Ch 17 Economics

Which one of the following is a negative effect of efficiency wage theory?

Surplus of labor

What is the natural rate of unemployment?

The lowest sustainable rate of unemployment over a long period of time.

In December 2016, 155,000 of Mainfield's adult residents were employed while 27,000 were unemployed. What was Mainfield's unemployment rate in December?

15%

Under one formulation of Okun's law, a _____ increase in unemployment results in a _____ percent drop in GDP.

1;2

Which of the following technological innovations would have the greatest impact on the natural rate of unemployment?

A set of robots that can manufacture cars without any human supervision, at the exact same level of efficiency.

Which of the following is NOT an example of seasonal unemployment?

An economics professor in August

According to the chart, a government imposed minimum wage of $7 will result in which of the following?

An increase in unemployment of 20 workers.

The natural rate of unemployment is the rate of unemployment that coincides with which part of a graph of a labor market's supply and demand curves?

At the equilibrium point

Which of the following statements about the natural rate of unemployment is FALSE?

At the natural rate of unemployment, there is only cyclical unemployment.

How does the theory of rational expectations relate future economic outcomes to the behavior of those making market decisions?

Because people are forward-looking and incorporate this into their expectations, the future tends to follow their expectations.

Which of the following methods best describes how data is gathered for the monthly unemployment rate?

Census workers survey 60,000 households regarding their employment status and then extrapolate that to the rest of the country.

Which of the following statements is true regarding changes to the unemployment rate?

Changes to either the numerator (number of unemployed) or the denominator (total workforce) can change the unemployment rate.

Construct Company Ltd. had to lay off quite a few workers because the company has not been able to secure enough work contracts. What type of unemployment is being described?

Cyclical unemployment

Which of the following is NOT an individual cost of unemployment?

Decrease in demand

Which of the following is NOT a benefit of applying the efficiency wage theory?

Higher turnover

Why do governments impose minimum wages?

In order to help unskilled workers pay the bills.

Which of the following is NOT a likely result of a prolonged rate of unemployment?

Increasing support for free trade

Why does frictional unemployment occur in the workforce?

It is due to normal turnover in the labor market and the time it takes for workers for find new jobs

Which of the following statements is true regarding a minimum wage?

It is set above the market wage.

Which of the following individuals would be counted as unemployed?

Jennifer, who is about to start a new job

Jim owns a custom printing business. According to the theory of rational expectations, how would he reach a decision about whether to expand his business in the next year?

Jim will use his past experiences along with all information available to him.

Select the person who is considered as being unemployed.

Maggie, who is a university graduate looking for a full-time job.

Which of the following workers is MOST likely to be classified as structurally unemployed?

Matt, an unemployed worker whose skills are now obsolete.

Governments often impose minimum wages in order to help unskilled workers. Which of the following statements is true?

Minimum wages increase unemployment.

Jeb is starting up a restaurant, and he's trying to decide how much to pay his servers. He knows that the market-clearing wage for servers is $10 per hour. According to efficiency wage theory, how much should he pay them? Why?

More than $10 per hour, in order to motivate his servers to work harder and stay with the company longer.

Which one of the following groups of people are NOT taken into consideration when calculating unemployment rates?

People not working and not looking for work

If Anytown, USA has a high unemployment rate but also has a large number of unfilled computer programming jobs, what type of unemployment are they suffering from?

Structural unemployment

What prevailing economy theory was the theory of rational expectations developed to counter?

The Keynesian theory that promotes government intervention in the economy.

Why do most economists not subscribe to the classical theory of unemployment?

The classical theory of unemployment views employment as theoretically possible, while most economists think that an unemployment rate of zero is unobtainable over the long term.

When the labor market is in equilibrium, how does labor affect other economic drivers?

The supply of labor is equal to the demand for labor.

If discouraged workers were actually counted in the unemployment rate:

The unemployment rate would be higher.

According to Okun's law, how are employment and GNP related?

There is a positive relationship between them.

For the last year, the rate of unemployment has been above the natural rate for the labor market. How does this affect labor costs?

They tend to be less expensive than when unemployment is at its natural rate.

How can the rational expectations theory be applied to the labor market and the government's role in employment levels?

Unemployment levels will find a natural equilibrium, government actions to reduce these levels will lead to higher prices.

Which of the following individuals is structurally unemployed?

Wanda, who picks berries at a farm over the summers.

Why is unemployment a significant concern for businesses?

We live in a consumption-based economy.

What do we call the wage that occurs when labor supplied equals labor demanded?

market-clearing wage

According to rational expectations theory, if the government or the central bank work actively to increase GDP what will be the end result?

When people discover that the government or central bank intends to act, they will change their behavior and raise their prices accordingly.

The Bureau of Labor Statistics categorizes an individual as unemployed if they are:

Without a job but looking for work

Derek was working in construction when the housing bubble burst following the 2008 financial crisis. The demand for new construction declined, and Derek lost his job. This scenario is an example of which type of unemployment?

cyclical

When actual unemployment falls below the natural rate, that LIKELY results in _____.

higher inflation

If the unemployment rate rose from 5% to 7%, but more people were employed, what likely occurred?

the population grew at a faster rate than the number of employed people did.

How does efficiency wage theory generally affect a company's turnover rate?

it decreases

Mary Beth ran a local newspaper business. She found that fewer people were purchasing the local paper since they were able to conveniently access the news online via their computers and smart phones. Mary Beth's business was no longer making a profit, and she was forced to close its doors. This led to people losing their jobs, such as journalists, printers, and newspaper delivery boys. This is an example of _____.

structural unemployment

Economists describe an economy that is at the natural rate of unemployment as _____.

the full employment level of output