Chap 26
Chap 26
Chap 26
9. Which list includes all the categories into which the BLS divides the adult population?
a. employed or unemployed
b. discouraged workers, employed, or unemployed
c. employed, unemployed, or not in the labor force
d. discouraged workers, employed, or not in the labor force ANSWER: c. employ
ed, unemployed, or not in the labor force TYPE: M KEY1: D Y
10. Which of the following would be counted as unemployed according to official statistic
s?
a. Tim, who worked, but worked only 35 hours last week
b. Mary, who is waiting for her new job to start
c. Bev, who neither has a job nor is looking for one
d. None of the above would be counted as unemployed.
ANSWER: b. Mary, who is waiting for her new job to start
11. Which of the following would be counted as unemployed according to official statistic
s?
a. Gary, who has retired and is not looking for work
b. Brian, a full time student who is not looking for work
c. Nancy, who is on temporary layoff
d. All of the above are correct.
ANSWER: c. Nancy, who is on temporary layoff
12. Who would not be included in the labor force?
a. Mike, who has retired and is not looking for work
b. Jay, who is on temporary layoff
c. Jane, who does not have a job, but has applied for several in the last week
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d. None of the above are included in the labor force. ANSWER: a. Mike, who has
retired and is not looking for work TYPE: M KEY1: D SECTION: 1 OBJECTI
VE: 1 RANDOM: Y
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28. Ann has just finished school and is looking for a job, but has not yet found one. Result,
a. the unemployment rate is unaffected, and the labor-force participation rate increa
ses.
b. the unemployment rate increases, and the labor-force participation rate decrease
s.
c. the unemployment rate increases, and the labor-force participation rate is unaffec
ted.
d. the unemployment rate increases, and the labor-force participation rate increases.
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6 Chapter 26/Unemployment and Its Natural Rate
b.the unemployment rate increases, and the labor-force participation rate decrease
s.
c. the unemployment rate increases, and the labor-force participation rate is unaffec
ted.
d. the unemployment rate increases, and the labor-force participation rate increases.
the labor-force participation rate is
30. Which group has the highest labor-force participation rate?
a. black females
b. white females
c. white males
d. There are no significant differences in participation rates across these groups.
ANSWER: c. white males
31. Among teenagers, which group has the highest unemployment rate?
a. black females
b. black males
c. white males
d. There are no significant differences in unemployment rates across these groups.
ANSWER: b. black males
32. Which of the following correctly lists teenage groups in order of unemployment rates fr
om highest to lowest?
a. black females, white females, white males.
b. black females, white males, white females.
c. white males, black females, white females.
d. white males, white females, black females.
ANSWER: a. black females, white females, white males.
33. Which of the following is correct for people ages 20 and over?
a. Women have lower rates of labor-force participation and higher rates of unemplo
yment compared to those of men.
b. Women have lower rates of labor-force participation and similar unemployment r
ates compared to those of men.
c. Men have lower rates of labor-force participation and similar unemployment rate
s compared to women.
d. Men have lower rates of labor-force participation and higher rates of unemploym
ent than do women.
ANSWER: b. Women have lower rates of labor-force participation and similar
34. Which of the following is correct for people ages 20 and over?
a. Blacks have similar rates of labor-force participation and lower unemployment r
ates than those of whites.
b. Blacks have similar rates of labor-force participation and higher unemployment r
ates than those of whites.
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10 Chapter 26/Unemployment and Its Natural Rate
ANSWER: b. both the unemployment rate and labor-force participation rate would be lowe
r.
51. Some people are counted as out of the labor force because they make no serious effort t
o look for work. However, some of these people may want to work even though they ar
e too discouraged to make serious effort to look for work. If these persons were counte
d as unemployed instead of out of the labor force,
a. both the unemployment rate and labor-force participation rate would be higher.
b. the unemployment rate would be higher and the labor-force participation rate wo
uld be lower.
c. the unemployment rate would be lower and the labor-force participation rate wo
uld be higher.
d. None of the above are correct.
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d. Economists have determined that the unemployment rate as reported by the BLS
is a perfectly reliable indicator of conditions in the labor market.
ANSWER: a. There is no easy way to fix the unemployment rate as reported by the
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12 Chapter 26/Unemployment and Its Natural Rate
61. Nancy is searching for a job that suits her tastes about where to live and the people she
works with.
Laura is looking for a job that makes the best use of her skills.
a. Nancy and Laura are both frictionally unemployed.
b. Nancy and Laura are both structurally unemployed.
c. Nancy is frictionally unemployed and Laura is structurally unemployed.
d. Nancy is structurally unemployed and Laura is frictionally unemployed.
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64. People who are unemployed because of job search are best classified as
a. cyclically unemployed.
b. frictionally unemployed.
c. structurally unemployed.
d. discouraged workers.
ANSWER: b. frictionally unemployed.
65. Sectoral shifts in the economy
a. create structural unemployment.
b. immediately reduce unemployment.
c. increase unemployment due to job search.
d. on net leave unemployment unchanged.
ANSWER: c. increase unemployment due to job search.
66. Frictional unemployment can be the consequence of
a. workers leaving existing jobs to find ones they like better.
b. an industry declining while another is growing.
c. changes in the working conditions offered by competing firms.
d. All of the above are correct.
