Ssozi Exam III

The value of the marginal product of the tenth worker hired by a firm is $50. What is the maximum wage that should be paid to the worker?

$50

Which of the following is likely to shift the demand curve for workers on rice farms to the right, assuming all else equal?

An increase in the price of rice

Which of the following is likely to shift the demand curve for engineers rightward, assuming all else equal?

An increase in the productivity of engineers

Adults not in the labor force

= Potential adult workers − Labor force

________ increase workers' productivity and improve the profitability of a firm.

Efficiency wages

In a perfectly competitive labor market, at the equilibrium wage rate, ____

Involuntary unemployment is zero

The government institutes a minimum-wage above the equilibrium wage rate in a perfectly competitive labor market. If the labor demand curve is perfectly inelastic, what will the minimum wage do to structural unemployment and the wage rate?

It will increase structural unemployment and raise the wage rate.

Assuming competitive labor markets, which of the following would you not expect to increase long-term, structural unemployment?

Lower productivity

As per the records of the Bureau of Labor Statistics (BLS), which of the following was TRUE of the U.S. economy in 2016?

The number of employed workers > The number of adults out of the labor force > The number of unemployed workers

What will happen to the demand curve for workers in cotton farms if the price of cotton falls, assuming all else equal?

There will be a left shift of the demand curve for these workers.

What will happen to the demand curve for tea workers if the price of tea increases, assuming all else equal?

There will be a right shift of the demand curve for tea workers.

What will happen to the demand curve for workers in steel mills if some technology that increases their productivity is introduced, assuming all else equal?

There will be a right shift of the demand curve for the workers.

Difference between unemployed workers and discouraged workers?

Unemployed workers are counted in the labor force, but discouraged workers are excluded from the labor force.

Economic agents who borrow funds are known as

debtors

For the textile industries of England in 1811, the invention of new technology that allowed workers to complete tasks that had previously taken hours in minutes resulted in a(n) ________ in these industries.

decrease in the demand for labor

Areas where whole industries disappear will most likely experience _____

decreases in the number of possible workers and an ambiguous change in wage rates

The slope of the labor demand curve can be attributed to the law of ____

diminishing marginal productivity of labor

Workers who are unemployed but are NOT actively looking for jobs are referred to as _____

discouraged workers

Wages that are higher than the current market wage ______

dissuade workers from shirking

A worker is said to be unemployed if he ____

does not have a job, has been actively looking for one in the prior 4 weeks, and is available for work

The credit demand curve is:

downward sloping.

If a firm hires a worker by paying him a wage higher than the value of the marginal product of the worker, ____

firing the worker will increase the firm's profits

Frictional unemployment exists because _____

firms and workers have imperfect information about each other and the state of the economy

Unemployment arising from job search is called _____

frictional unemployment

An employed individual is one who ___

has a full-time or part-time paid job

The slope of the credit demand curve from the text book implies that the:

higher the real rate of interest, the lower the quantity of credit demanded.

At a fixed level of worker productivity, ______

higher wages reduce profits

Collective bargaining can _____

increase unemployment

Downward wage rigidity is likely to ________ in an economy.

increase unemployment

If the real interest rate is greater than the nominal interest rate in an economy:

inflation must be negative in the economy.

If the nominal interest rate is greater than the real interest rate in an economy:

inflation must be positive in the economy.

If the real interest rate is equal to the nominal interest rate in an economy:

inflation must be zero in the economy.

The value of a worker's marginal product _____

is the additional revenue that the worker brings to the firm

The long-run unemployment rate _____

is the average of the unemployment rate in a country over time

The unemployment rate is defined as the percentage of the ________ that is unemployed.

labor force

International trade generally _____

leads higher overall GDP causes economic dislocation leads to lower wage rates for some workers

Excessive dependence on cheap foreign imports can cause a(n) ________ in certain sectors of the economy.

left shift in the domestic labor demand curve

Any change that causes a decrease in the demand for labor at a given wage rate will be represented by a(n) ________ the labor demand curve, assuming all else equal.

left shift of

Recessions are periods of _____

left shifts in the labor demand curves

A reduction in wage is most likely to _____

lower worker productivity

Rapid unemployment increases ______

may happen in one area but not in adjacent areas

A debtor's quantity of credit demanded and the rate of interest are likely to be

negatively correlated

The size of the labor force in a country is equal to the ___

number of employed workers plus the number of unemployed workers in the country

The total interest that a borrower has to pay on a loan is equal to the

principal times the rate of interest.

As the wage rate increases, the _____

quantity of labor supplied increases

An optimizing economic agent will use the ________ rate while calculating the economic cost of a loan.

real interest

Assuming all else equal, a rise in the rate of interest:

results in a fall in the quantity of credit demanded.

