Econ Review Chapter 15

Which of the following statements about efficiency wage theory is true? a. Paying above the competitive equilibrium wage may improve worker health, lower worker turnover, improve worker quality, and increase worker effort. b. Paying above the competitive equilibrium wage tends to cause workers to shirk their responsibilities. c. Firms do not have a choice about whether they pay efficiency wages or not because these wages are determined by law. d. Paying the lowest possible wage is always the most efficient (profitable).

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

Which of the following statements is true? a. Prime-age men and women tend to have similar unemployment rates. b. The labor-force participation rate of men is rising. c. Blacks have a lower unemployment rate than whites. d. Most spells of unemployment are long term, but most unemployment observed at any given time is short term. e. All of the above are true.

a. Prime-age men and women tend to have similar unemployment rates.

A minimum-wage law tends to a. create more unemployment in low-skill job markets than in high-skill job markets. b. help all teenagers because they receive a higher wage than they would otherwise. c. create more unemployment in high-skill job markets than in low-skill job markets. d. have no impact on unemployment as long as it is set above the competitive equilibrium wage.

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

When a firm pays an efficiency wage, it may a. find that its workers quit less frequently. b. experience declines in worker quality. c. have to monitor its workers more closely. d. have trouble attracting enough workers.

a. find that its workers quit less frequently.

Sectoral shifts tend to raise which type of unemployment? a. frictional unemployment b. unemployment due to efficiency wages c. unemployment due to unions d. structural unemployment

a. frictional unemployment

Which of the following types of unemployment will exist even if the wage is at the competitive equilibrium? a. frictional unemployment b. unemployment due to unions c. unemployment due to minimum-wage laws d. unemployment due to efficiency wages

a. frictional unemployment

Unions might increase efficiency in the case where they a. offset the market power of a large firm in a "company town." b. lower the wage of local outsiders. c. raise the wage for insiders above the competitive equilibrium. d. threaten a strike but don't actually follow through, so there are no lost hours of work.

a. offset the market power of a large firm in a "company town.

In many European nations, unions a. play a much larger role than they do in the United States. b. are considered cartels in violation of antitrust laws. c. conspire with firms to keep wages below competitive levels. d. are social clubs without any economic impact.

a. play a much larger role than they do in the United States.

Which one of the following types of unemployment results from the wage being held above the competitive equilibrium wage? a. structural unemployment b. cyclical unemployment c. frictional unemployment d. sectoral unemployment e. None of the above is correct.

a. structural unemployment

The amount of unemployment that the economy normally experiences is known as a. the natural rate of unemployment. b. cyclical unemployment. c. efficiency wage unemployment. d. frictional unemployment.

a. the natural rate of unemployment.

Approximately what percent of U.S. workers are directly affected by the minimum wage? a. 6 b. 1 c. 25 d. 12

b. 1

In the United States, unionized workers are paid about _____ percent more than similar nonunion workers. a. 2 b. 15 c. 40 d. 5

b. 15

Use the following table to answer question. Numbers are in millions. The unemployment rate is a. 3.2 percent. b. 5.8 percent. c. Not enough information is available to answer this question. d. 6.2 percent. e. 5.7 percent.

b. 5.8 percent.

Use the following table to answer question. Numbers are in millions. The labor force is a. 92.3 million. b. 98.0 million. c. 134.0 million. d. 139.7 million. e. none of the above.

b. 98.0 million.

According to the theory of efficiency wages, a. sectoral shifts are the main source of frictional unemployment. b. firms may find it profitable to pay above-equilibrium wages. c. an excess supply of labor puts downward pressure on wages. d. right-to-work laws reduce the bargaining power of unions.

b. firms may find it profitable to pay above-equilibrium wages.

Unions tend to increase the disparity in pay between insiders and outsiders by a. increasing the demand for workers in the unionized sector. b. increasing the wage in the unionized sector, which may create an increase in the supply of workers in the nonunionized sector. c. increasing the wage in the unionized sector, which may create a decrease in the supply of workers in the nonunionized sector. d. decreasing the demand for workers in the unionized sector.

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

According to the Bureau of Labor Statistics, a husband who chooses to stay home and take care of the household is a. unemployed. b. not in the labor force. c. employed. d. a discouraged worker.

b. not in the labor force.

One unintended consequence of unemployment insurance is that it reduces the a. role of unions in wage setting. b. search effort of the unemployed. c. amount of frictional unemployment. d. income uncertainty that workers face.

b. search effort of the unemployed.

If unemployment insurance were so generous that it paid laid-off workers 95 percent of their regular salary, a. the official unemployment rate would probably understate true unemployment. b. the official unemployment rate would probably overstate true unemployment. c. there would be no impact on the official unemployment rate. d. frictional unemployment would fall. e. none of the above is true.

b. the official unemployment rate would probably overstate true unemployment.

The main policy goal of unemployment insurance is to reduce the a. amount of frictional unemployment. b. search effort of the unemployed. c. income uncertainty that workers face. d. role of unions in wage setting.

c. income uncertainty that workers face.

An accountant with a CPA designation who has been unable to find work for so long that she has stopped looking for work is considered to be a. employed. b. unemployed. c. not in the labor force. d. not in the adult population.

c. not in the labor force

Which of the following government policies would fail to lower the unemployment rate? a. establish employment agencies b. establish worker training programs c. raise the minimum wage d. reduce unemployment benefits e. establish right-to-work laws

c. raise the minimum wage

Some frictional unemployment is inevitable because a. efficiency wages may hold the wage above the equilibrium wage. b. of minimum-wage laws. c. there are changes in the demand for labor among different firms. d. of unions. e. of all of the above

c. there are changes in the demand for labor among different firms.

Use the following table to answer question. Numbers are in millions. The labor-force participation rate is a. 47.1 percent. b. 50.2 percent. c. 65.9 percent. d. 70.2 percent. e. none of the above.

d. 70.2 percent.

Which of the following is not a characteristic of minimum-wage workers? They tend to be a. young. b. in the food service and drinking place industry. c. less educated. d. full-time.

d. full-time.

In a competitive labor market, an increase in the minimum wage results in a(n) __________ in the quantity of labor supplied and a(n) __________ in the quantity of labor demanded. a. decrease, decrease b. increase, increase c. decrease, increase d. increase, decrease

d. increase, decrease

If, for any reason, the wage is held above the competitive equilibrium wage, a. unions will likely strike and the wage will fall to equilibrium. b. the quality of workers in the applicant pool will tend to fall. c. the quantity of labor demanded will exceed the quantity of labor supplied and there will be a labor shortage. d. the quantity of labor supplied will exceed the quantity of labor demanded and there will be unemployment.

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