Macroeconomics, Chapter
Compared to bondholders, stockholders
face higher risk and have potential for higher returns
Most spells on unemployment are
short, but most unemployment observed at any given timr is long term
Job search is not an explanation for the existence of _____ unemployment.
sructural
Unions
An association of workers, formed to bargain for better working conditions and higher wages.
Bob is looking for work after school, but everywhere he fills out an application, the managers say they always have a lot more applications than open positions. Tom has a lawdegree. Several firms have made him offers, but he thinks he might be able to find a firm where his talents could be put to better use.
Bob is structurally unemployed, and Tom is frictionally unemployed
Unions Contribute to
Both structural unemployment and the natural rate of unemployment
Which of the following bond buyers did NOT buy the bond that best met his or her objective?
Cecilia help long term bonds rather than short term bonds to avoid risk
Eponine works part-time as a babysitter. The Bureau of Labor Statistics counts Eponine as
Employed and in the labor force
Who of the following would be included in the BLS "unemployed" category?
Eric, who is on a temporary layoff
Octavia does not currently have a job, but she has applied for several jobs in the previous week. Eve is an unpaid stay-at-home mom who has not searched for work in recent years. Who does the Bureau of Labor Statistics count as "out of the labor force"?
Eve but not Octavia
The adult population must equal the sum of the employed and the unemployed.
False
Unpaid stay-at-home fathers are included in the Bureau of Labor Statistics' "unemployed" category
False
Who is included in the labor force by the Bureau of Labor Statistics? Azibo, a homemaker not looking for other work Kwamie, a full-time student not looking for work Geroy, who does not have a job, but is looking for work
Geroy, who does not have a job, but is looking for work
Which of the following statements about the "term" of a bond is correct?
Interest rates on long-term bonds are usually higher than interest rates on short-term bonds
Labor Force Statistics
Produced by Bureau of Labor Statistics (BLS), in the U.S. Dept. of Labor Based on regular survey of 60,000 households Based on "adult population" (16 yrs or older)
Four reasons for Efficiency Wages
Worker Health, Worker Turnover, Worker Quality, Worker Health
Unemployment that results because it takes time for workers to search for jobs that best suit their tastes and skills is called
frictional unemployment
Institutions that help to match once persons saving with another persons investment are collectively called the
financial system
The theory of efficiency wages provides a possible explanation as to why
firms may be inclined to keep their workers' wages above the equilibrium level
The theory of efficiency wages provides a possible explanation as to why
firms may be included to keep their workers' wages above the equilibrium level
Government run employment agencies, public training programs, and the Internet help reduce _____ unemployment.
frictional
Minimum wage laws are not a cause of _______ unemployment.
frictional
Unemployment insurance does not help reduce ______ unemployment.
frictional
People who are unemployed because they are in search of a job that suits their skills are included within
frictional unemployment
a worker who has quit one job and is taking two weeks off before reporting to a new job is an example of
frictional unemployment
If unions were formed in more industries, the supply of labor in other industries would
increase, causing employment in other industries to rise
The unemployment rate of wrexington
increased from 2004 to 2005 and decreased from 2005 to 2006
production and employment would be least affected by a severe depression in which type of industry?
nondurable consumer goods
Natural Rate of Unemployment
normal rate of unemployment around which the unemployment rate fluctuates
Those waiting to be recalled to a job from which they had been laid off are ____ the employed category.
not in
Imagine someone who is not looking for work because they are embarrassed in the interview process when their inability to read is revealed. However this person would take almost any job that was offered. according to the bureau of labor statistics this person is
not in the labor force
The labor force equals the:
number of people employed plus the number of people unemployed
unemployment rate=
number of unemployed / (number of employed+number of unemployed) X 100
Structural Unemployment
occurs when there are fewer jobs than workers
Amy is working part-time. Tavaris is on temporary layoff. Who is included in the Bureau of Labor Statistics' "employed" category?
only Amy
Which tool of monetary policy does the Federal Reserve use most often?
open market operation
If the supply for loanable funds shifts to the left, then the equilibrium interest rate
rises and the quantity of loanable funds falls
which of the following is not a reason economies always experience some unemployment
scarcity of resources
Jouke is on a temporary layoff from his factory job but has not looked for work in the last four weeks. The BLS counts Jouke as
unemployed and in the labor force
Which of the following does NOT help reduce frictional unemployment?
unemployment insurance
Frictional Unemployment
unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills
Efficiency Wages
wages that employers set above the equilibrium wage rate as an incentive for better employee performance,
the burden of unemployment is least felt by
white collar workers
in 2010 the us had a trade deficit of $600 billion therefore
americans consumed more than they produced.
