Macroeconomics test 2- chapters, 15, 12, 13

unemployment rate equation

# of unemployed/labor force X 100

examples of how efficiency wages are beneficial

-employes will have better health -employes will have less turnover -quality of work will increase because higher wages attract individuals with better skills -effort will increase to keep jobs

what reduces frictional unemployment

-the internet --> job search -public policy --> government programs

natural resources

the inputs into the production of goods and services that are provided by nature, such as land, rivers, and mineral deposits

human capital

the knowledge and skills that workers acquire through education, training, and experience

bond

a certificate of indebtness

stock

a claim to partial ownership in a firm

crowding out

a decrease in investment that results from government borrowing

unemployment insurance

a government program that partially protects workers incomes when they become unemployed

budget deficit

a shortfall of tax revenue from government spending

union

a worker association that bargains with employers over wages, benefits, and working conditions

If the nominal interest rate is 2.5 percent and the inflation rate is 2 percent, what is the real interest rate? a. .5 percent b. 1.25 percent c. 4.5 percent d. None of the above is correct. Hide Feedback

a. .5 percent

Which of the following is not a reason economies experience structural unemployment? a. job search b. unions c. minimum-wage laws d. efficiency wages

a. Job Search

Who would be included in the labor force? a. Louie, who is waiting for his new job to start b. Daisey, who has become discouraged looking for a job and has quit looking c. Donald, an unpaid stay-at-home father d. None of the above is correct

a. Louie, who is waiting for his new job to start

Changes in the composition of demand among industries or regions are called sectoral shifts. a. True b. False

a. True

The Bureau of Labor Statistics divides the adult population into three categories: employed, unemployed, and not in the labor force. a. True b. False

a. True

The Bureau of Labor Statistics' "unemployed" category includes those who were not employed, were available for work, and had tried to find employment during the previous four weeks. a. True b. False

a. True

Other things the same, which of the following would increase productivity? a. an increase in either human or physical capital b. an increase in human capital but not an increase in physical capital c. an increase in physical capital but not an increase in human capital d. neither an increase in human capital nor an increase in physical capital

a. an increase in either human or physical capital

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 a. both the unemployment rate and labor-force participation rate would be higher. b. the unemployment rate would be higher ,and the labor-force participation rate would be lower. c. the unemployment rate would be lower, and the labor-force participation rate would be higher. d. both the unemployment rate and labor-force participation rate would be lower.

a. both the unemployment rate and labor-force participation rate would be higher.

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 a. increases, and the labor-force participation rate decreases. b. increases, and the labor-force participation rate is unaffected. c. is unaffected, and the labor-force participation rate decreases. d. and the labor-force participation rate are both unaffected.

a. increases, and the labor-force participation rate decreases.

Human capital is the... a. knowledge and skills that workers acquire through education, training, and experience. b. stock of equipment and structures that is used to produce goods and services. c. total number of hours worked in an economy. d. same thing as technological knowledge.

a. knowledge and skills that workers acquire through education, training, and experience.

Efficiency wages create a labor a. surplus and so increase unemployment. b. surplus and so decrease unemployment. c. shortage and so increase unemployment. d. shortage and so decrease unemployment.

a. surplus and so increase unemployment.

The labor-force participation rate measures the percentage of the a. total adult population that is in the labor force. b. total adult population that is employed. c. labor force that is employed. d. labor force that is either employed or unemployed.

a. total adult population that is in the labor force.

Most job search in the U.S. economy takes place without intervention by the government. a. True b. False

a. true

budget surplus

an excess of tax revenue from over government spending

mutual fund

an institution that sells shares to the public and uses the proceeds to buy a portfolio of stocks and bonds

Suppose that some country had an adult population of about 25 million, a labor-force participation rate of 60 percent, and an unemployment rate of 6 percent. How many people were employed? a. 0.9 million b. 14.1 million c. 15 million d. 23.5 million

b. 14.1 million

The Bureau of Labor Statistics counts a member of a surveyed household as an adult if that person is at least a. 14 years old. b. 16 years old. c. 18 years old. d. 21 years old.

