Micro

Which of the following is an example of cyclical unemployment?

A company has to lay off half of its work force to cut costs in order to make it through the recession. Cyclical unemployment refers to when unemployment is closely tied to the business cycle, like higher unemployment during a recession. Therefore, lawn-care workers not working during the winter months due to lawns being dormant is not example is cyclical unemployment.

Which of the following two countries are "fast growth" countries?

India China China and India both averaged GDP growth (after adjusting for inflation) of at least 5% per year in both the time periods from 1990 to 2000 and from 2000 to 2008. Since economic growth in these countries has exceeded the average of the world's high-income economies, these countries may converge with the high-income countries.

Which of the following best defines involuntary unemployment?

People are unemployed but willing to work jobs that employ people with similar skills. Involuntary unemployment refers to situations in which the unemployed are willing to work jobs that employ people with similar skills. For example, unemployed people often have friends or acquaintances of similar skill levels who are employed, and the unemployed would be willing to work such jobs if offered to them. However, the employers of their friends and acquaintances do not seem to be hiring. In other words, these people are involuntarily unemployed.

Which of the following is an example of cyclical unemployment?

Ronald is laid off by his company as part of company reorganization to cut costs to meet slowing demand in the economy. Cyclical unemployment refers to unemployment which is closely tied to the business cycle, such as higher unemployment during a recession. Ronald lost his job because of slowing demand for the company's products which occurs during recessionary contraction of the economy.

What is efficiency wage theory?

The theory that workers' productivity depends on their pay, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. Efficiency wage theory argues that workers' productivity depends on their pay, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. One reason is that employees who receive better pay than others will be more productive because they recognize that if they were to lose their current jobs, they would suffer a decline in salary. As a result, they are motivated to work harder and to stay with the current employer.

All of the following are examples of someone who is involuntary unemployed, except:

Tom was let go from his job at The Burger Shack five weeks ago and has yet to search for another job because he wants to earn more than $15/hour. Not only is Tom not considered involuntary unemployed, he is not considered unemployed by the Bureau of Labor Statistics because he is not actively seeking work. Tina, Tonya, and Trent are considered involuntary unemployed because they are willing to work at the jobs similar to what those with their skill sets have and at wages that are similar to what those with their skill sets are receiving.

Capital deepening refers to an increase in the amount of capital per worker.

True Capital deepening refers to an increase in the amount of capital per worker, either human capital per worker, in the form of higher education or skills, or physical capital per worker.

The loss of construction jobs during the 2008 housing financial crisis is an example of cyclical unemployment.

True Cyclical unemployment refers to unemployment, closely tied to the business cycle. The loss of construction jobs during the 2008 housing financial crisis is an example of cyclical unemployment because when home builders stopped building homes, many construction workers lost their jobs.

On average, low and middle-income economies around the world are more likely to grow faster than high-income countries.

True This is known as convergence. Some low-income and middle-income economies around the world have shown a pattern of convergence, in which their economies grow faster than those of high-income countries. While there is no guarantee that every low-income economy will experience a high growth rate, it is true, on average, that low-income economies tend to grow at a faster rate than middle and high-income economies. (i.e. This statement is not true in all cases, but it is true in the general case.)

Which of the following can lead to cyclical unemployment?

a stock market crash A stock market crash often jump starts an economic downturn that results in cyclical unemployment. On the other hand, a reduction in interest rates often leads to job growth because companies are able to expand and hire more workers. Similarly, increased spending on public works creates jobs. Increased unemployment benefits can also increase jobs because the unemployed are able to spend money on necessities and keep an address, which is needed for most jobs.

Which of the following explains the importance of education in economic growth?

all of the above Human capital, physical capital, and technology all work together. Strengthening education means workers with a higher level of education and skills are able to come up with new technological innovations. These innovations result in investment in physical capital. New machines require additional training, which increases investments in human capital. Education impacts all three factors.

Low-income economies grow faster than high-income economies because _______.

all of the above Low-income countries like China and India tend to have lower levels of human capital and physical capital, so an investment in capital deepening should have a larger marginal effect in these countries than in high-income countries, where levels of human and physical capital are already relatively high. Low-income economies find improving technology easier, as it is easier to apply technology that is already invented than it is to invent new technology. Low-income economies are also more likely to observe the successes of high-income economies and imitate them.

Capital deepening is __________.

an increase by society in the average level of physical and/or human capital per person Capital deepening is defined as an increase in the average level of physical and/or human capital per person. Physical capital is increased by improvements in such factors of production as technology, equipment, factories, and transportation. Human capital is improved by such factors as more education, training, and other means of building skills and capacities for critical thinking and problem solving that lead to innovation and invention.

In economic terms, new roads are considered _______.

physical capital Physical capital is all the property and equipment used by firms in production. It also includes infrastructure such as roads and bridges.

The Panda Toy Company is losing money and reacts by reducing wages for all 250 employees. As a result, the employees with the best employment alternatives at other toy companies end up leaving. Which of the following best describes why this scenario can lead to wage stickiness?

the adverse selection of wage cuts argument The adverse selection of wage cuts argument points out that if an employer reacts to poor business conditions by reducing wages for all workers, then the best workers, those with the best employment alternatives at other firms, are the most likely to leave. The least attractive workers, with fewer employment alternatives, are more likely to stay.

Which of the following best defines the concept of human capital?

the level of knowledge, education, and skills a worker possesses Human capital refers to the skills and knowledge that make workers productive. The human capital of modern workers is far higher today because the education and skills of workers have risen dramatically. By 2010, more than 87% of Americans had a high school degree and over 29% had a four-year college degree as well. In 2014, 40% of working-age Americans had a four-year college degree.

Education for girls is a good investment in low-income countries because __________________.

all of the above Girls in low-income countries often play the social role of mothers and homemakers. When they receive more education, they are more likely to have fewer, healthier, better-educated children. They are less likely to die in childbirth and likely to receive more schooling. Investing in education for girls is an investment in economic growth and has benefits beyond the current generation.

Which of the following explains why convergence between high-income countries and the rest of the world may not be likely?

all of the above High-income countries have been building up their advantage in standard of living over decades—more than a century in some cases. Even in an optimistic scenario, it will take decades for the low-income countries of the world to catch up significantly. With the combination of technology and capital deepening, the rise in GDP per capita in high-income countries does not need to fade away because of diminishing returns. The gains from technology can offset the diminishing returns involved with capital deepening. In theory, perhaps, low-income countries have many opportunities to copy and adapt technology, but if they lack the appropriate supportive economic infrastructure and institutions, the theoretical possibility that backwardness might have certain advantages is of little practical relevance. With the combination of technology and capital deepening, the rise in GDP per capita in high-income countries does not need to fade away because of diminishing returns. The gains from technology can offset the diminishing returns involved with capital deepening.