An economy's natural rate of unemployment is the
amount of unemployment that the economy normally experiences
The Bureau of Labor Statistics produces data on:
all of the above are correct
Who of the following are included in the Bureau of Labor Statistics' "employed" category?
all of the above are correct
Minimum wage laws can keep wages
above equilibrium and cause a surplus of labor
Minimum-wage laws can keep wages:
above equilibrium and cause a surplus of labor
Unions do not cause which of the following
Frictional Unemployment
From time to time the demand for workers has risen in one region of the united states and fallen in another. this illustrates
Frictional unemployment created by sectoral shifts
Who is included in the labor force by the BLS?
Gabe, who does not have a job, but is looking for work
Pay efficiency wages means that wages are
above equilibrium and profits are higher than otherwise
If the reserve ratio is 8 percent, then an additional $1000 of reserves can increase the money supply by as much as
$12500
A banks reserve ratio is 5 percent and the bank has $1000 in deposits. Its reserves amount to
$50
Suppose a closed economy had public saving of $2 trillion and private saving of $4 trillion. What are national saving investment for this country?
$6 trillion, $6 trillion
the value of the GDP in 2010 in terms of 2000 prices was
$600
If the reserve ratio is 9 percent, then a decrease in reserves of $6000 can cause the money supply to fall by as much as
$66666.67
The labor-force participation rate is computed as
(labor force/adult population) x 100
the labor-force participation rate is computed as
(labor-force/adult population) X 100
Not in the labor force
everyone else
if GDP is declining the economy is most likely in which part of the business cycle?
contradictory
Suppose some country had an adult population of about 50 million, a labor-force participation rate of 60 percent, and an unemployment rate of 5 percent. How many people were unemployed?
1.5 million
Access to which of the following explains the lower growth rate for the American economy in the 21st century compared to the previous 250 years?
-Social Security disability payments -Pell grants -food stamps
Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 2,500 consumption equals 7,500 and government purchase equal 2,000. What are the private saving, public saving and national saving?
1,000, 500, 1,500, respectively
Suppose that some country had an adult population of about 50 million, a labor-force participation rate of 60 percent, and an unemployment rate of 5 percent. How many people were unemployed?
1.5 million
Spells of unemployment end about
1/2 of the time with the person leaving the labor force
Recent entrants into the labor force account for about
1/3 of those who are unemployed
If R represents the reserve ratio for all banks in the economy, then the money multiplier is
1/R
Economists have found that union workers earn what percent more than similar nonunion workers?
10 to 20
Refer to Table 28-7. If the local government imposed a minimum wage of $8 in Productionville, how many people would be unemployed?
10,000
how many people were in wrexington's labor force in 2009
12,600
In June 2009 the BLS reported an adult population of 234.9, a labor force of 154 and employment of 141.6. Unemployment rate was:
12.4/154
In June 2009 the Bureau of Labor Statistics reported an adult population of 234.9 million, a labor force of 154 million and employment of 141.6 million. Based on these numbers the unemployment rate was
12.4/154
what was wrexingtons unemployment rate in 2009
12.7%
the unemployment rate in an economy is 8%. the total population of the economy is 250 million and the size of the civilian labor force is 150 million. The number of employed workers is
138 million
In June 2009 the BLS reported an adult population of 234.9, unemployment of 12.4, and employment of 141.6. The labor-force participation rate was:
154/234.9
In June 2009 the BLS reported an adult population of 234.9 million, unemployment of 12.4 million, and employment of 141.6 million. Based on these numbers the labor-force participation rate was
154/234.9.