b. 16 years old

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"? a. Octavia but not Eve b. Eve but not Octavia c. both Octavia and Eve d. neither Octavia nor Eve

b. Eve but not Octavia

Economist Michael Kremer found that world growth rates fell as population increased. a. True b. False

b. False

Taking out a mortgage to buy a condo, buying a mutual fund, and building a new factory are all examples of investment. a. True b. False

b. False

The natural rate of unemployment is the desirable rate of unemployment for an economy. a. True b. False

b. False

Each day Sue works 8 hours and produces 7 units of goods and services. Mary works 10 hours each day and produces 10 units of goods and services. It follows that a. Sue's productivity is higher than Mary's. b. Mary's productivity is higher than Sue's. c. Sue's income per hour will be higher than Mary's. d. Sue's income per day will be higher than Mary's.

b. Mary's productivity is higher than Sue's.

Skyline Chili wants to finance the purchase of new equipment for its restaurants. The firm has limited internal funds, so Skyline likely will a. demand funds from the financial system by buying bonds. b. demand funds from the financial system by selling bonds. c. supply funds to the financial system by buying bonds. d. supply funds to the financial system by selling bonds.

b. demand funds from the financial system by selling bonds.

Every month, the Bureau of Labor Statistics surveys 160,000 business establishments to help determine the a. number of people unemployed. b. number of jobs the economy has gained or lost. c. size of the labor force. d. number of people who own their own businesses.

b. number of jobs the economy has gained or lost.

The labor force equals the a. number of people employed. b. number of people employed plus the number of people unemployed. c. number of people employed plus the number of people unemployed plus teenagers between ages 14 and 16 who work at least 10 hours a week. d. adult population.

b. number of people employed plus the number of people unemployed.

If a union raises the wage in its industry above equilibrium, then there is an increase in a. structural unemployment which is part of cyclical unemployment. b. structural unemployment which is part of the natural rate of unemployment. c. frictional unemployment which is part of cyclical unemployment. d. frictional unemployment which is part of the natural rate of unemployment.

b. structural unemployment which is part of the natural rate of unemployment.

A person who is counted as "unemployed" by the Bureau of Labor Statistics a. is also in the labor force. b. must have recently looked for work or be on temporary layoff. c. must be at least 16 years old. d. All of the above are correct.

d. All of the above are correct.

Which of the following is correct? a. Unemployment insurance raises structural unemployment because it reduces the job search efforts of the unemployed. b. Most economists are skeptical of the value of unemployment insurance primarily because they believe that it results in a poorer match between workers and jobs. c. Studies show that when the unemployed become ineligible for benefits, the probability of their finding a job rises markedly. d. All of the above are correct.

c. Studies show that when the unemployed become ineligible for benefits, the probability of their finding a job rises markedly.

When a minimum-wage law forces the wage to remain above the equilibrium level, the result is a. both a shortage of labor and a shortage of jobs. b. a shortage of labor and a surplus of jobs. c. a surplus of labor and a shortage of jobs. d. both surplus of labor and a surplus of jobs.

c. a surplus of labor and a shortage of jobs.

Other things the same, when the interest rate rises, a. people would want to lend more, making the supply of loanable funds increase. b. people would want to lend less, making the supply of loanable funds decrease. c. people would want to lend more, making the quantity of loanable funds supplied increase. d. people would want to lend less, making the quantity of loanable funds supplied decrease.

c. people would want to lend more, making the quantity of loanable funds supplied increase.

In a closed economy, public saving is the amount of a. income that households have left after paying for taxes and consumption. b. income that businesses have left after paying for the factors of production. c. tax revenue that the government has left after paying for its spending. d. spending that the government undertakes in excess of the taxes it collects.

c. tax revenue that the government has left after paying for its spending.