ANSWER: d. All of the above are correct.
67. Which of the following is incorrect?
a. Frictional unemployment is inevitable in a dynamic economy.
b. Although the unemployment created by sectoral shifts is unfortunate, in the long
run such changes lead to higher productivity and living standards.
c. About 1 percent of U.S. manufacturing jobs are destroyed each year.
d. In a typical month more than 3 percent of workers leave their jobs. ANSWER:
c. About 1 percent of U.S. manufacturing jobs are destroyed each year.
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68. The government operates programs for job training and job information intended to red
uce unemployment.
a. Almost all economists agree that such programs are of no use.
b. Almost all economists agree that such programs work very well.
c. Some economists claim that the government can do these things no better than fi
rms and individuals could do them for themselves.
d. None of the above are correct.
ANSWER: c. Some economists claim that the government can do these things no better
69. Unemployment insurance
a. protects workers from the financial hardship of being unemployed.
b. reduces job search unemployment.
c. decreases the natural rate of unemployment.
d. All of the above are correct.
ANSWER: a. protects workers from the financial hardship of being unemployed.
70. We would predict that the more generous unemployment compensation a country has,
a. the longer the duration of each spell of unemployment, and the higher the unemp
loyment rate.
b. the shorter the duration of each spell of unemployment, and the higher the unem
ployment
rate.
c. the longer the duration of each spell of unemployment, and the lower the unempl
oyment rate.
d. the shorter the duration of each spell of unemployment, and the lower the unemp
loyment rate.
ANSWER: a. the longer the duration of each spell of unemployment, and the higher the
71. A typical American worker covered by unemployment insurance receives
a. 100 percent of their former wages for 26 weeks.
b. 50 percent of their former wages for 26 weeks.
c. 25 percent of their former wages for 50 weeks.
d. None of the above are correct.
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40.
83. Collective bargaining refers to
a. the process by which unions and firms agree on the terms of employment.
b. the process by which the government sets exemptions from the minimum wage l
aw.
c. setting the same wage for all employees to prevent jealousy among workers.
d. setting the wage after discussion with employees in hopes of preventing unioniza
tion.
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101. According to the theory of efficiency wages, if Sarah, the CEO of a corporation that hir
es nonunion labor, decides to increase what she pays workers above the competitive eq
uilibrium wage,
a. the profits of her firm may increase as a result.
b. the higher wages will induce her workers to shirk.
c. the turnover of her workers may increase.
d. she will face a shortage of labor.
ANSWER: a. the profits of her firm may increase as a result.
102. Becky, the CEO of a corporation operating in Ethiopia, decides to raise the wages of he
r workers even though she faces an excess supply of labor. Her decision
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Chapter 26/Unemployment and Its Natural Rate 21
a. might increase profits if it means that the wage is high enough for her workers to
eat a nutritious diet that makes them more productive.
b. will help eliminate the excess supply of labor if she raises it sufficiently.
c. though humanitarian, will certainly cause her profits to fall.
d. Both b and c are correct.
105. Mary Sue is the newly appointed CEO of a company that manufactures clocks on an as
sembly line. Her staff has told her that the output the firm produces given the number o
f workers employed indicates some workers may be shirking. According to efficiency
wage theory, what should she do?
a. Reward those who shirk with higher wages.
b. Pay below the equilibrium wage rate to make up for the loss from shirking.
c. Make sure that workers are getting paid exactly the equilibrium wage rate.
d. Pay all workers more than the equilibrium wage rate. ANSWER: d. Pay all wor
kers more than the equilibrium wage rate.
106. Better management techniques of monitoring employee work effort would
a. increase real wages.
b. increase shirking.
c. increase labor-force participation rates.
d. reduce unemployment by reducing the need for efficiency wages. ANSWER: d.
reduce unemployment by reducing the need for efficiency wages.
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b. Jay develops a new assembly line technology that limits the amount of shirking
workers may do, so he reduces what he pays his employees toward the equilibriu
m wage.
c. Ray pays his workers in a developing country more than the going wage hoping t
hat they will get a better diet and so be more productive.
d. All of the above are inconsistent with the logic of efficiency wage theory.
ANSWER: a. Kay pays her workers less than the equilibrium wage so they won’t have the
113. Which list has a problem caused by moral hazard followed by a problem caused by adv
erse selection?
a. Someone with auto insurance drives more recklessly; people avoid buying used
cars.
b. People with average health problems are reluctant to buy health insurance becau
se of its cost; someone with auto insurance drives more recklessly.
c. A firm that pays low wages faces greater risk of hiring inept employees; people a
void buying used cars
d. People with greater hidden health problems are more likely to buy health insuran
ce; a firm that pays low wages faces greater risk of hiring inept employees.
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24 Chapter 26/Unemployment and Its Natural Rate
121. Which of the following causes of unemployment is not associated with an excess suppl
y of labor? a. job search
b. minimum wage laws
c. unions
d. efficiency wages
ANSWER: a. job search
122. Which of the following causes of unemployment is associated with a wage rate above t
he market equilibrium level?
a. minimum wage laws
b. unions
c. efficiency wages
d. All of the above are correct.
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