ECON 315 Macroeconomics CH 7

If wage rigidity holds the real wage above the equilibrium level, an increase in the supply of labor will ___ the number unemployed.

increase

Unions contribute to structural unemployment when collective bargaining results in wages:

above the equilibrium level

When the real wage is above the level that equilibrates supply and demand:

the quantity of labor supplied exceeds the quantity demanded:

All of the following are reasons frictional unemployment except:

unemployed workers accept the first job offer that they receive.

A policy that increases the job-finding rate ____ the natural rate of unemployment.

will decrease

All of the following statements about minimum-wage workers in the US are correct except:

minimum-wage workers are more likely to be male

When insiders have a much greater impact on the wage-bargaining process than do outsiders, the negotiated wage is likely to be ___ the equilibrium wage.

much greater than

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 .10 and the fraction of employed workers who lose their jobs each month (the rate of job separation) is .02, the the fraction of unemployed workers who find jobs each month (the rate of job findings)

.18

The unemployment rate in the United States since 1952 has:

Never been close to zero

Which of the following characteristics made the 2008-2009 recession differ most sharply from previous recessions?

a large spike in the duration of unemployment

If the rate of separation is .02 and the rate of job finding is .08 but the current unemployment rate is .10, then the current unemployment rate is ___ the equilibrium rate, and in the next period it will move ___ the equilibrium rate.

below; toward

As the relative demand for unskilled workers falls. wages for unskilled workers ___ and unemployment compensation becomes a ____ attractive option.

fall; more

unemployment caused by the time it takes workers to search for a job is called ___ unemployment.

frictional

Many economists attribute part of the recent increase in European unemployment to:

generous benefits for unemployed workers.

The minimum wage:

has its greatest impact on teenage unemployment

The unemployment insurance system may be desirable because unemployment insurance:

induces workers to reject unattractive job offers.

Wage rigidity:

prevents labor demand and labor supply from reaching the equilibrium level.

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

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

The natural rate of unemployment is

the average rate of unemployment around which the economy fluctuates.

Frictional unemployment is inevitable because:

the demand for different goods always fluctuates

In a steady state:

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

Which of the following statements correctly describes European labor markets?

In recent years, the average unemployment rate in Europe has been higher than the unemployment rate in the US

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.

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

By paying efficiency wages, firms contribute to higher unemployment because they:

keep the wage above the equilibrium level

sectoral shifts:

make frictional employment inevitable.

Permitting a lower minimum wage for teenagers would likely:

raise unemployment among unskilled adults

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

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

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:

s/(s+f)

Unemployment insurance increases the amount of frictional unemployment by:

softening the economic hardship of unemployment.