If the reserve ratio is 4 percent, then the money multiplier is
25
suppose a country produces only two goods, picca and soda. Given the information in the table below, nominal GDP real GDP and the GDP deflator in 2005 are
260 130 200
if the negative GDP gap were equal to 6% of the potential GDR the actual unemployment rate would exceed natural rate of unemployment by
3 percentage points
Suppose that the adult population in the country of Atlantis is 115 million. If 80 million people are employed and 5 million are unemployed, then
30 million are not in the labor force
Suppose some country had an adult population of about 46 million, a labor-force participation rate of 75%, and an unemployment rate of 8 % how many people were employed
31.74 million
if the government imposes a minimum wage of $8 then unemployment will increase by
4,000 workers
if 2010 were made the base year for the GDP price deflator index, the value of the index number for 200 (rounded to the nearest whole number would be)
42
In 2009, the Italian adult non-institutionalized population was 51.070, the labor force was 24.710, and the number of people employed was 22.765. The labor-force participation rate and unemployment rate were about:
48.4% and 7.9%.
At any given time, the voting members of the Federal Open Market Committee include
5 of the presidents of the regional Federal Reserve banks, the presidents of the Federal Reserve Bank of NY, and the 7 members of the Board of Governors
In 2009, the Japanese adult non-institutionalized population was 110.272, the labor force was 65.362, and the number of people employed was 62.242. The Japanese labor-force participation rate and unemployment rate were about:
59.3% and 4.8%
The Bureau of Labor Statistics produces data on unemployment and other aspects of the labor market from a regular survey of about
60,000 households.
In 2004, based on concepts similar to those used to estimate U.S. employment figures, the Canadian adult non-institutionalized population was 25.022 million, the labor force was 16.956 million, and the number of people employed was 15.864 million. According to these numbers, the Canadian labor-force participation rate and unemployment rate were about
67.8% and 6.4%.
In 2004 based on concepts similar to those used to estimate U.S employment figures, the swedish adult non-institutionalized population was 6.712 million, the labor force was 4.576 million, and the number of people employed was 4.276 million. according to these numbers the swedish labor-force participation rate and unemployment rate were about
68.2% and 6.6%
what is the adult female unemployment rate in meditor
7.1%
Suppose that the adult population is 4 million, the number of unemployed is 0.25 million, and the labor-force participation rate is 75%. What is the unemployment rate?
8.3%
The adult population in the town of Shelbyville is 150 thousand. If 100 thousand people are employed and 20 thousand are unemployed, then the labor force participation rate is approximately
80%
Which of the following statements is correct?
All items that are included in M1 are included in M2 also
An economy's natural rate of unemployment is: the economy's long-run target level of unemployment. the amount of unemployment that the economy normally experiences. the lowest rate of unemployment the economy can achieve.
All of the above are correct.
The Bureau of Labor Statistics places people in the "employed" category if they: are temporarily absent from their jobs. are self-employed. work without pay in a family member's business.
All of the above are correct.
The Unemplyment Rate has Issues in which
It excludes the discouraged workers, does not distinguish between Full Time & Part Time work or people who work Part time cause Full time is unavailable, and Some people misreport their status in the survey
Labor Force Participation Rate
Labor Force/Population, the percentage of the adult population that is in the labor force
Derek decides to forego a major appliance purchase and save the money. He transfers $2,100 from his checking account to his savings account. As a result of this transfer by itself
M1 decreases by $2100 and M2 stays the same
Money market mutual funds is included in
M2
Minimum Wage Laws
May exceed the eq'm wage for the least skilled or experienced workers, causing structural unemployment. But this group is a small part of the labor force, so the min. wage can't explain most unemployment.
Meredith is looking for work as a computer programmer. Although her prospects are good, she has not yet taken a job. Julie is looking for work in a steel mill. Every time she shows up for an interview, there are more people looking for work than their are openings. Someone waiting in line with her tells her it has been that way for a long time.
Meredith is frictionally unemployed, and Julie is structurally unemployed.
Reason Wages are above equilibrium
Minimum Wage Laws, Unions, Efficiency Wages,
In June 2009 the BLS reported a U.S. foreign-born population of 35.3. Of these, 22.7 employed and 1.4 unemployed. The unemployment rate and the labor-force participation rate of the foreign-born U.S. population?
