Macroeconomics

As the unemployment rate falls, the proportion of the unemployed finding a job increase the separation rate increases the young and unskilled experience larger- than-average decreases in unemployment Both A and C all of the Above

Both A and C

All else being equal, raising the minimum wage may increase not only the minimum wage itself, but all other wages above the minimum wage, leading to an increase in the average wage, W

True

The price setting equation is represented by the following : P=(1+m)W. When there is perfect competition, we know that m will equal W P 1 W/p none of the above

1

The non-institutional civilian population is 250, of which 100 million are employed and 10 million are unemployed Based on the information above, the labor force participation rate is 36% 40% 44% 90.1% 66%

44%

The non-institutional civilian population is 250, of which 100 million are employed and 10 million are unemployed Based on that information above, the unemployment rate is 4% 6.6% 9.1% 10% 11.1%

9.1%

Accordingly, and all else being equal, raising the minimum wage may result in a higher 'natural' unemployment rate (movement from point A to A')

True

All else being equal, an increase in the minimum wage may trigger higher prices for U.S goods and a loss in international competitiveness, thus creating problems for the U.S economy

True

All else being equal, higher average wages raise production costs for firms and thus prices, requiring workers to demand higher nominal wages, thus causing an upward shift in the wage-setting relation (from WS to WS')

True

To avert the adverse impact on unemployment, the Fed may have to pursue expansionary monetary policies which could be self-defeating

True

A reduction in unemployment benefits will tend to cause which of the following? an upward shift in the WS curve a downward shift in the WS curve an upward shift in the PS curve a downward shift in the PS curve none of the above

a downward shift in the WS curve

a reduction in the minimum wage will tend to cause which of the following an upward shift in the WS curve a downward shift in the WS curve an upward shift in the PS curve a downward shift in the PS cu rve non of the above

a downward shift in the WS curve

A reduction in the unemployment rate will tend to cause which of the following? an increase in the separation rate a reduction in the nominal wage a reduction in the duration that one is unemployed none of the above

a reduction in the duration that one is unemployed

Based on our understanding of the labor market model presented in Chapter 6, we know that an increase in the markup will cause an increase in the equilibrium real wage a reduction in the equilibrium real wage a reduction in the natural rate of unemployment both B and C

a reduction in the equilibrium real wage

Henry Ford's experiment with efficiency wages resulted in a dramatic drop in productivity a dramatic increase in the turnover rate a reduction in the layoff rate new problems with the work force, like drunkenness and reckless driving no noticeable effects.

a reduction in the layoff rate

Based on wage setting behavior, we know that increase in the unemployment rate will cause no change in the real wage a reduction in the real wage an increase in the real wage an upward shift on the WS curve

a reduction in the real wage

The natural level of employment (N) will increase when which of the following occurs? an increase in the markup of prices over cost a reduction in unemployment benefits an increase in the actual unemployment rate all of the above none of the above.

a reduction in unemployment benefits

Based on our understanding of the labor market model presented in Chapter 6,we know that a reduction in the mark up will cause an increase in the equilibrium real wage a reduction in the equilibrium real wage an increase in the natural rate on unemployment a reduction in the natural rate of of unemployment and no change in the real wage

an increase in the equilibrium real wage

Based on wage setting behavior, we know that a reduction in the unemployment rate will cause no change in the real wage a reduction in the real wage an increase in the real wage an upward shift on the WS curve

an increase in the real wage

an increase in the minimum wage will tend to cause when of the following an upward shift in the WS curve a downward shift in the WS curve an upward shift in the PS curve a downward shift in the PS curve none of the above

an upward shift in the WS curve

Based on our understanding of the labor market model presented in Chapter 6, we know that an increase in the minimum wage will cause and increase in the equilibrium real wage a reduction in the equilibrium real wage a reduction in the natural rate of unemployment both B and C

and increase in the equilibrium real wage

in the United States, the average length of time people spend unemployed is approximately one month between two and three month between ten and eleven months greater than twelve months

between two and three month

When the unemployment rate is lower, workers are better off because there are fewer suicides employed workers face a lower probability of losing their jobs unemployed workers face a higher probability of finding a job both B and C

both B and C

When the unemployment rate is high, workers are worse off because they are discouraged employed workers face a higher probability of losing their jobs unemployed workers can easily find a job labor participation rate is low

