1.

If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals _____ percent (rounded to the nearest percent).

A.

0

B.

9

C.

10

D.

20



2.

In a steady state:

A.

no hiring or firings are occurring.

B.

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

C.

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

D.

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



3.

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 separation) is 0.02, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be:

A.

0.02.

B.

0.08.

C.

0.10.

D.

0.18.



4.

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

A.

reduce; reduce

B.

increase; increase

C.

reduce; increase

D.

increase; reduce



5.

One reason for unemployment is that:

A.

it takes time to match workers and jobs.

B.

all jobs are identical.

C.

the labor market is always in equilibrium.

D.

a laid-off worker can immediately find a new job at the market wage.



6.

Frictional unemployment is unemployment caused by:

A.

wage rigidity.

B.

minimum-wage legislation.

C.

the time it takes workers to search for a job.

D.

clashes between the motives of insiders and outsiders.



7.

Sectoral shifts:

A.

lead to wage rigidity.

B.

explain the payment of efficiency wages.

C.

depend on the level of the minimum wage.

D.

make frictional employment inevitable.



8.

A typical worker in the United States who is covered by unemployment insurance receives ______ percent of his or her former wages for ______ weeks.

A.

50; 26

B.

50; 52

C.

67; 26

D.

67; 52



9.

Firms currently have incentives to temporarily lay off workers because firms typically are charged for ______ of workers' unemployment benefits.

A.

all

B.

only a part

C.

none

D.

twice the cost



10.

When there is structural unemployment, the real wage is:

A.

rigid at a level below the market-clearing level.

B.

rigid at the market-clearing level.

C.

rigid at a level above the market-clearing level.

D.

flexible.



11.

When the real wage is above the level that equilibrates supply and demand:

A.

the quantity of labor supplied exceeds the quantity demanded.

B.

the quantity of labor demanded exceeds the quantity supplied.

C.

there is no unemployment.

D.

the labor market clears.



12.

The minimum wage:

A.

is usually about 75 percent of the average wage earned in manufacturing.

B.

raises the wages of highly skilled workers.

C.

encourages master workers to take on apprentices.

D.

has its greatest impact on teenage unemployment.



13.

Unions contribute to structural unemployment when collective bargaining results in wages:

A.

above the equilibrium level.

B.

below the minimum wage.

C.

below the equilibrium level.

D.

above the level of unemployment compensation.



14.

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

A.

this practice increases the problem of moral hazard.

B.

in wealthy countries, it is important to pay workers high wages to improve their health.

C.

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

D.

paying high wages promotes adverse selection.



15.

In 2000 in the United States among labor-force members ages 16-19, the highest unemployment rate was for:

A.

black females.

B.

black males.

C.

white females.

D.

white males.



16.

During the past 50 years the natural rate of unemployment in the United States ______ during the 1970s and 1980s, compared to the 1950s and 1960s, and then ______ during the 1990s, compared to the previous two decades.

A.

increased; increased

B.

increased; decreased

C.

decreased; decreased

D.

decreased; increased



17.

Spells of unemployment end when the unemployed person finds a job or:

A.

withdraws from the labor force.

B.

enters the labor force.

C.

runs out of unemployment insurance compensation.

D.

refuses to answer unemployment survey questions.



18.

Discouraged workers are counted as:

A.

part of the labor force.

B.

out of the labor force.

C.

employed.

D.

unemployed.



19.

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

A.

fall; more

B.

fall; less

C.

rise; more

D.

rise; less



20.

Assume that a country experiences a reduction in productivity that lowers the marginal product of labor for any given level of labor. In this case, the:

A.

labor supply curve shifts to the right.

B.

labor supply curve shifts to the left.

C.

labor demand curve shifts upward and to the right.

D.

labor demand curve shifts downward and to the left.




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