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Chapter 28 Unemployment

TRUE/FALSE 1. Most people rely on income other than their labor earnings to maintain their standard of living. ANS: F DIF: 1 R F: !"#$ NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Income + Standard of living MS(: Definitional !. %he amo)nt of )nemployment that a co)ntry typically e,periences is a determinant of that co)ntry-s standard of living. ANS: % DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment + Standard of living MS(: Definitional /. Some degree of )nemployment is inevitable in a comple, economy. ANS: % DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: MS(: Definitional

.nemployment

0. %he amo)nt of )nemployment varies little over time and across co)ntries. ANS: F DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional 1. 2hen a co)ntry 3eeps its 4or3ers as f)lly employed as possible5 it achieves a higher level of 6D* than it 4o)ld if it left many of its 4or3ers standing idle. ANS: % DIF: 1 R F: !"#$ NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: mployment + 6D* MS(: Definitional 7. An economy8s nat)ral rate of )nemployment refers to the amo)nt of )nemployment that the economy normally e,periences. ANS: % DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 9. (yclical )nemployment refers to the year#to#year fl)ct)ations in )nemployment aro)nd its nat)ral rate. ANS: % DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: (yclical )nemployment MS(: Definitional ". %he nat)ral rate of )nemployment is closely associated 4ith the short#r)n )ps and do4ns of economic activity. ANS: F DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional :. %he nat)ral rate of )nemployment is the desirable rate of )nemployment for an economy. ANS: F DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 1$. %he nat)ral rate of )nemployment is constant over time. ANS: F DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional

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(hapter !";.nemployment

11. %he nat)ral rate of )nemployment is impervio)s to economic policy. ANS: F DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 1!. 6overnment policy can do nothing abo)t the nat)ral rate of )nemployment. ANS: F DIF: ! R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Interpretive 1/. %he nat)ral rate of )nemployment is a type of )nemployment that does not go a4ay on its o4n even in the long r)n. ANS: % DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 10. &ong#r)n )nemployment arises from a single problem that has a single sol)tion. ANS: F DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 11. %here is no easy 4ay for policyma3ers to red)ce the economy8s nat)ral rate of )nemployment. ANS: % DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 17. Meas)ring )nemployment is the <ob of the =)rea) of &abor Statistics. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: MS(: Definitional 19.

=)rea) of &abor Statistics

Meas)ring )nemployment is the <ob of the =)rea) of &abor Statistics5 4hich is part of the ..S. Department of (ommerce. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics MS(: Definitional 1". ANS: NA%: MS(: 1:. very 4ee35 the =)rea) of &abor Statistics prod)ces data on )nemployment. F DIF: 1 R F: !"#1 Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics Definitional

%he =)rea) of &abor Statistics prod)ces data on )nemployment5 types of employment5 length of the average 4or34ee35 and the d)ration of )nemployment. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics MS(: Definitional !$. %he =)rea) of &abor Statistics prod)ces data on )nemployment and other aspects of the labor mar3et from a reg)lar s)rvey of abo)t 7$$ ho)seholds5 called the ()rrent *op)lation S)rvey. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics MS(: Definitional !1. %he =)rea) of &abor Statistics prod)ces data on )nemployment and other aspects of the labor mar3et from a reg)lar s)rvey of abo)t 7$5$$$ ho)seholds5 called the ()rrent *op)lation S)rvey. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics MS(: Definitional

(hapter !";.nemployment
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%he =)rea) of &abor Statistics prod)ces data on )nemployment and other aspects of the labor mar3et from a reg)lar s)rvey of abo)t 7$5$$$ ho)seholds5 called the (ens)s. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics MS(: Definitional !/. %he =)rea) of &abor Statistics places each ad)lt >aged 17 and older? of each s)rveyed ho)sehold into one of three categories: employed5 )nemployed5 and not in the labor force. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics MS(: Definitional !0. %he =)rea) of &abor Statistics places each ad)lt >aged 17 and older? of each s)rveyed ho)sehold into one of fo)r categories: employed5 )nderemployed5 )nemployed5 and not in the labor force. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics MS(: Definitional !1. %he =)rea) of &abor Statistics8 @employedA category incl)des those 4ho 4or3ed as paid employees5 4or3ed in their o4n b)siness5 or 4or3ed as )npaid 4or3ers in a family member8s b)siness. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Definitional !7. 'nly paid 4or3ers are incl)ded in the =)rea) of &abor Statistics8 @employedA category. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive !9. =oth f)ll#time and part#time 4or3ers are incl)ded in the =)rea) of &abor Statistics8 @employedA category. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Definitional !". Some ad)lts 4ho 4ere not 4or3ing are incl)ded in the =)rea) of &abor Statistics8 @employedA category. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive !:. Ad)lts 4ho 4ere not 4or3ing b)t 4ho had <obs from 4hich they 4ere temporarily absent are incl)ded in the =)rea) of &abor Statistics8 @employedA category. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Definitional /$. Ad)lts 4ho 4ere 4aiting to be recalled to a <ob from 4hich they had been laid off are incl)ded in the =)rea) of &abor Statistics8 @employedA category. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive /1. %he =)rea) of &abor Statistics8 @)nemployedA category incl)des those 4ho 4ere not employed5 4ere available for 4or35 and had tried to find employment d)ring the previo)s 0 4ee3s. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment MS(: Definitional