None of the above are correct
For the Bureau of Labor Statistics to place someone in the "unemployed" category, that person must: have worked 10 or fewer hours during the previous week. have tried to find employment during the previous year. not have been laid off.
None of the above is correct.
Egzon is working part-time. Dijana is on temporary layoff. who is included in the Bureau of Labor Statistics "employed" Category?
Only Egzon
Unemployment insurance
Reduces the hardship of unemployment, but it also increases the amount of unemployment. Reduces the incentive for the unemployed to find and take new jobs. Causes workers to be less likely to see guarantees of job security when they negotiate with employers over the terms of employment.
Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work during the last two months. Who does the Bureau of Labor Statistics count as "unemployed"?
Tatiana but not Ivan
Suppose that Congress were to institute an investment tax credit. What would happen in the market for loanable funds?
The demand for loanable funds would shift right
Which of the following could explain a decrease in the equilibrium interest rate and an increase in the equilibrium quantity of loanable funds?
The supply of loanable funds shifted to the rightward
What would happen in the market for loanable funds if the government were to increase the tax on interest income?
The supply of loanable funds would shift to the left
The labor force participation rate measures the percentage of the
Total adult population that is in the labor force
People who report being unemployed but who, in fact, are working for "under the table" pay to avoid taxes on their earnings are really employed and therefore cause the reported unemployment rate to be higher than it would otherwise be.
True
Structural unemployment results when wages are, for some reason, set above the level that brings supply and demand into equilibrium.
True
Workers in unions reap the benefit of collective bargaining, while workers not in unions bear some of the cost.
True
Unemployment Rate
Unemployed/Labor Force, the percentage of the work force that is unemployed at any given date
Sectoral Shift
a change in the composition of demand among industries or regions
On which of these bonds is the prospect of default most likely?
a junk bond
A price floor is
a legal minimum on the price at which a good can be sold, often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor, and a source of inefficiency in a market
which has helped decrease the natural rate of unemployment in the United States in recent years?
a smaller portion of young workers in the labor force
After a binding price floor becomes effective,
a smaller quantity of the good is bought and sold
When in France you notice that prices are posted in euros, this best illustrates money's function as
a unit of account
The labor force includes those who are
able and willing to work
Job search is not associated with a wage rate __________ the equilibrium market.
above
A price floor is binding when it is set
above the equilibrium price, causing a surplus.
Which of the following is an example of an efficiency wage?
an above equilibrium wage paid by a firm to reduce turnover costs
which of the following shifts the production possibilities curve outward?
an increase in labor productivity
If the demand for loanable funds shifts to the left, then the equilibrium interest rate
and quantity of loanable funds fall
If an unemployed person quits looking for work, then, eventually the unemployment rate
and the labor force participation rate both decrease
if an unemployed person quits looking for work. then. other things the same, the unemployment rate
and the labor-force participation rate is unaffected.
Which of the following includes everyone in the adult population that the Bureau of Labor Statistics counts as unemployed?
anyone who is not employed, is available for work, has looked for work in the past 4 weeks, and anyone who is waiting to be recalled from a job from which they have been laid off
The members of the Federal Reverse Board of Governors
are appropriate by the president of the US and confirmed by the US Senate
Who of the following are included in the Bureau of Labor Statistics' "employed" category?
certain unpaid workers, part time workers, and workers on vacation
The federal funds rate is the interest rate
banks charge each other for the short term loans of reserves
For the BLS to place someone in the "unemployed" category, that person must
be available for work
Adam is looking for a job in marketing. He has had some offers and his prospects are promising, but he has not yet accepted a job. Amanda lost her job working for Mercury Bicycles because many customers decided they prefer bicycles manufactured by Ultimate Bicycles instead. Who is frictionally unemployed?
both Adam and Amanda
Esmerelda worked part-time for her mother's business without pay. Tabitha was absent from work because she had strep throat. Who is counted as "employed" by the Bureau of Labor Statistics?
both Esmerelda and Tabitha
Mary worked part time for her mothers business without pay. Larry was absent from work because he had the flu. Who is counted employed by the BLS?
both Mary and Larry
The natural unemployment rate includes
both frictional and structural unemployment
The natural unemployment rate includes
both frictional and structural unemployment.
