chapter 8 practice

Which is true regarding efficiency wages?

An employer can encourage workers to work hard by paying an efficiency wage.

The natural rate of unemployment equals:

the sum of fric+struc

The Bureau of Labor Statistics' treatment of discouraged workers causes the unemployment rate to _____ the "true" level of unemployment. of unemployment; however, there is a better answer choice.]]

understate

Unemployment usually _____ during recessions

unemployment always rises during recessions and usually falls during expansions

In an economy, the demand for labor is given by the equation W = 15 - (1/200)L and the supply of labor is given by the equation W = 5 + (1/200)L, where "W" is the wage rate and "L" is the quantity of labor. In this economy, the equilibrium wage rate is _____ and the equilibrium quantity of labor is _____ workers.

10;1000

To be counted as unemployed, a person without a job must have actively looked for work in the last:

4 weeks

The adult population of Inquanok is 100,000 people. Of these 100,000 people, 20,000 are not in the labor force. Of the remaining 80,000 people, 16,000 have given up searching for a job and are not actively seeking work, 4,000 are unemployed and actively seeking work, 14,000 work part-time, and the remainder are fully employed. The unemployment rate in Inquanok is _____ percent.

6.3

Efficiency wages are efficient for a firm because they are paid to workers who:

Efficiency wages are wages that employers set above the equilibrium wage rate as an incentive for better employee performance.

Mary expects the inflation rate to be 5 percent, and she is willing to pay a real interest rate of 3 percent. Joe expects the inflation rate to be 5 percent, and he is willing to lend money if he receives a real interest rate of 3 percent. If the actual inflation rate is 6 percent and the loan contract specifies a nominal interest rate of 8 percent, then:

Mary is glad she borrowed the funds because her real interest rate has fallen.

The increased transaction costs caused by inflation are known as _____ costs.

Shoe-leather costs are the increased costs of transactions caused by inflation.

Which will cause the natural rate of unemployment to decrease?

an increase in the median age of the labor force

Inflation causes nominal interest rates to:

increase

If the real interest rate is 6 percent and the nominal interest rate is 5 percent, then this economy is experiencing:

deflation

When the actual unemployment rate is low, most unemployment is:

frictional

In a period of deflation:

lenders benefit, because they are repaid dollars with greater real value than they anticipated when signing the loan contract

Back to Study Plan Score: 120/450 Question Value: 12 points Close this feedback Sorry! The correct answer is not Mason and Abbot. To be unemployed, a person must not be working, but be available to work and actively seeking work. Challenge this Question An economy has five people: George, Sarah, Mason, Abbot, and Jin. George works for Plastics, Inc., 40 hours a week. Sarah works for Baker's United for 20 hours a week and would like to move from part-time work to full-time work. Mason has been looking for work and applying for jobs for the past six months after he finished completing his high school education. Abbot worked for Baker's United for the first six months of the year before he was fired; for the next four months Abbot sought work, but finally gave up looking for work when he realized that it was unlikely that he would be able to find work in this economy. Jin is 70 years old and enjoys reading, needlepoint, and watching movies. The unemployed in this economy include:

only Mason

According to the text, disinflation in an economy which has grown to expect inflation is

possible only if policymakers are willing to accept higher rates of unemployment and a lower level of aggregate output.