Chapter 9 Quiz

Which of the following does not cause the labor supply curve to shift? a. changes in population b. changes in the wage rate paid to workers c. changing social norms and their impact on people's willingness to take a job. d. changing opportunity cost of time

b. changes in the wage rate paid to workers

What other reasons might explain why unemployment is lower among workers with a relatively higher level of education? a. more educated workers have more human capital b. more educated workers have a higher opportunity cost of time c. workers with a higher level of education are in greater demand by firms d. all of the above

d. all of the above

Which of the following is an example of what economists refer to as job search? a. a person who applies for a high-paying job but does not qualify, so she begins searching for an appropriate position b. an individual that engages in the job hunt by determining who is hiring and how much they pay c. people that engage in the job hunt by sending out resumes d. all of the above

d. all of the above

Which of the following is not one of the factors that can increase wage rigidity in the labor market? a. collective bargaining b. worker resistance to a decline in wages c. efficiency wages d. the economy falling into a recession

d. the economy falling into a recession

labor demand curve

depicts the relationship between the quantity of labor demand and the wage

Structural unemployment can be caused by _____. a. efficiency wages b. collective bargaining rights of workers c. time-consuming job search efforts d. all of the above e. a and b only

e. a and b only

What type of unemployment does job search lead to?

frictional unemployment

Potential workers are classified as being unemployed when ___.

hey do not have a paid job, have looked for work in the previous 4 weeks, and are available for work.

potential workers

include everyone in the general population with 3 exceptions: children under 16 years of age, people on active duty in the military, and people who are living in institutions where the residents have restricted personal mobility

In February 2014, the United States added 175,000 jobs to the economy. Given this information, what can we say about the unemployment rate of the country?

it may increase, decrease, or not change depending on how many people started searching for jobs during the month

The value of the marginal product of labor is the ___.

market value of a worker's additional output for a firm

The labor force equation is equal to the number employed ____ the number unemployed.

plus

market-clearing wage

the competitive equilibrium wage; the wage at which every worker who wants a job can find one: the quantity of labor demanded matches the quantity of labor supplied

value of the marginal product of labor

the contribution of an additional worker to a firm's revenues

cyclical unemployment

the deviation of the actual unemployment rate from the natural rate of unemployment

labor force participation rate

the percentage of potential workers who are in the labor force

unemployment rate

the percentage of the labor force that is unemployed

natural rate of unemployment

the rate around which the actual rate of unemployment fluctuates

labor force

the sum of all employed and unemployed workers

efficiency wages

wages above the lowest pay that workers would accept; employers use them to increase motivation and productivity

Frictional unemployment can result when ____.

- it takes time to find what jobs are available in a specific field - firms and workers have imperfect information about the state of the economy - it takes time for applicants to prepare a resume and line up references

In general, we find that unemployment rates are lower among _____ workers since the opportunity cost of their time spent not working is ____.

1. more educated 2. higher

The equation for the labor force participation rate is defined as _____.

100% x (labor force / potential workers)

Which of the following statements regarding the natural rate of unemployment are true? a. it is the rate around which the actual rate of unemployment fluctuates b. it is the rate of unemployment that is socially optimal or desirable c. it is the rate which fluctuates around the actual rate of unemployment d. it is the long-term average rate of unemployment

a and d

employed

a person holding a full-time or part-time paid job is employed

unemployed

a worker who does not have a job, has actively looked for work in the prior 4 weeks, and is currently available for work

Which of the following people are counted as potential workers? a. people who are already employed full-time b. people that are institutionalized c. people on active duty in the military d. children under the age of 16

a. people who are already employed full-time

Which of the following would be classified as unemployed? a. someone who is not working and looked for work two weeks age b. someone who is working part-time but wants a full-time job c. students who are not working or looking for work d. all of the above

a. someone who is not working and looked for work two weeks ago

structural unemployment

arises when the quantity of labor supplied persistently exceeds the quantity of labor demanded

downward wage rigidity

arises when workers resist a cut in their wage

Which of the following statements regarding cyclical unemployment are not true? a. it is positive in recessions and negative in economic booms b. it is the difference between the long-term average rate of unemployment and the natural rate of unemployment c. it is the difference between the current rate of unemployment and the natural rate of unemployment d. it is negative in recessions and positive in economic booms

b and d

Which of the following would cause the labor demand curve to shift to the right? a. a decrease in the price of a product b. an increase in the wage rate c. an increase in the demand for a product d. an increase in the price of an input

c. an increase in the demand for a product

Which of the following factors does not cause a shift in the labor demand curve? a. changes in output prices b. changing technology c. changes in the wage rate d. changing input prices

c. changes in the wage rate

cyclical unemployment is the unemployment that arises ____. a. from workers' imperfect information about available jobs b. when wage rigidity creates a persistent gap between labor supply and labor demand c. during recessions when the unemployment rate is above the natural rate d. from the average of the unemployment rates over an extended period of time

c. during recessions when the unemployment rate is above the natural rate

Which of the following is true regarding wage rigidity? a. it usually causes the quantity of labor demanded to be greater than the quantity of labor supplies. b. it results in frictional unemployment c. it occurs when wages are held fixed above the competitive equilibrium level d. all of the above

c. it occurs when wages are held fixed above the competitive equilibrium level

Which of the following best explains why the labor supply curve slopes upward? a. when the rage rate increases, the number of employed that a firm wants to hire increases b. when the output that a firm produces increases, the opportunity cost of hiring another worker increases c. when wages increase, the opportunity cost of not working increases, leading people to seek more work hours d. when the price of a good increases, firms get more value out of each worker and thus seek to hire more workers.

c. when wages increase, the opportunity cost of not working increases, leading people to seek more work hours

The goal of a country with a healthy economy is to have _____ equal to zero

cyclical unemployment

The fact that unemployment is lower among workers with a relatively higher level of education can be explained in part by the ____.

principle of optimization

collective bargaining

refers to contract negotiations between firms and labor unions

job search

refers to the activities that workers undertake to find appropriate jobs

wage rigidity

refers to the condition in which the market wage is held above the competitive equilibrium level that would clean the labor market

frictional unemployment

refers to unemployment that arises because workers have imperfect information about available jobs and need to engage in a time-consuming process of job search

labor supply curve

represents the relationship between the quantity of labor supplies and the wage