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(hapter !";.nemployment

very ad)lt 4ho 4as not employed d)ring the previo)s 0 4ee3s is incl)ded in the =)rea) of &abor Statistics8 @)nemployedA category. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment MS(: Interpretive //. Someone 4ho is 4itho)t 4or3 b)t is not loo3ing for 4or3 is incl)ded in the =)rea) of &abor Statistics8 @)nemployedA category. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment MS(: Interpretive /0. F)ll#time st)dents and homema3ers are incl)ded in the =)rea) of &abor Statistics8 @)nemployedA category. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment MS(: Interpretive /1. Stay#at#home fathers are incl)ded in the =)rea) of &abor Statistics8 @)nemployedA category. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment MS(: Interpretive /7. Ad)lts 4ho 4ere 4aiting to be recalled to a <ob from 4hich they had been laid off are incl)ded in the =)rea) of &abor Statistics8 @)nemployedA category. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment MS(: Definitional /9. Retirees are incl)ded in the =)rea) of &abor Statistics8 @not in the labor forceA category. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + &abor force MS(: Definitional /". %he ad)lt pop)lation m)st eB)al the s)m of the employed5 the )nemployed5 and those not in the labor force. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Ad)lt pop)lation MS(: Interpretive /:. %he ad)lt pop)lation m)st eB)al the s)m of the employed and the )nemployed. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Ad)lt pop)lation MS(: Interpretive 0$. %he =)rea) of &abor Statistics defines the labor force as the s)m of the employed and the )nemployed. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + &abor force MS(: Definitional 01. %he labor force min)s the n)mber of employed eB)als the n)mber of )nemployed. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Interpretive 0!. %he =)rea) of &abor Statistics defines the )nemployment rate as the percentage of the ad)lt pop)lation that is )nemployed. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment rate MS(: Definitional

(hapter !";.nemployment
0/. %he =)rea) of &abor Statistics defines the )nemployment rate as the percentage of the labor force that is )nemployed. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment rate MS(: Definitional 00. %he =)rea) of &abor Statistics comp)tes )nemployment rates for the entire ad)lt pop)lation and for more narro4ly defined gro)ps. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment rate MS(: Definitional 01. %he =)rea) of &abor Statistics defines the labor#force participation rate as the percentage of the labor force that is employed. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + &abor#force participation rate MS(: Definitional 07. %he =)rea) of &abor Statistics defines the labor#force participation rate as the percentage of the total ad)lt pop)lation that is in the labor force. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + &abor#force participation rate MS(: Definitional 09. %he labor#force participation rate is the percentage of the ad)lt pop)lation that is either employed or )nemployed. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive 0". %he labor#force participation rate tells )s the fraction of the pop)lation that is able to participate in the labor mar3et. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional 0:. %he labor#force participation rate tells )s the fraction of the pop)lation that has chosen to participate in the labor mar3et. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional 1$.

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%he =)rea) of &abor Statistics comp)tes labor#force participation rates for the entire ad)lt pop)lation and for more narro4ly defined gro)ps. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + &abor#force participation rate MS(: Definitional Table 28-5 !$1$ &abor Data for 2re,ington N)mber of ad)lts employed N)mber of ad)lts )nemployed N)mber of ad)lts not in the labor force 1$5$$$ !5!1$ 19591$

11. Refer to Table 28-5. %he total ad)lt pop)lation of 2re,ington in !$1$ is /$5$$$. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Ad)lt pop)lation MS(: Applicative

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(hapter !";.nemployment

1!. Refer to Table 28-5. %he total ad)lt pop)lation of 2re,ington in !$1$ is 1!5!1$. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Ad)lt pop)lation MS(: Applicative 1/. Refer to Table 28-5. %he labor force of 2re,ington in !$1$ is 1!5!1$. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor force MS(: Applicative 10. Refer to Table 28-5. %he labor force of 2re,ington in !$1$ is 1$5$$$. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor force MS(: Applicative 11. Refer to Table 28-5. %he )nemployment rate of 2re,ington in !$1$ is abo)t 1".0 percent. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Applicative 17. Refer to Table 28-5. %he )nemployment rate of 2re,ington in !$1$ is abo)t 9.1 percent. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Applicative 19. Refer to Table 28-5. %he labor#force participation rate of 2re,ington in !$1$ is abo)t 0$." percent. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Applicative 1". Refer to Table 28-5. %he labor#force participation rate of 2re,ington in !$1$ is abo)t //./ percent. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Applicative 1:. 2ithin the ..S. pop)lation5 4omen ages !$ and older have lo4er rates of labor#force participation than men. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional 7$. 2ithin the ..S. pop)lation5 4omen ages !$ and older have similar rates of labor#force participation as men. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional 71. 2ithin the ..S. pop)lation5 men and 4omen have similar rates of )nemployment. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Definitional 7!. 2ithin the ..S. pop)lation5 4omen have higher rates of )nemployment than men. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Definitional 7/. 2ithin the ..S. pop)lation5 blac3s ages !$ and older have similar rates of labor#force participation as 4hites. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional

(hapter !";.nemployment

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70. 2ithin the ..S. pop)lation5 blac3s ages !$ and older have lo4er rates of labor#force participation than 4hites. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional 71. 2ithin the ..S. pop)lation5 blac3s have higher rates of )nemployment than 4hites. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Definitional 77. 2ithin the ..S. pop)lation5 blac3s and 4hites have similar rates of )nemployment. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Definitional 79. 2ithin the ..S. pop)lation5 teenagers have lo4er rates of labor#force participation than older 4or3ers. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional 7". 2ithin the ..S. pop)lation5 teenagers have similar rates of labor#force participation as older 4or3ers. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional 7:. 2ithin the ..S. pop)lation5 teenagers have higher rates of )nemployment than older 4or3ers. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Definitional 9$. 2ithin the ..S. pop)lation5 teenagers have similar rates of )nemployment as older 4or3ers. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Definitional 91. Data on the )nemployment rate in the ..S. since 1:7$ sho4 that the economy al4ays has some )nemployment and that the amo)nt changes from year to year. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Definitional 9!. Data on the )nemployment rate in the ..S. since 1:7$ sho4 that the )nemployment rate sometimes is Cero. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Interpretive 9/. %he normal rate of )nemployment aro)nd 4hich the )nemployment rate fl)ct)ates is called the nat)ral rate of )nemployment. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 90. %he normal rate of )nemployment aro)nd 4hich the )nemployment rate fl)ct)ates is called cyclical )nemployment. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional

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(hapter !";.nemployment

91. %he deviation of )nemployment from its nat)ral rate is called cyclical )nemployment. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: (yclical )nemployment MS(: Definitional 97. conomists at the (ongressional =)dget 'ffice estimated that for !$$95 the ..S. nat)ral rate of )nemployment 4as 0." percent. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 99. In !$$95 the ..S. nat)ral rate of )nemployment 4as estimated to be 0." percent5 4hich 4as close to the act)al rate of )nemployment of 0.7 percent. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 9". (a)ses of the changing role of 4omen in American society over the past several decades incl)de ne4 technologies that have red)ced the amo)nt of time reB)ired to complete ro)tine ho)sehold tas3s5 improved birth control5 and changing political and social attit)des. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Role of 4omen MS(: Interpretive 9:. 'ver the past several decades5 the difference bet4een the labor#force participation rates of men and 4omen in the ..S. has grad)ally decreased. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional "$. 'ver the past several decades5 the difference bet4een the labor#force participation rates of men and 4omen in the ..S. has grad)ally increased. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional "1. 'ver the past several decades in the .nited States5 the labor#force participation rate of 4omen has increased and the labor#force participation rate of men had decreased. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional "!. 'ver the past several decades in the .nited States5 the labor#force participation rate of 4omen has increased and the labor#force participation rate of men had remained steady. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional "/. (a)ses of the decline in the ..S. men8s labor#force participation rate over the past several decades incl)de yo)ng men no4 staying in school longer than their fathers and grandfathers did5 older men no4 retiring earlier and living longer5 and more fathers no4 staying at home to raise their children. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive "0. ven tho)gh the difference in labor#force participation rates of ..S. males and females has narro4ed5 the labor#force participation rate of males remains higher than that of females. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive

(hapter !";.nemployment
"1. Meas)ring the amo)nt of )nemployment in the economy is a straightfor4ard tas3. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional "7. More than one#third of the )nemployed are recent entrants into the labor force. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional "9. More than three#fo)rths of the )nemployed are recent entrants into the labor force. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional "". Not all )nemployment ends 4ith the <ob see3er finding a <ob. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation MS(: Definitional

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%'*:

.nemployment

":. Almost half of all spells of )nemployment end 4hen the )nemployed person leaves the labor force. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional :$. Almost nine#tenths of all spells of )nemployment end 4hen the )nemployed person leaves the labor force. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional :1. =eca)se people move into and o)t of the labor force so often5 statistics on )nemployment are diffic)lt to interpret. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional :!. *eople 4ho report being )nemployed b)t 4ho5 in fact5 are not trying hard to find a <ob are really not in the labor force and therefore ca)se the reported )nemployment rate to be higher than it 4o)ld other4ise be. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Interpretive :/. R)pert is collecting )nemployment ins)rance benefits. %o contin)e to receive his benefits5 he m)st be loo3ing for 4or3. =eca)se he8d li3e to contin)e collecting benefits rather than ta3e a <ob5 he applies at places that are )nli3ely to hire him. *eople li3e R)pert ma3e the reported )nemployment rate less than it 4o)ld other4ise be. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Interpretive :0. *eople 4ho report being )nemployed b)t 4ho5 in fact5 are 4or3ing for @)nder the tableA pay to avoid ta,es on their earnings are really employed and therefore ca)se the reported )nemployment rate to be higher than it 4o)ld other4ise be. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Interpretive

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:1.