employed workers face a higher probability of losing their jobs

Using the efficiency wage theory argument, an increase in the unemployment rate reduces nominal wages because, it strengthens workers' self-esteem and motivation it strengthens workers' bargaining power employers need not significantly raise the efficiency wage premium reservation wages will be higher workers will be asking for a raise

employers need not significantly raise the efficiency wage premium

Based on price setting behavior, we know that a reduction in the unemployment rate will cause no change in the real wage a reduction in the real wage an increase in the real wage an upward shift on the PS curve

no change in the real wage

Based on price setting behavior, we know that increase in the unemployment rate will cause no change in the real wage a reduction in the real wage an increase in the real wage an upward shift on the WS curve

no change in the real wage

Which of the following variable is most directly determined in the labor market? stock prices nominal wages interest rates all of the above none of the above

nominal wages

The natural rate of unemployment is the rate of unemployment that occurs when the money market is in equilibrium that occurs when the markup of prices over cost is zero where the markup of prices over costs is equal to its historical value that occurs when both the goods and financial markets are in equilibrium none of the above

none of the above

The reservation wage is The wage that an employer must pay workers to reduce turnover to a reasonable level the wage that ensures a laid-off individual will wait for re-hire, rather than find another job. the lowest wage firms are allowed by law to pay workers the wage offer that will end a labor-strike none of the above

none of the above

Which of the following individuals would be considered unemployed? an individual who works only part-time an individual who works full-time in a family business, but is not paid an individual who is not working and is not looking for work all of the above none of the above

none of the above

Efficiency wage theory suggests that workers will be paid less than their reservation wage productivity might drop if the wage rate is too low the government can only set tax rates so high before people will prefer not to work unskilled workers will have a lower turnover rate than skilled workers firms will be more resistant to wage increases as the labor marker tightens.

productivity might drop if the wage rate is too low

With the real wage on the vertical axis and employment (N) on the horizontal axis, we know that the WS curve is upward sloping the WS curve is downward sloping The PS curve is upward sloping the PS curve is downward sloping

the WS curve is upward sloping

The natural level of output is the level of output that occurs when the goods market and financial markets are in equilibrium the economy is operating at the unemployment rate consisten with both the wage-setting and price-setting equations the markup (m) is zero the unemployment rate is zero there are no discouraged workers in the economy

the economy is operating at the unemployment rate consisten with both the wage-setting and price-setting equations

In the wage setting relation W= PeF (u,z), the variable z does not include which of the following variables? the minimum wage unemployment benefits the extent to which firms mark up prices over their marginal cost all of the above none of the above

the extent to which firms mark up prices over their marginal cost

Suppose workers and firms expect the overall price level to increase by 5%. given this information, we would expect that the nominal wage will increase by less than 5% the nominal wage will increase by exactly 5% the nominal wage will increase by more than 5% the real wage will increase by 5% the real wage will increase by less than 5%

the nominal wage will increase by exactly 5%

When the unemployment rate is low, we would expect that the probability of losing a job is high the probability of losing a job is low the probability an unemployed individual will find another job is low the separation rate will increase

the probability of losing a job is low

The labor force is defined as the sum of the employed and unemployed the total number employed the total number of working age individuals in the population the sum of the number of employed, unemployed and discouraged individuals

the sum of the employed and unemployed

The labor force is defined as the sum of the employed and unemployed the total number employed the total number of working age individuals in the population the sum of the number of employed, unemployed and discouraged individuals

the total number employed

in the wage-setting relation, the nominal wage tends to decrease when the price level increases the unemployment rate decrease unemployment benefits decrease the minimum wage increase all of the above

unemployment benefits decrease

An increase in the unemployment rate will reduce nominal wages by weakening workers' bargaining power increasing the markup of prices over cost reducing unemployment benefits by decreasing the prices of goods none of the above

weakening workers' bargaining power

An increase in unemployment benefits will tend to cause which of the following? a downward shift in the WS curve an upward shift in the PS curve an upward shift in the WS curve a downward shift in the PS curve none of the above

an upward shift in the WS curve

The labor participation rate is defined as Sum of the employed, unemployed and discouraged workers the ratio of the labor force to the non-institutional civilian population the ratio of the labor force to the civilian population the ratio of all empolyed workers to the non--institutional civilian population

the ratio of the labor force to the non-institutional civilian population

If efficiency wage theory is valid, we would expect a relatively low premium over the reservation wage when the unemployment rate is low the job requires very little training workers can be easily monitored workers have few other options for employment in the area all of the above

workers can be easily monitored