HW 3 (ch.6 + 7)

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

- Encouraging unsupervised workers to maintain a high level of productivity - Providing an incentive for the best - qualified workers to remain with the firm

24. Remittance

A) Is an important source of foreign exchange for some countries B) May provide support for family members in the country of origin C) Exceeds FDI for some countries D) Exceeds $500 billion annually world-wide E) All of the above or none of the above ANSWER: E

23. Family migration:

Permits lawful permanent residents to bring certain family members to the U.S. on a family-based visa

25. The number of unemployed workers in August 2021 was approximately 8.4 million or 5.2 percent of the labor force. T or F

True

26. The average workweek for all private nonfarm workers was approximately 34.5 hours in August. T or F

True

27. The number of U.S. citizens filing for unemployment benefits fell to a 48-year low in September 2018. T or F

True

28. In August 2021, 4.5 million individuals were employed part-time for economic reasons. T or F

True

32. Increasing productivity is the key to rising wages. T or F

True

33. The number of U.S. patents granted has increased to over 350,000 per year. T or F

True

34. An important element of migration policy is to provide for early integration of migrants into the workforce and economic activity. T or F

True

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

a large spike in the duration of unemployment

7. In a small open economy, if domestic investment exceeds domestic saving, then the extra investment will be financed by:

borrowing from abroad

20. If wage rigidity holds the real wage above the equilibrium level, an increase in the demand for labor will ______ the number unemployed.

decrease

3. The U.S. dollar exchange rate (units of foreign currency per U.S. dollar) for currencies of countries with high inflation rates relative to the United States has tended to ______, and the U.S. dollar exchange rate (units of foreign currency per U.S. dollar) for currencies of countries with low inflation rates relative to the United States has tended to ______.

depreciate; appreciate

5. A "small" economy is one in which the:

domestic interest rate equals the world interest

6. In a small, open economy if net exports are negative, then:

domestic spending is greater than output

19. As the relative demand for unskilled workers falls, wages for unskilled workers ______ and unemployment compensation becomes a ______ attractive option.

fall; more

9. In a small open economy, when foreign governments reduce national saving in their countries, the equilibrium real exchange rate:

falls and net exports rise

13. More frequent holidays for workers in Europe than in the United States contribute to:

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

ch. 7 11. The minimum wage:

has its greatest impact on teenage unemployment

21. 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 United States

4. In a small open economy, if the world interest rate increases, then the supply of domestic currency on the foreign exchange market will _____ and the real exchange rate will _____, holding all else constant.

increase; decrease

2. If the government of a small open economy wishes to reduce a trade deficit, which policy action will be successful in achieving this goal?

increasing taxes

17. 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

29. The Opportunity Index is less than 1 as of the end of August 2021. T or F

False

30. Unemployment Insurance benefits pay on average 80 percent of a person's previous wages. T or F

False

31. Unemployment Insurance benefits are identical in all states. T or F

False

35. Migrants tend to have a lower participation rates than non-migrants. T or F

False

22. Increasing the use of robotics and AI in business will:

Increase labor productivity

8. If the number of dollars per yen rises, this is called a(n):

appreciation of the yen

16. 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

10. In a large open economy, when interest rates rise, we would expect foreign investment to increase, the equilibrium real exchange rate:

rises and net exports fall

1. According to purchasing-power parity, if the dollar price of oil is higher in New York than in London, arbitrageurs will ____ oil in New York and ____ oil in London to drive ____ the price of oil in New York.

sell; buy; down

12. Unemployment insurance increases the amount of frictional unemployment by:

softening the economic hardship of unemployment

15. 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