(hapter !";.nemployment

*eople 4ho report being not in the labor force b)t 4ho5 in fact5 4ant to 4or3 b)t have given )p trying to find a <ob after an )ns)ccessf)l search are really )nemployed and therefore ca)se the reported )nemployment rate to be lo4er than it 4o)ld other4ise be. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Interpretive :7. Disco)raged 4or3ers are people 4ho 4ant to 4or3 b)t have given )p trying to find a <ob after an )ns)ccessf)l search. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Disco)raged 4or3ers MS(: Definitional :9. It is best to vie4 the official )nemployment rate as a )sef)l b)t imperfect meas)re of <oblessness. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Definitional :". %he )nemployment rate reported by the =)rea) of &abor Statistics clearly )nderstates the tr)e )nemployment rate. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate MS(: Interpretive ::. %he =)rea) of &abor Statistics defines marginally attached 4or3ers as persons 4ho c)rrently are neither 4or3ing nor loo3ing for 4or3 b)t indicate that they 4ant and are available for a <ob and have loo3ed for 4or3 sometime in the recent past. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + Marginally attached 4or3ers MS(: Definitional 1$$. %he =)rea) of &abor Statistics defines disco)raged 4or3ers as marginally attached 4or3ers 4ho have given a <ob#mar3et related reason for not c)rrently loo3ing for a <ob. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + Disco)raged 4or3ers MS(: Definitional 1$1. %he =)rea) of &abor Statistics8 .#1 meas)re of <oblessness is smaller than its .#7 meas)re of <oblessness. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .#1 + .#7 MS(: Interpretive 1$!. %he =)rea) of &abor Statistics8 .#1 meas)re of <oblessness is larger than its .#7 meas)re of <oblessness. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .#1 + .#7 MS(: Interpretive 1$/. %he =)rea) of &abor Statistics8 .#1 meas)re of <oblessness incl)des only very long#term )nemployed. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .#1 MS(: Interpretive 1$0. %he =)rea) of &abor Statistics8 .#! meas)re of <oblessness incl)des <ob losers and <ob leavers. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .#! MS(: Interpretive 1$1. %he =)rea) of &abor Statistics8 .#/ meas)re of <oblessness is the official )nemployment rate. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .#/ MS(: Interpretive

(hapter !";.nemployment
1$7. %he =)rea) of &abor Statistics8 .#0 meas)re of <oblessness incl)des disco)raged 4or3ers. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .#0 MS(: Interpretive 1$9. %he =)rea) of &abor Statistics8 .#1 meas)re of <oblessness is the official )nemployment rate. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .#1 MS(: Interpretive 1$". %he =)rea) of &abor Statistics8 .#1 meas)re of <oblessness incl)des marginally attached 4or3ers. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .#1 MS(: Interpretive 1$:. Most spells of )nemployment are short5 and most )nemployment observed at any given time is long#term. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional 11$. Most spells of )nemployment are long5 and most )nemployment observed at any given time is short#term. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional 111. Most spells of )nemployment are short5 and most )nemployment observed at any given time is short#term. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional 11!. Most spells of )nemployment are long5 and most )nemployment observed at any given time is long#term. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional 11/. Data on )nemployment indicate that most people 4ho become )nemployed 4ill soon find <obs. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Interpretive

:$

110. In an ideal labor mar3et5 4ages 4o)ld ad<)st to balance the B)antity of labor s)pplied and the B)antity of labor demanded5 ens)ring that all 4or3ers are al4ays f)lly employed. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: 2ages + mployment MS(: Definitional 111. %here are al4ays some 4or3ers 4itho)t <obs5 even 4hen the overall economy is doing 4ell. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional 117. %he )nemployment rate never falls to Cero. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation MS(: Definitional 119. %he )nemployment rate sometimes falls to Cero. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation MS(: Definitional

%'*:

.nemployment rate

%'*:

.nemployment rate

:1

(hapter !";.nemployment

11". 'ne e,planation for long#r)n )nemployment is that it ta3es time for 4or3ers to search for the <obs that are best s)ited for them. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment + Dob search MS(: Definitional 11:. %he )nemployment that res)lts from the process of matching 4or3ers and <obs is called frictional )nemployment. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment MS(: Definitional 1!$. %he )nemployment that res)lts from the process of matching 4or3ers and <obs is called str)ct)ral )nemployment. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment MS(: Definitional 1!1. Frictional )nemployment is often tho)ght to e,plain relatively short spells of )nemployment. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment MS(: Definitional 1!!. Frictional )nemployment is often tho)ght to e,plain relatively long spells of )nemployment. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment MS(: Definitional 1!/. Some long#r)n )nemployment may be e,plained by the fact that the n)mber of <obs available in some labor mar3ets may be ins)fficient to give a <ob to everyone 4ho 4ants one. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional 1!0. %he )nemployment that res)lts from the B)antity of labor s)pplied e,ceeding the B)antity demanded is called str)ct)ral )nemployment. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment MS(: Definitional 1!1. %he )nemployment that res)lts from the B)antity of labor s)pplied e,ceeding the B)antity demanded is called frictional )nemployment. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment MS(: Definitional 1!7. Str)ct)ral )nemployment is often tho)ght to e,plain relatively long spells of )nemployment. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment MS(: Definitional 1!9. Str)ct)ral )nemployment is often tho)ght to e,plain relatively short spells of )nemployment. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment MS(: Definitional 1!". Str)ct)ral )nemployment res)lts 4hen 4ages are5 for some reason5 set above the level that brings s)pply and demand into eB)ilibri)m. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment MS(: Definitional

(hapter !";.nemployment

:!