Wages in excess of their equilibrium level help explain
both structural unemployment and the natural rate of unemployment.
Suppose there are a large number of men who used to work or seek work who now no longer do either. Other things the same, this makes:
both the number of people unemployed and the labor force fall
Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. However, some of these individuals may want to work even though they are too discouraged to make a serious effort to look for work. If these individuals were counted as unemployed instead of out of the labor force, then
both the unemployment rate and labor-force participation rate would be higher
Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. However, some of these individuals may want to work even though they are too discouraged to make a serious effort to look for work. If these individuals were counted as unemployed instead of out of the labor force, then
both the unemployment rate and labor-force participation rate would be higher.
A budget deficit
changes the supply of loanable funds
The primary difference between commodity money and fiat money is that
commodity money has intrinsic value but fiat money does not
Suppose that some people are counted as unemployed when, to maintain unemployment compensation, they search for work only at places where they are unlikely to be hired. If these individuals were counted as out of the labor force instead of as unemployed, then
both the unemployment rate and labor-force participation rate would be lower.
When a union bargains successfully with employers, in that industry
both wages and unemployment increase
When conducting an open market sale, the Fed
buys government bonds, and in so doing increases the money supply
Policies that reduce the time it takes unemployed workers to find new jobs
can reduce both frictional unemployment and the natural rate of unemployment
Policies that reduce the time it takes unemployed workers to find new jobs
can reduce both frictional unemployment and the natural rate of unemployment.
Which of the following lists is included in what economist call "money"?
cash
A binding price floor
causes a surplus and is set at a price above the equilibrium price
The fact that borrowers sometimes default on their loans by declaring bankruptcy is directly related to the characteristic of a bond called
credit risk
M1 includes
currency, demand deposits, and travelers checks
insufficient total spending in the economy results in
cyclical unemployment
If the natural rate of unemployment is 5.2 percent and the actual rate of unemployment is 5.7 percent, then by definition there is
cyclical unemployment amounting to 0.5 percent of the labor force.
if the natural rate of unemployment is 5.2% and the actual rate of unemployment is 5.7% then by definition there is
cyclical unemployment amounting to 0.5% of the labor force.
the full employment unemployment rate in the economy has been achieved when
cyclical unemployment is zero
Suppose that efficiency wages become more common in the economy. Economists would predict that this would
decrease the quantity demanded and increase the quantity supplied of labor, thereby increasing the natural rate of unemployment.
As the reserve ratio increases, the money multiplier
decreases
In a fractional reserve banking system, an increase in reserve requirements
decreases both the money multiplier and the money supply
An increase in the minimum wage:
decreases the quantity of labor demanded but increases the quantity of labor supplied
Skyline Chili wants to finance the purchase of new equipment for its restaurants. The firm has limited internal funds, so Skyline likely will
demand funds from the financial system by selling bonds
the unemployment data collected by the bureau of labor statistics have been criticized because
discouraged workers are not considered
The unemployment rate is computed as the number of unemployed:
divided by the labor force, all times 100
The designation "natural" implies that the natural rate of unemployment
does not go away on its own even in the long run
Jackson works part time as a babysitter, The bLS counts Jackson as
employed and in the labor force
Ipo did not work last week because flooding forced an evacuation of her workplace. The Bureau of Labor Statistics counts Ipo as
employed and in the labor force.
The National Labor Relations Board
enforces workers' rights to unionize.
if the cost of the basket of goods and services the bureau of labor statistics uses to calculate the consumer price index rises from $200 in the base period to $400 in the current period, then the consumer price index
equals 200 in the current period
an economy in recession can return to full employment in the long run through
expansionary monetary policy
if the cpi goes to 150 from 120 then prices have
risen 25%
Consumes decide to ride bikes more and drive cars less. Bicycle companies expand production while automobile companies fire workers. This is an example of
frictional unemployment created by sectoral shifts
Suppose that consumers decide to walk to work more frequently and drive cars less. Companies that make walking shoes hire workers, while automobile companies lay off workers. This is an example of
frictional unemployment created by sectoral shifts
Suppose that because of the popularity of the low-carb diet, bakeries need fewer workers and steak houses need more workers. The unemployment created by this change is
frictional unemployment created by sectoral shifts.
