MACRO FINAL CHAPTER 7

Unions contribute to structural unemployment when collective bargaining results in wages: A) Above the equilibrium level B) Below the minimum wage C) Below the equilibrium level D) Above the level of unemployment compensation

A) Above the equilibrium level

As the relative demand for unskilled workers falls, wages for unskilled workers ____ and unemployment compensation becomes a ____ attractive option. A) Fall, more B) Fall, less C) Rise, more D) Rise, less

A) Fall, more

Unemployment caused by the time it takes workers to search for a job is called: A) Frictional B) Structural C) Efficiency D) insider

A) Frictional

One reason for unemployment is that: A) It takes time to match workers and jobs B) All jobs are identical C) The labor market is always in equilibrium D) A laid-off worker can immediately find a new job at the market wage

A) It takes time to match workers and jobs

When the real wage is above the level that equilibrates supply and demand A) The quantity of labor supplied exceeds the quantity demanded. B) The quantity of labor demanded exceeds the quantity supplied. C) There is no unemployment D) The labor market clears

A) The quantity of labor supplied exceeds the quantity demanded.

The natural rate of unemployment in the US since 1950 has average between ___ and ___ percent. A) 0, 1 B) 1, 3 C) 5, 6 D) 10,15

C) 5, 6

The earned income tax credit: A) Increases the government's tax revenue B) Reduces the incomes of poor working families C) Does not raise labor costs D) Is not an alternative to raising the minimum wage

C) Does not raise labor costs

Public policy to increase the job finding rate include ___ and public policy to decrease the job separation rate include ___. A) Government employment agencies, higher unemployment insurance benefits B) Job training programs, 100 percent experience rated unemployment insurance C) Higher minimum wage laws, payment of unemployment benefits for longer periods D) Higher efficiency wage, partially experience rated unemployment insurance

B) Job training programs, 100 percent experience rated unemployment insurance

Much of the difference in unemployment rates across Europe is attributable to difference in: A) Short-term unemployment B) Long-term unemployment C) Frictional unemployment D) The natural rate of unemployment

B) Long-term unemployment

In recent years, Europe has experienced ___ unemployment than the US, and employed Europenas work ___ hours than employed Americans. A) More, more B) More, fewer C) Less, fewer D) Less, more

B) More, fewer

Firms currently have incentives to temporarily lay off workers because firms typically are charged for ___ of workers' unemployment benefits. A) All B) Only a part C) None D) Twice the cost

B) Only a part

Economists call the changes in the composition of demand among industries and regions: A) Insider-outsider conflicts B) Sectoral shifts C) Moral hazard D) Adverse selection

B) Sectoral shifts

In a steady state, A) No hiring or firings are occurring B) The number of people finding jobs equals the number of people losing jobs C) The number of people finding jobs exceeds the number of people losing jobs D) The number of people losing jobs exceeds the number of people finding jobs

B) The number of people finding jobs equals the number of people losing jobs

A policy that decreases the job separation rate ___ the natural rate of unemployment. A) Will increase B) Will decrease C) Will not change D) Could either increase or decrease

B) Will decrease

Paying efficiency wages helps firms reduce the problems of moral hazards by: A) Generating additional profits that can be used to improve working conditions B) Matching the wages each worker is paid to the number of units of output each worker produces C) Encouraging unsupervised workers to maintain a high level of productivity D) Proving an incentive for the best qualified workers to remain with the firm

C) Encouraging unsupervised workers to maintain a high level of productivity

According to Blanchard, Europeans are more likely to use increases in real wages resulting from technological progress in increases ____, and Americans are more likely to use these increases in real wages to increase ___. A) Hours of work, hours of leisure B) Consumption of goods and services, hours of leisure C) Hours of leisure, consumption of goods and services D) Unemployment insurance benefits, efficiency wages

C) Hours of leisure, consumption of goods and services

Transitions into and out of the labor force: A) Rarely occur B) Do not affect unemployment statistics C) Make unemployment statistics difficult to interpret D) Reduce the amount of frictional unemployment

C) Make unemployment statistics difficult to interpret

When there is structural unemployment, the real wage is, A) Rigid at a level below the market-clearing level B) Rigid at the market-cleaning level C) Rigid at a level above the market-cleaning level D) Flexible

C) Rigid at a level above the market-cleaning level

Examples of "active" labor-market policies include all of the following except: A) Job-search assistance B) Subsidized employment C) Unemployment insurance D) Job-training programs

C) Unemployment insurance

Entry into and exit from the labor force are important to the determination of the unemployment rate because: A) More than one-half of the unemployed have only recently entered the labor force B) Most of the unemployed are young workers still looking for their first job C) Discouraged workers are counted as part of the labor force D) Almost one-half of all spells of unemployment end in the unemployed person's withdrawal from the labor market.

D) Almost one-half of all spells of unemployment end in the unemployed person's withdrawal from the labor market.

More frequent holidays for workers in Europe than in the US contribute to: A) Higher employment-to-population ratios in Europe than in the United States B) Lower employment-to-population ratios in Europe than in the United States C) More hours worked per year by the average employed person in Europe than the average employed person in the United States D) Fewer hours worked per year by the average employed person in Europe than the average employed person in the United States

D) Fewer hours worked per year by the average employed person in Europe than the average employed person in the United States

Short term unemployment is most likely to be ___ unemployment, while long term unemployment is mostly likely to be ____ unemployment. A) Structural, frictional B) Structural, the natural rate of C) The natural rate of, frictional D) Fictional, structural

D) Fictional, structural

The minimum wage: A) Is usually about 75 percent of the average wage earned in manufacturing B) Raises the wages of highly skilled workers C) Encourages master workers to take on apprentices D) Has its greatest impact on teenage unemployment

D) Has its greatest impact on teenage unemployment

Efficiency wage theories suggest that a firm may pay workers more than the market clearing wage for all of the following reasons except to: A) Reduce labor turnover B) Improve the quality of the firm's labor force C) Increase worker effort D) Reduce the firms wage bill

D) Reduce the firms wage bill

Unemployment insurance increases the amount of frictional unemployment by: A) Making workers more frantic in their search for new jobs B) Inducing workers to accept the first job offer that they receive C) Making employers more reluctant to lay off workers D) Softening the economic hardship of unemployment

D) Softening the economic hardship of unemployment