1!:. %hree possible reasons for an above#eB)ilibri)m 4age are minim)m#4age la4s5 )nions5 and efficiency 4ages. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment MS(: Definitional 1/$. very month5 the =)rea) of &abor Statistics s)rveys 17$5$$$ b)siness establishments to help determine the n)mber of <obs the economy has gained or lost. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + Dobs n)mber MS(: Interpretive 1/1. %he =)rea) of &abor Statistics8 ho)sehold s)rvey and establishment s)rvey both yield the same res)lts abo)t total employment. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive 1/!. %he =)rea) of &abor Statistics8 ho)sehold s)rvey and establishment s)rvey both yield information abo)t )nemployment. ANS: F DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive 1//. 'ne reason economies al4ays e,perience some )nemployment is <ob search. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment + Dob search MS(: Definitional 1/0. Dob search is the process of matching 4or3ers 4ith appropriate <obs. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: MS(: Definitional

Dob search

1/1. If all 4or3ers and all <obs 4ere the same s)ch that all 4or3ers 4ere eB)ally 4ell s)ited for all <obs5 then <ob search 4o)ld not be a problem. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Dob search MS(: Definitional 1/7. If all 4or3ers and all <obs 4ere the same s)ch that all 4or3ers 4ere eB)ally 4ell s)ited for all <obs5 then there 4o)ld be no frictional )nemployment. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment MS(: Interpretive 1/9. Frictional )nemployment is often the res)lt of changes in the demand for labor among different firms. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment MS(: Definitional 1/". %he demand for labor by a certain firm fl)ct)ates as the demand for that firm8s prod)ct fl)ct)ates. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: &abor mar3ets %'*: &abor demand + Demand MS(: Interpretive 1/:. %he demand for labor by a certain firm is independent of the demand for that firm8s prod)ct. ANS: F DIF: ! R F: !"#! NA%: Analytic &'(: &abor mar3ets %'*: &abor demand + Demand MS(: Interpretive

:/

(hapter !";.nemployment

10$. mployment can rise in one region of the co)ntry 4hile it falls in another. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: mployment MS(: Definitional 101. (hanges in the composition of demand among ind)stries or regions are called sectoral shifts. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Sectoral shifts MS(: Definitional 10!. Sectoral shifts temporarily ca)se )nemployment. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Sectoral shifts + .nemployment MS(: Definitional 10/. Sectoral shifts contrib)te to frictional )nemployment. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Sectoral shifts + Frictional )nemployment

MS(: Interpretive

100. Frictional )nemployment is inevitable beca)se the economy is al4ays changing. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment MS(: Definitional 101. A cent)ry ago5 the fo)r ind)stries 4ith the largest employment in the .nited States 4ere cotton goods5 4oolen goods5 men8s clothing5 and l)mber. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: mployment MS(: Definitional 107. %oday5 the fo)r ind)stries 4ith the largest employment in the .nited States are a)tos5 aircraft5 comm)nications5 and electrical components. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: mployment MS(: Definitional 109. Data sho4 that at least 1$ percent of ..S. man)fact)ring <obs are destroyed every year. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional 10". Data sho4 that at least !$ percent of ..S. man)fact)ring <obs are destroyed every year. ANS: F DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional 10:. More than / percent of ..S. 4or3ers leave their <obs in a typical month. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: MS(: Definitional

.nemployment

11$. More than /$ percent of ..S. 4or3ers leave their <obs in a typical month. ANS: F DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment MS(: Definitional

(hapter !";.nemployment
111. %he destr)ction of man)fact)ring <obs and 4or3ers leaving their <obs to find better ones both contrib)te to frictional )nemployment. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment MS(: Interpretive 11!. *)blic policy can red)ce the economy8s nat)ral rate of )nemployment. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: *)blic policy + Nat)ral rate of )nemployment MS(: Definitional 11/. *)blic policy cannot red)ce the economy8s nat)ral rate of )nemployment. ANS: F DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: *)blic policy + Nat)ral rate of )nemployment MS(: Definitional 110. *)blic policy can red)ce frictional )nemployment. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: *)blic policy + Frictional )nemployment MS(:

:0

Interpretive

111. *olicies that red)ce the time it ta3es )nemployed 4or3ers to find ne4 <obs can red)ce the economy8s nat)ral rate of )nemployment. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: *)blic policy + Nat)ral rate of )nemployment MS(: Definitional 117. 6overnment#r)n employment agencies and p)blic training programs both see3 to red)ce frictional )nemployment. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: *)blic policy + Frictional )nemployment MS(: Interpretive 119. Advocates of government#r)n employment agencies and p)blic training programs believe they ma3e <ob search more efficient. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: *)blic policy + Dob search + fficiency MS(: Interpretive 11". (ritics of government#r)n employment agencies and p)blic training programs arg)e that the private mar3et is better at matching 4or3ers and <obs than the government is. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: *)blic policy + Dob search MS(: Interpretive 11:. Most <ob search in the ..S. economy ta3es place 4itho)t intervention by the government. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Dob search MS(: Definitional 17$. Most <ob search in the ..S. economy ta3es place 4ith the help of the government. ANS: F DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Dob search MS(: Definitional 171. *)blic policy5 4itho)t intending to do so5 can increase frictional )nemployment. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: *)blic policy + Frictional )nemployment MS(: Interpretive

