chapter 20

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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

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

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

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

c. frictional unemployment

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

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

d. full-time.

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. Firms do not have a choice about whether they pay efficiency wages or not because these wages are determined by law. c. Paying above the competitive equilibrium wage tends to cause workers to shirk their responsibilities. 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.

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

a. not in the labor force.

Use the following table to answer question. Numbers are in millions. total population// 195.4 adult population//139.7 number of unemployed//5.7 number of employed // 92.3 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.

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

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

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

b. the natural rate of unemployment

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.

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

c. frictional unemployment

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 worker training programs b. establish right-to-work laws c. raise the minimum wage d. establish employment agencies e. reduce unemployment benefits

c. raise the minimum wage

Use the following table to answer question. Numbers are in millions. total population// 195.4 adult population//139.7 number of unemployed//5.7 number of employed // 92.3 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.

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

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

If, for any reason, the wage is held above the competitive equilibrium wage, a. the quality of workers in the applicant pool will tend to fall. b. unions will likely strike and the wage will fall to equilibrium. 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.

Use the following table to answer question. Numbers are in millions. total population// 195.4 adult population//139.7 number of unemployed//5.7 number of employed // 92.3 The unemployment rate is a. 5.7 percent. b. 3.2 percent. c. Not enough information is available to answer this question. d. 6.2 percent. e. 5.8 percent.

e. 5.8 percent

Which of the following is an example of a reason why firms might pay efficiency wages? a. At equilibrium wages, workers often quit to find better jobs. b. At equilibrium wages, workers sleep when the boss is not looking because workers are not deeply concerned about being fired. c. At equilibrium wages, only minimally qualified workers apply for the job. d. At equilibrium wages, workers cannot afford a healthy diet so they fall asleep at work due to a lack of energy. e. All of the above are true.

e. All of the above are true.


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