Providing training for unemployed individuals is primarily intended to reduce
frictional unemployment.
People who are unemployed because of job search are best classified as
frictionally unemployed
Sandy has graduated from college and is devoting her time to searching for a job. She has seen plenty of openings, but has not yet been offered one that best suits her taste and skills. Sandy is
frictionally unemployed, which exists even in the long run
Unemployment Insurance (UI)
gov't programs that partially protect workers' incomes when they become unemployed. increases frictional unemployment. benefits end when a worker takes a job.
Over the past several decades, the difference between the labor-force participation rates of men and women in the U.S. has
gradually decreased
In Belgium, Norway, and Sweden, the percentage of workers who belong to unions is
greater than it is in the United States.
The Board of Governors
has 7 members
Cyclical unemployment
has a different explanation than does the natural rate of unemployment, refers to the year-to-year fluctuation in unemployment around an economy's natural rate of unemployment, and is closely associated with short-run ups and downs of economic activity.
Fiat money
has no intrinsic value
an increase in the price of forklifts imported into the US from Belgium will
have no effect on the consumer price index or the GDP deflator.
Efficiency-wage theory suggests that paying
high wages might be profitable because they raise the efficiency of a firm's workers.
In the early 1900s, Henry Ford introduced a
high-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory.
the natural rate of unemployment
includes structural and frictional unemployment
Efficiency wages
increase productivity but increase unemployment
Efficiency wages
increase structural unemployment by keeping wages above equilibrium
Sectoral shifts in demand for output
increase unemployment due to job search
An increase in the minimum wage: (Part II)
increases structural unemployment
Other things the same, an increase in wages above the equilibrium level
increases structural unemployment and increase the natural rate of unemployment
An increase in the minimum wage
increases structural unemployment.
Sheamous loses his job and decides to sit on the beach rather than look for work during the next few months. Other things the same, the unemployment rate
increases, and the labor force participation rate decreases
Satchel loses his job and immediately begins looking for another. Other things the same, the unemployment rate
increases, and the labor-force participation rate is unaffected
Frictional unemployment is
inevitable, because at any given time, jobs are being created in some firms and destroyed in other firms.
classical economists believe
int hat the quantity theory of money that both the velocity and the quantity of good and services per period are fairly stable.
A person who is not employed and claims to be trying hard to find a job but really is not trying hard to find a job
is counted as unemployed but should be counted as out of the labor force.
The Federal Reserve
is responsible for conduction the nations monetary policy, and it plays a role in regulating banks
The source of the supply of loanable funds
is saving and the source of demand for loanable funds is investment
The GDP deflator
is used to calculate inflation rises and its alternate to the CPI
When the Fed conducts open market purchases
it buys the Treasury securities, which increases the money supply
Sectoral changes
it may be in the best interest of firms to offer wages that are above the equilibrium level
The theory of efficiency wages explains why
it may be in the best interest of firms to offer wages that are above the equilibrium level
The theory of efficiency wages explains why
it may be in the best interest of firms to offer wages that are above the equilibrium level.
When the Fed conducts open market sales,
it sells Treasury securities, which decreases the money supply
In a fractional reserve banking system, a bank
keeps only a faction of its deposits in reserves
Suppose that garbage collectors and landscaping workers have no unions. Now suppose that garbage collectors form unions. What does this do the labor supply and wages of landscaping workers?
labor supply increases and wages decrease
Economists would predict that, other things the same, the more generous unemployment compensation a country has, the
longer the duration of each spell of unemployment and the higher the unemployment rate.
If a reform of the tax encourages greater saving, the result would be
lower interest rates and greater investments
Unions
lower the wages of workers in industries without unions.
which of the following persons is considered to be unemployed?
mary, who has quit her job to look for another one.