:1

(hapter !";.nemployment

17!. .nemployment ins)rance increases frictional )nemployment. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance + Frictional )nemployment

MS(: Definitional

17/. .nemployment ins)rance red)ces hardships of )nemployment b)t also increases the amo)nt of str)ct)ral )nemployment. ANS: F DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance + Frictional )nemployment MS(: Interpretive 170. .nemployment ins)rance is designed to offer 4or3ers partial protection against <ob loss. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance MS(: Definitional 171. %he )nemployed 4ho B)it their <obs5 4ere fired for ca)se5 or <)st entered the labor force are not eligible for )nemployment ins)rance. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance MS(: Definitional 177. %he )nemployed 4ho B)it their <obs5 4ere fired for ca)se5 or <)st entered the labor force are eligible for )nemployment ins)rance. ANS: F DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance MS(: Definitional 179. A typical American 4or3er covered by )nemployment ins)rance receives 1$ percent of his former 4ages for 1! 4ee3s. ANS: F DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance MS(: Definitional 17". .nemployment ins)rance red)ces the incentive for the )nemployed to find and ta3e ne4 <obs. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance + Incentives MS(: Interpretive 17:. .nemployment ins)rance ca)ses 4or3ers to be less li3ely to see3 g)arantees of <ob sec)rity 4hen they negotiate 4ith employers over the terms of employment. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance MS(: Definitional 19$. St)dies have sho4n that the design of the )nemployment ins)rance system red)ces the <ob search effort of the )nemployed. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance MS(: Interpretive 191. Some economists have arg)ed that )nemployment ins)rance improves the ability of the economy to match each 4or3er 4ith the most appropriate <ob. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: conomists + .nemployment ins)rance MS(: Definitional 19!. %he )nemployment rate is an imperfect meas)re of a nation8s overall level of economic 4ell#being. ANS: % DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate + conomic 4ell#being MS(: Definitional

(hapter !";.nemployment
19/. Most economists agree that eliminating )nemployment ins)rance 4o)ld increase the amo)nt of )nemployment in the economy. ANS: F DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: conomists + .nemployment ins)rance MS(: Definitional

:7

190. Most economists agree that eliminating )nemployment ins)rance 4o)ld increase the nation8s overall level of 4ell#being. ANS: F DIF: 1 R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: conomists + .nemployment ins)rance + conomic 4ell#being MS(: Definitional 191. 'ther things the same5 co)ntries that offer more genero)s and longer#lasting )nemployment ins)rance benefits are li3ely to have higher )nemployment rates. ANS: % DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance MS(: Interpretive 197. Str)ct)ral )nemployment res)lts 4hen the n)mber of <obs is ins)fficient for the n)mber of 4or3ers. ANS: % DIF: 1 R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment MS(: Definitional 199. Minim)m 4ages are the predominant reason for )nemployment in the ..S. economy. ANS: F DIF: 1 R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Minim)m 4age + .nemployment MS(: Definitional 19". 2hen a minim)m#4age la4 forces the 4age to remain above the level that balances s)pply and demand5 it raises the B)antity of labor s)pplied and red)ces the B)antity of labor demanded compared to the eB)ilibri)m level. ANS: % DIF: 1 R F: !"#/ NA%: Analytic &'(: &abor mar3ets %'*: Minim)m 4age MS(: Definitional 19:. 2hen a minim)m#4age la4 forces the 4age to remain above the level that balances s)pply and demand5 it red)ces the B)antity of labor s)pplied and raises the B)antity of labor demanded compared to the eB)ilibri)m level. ANS: F DIF: 1 R F: !"#/ NA%: Analytic &'(: &abor mar3ets %'*: Minim)m 4age MS(: Definitional 1"$. 2hen a minim)m#4age la4 forces the 4age to remain above the level that balances s)pply and demand5 the res)lt is a s)rpl)s of labor. ANS: % DIF: ! R F: !"#/ NA%: Analytic &'(: &abor mar3ets %'*: Minim)m 4age MS(: Interpretive 1"1. 2hen a minim)m#4age la4 forces the 4age to remain above the level that balances s)pply and demand5 the res)lt is a shortage of labor. ANS: F DIF: ! R F: !"#/ NA%: Analytic &'(: &abor mar3ets %'*: Minim)m 4age MS(: Interpretive 1"!. 2hen a minim)m#4age la4 forces the 4age to remain above the level that balances s)pply and demand5 there are more 4or3ers 4illing to 4or3 than there are <obs5 so some 4or3ers are )nemployed. ANS: % DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Minim)m 4age + .nemployment MS(: Interpretive

