Macroeconomics - Unemployment

If wages were always at the competitive equilibrium, there would be absolutely no unemployment. T or F?

F

Paying efficiency wages tends to increase worker turnover because workers can get continually higher wages if they change employer often. T or F?

F

The presence of unemployment insurance tends to decrease the unemployment rate because recipients of unemployment benefits are not counted in the labour force. T or F?

F

The unemployment rate is about the same for the various demographic groups: men, women, people from non-white ethnic backgrounds, people from white ethnic backgrounds, young people, old people. T or F?

F

Some frictional unemployment is inevitable because

there are changes in the demand for labour among different firms.

A minimum wage law tends to

create more unemployment in low-skill job markets than in high-skill job markets.

labour force participants rate

((labour force) / (adult population)) * 100

unemployed rate

((number of unemployed) / (labour force)) * 100

the theory of efficiency wages

- (worker health) - worker turnover - worker effort - worker quality

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 labour markets is insufficient to provide a job for everyone who wants one

A reservation wage is the

minimum wage the worker is willing to accept.

Figure 28-1 Total population 195.4 Adult population 139.7 Number of unemployed 5.7 Number of employed 92.3 Refer to Figure 28-1. The unemployment rate is a. 3.2 percent. b. 5.7 percent. c. 5.8 percent. d. Not enough informa. is available to answer. e. 6.2 percent.

C

Figure 28-1 Total population 195.4 Adult population 139.7 Number of unemployed 5.7 Number of employed 92.3 Refer to Figure 28-1. The labour force is a. 134.0 million. b. none of these answers. c. 92.3 million. d. 139.7 million. e. 98.0 million.

E

Figure 28-1 Total population 195.4 Adult population 139.7 Number of unemployed 5.7 Number of employed 92.3 Refer to Figure 28-1. The labour force participation rate is a. 47.1 percent. b. 65.9 percent. c. 50.2 percent. d. none of these answers. e. 70.2 percent.

E

A minimum wage is likely to have a greater impact on the market for skilled workers than on the market for unskilled workers. T or F?

F

An efficiency wage is like a minimum wage in that firms are required by legislation to pay it. T or F?

F

Due to the existence of discouraged workers, the official unemployment rate may overstate true unemployment. T or F?

F

If the unemployment rate falls, we can be certain that more workers have jobs.

F

Sectoral shifts tend to raise which type of unemployment?

Frictional unemployment

Which of the following statements about efficiency wage theory is true?

Paying above the competitive equilibrium wage may improve worker health, lower worker turnover, improve worker quality, and increase worker effort.

Which of the following government policies would fail to lower the unemployment rate?

Raising the minimum wage

Which one of the following types of unemployment results from the wage being held above the competitive equilibrium wage?

Structural unemployment

A union is a labour cartel. T or F?

T

Firms may voluntarily pay wages above the level that balances the supply and demand for workers because the higher wage improves the average quality of workers that apply for employment. T or F?

T

In the UK over the twenty years from mid-1980s, the labour-force participation rate has been rising for women and has been falling for men. T or F?

T

The natural rate of unemployment is the amount of unemployment that won't go away on its own, even in the long run. T or F?

T

The presence of a union tends to raise the wage for insiders and lower the wage for outsiders. T or F?

T

Unions may increase efficiency in some circumstances because they decrease the cost of bargaining between labour and management. T or F?

T

Whenever the wage rises above the competitive equilibrium, regardless of the source, the result is additional unemployment. T or F?

T

Which of the following statements is true of the UK?

Women tend to have broadly similar unemployment rates as men.

unemployment insurance

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

union

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

Which of the following is an example of a reason why firms might pay efficiency wages?

a. At equilibrium wages, workers sleep when the boss is not looking because workers are not deeply concerned about being fired. b. At equilibrium wages, workers often quit to find better jobs. c. At equilibrium wages, only minimally qualified workers apply for the job. d. At equilibrium wages, workers cannot afford a healthy diet so they fall asleep at work due to a lack of energy. e. All of these answers

efficiency wages

above-equilibrium wages paid by firms in order to increase worker productivity

sectoral shifts

changes in the composition of demand among industries or regions

claimant count

claiming unemployment benefit payments from the government

Which of the following types of unemployment will exist even if the wage is at the competitive equilibrium?

frictional unemployment

labour force surveys

going out and asking people questions

Unions tend to increase the disparity in pay between insiders and outsiders by

increasing the wage in the unionized sector, which may create an increase in the supply of workers in the non-unionized sector.

A miner who has been unable to find work for so long that he has stopped looking for work is considered to be

not in the labour force.

According to the Office of National Statistics, a husband who chooses to stay home and take care of the household is

not in the labour force.

labour force

number of employed + number of unemployed

Unions might increase efficiency in the case where they

offset the market power of a large firm that is the dominant employer in a region.

cyclical unemployment

the deviation of unemployment from its natural rate

The amount of unemployment that the economy normally experiences is known as

the natural rate of unemployment.

natural rate of unemployment

the normal rate of unemployment around which the unemployment rate fluctuates

If unemployment insurance were so generous that it paid laid off workers 95 per cent of their regular salary,

the official unemployment rate would probably overstate true unemployment.

strike

the organized withdrawal of labour from a firm by a union

collective bargaining

the process by which unions and firms agree on the terms of employment

job search

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

If, for any reason, the wage is held above the competitive equilibrium wage,

the quantity of labour supplied will exceed the quantity of labour demanded and there will be unemployment.