Which of the following is a good gauge of economic progress? a. the level of real GDP per person, but not the growth rate of real GDP per person b. the level of real GDP per person and the growth rate of real GDP per person c. the growth rate of real GDP per person, but not the level of real GDP per person d. neither the level nor the growth rate of real GDP per person

c. the growth rate of real GDP per person, but not the level of real GDP per person

​Daniel goes on vacation for four weeks. When he returns the company puts him on layoff for four weeks during which he waits to be recalled. In which weeks is Daniel counted as unemployed, if any? a. ​neither the first four or second four weeks b. the first four weeks but not the second four weeks c. ​the second four weeks but not the first four weeks d. ​both the first four weeks and the second four weeks

c. ​the second four weeks but not the first four weeks

Unemployment insurance.... a. reduces the hardship of unemployment, but it also increases the amount of unemployment. b. reduces the incentive for the unemployed to find and take new jobs. c. causes workers to be less likely to seek guarantees of job security when they negotiate with employers over the terms of employment. d. All of the above are correct.

d. All of the above are correct.

market for loanable funds

the market in which those who want to save supply the funds and those who want to borrow invest in demand funds

Minimum-wage laws.... a. reduce unemployment. b. cause labor shortages, which further raise wages above equilibrium. c. affect highly-educated workers more than high school dropouts. d. None of the above is correct.

d. None of the above is correct.

To be counted as "employed" in the U.S. labor force statistics, a person a. must be working for pay and be working full time. b. must be working for pay but does not have to be working full time. c. does not have to be working for pay if they are working for a family business but must be employed full time. d. does not have to be working for pay if they are working for a family business and does not have to be working full time

d. does not have to be working for pay if they are working for a family business and does not have to be working full time

Which of the following is an explanation for the existence of frictional unemployment? a. efficiency wages b. minimum-wage laws c. unions d. job search

d. job search

It is claimed that a secondary advantage of mutual funds is that a. an investor can avoid investment charges and fees. b. they give ordinary people access to loanable funds for investing. c. they usually outperform stock market indexes. d. they give ordinary people access to the skills of professional money managers.

d. they give ordinary people access to the skills of professional money managers.

financial system

the group of institutions in the economy that help to match one persons saving with another persons investment

private saving

the income that households have left after paying for taxes and consumption

financial markets

financial institutions through which savers can directly provide funds to borrowers

financial intermediaries

financial institutions through which savers can indirectly provide funds to borrowers

which form of unemployment is typically short term

frictional unemployment

discouraged workers

individuals who would like to work but have given up looking for a job

Which of the following is not a reason economies experience structural unemployment? a. job search b. unions c. minimum-wage laws d. efficiency wages

job search

labor force participation rate equation

labor force/adult population X 100

Which of the following is an example of a renewable natural resource? a. the knowledge possessed by scientists b. carpenters' labor services c. lumber d. All of the above are correct.

lumber

Which of the following is not a cause of frictional unemployment? a. the destruction of manufacturing jobs b.unemployment insurance c. minimum-wage laws d. a worker leaving a job to find one with better benefits

minwage laws

technological knowledge

society's understanding of the best ways to produce goods and services

Efficiency wages create a a) shortage of labor and so reduce unemployment b) shortage of labor and so raise unemployment c) surplus of labor and so reduce unemployment d) surplus of labor and so raise unemployment

surplus of labor and so raise unemployment

cyclical unemployment

the deviation of unemployment from its natural rate

natural rate of unemployment

the normal rate of unemployment around which the unemployment rate fluctuates

strike

the organized withdrawal of labor from a firm by a union

labor force participation rate

the percent of the adult population that is in the labor force

unemployment rate

the percent of the labor force that is unemployed

collective bargaining

the process by which the union and firm agree on the terms of employment

job search

the process by which workers find appropriate jobs given their tastes and skills

catch-up effect

the proper whereby countries that start off poor tend to grow more rapidly than countries that start off rich

diminishing returns

the property whereby the benefit from an extra unit of an input declines as the quantity of the input increases

productivity

the quantity of goods and services produces from each unit of labor input

physical capital

the stock of equipment and structures that are used to produce goods and services

public saving

the tax revenue that the government has left after paying for its spending

national saving

the total income in the economy that remains after paying for consummation and government purchases

labor force

the total number of workers, both employed and unemployed

frictional unemployment

unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills

structural unemployment

unemployment that results because the number of jobs available in some labor markers is insufficient to provide a job for everyone who wants it

efficiency wages

wages above the equilibrium wage paid by firms to increase worker productivity

equilibrium wage

where supply and demand are balanced at the wage