:9

(hapter !";.nemployment

1"/. Minim)m#4age la4s are one reason there is al4ays some )nemployment in the ..S. economy. ANS: % DIF: 1 R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Minim)m 4age + .nemployment MS(: Definitional 1"0. Minim)m#4age la4s affect all 4or3ers. ANS: F DIF: ! R F: NA%: Analytic &'(: &abor mar3ets MS(: Interpretive !"#/ %'*: Minim)m 4age

1"1. Most ..S. 4or3ers have 4ages 4ell above the legal minim)m5 so minim)m#4age la4s do not prevent the 4age from ad<)sting to balance s)pply and demand. ANS: % DIF: 1 R F: !"#/ NA%: Analytic &'(: &abor mar3ets %'*: Minim)m 4age MS(: Definitional 1"7. Minim)m#4age la4s matter most for the least s3illed and least e,perienced members of the labor force5 s)ch as teenagers. ANS: % DIF: 1 R F: !"#/ NA%: Analytic &'(: &abor mar3ets %'*: Minim)m 4age MS(: Definitional 1"9. It is only among the least s3illed and least e,perienced members of the labor force that minim)m#4age la4s ca)se )nemployment. ANS: % DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Minim)m 4age + .nemployment MS(: Interpretive 1"". If the 4age is 3ept above the eB)ilibri)m level for any reason5 the res)lt is )nemployment. ANS: % DIF: 1 R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: 2ages + .nemployment MS(: Definitional 1":. If the 4age is 3ept above the eB)ilibri)m 4age for any reason5 the res)lt is str)ct)ral )nemployment. ANS: % DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: 2ages + Str)ct)ral )nemployment MS(: Interpretive 1:$. If the 4age is 3ept above the eB)ilibri)m level beca)se of minim)m#4age la4s5 then the res)lt is )nemploymentE if the 4age is 3ept above the eB)ilibri)m level for some other reason5 the res)lt need not be )nemployment. ANS: F DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: 2ages + .nemployment MS(: Interpretive 1:1. 2hen <ob search is the e,planation for )nemployment5 4or3ers are searching for the <obs that best s)it their tastes and s3ills5 b)t 4hen the 4age is above the eB)ilibri)m level5 the B)antity of labor s)pplied e,ceeds the B)antity of labor demanded5 and 4or3ers are )nemployed beca)se they are 4aiting for <obs to open )p. ANS: % DIF: 1 R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Str)ct)ral )nemployment MS(: Definitional 1:!. ..S. Department of &abor data sho4 that minim)m#4age 4or3ers tend to be yo)ng5 less ed)cated5 more li3ely to be 4or3ing part time5 and concentrated in the leis)re and hospitality ind)stry. ANS: % DIF: 1 R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Minim)m 4age MS(: Definitional

(hapter !";.nemployment

:"

1:/. A )nion is an employer association that bargains 4ith 4or3ers over 4ages5 benefits5 and 4or3ing conditions. ANS: F DIF: 1 R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions MS(: Definitional 1:0. In the 1:0$s and 1:1$s5 abo)t one#third of ..S. 4or3ers belonged to )nions5 b)t today5 only abo)t one#fifth of ..S. 4or3ers belong to )nions. ANS: F DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions MS(: Interpretive 1:1. %oday5 )nions play a larger role in )rope than they do in the ..S. ANS: % DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: MS(: Interpretive

.nions

1:7. 2hen a )nion is present in a labor mar3et5 4ages are not determined by the eB)ilibri)m of s)pply and demand. ANS: % DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + 2ages MS(: Interpretive 1:9. A )nion is a type of cartel. ANS: % DIF: 1 R F: NA%: Analytic &'(: &abor mar3ets MS(: Definitional !"#0 %'*: .nions

1:". &i3e any cartel5 a )nion is a gro)p of sellers acting together in the hope of e,erting their <oint mar3et po4er. ANS: % DIF: 1 R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions MS(: Definitional 1::. %he process by 4hich )nions and firms agree on the terms of employment is called collective bargaining. ANS: % DIF: 1 R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + (ollective bargaining MS(: Definitional !$$. If a )nion and a firm cannot reach an agreement on the terms of employment5 then the )nion can organiCe a 4ithdra4al of labor from the firm5 called a stri3e. ANS: % DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + Stri3es MS(: Interpretive !$1. conomists have fo)nd that )nion 4or3ers earn abo)t /$ to 0$ percent more than similar 4or3ers 4ho do not belong to )nions. ANS: F DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: conomists + .nions + 2ages MS(: Interpretive !$!. 2hen a )nion raises the 4age above the eB)ilibri)m level5 it red)ces the B)antity of labor s)pplied and raises the B)antity of labor demanded5 res)lting in )nemployment. ANS: F DIF: 1 R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + .nemployment MS(: Definitional !$/. %he introd)ction of a )nion into a firm benefits all of that firm8s 4or3ers. ANS: F DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions MS(: Interpretive

::

