. B. under 55 years old. C. frictionally unemployed. D. structurally unemployed. E. retired or a full-time student

A

Use the "Minimum Wage" Figure 13-1. When the government introduces the binding minimum wage of P3, the quantity of labor supplied rises by: A. Q4 - Q1. B. Q3 - Q2. C. Q2 - Q1. D. Q4 - Q2. E. zero.

D

A minimum wage of $7.25 per hour might cause structural unemployment if the equilibrium wage in that labor market is: A. $7.25. B. $8.00. C. $10.00. D. $7.30. E. $6.85.

E

A survey reveals that on a small island initially 40 adults have jobs, 10 other adults are looking for jobs, and 30 are neither working nor looking for work. Suppose that 10 of the 30 people who weren't looking for work now begin looking for work. There are now 20 people looking for work and 40 people working. What happens to the unemployment rate? A. It falls to 33.3%. B. It rises to 50.0%. C. It falls to 25.0%. D. It remains the same. E. It rises to 33.3%.

E

A person who spends time looking for work is: A. engaged in a job search. B. counted as employed. C. counted as out of the labor force. D. usually counted as a discouraged worker. E. ineligible for unemployment insurance benefits.

A

A minimum wage in a labor market is set _____ the equilibrium wage and creates a _____ of labor. A. below; surplus B. equal to; an efficient allocation C. above; surplus D. above; shortage E. below; shortage

C

A person who is out of work, would like to work, but has given up looking for work, is called: A. unemployed. B. employed. C. a discouraged worker. D. a marginally productive worker. E. retired or disabled.

C

Deviations in the actual rate of unemployment away from the natural rate of unemployment is called: A. seasonal unemployment. B. frictional unemployment. C. cyclical unemployment. D. structural unemployment. E. operational unemployment.

C

Unemployment that is due to the time workers spend in job search is considered: A. operational unemployment. B. structural unemployment. C. cyclical unemployment. D. natural unemployment. E. frictional unemployment.

E