You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate?
medium of exchange
Emeril is the owner of a restaurant. He decides to raise the wages of his workers even though he faces an excess supply of labor. His decision
might increase profits if it attracts a better pool of workers to apply for jobs at his restaurant.
Quinn, the CEO of a corporation operating in a relatively poor country where wages are low, decides to raise the wages of her workers even though she faces an excess supply of labor. Her decision
might increase profits if it means that the wage is high enough for her workers to eat a nutritious diet that makes them more productive.
Susan is a plant manager in charge of a factory in a relatively poor country. Even though market wages are low, she decides to raise the wages of her workers. Her decision
might increase profits if it means that the wage is high enough for her workers to eat a nutritious diet that makes them more productive.
Commodity money is
money with intrinsic value
The Bureau of Labor Statistics produces data on unemployment:
monthly
When a country saves a larger portion of its GDP than it did before, it will have
more capital and higher productivity
Compared to short-term bonds, other things the same, long-term bonds generally have
more risk and so they pay higher interest rates.
Ellen decides to hire some addiction workers for her vinyl siding factory. the equilibrium wage is $14 per hour. efficiency wage theory suggests that it is reasonable for ellen to offer
more than$14 per hour, so as to attract a better pool of applicants
In a closed economy, what remains after paying for consumption and government purchases is
national saving
the amount of unemployment that an economy normally experiences is called the
natural rate of unemployment
Zeeman is a college student who is not working or looking for a job. The Bureau of Labor Statistics counts Zeeman as
neither in the labor force nor unemployed.
If a price floor is not binding, then there will be ___________ on the market price or quantity sold.
no effect
The Bureau of Labor Statistics classifies people who would like to work but have given up looking for a job as
out of the labor force. If they were classified as unemployed, the reported unemployment rate would be larger.
The BLS counts discouraged workers as
out of the labor force. If they were counted as unemployed the unemployment rate would be higher.
when products improve in quality the CPI will
overestimate the inflation rate
according to experts the CPI
overstates increases in the cost of living
Employed
paid employees, self-employed, and unpaid workers in a family business
who of the following are included in the bureau of labor statistics employed category?
part time workers and workers on vacation
Unemployed
people not working who have looked for work during previous 4 weeks
Discouraged Workers
people who are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them
Other things the same, when the interest rate rises,
people would want to lend more more, making the quantity of loanable funds supplied decrease.
Minimum-wage laws and unions are similar to each other but different from efficiency wages in that minimum-wage law and unions
prevent firms from lowering wages in the presence of a surplus of workers.
The Wagner Act of 1935
prevents employers from interfering when workers try to organize a union
You observe a closed economy that has a government deficit and positive investment. Which of the following is correct?
private saving is positive; public saving is negative
In a closed economy, what does (Y-T-C) represent?
private spending
which of the following policies is most likely to bring about economic growth in the long run?
promoting improvements in the education of the population
In a closed economy, what does (T-G) represent?
public saving
More generous unemployment insurance would
raise frictional unemployment.
suppose taxes are cut in an economy that is in equilibrium at full employment. In the long run the tax cut will
raise the price level
Unions
raise the wages of unionized workers and raise unemployment
Labor unions
raise wages in unionized industries
A larger budget deficit
raises the interest rate and reduces investment
A firm may pay efficiency wages in an attempt to
reduce incentives to shrink, reduce turnover, or attract a well qualified pool of applicants
A larger budget surplus
reduces the interest rate and raises investment
Which of the following is not a cause of the changing role of women in American society over the past several decades?
scientists have shown that women are better employees than men
Mia puts money into a piggy bank so she can spend it later. What function of money does this best illustrate?
store of value
Unions contribute to
structural but not frictional unemployment.
If minimum-wage laws, unions, efficiency wages, and all other factors that could prevent wages from reaching equilibrium were eliminated, then there would be no
structural unemployment
Unemployment that results because the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one is called
structural unemployment
Unions contribute to
structural unemployment
a worker who loses a job at a petroleum refinery because consumers and business firms switch from the use of oil to the burning of coal is an example of
structural unemployment
if global warming raises temperatures so high that snow can never again exist anywhere, snow ski instructors will experience
structural unemployment
unemployment that results because the job skills possessed by those in some labor markets may be insufficient to give a job to everyone who wants one is called
structural unemployment
Unemployment that results because the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one is called
structural unemployment.
