PrQ7

Economists call the changes in the composition of demand among industries and regions:

sectoral shifts.

When the unemployment rate is at a steady state:

the number of people finding jobs equals the number of people losing jobs.

Wage rigidity:

prevents labor demand and labor supply from reaching the equilibrium level.

Any policy aimed at lowering the natural rate of unemployment must either _____ the rate of job separation or _____ the rate of job finding.

reduce; increase

Unemployment insurance increases the amount of frictional unemployment by:

softening the economic hardship of unemployment.

One efficiency-wage theory implies that firms pay high wages because:

the more a firm pays its workers, the greater their incentive to stay with the firm.

The macroeconomic problem that affects individuals most directly and severely is:

unemployment

If the steady-state rate of unemployment equals 0.10 and the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.02, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be:

0.18

Suppose that over the course of a year 100 people are unemployed for four weeks each (the short-term unemployed), while 10 people are unemployed for 52 weeks each (the long-term unemployed). Approximately what percentage of the total spells of unemployment were attributable to the short-term unemployed?

43.5 percent

All of these are reasons for frictional unemployment EXCEPT: - workers have different preferences and abilities. - unemployed workers accept the first job offer that they receive. - the flow of information is imperfect. - geographic mobility takes time.

unemployed workers accept the first job offer that they receive

All of these are causes of structural unemployment EXCEPT: - minimum-wage laws. - the monopoly power of unions. - unemployment insurance. - efficiency wages.

unemployment insurance.

A policy that increases the job-finding rate _____ the natural rate of unemployment.

will decrease

According to studies of individual unemployed workers, these workers are MOST likely to find a job:

within a few weeks of their unemployment insurance running out.

The earned income tax credit:

does not raise labor costs.

Which of these is an example of frictional unemployment? - Dave searches for a new job after voluntarily moving to San Diego. - Elaine is willing to work for less than the minimum wage, but employers cannot hire her for less than the minimum wage. - Bill is qualified and would like to be an airline pilot, but airlines do not find it profitable to hire him at the wage established by the airline pilots' union. - Joan is willing to work for less than the going wage, but there are no jobs available.

Dave searches for a new job after voluntarily moving to San Diego.

Which of these characteristics made the 2008-2009 recession differ MOST sharply from previous recessions?

a large spike in the duration of unemployment

As the relative demand for unskilled workers falls, wages for unskilled workers _____, and unemployment compensation becomes a _____ attractive option.

fall; more

Government policies directed at reducing frictional unemployment include:

making unemployment insurance 100 percent experience rated.