Chapter 8 Questions
Menu costs are the
real costs of changing listed prices
Labor Force Distribution. The total population is _____ million
278
Employment Data. If marginally attached workers are included in the labor force, the labor force is _____ million
33
If the actual unemployment rate is 7% and the cyclical unemployment rate is 2%, then the natural rate of unemployment is
5%
Which federal agency calculates and reports the official unemployment rate?
Bureau of Labor Statistics
Suppose that a bank wishes to make a 5% rate of return on a one-year loan but expects inflation over the course of the loan to be roughly 3%. Which statement is TRUE?
If the bank charges 8% and the inflation rate is less than 3%, then the bank will have earned a higher rate of return than expected
The Effect of a Minimum Wage. Suppose the labor market is in equilibrium at E when the government imposes a minimum wage of WF. Structural unemployment, assuming all workers without a job are searching, will equal:
QS - QD
Unemployment that is due to the time workers spend in job search is _____ unemployment
frictional
The natural level of unemployment contains no_____ unemployment
cyclical
Internet employment agencies have simplified the job search for the applicants. They have also led to a(n) _____ unemployment
decrease in frictional
Deflation is a
decreasing aggregate price level
When labor unions successfully bargain for wage rates that are _____ the equilibrium wage rate, they may cause _____.
higher than; an increase in structural unemployment
When the unemployment rate is high, there is political demand to increase the benefit period for unemployment compensation. In a standard analysis, doing so will lead to
increases in the unemployment rate
To be officially unemployed, a person must
not have a job and must have looked for work in the past four weeks
A survey reveals that, on a small island, initially 100 people have jobs, 25 people don't have jobs but are looking for jobs, and 45 people are neither working nor looking for work. Suppose that 15 of the 45 people who weren't looking for work now begin looking for work. There are now 40 people looking for work and 100 people working. The unemployment rate
rises to 28.6%
Shoe-leather costs are the costs of
the increased number of transactions as inflation increases
The unemployment rate is the ratio of all of the people
unemployed to those in the labor force
During a recession
unemployment increases and the growth rate of real GDP decreases