People who are unemployed because wages are, for some reason, set above the level that brings labor supply and demand into equilibrium are best classified as
structurally unemployed
People who are unemployed because wages are, for some reason, set above the level that brings labor supply and demand into equilibrium are best classified as
structurally unemployed.
The amount of unemployment varies
substantially over time and across countries
Efficiency wages create a labor
surplus and so increase unemployment
When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the result is a
surplus of labor and a shortage of jobs.
Minimum wages create unemployment in markets where they create a
surplus of labor. Minimum wage laws are not the predominant reason for unemployment in the US
Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?
the FOMC
The discount rate is the interest rate that
the Fed charges banks for loans
Cyclical unemployment: has a different explanation than does the natural rate of unemployment. refers to the year-to-year fluctuation in unemployment around an economy's natural rate of unemployment. is closely associated with short-run ups and downs of economic activity.
the amount of unemployment that the economy normally experiences.
The economy's two most important financial markets are
the bind market and the saving market
We associate the term "debt finance" with
the bond market, and we associate the term "equity finance" with the stock market
Nastech Pharmaceutics announced it has developed a nasal spray that would reduce hunger cravings. Other things the same we would expect
the demand for existing shares of stock in this company to increase, so the price would rise
Suppose that the tires of a certain tire manufacturer are discovered to be defective. Other things the same, this news would cause
the demand for this company 's stock to decrease, so the price would fall
Cyclical Unemployment
the deviation of unemployment from its natural rate
Liquidity refers to
the ease with which an asset is converted to the medium of exchange
If a price floor is not binding, then
the equilibrium price is above the price floor
some people who are employed or who are not making serious effort to find employment will report themselves as unemployed. some people who want to find work will be counted as out of the labor force.
the first fact tends to make the reported unemployment rate higher than the actual unemployment rate, whereas the second fact tends to make the reported unemployment rate lower than the actual unemployment rate.
The Bureau of Labor Statistics defines the unemployment rate as the percentage of:
the labor force that is unemployed
most economists believe that the immediate determinant of the levels of domestic output and employment is
the level of total spending
The slope of the demand for loanable funds curve represents
the negative relation between the real interest rate and investment
which of the following is not a requirement for the bureau of labor statistics to place someone in the unemployed category?
the person must not have been fired from their previous job
if technology makes production less expensive and at the same time exports decrease, which of the following will result with certainty?
the price level will decrease
Job Search
the process by which workers find appropriate jobs given their tastes and skills
potential GDP will fall, certeris paribus, if
the retirement age is lowered
the Labor Force
the total # of workers, including the employed and unemployed.
Of the following groups who is eligible for unemployment insurance benefits?
the unemployed who were laid off because their previous employers no longer needed their skills
Suppose that some people report themselves as unemployed when, in fact, they are working in the underground economy. If these persons were counted as employed, then
the unemployment rate would be lower and the labor-force participation rate would be unaffected.
Most entrepreneurs do not have enough money of their own to start their business. When they acquire the necessary funds from someone else,
their investments are being financed by someone else's saving
If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,
there is a shortage and the interest rate is below the equilibrium rate
You buy 100 shares in the XYZ company and your broker charges you $29.95
this will increase GDP by $29.95
Economist use the word "money" to refer to
those assets regularly used to buy goods and services
Who of the following is not included in the Bureau of Labor Statistics' "employed" category?
those waiting to be recalled to a job from which they had been laid off
Unemployment data are collected
through a regular survey of about 60,000 households
which of the following is not a type of unemployment?
traditional
Which of the following is not one of the categories into which the Bureau of Labor Statistics places each adult of each surveyed household?
underemployed
Frictional unemployment can be the consequence of
workers leaving existing jobs to find ones they like better, one industry declining while the other is growing or changes in the working conditions offered by competing firms
Cyclical unemployment refers to
year-to-year fluctuations of unemployment around its natural rate.