Any change that causes an increase in the demand for labor at a given wage rate will be represented by a(n) ________ the labor demand curve, assuming all else equal.

right shift of

If there is a new technology that increases worker productivity, labor demand would shift to the ________, and we would likely expect a ________ in voluntary unemployment among those who are counted as unemployed.

right; decrease

Any change that affects the entire schedule relating the quantity of labor and the value of the marginal product of labor will ________, assuming all else equal.

shift the labor demand curve

Any change that increases the quantity of labor supplied at all wage rates will ________, assuming all else equal.

shift the labor supply curve to the right

Unemployment that arises when there is a mismatch between the quantity of labor demanded and the quantity of labor supplied is referred to as _____

structural unemployment

Shifts in the demand curve of labor due to increased competition from Chinese imports are comparable to shifts in the demand curve due to ____

technological developments that replace manual labor

If a firm hires a worker by paying her a wage lower than the value of the marginal product of the worker, it implies that ____

the firm should hire more workers to increase profits

If the number of discouraged workers in a country increases, _____

the labor force participation rate will decrease

If the number of potential workers in an economy increases while the size of the labor force remains unchanged, ______

the labor force participation rate will fall

The real interest rate is given by:

the nominal interest rate adjusted for inflation.

When the credit demand curve is relatively steep:

the quantity of credit demanded doesn't change that much in response to variation in the real interest rate

If the nominal interest rate increases without any change in the rate of inflation:

the real interest rate increases.

The credit demand curve is the schedule that reports the relationship between the quantity of credit demanded and ________ in an economy, assuming all else equal.

the real rate of interest

As a firm hires more and more workers, _____

the value of the marginal product of the additional workers eventually decreases

A profit-maximizing firm will pay a worker ____

the value of the worker's marginal product

A downward movement along the labor demand curve occurs when ________, assuming all else equal.

the wage rate decreases

If, at a given wage, the quantity of labor supplied exceeds the quantity of labor demanded, _____

the wage rate will fall

If the quantity of labor demanded exceeds the quantity of labor supplied, ____

the wage rate will rise

If the opportunity cost of working outside the home increases, then ________ the labor supply curve, assuming all else equal.

there will be a left shift in

If a firm introduces technology that substitutes capital for labor, ________ the labor demand curve of the firm, assuming all else equal.

there will be a left shift of

The impact of an increase in the wage rate on labor demand is represented by a(n) ________ the demand curve for labor, assuming all else equal.

upward movement along

The labor supply curve is ____

upward sloping

The labor demand curve represents the relationship between the quantity of labor demanded and the ______

wage

Unemployment normally arises when _____

wages are above the market clearing wage level

Collective bargaining between unions and employers often leads to ___

wages that are higher than what workers would have received at equilibrium

If the annual inflation rate in an economy is positive, the purchasing power of a dollar kept in a bank:

will decrease over time.

If the annual inflation rate in an economy is negative, the purchasing power of a dollar:

will increase over time.

Downward wage rigidity arises when _____

workers and firms resist wage cuts

The impact of an increase in the wage rate on labor supply will be represented by ________, assuming all else equal.

an upward movement along the labor supply curve

Minimum wage laws ____

can give rise to wage rigidity

Minimum wages ____

can increase unemployment in an economy

Efficiency wages _____

can lead to wage rigidity

Downward wage rigidity ______

causes the wage to be above the market-clearing wage

The potential adult labor force includes the ____

civilian non-institutional population aged 16 years and older

Contract negotiations between an employer and a labor union representing workers are referred to as _____

collective bargaining

Workers who are underemployed are ____

considered employed

The number of adults not in the labor force of a country equals 6 million, and the number of individuals employed is 5 million. If there are 12 million potential adult workers in the economy, what is the current unemployment rate in this country?

16.67 percent

If the natural rate of unemployment in a country is 6 percent and the unemployment rate in the country is 8 percent, the cyclical unemployment in the country must be ___

2 percent

If the number of employed people in a country is 21 million and the number of unemployed workers in a country is 10 million, the size of the labor force in the country is equal to ____

31 million

Which of the following is likely to shift the demand curve for coffee workers to the left, assuming all else equal?

A decrease in the price of coffee

Which of the following is likely to shift the demand curve for carpenters rightward, assuming all else equal?

A fall in the price of wood

Which of the following is likely to shift the demand curve for corn farmers leftward, assuming all else equal?

A fall in the productivity of corn farmers due to increased pest attacks

Which of the following is likely to shift the labor supply curve to the right, assuming all else equal?

A rise in the immigration of workers in search of better work opportunities

Which of the following is likely to shift the demand curve for carpenters leftward, assuming all else equal?

A rise in the prices of the tools used by carpenters

Which of the following is likely to cause an upward movement along the labor supply curve, assuming all else equal?

A rise in the wage rate

Which of the following is likely to shift the labor supply curve to the left, assuming all else equal?

A social change that discourages women from participating in the labor force

Which of the following equations is TRUE of a profit-maximizing firm?

Wage = The value of a worker's marginal product

________ keeps the market wage above the level that would clear the labor market.

Wage rigidity

The impact of a decrease in the wage rate on labor supply will be represented by ________, assuming all else equal.

a downward movement along the labor supply curve

If the opportunity cost of working outside the home decreases, then ________ the labor supply curve is likely, assuming all else equal.

a right shift of

If the labor market is perfectly competitive, ____

a worker willing to work at the equilibrium wage rate can instantly find work