(hapter !";.nemployment

!$0. Some of a firm8s 4or3ers are made 4orse off by the introd)ction of a )nion. ANS: % DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions MS(: Interpretive !$1. .nions are often tho)ght to ca)se conflict bet4een different gro)ps of 4or3ers ## bet4een the insiders 4ho benefit from high )nion 4ages and the o)tsiders 4ho do not get the )nion <obs. ANS: % DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions MS(: Interpretive !$7. 2hen )nions raise 4ages in one part of the economy5 the s)pply of labor increases in other parts of the economy5 4hich red)ces 4ages in ind)stries that are not )nioniCed. ANS: % DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + 2ages MS(: Interpretive !$9. 2or3ers in )nions reap the benefit of collective bargaining5 4hile 4or3ers not in )nions bear some of the cost. ANS: % DIF: 1 R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions MS(: Definitional !$". .nions are e,empt from ..S. antitr)st la4s. ANS: % DIF: 1 R F: NA%: Analytic &'(: &abor mar3ets MS(: Definitional !"#0 %'*: .nions + Antitr)st la4s

!$:. In the ..S.5 it is illegal for employers to interfere 4hen 4or3ers try to organiCe )nions. ANS: % DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions MS(: Interpretive !1$. In the ..S.5 the National &abor Relations =oard is the government agency that enforces 4or3ers8 right to )nioniCe. ANS: % DIF: 1 R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + National &abor Relations =oard MS(: Definitional !11. Right#to#4or3 la4s give 4or3ers in a )nioniCed firm the right to choose 4hether to <oin the )nion. ANS: % DIF: 1 R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + Right#to#4or3 la4s MS(: Definitional !1!. Right#to#4or3 la4s allo4 stri3ing )nion members to be permanently replaced. ANS: F DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + Right#to#4or3 la4s MS(: Interpretive !1/. Most economists believe )nions are bad for the economy as a 4hole. ANS: F DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: MS(: Interpretive

conomists + .nions

!10. (ritics of )nions arg)e that )nions ca)se the allocation of labor to be inefficient and ineB)itable. ANS: % DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + fficiency + B)ality MS(: Interpretive

(hapter !";.nemployment

1$$

!11. Advocates of )nions contend that )nions are a necessary antidote to the mar3et po4er of the firms that hire 4or3ers and that )nions are important for helping firms respond efficiently to 4or3ers8 concerns. ANS: % DIF: 1 R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions MS(: Definitional !17. According to the theory of efficiency 4ages5 firms operate more efficiently if 4ages are above the eB)ilibri)m level. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages MS(: Definitional !19. According to the theory of efficiency 4ages5 firms operate more efficiently if 4ages are belo4 the eB)ilibri)m level. ANS: F DIF: 1 R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages MS(: Definitional !1". According to the theory of efficiency 4ages5 it may be profitable for firms to 3eep 4ages high even in the presence of a s)rpl)s of labor. ANS: % DIF: 1 R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages MS(: Definitional !1:. fficiency 4ages create str)ct)ral )nemployment. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + Str)ct)ral )nemployment MS(:

Interpretive

!!$. A firm might offer efficiency 4ages so its 4or3ers 4ill eat a more n)tritio)s diet and therefore be healthier and more prod)ctive. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er health MS(: Interpretive !!1. %he efficiency#4age theory of 4or3er health is more relevant for e,plaining )nemployment in less developed co)ntries than in rich co)ntries. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er health MS(: Interpretive !!!. A firm might offer efficiency 4ages to red)ce 4or3er t)rnover and thereby red)ce prod)ction costs. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er t)rnover MS(: Interpretive !!/. A firm might offer efficiency 4ages in order to attract a better pool of applicants. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er B)ality MS(: Interpretive !!0. A firm might offer efficiency 4ages in order to red)ce shir3ing. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er effort MS(: Interpretive !!1. In 1:105 Fenry Ford began paying his 4or3ers G1 per day5 abo)t t4ice the going 4age. As a res)lt5 t)rnover and absenteeism fell and prod)ctivity and profits rose. ANS: % DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages MS(: Interpretive

1$1
1.

(hapter !";.nemployment
%he table belo4 )ses data for the year !$$/ provided by the =)rea) of &abor Statistics and ad<)sted to be comparable to ..S. data. All val)es are in tho)sands. Fill in the blan3 entries in the table.
Ad)lt *op)lation &abor Force .nemployment Rate &abor#Force *articipation Rate

SHORT A S!ER

(o)ntry

mployed

.nemployed

Dapan France 6ermany ANS:


(o)ntry

1$:5090 9$511: !75"9$ /:51:1

7!511$

/51$$ !5199 :.7:

19.01

Ad)lt *op)lation

&abor Force

mployed

.nemployed

.nemployment Rate

&abor#Force *articipation Rate

Dapan France 6ermany

1$:5090 '"#8$' 9$511:

""#$%$ !75"9$ /:51:1

7!511$ 2'#2(& &5#)55

/51$$ !5199 &#8&"

5.&$ (.5( :.7:

"$.&$ 19.01 5".'&

DIF: ! R F: !"#1 &'(: .nemployment and inflation MS(: Applicative !.

NA%: Analytic %'*: &abor#force participation rate + .nemployment rate

Follo4ing the recession of !$$15 there 4as a month in 4hich employment and the )nemployment rate both rose. Ass)ming the comp)tations 4ere correct5 ho4 is it possible for both to have increasedH

ANS: %he rate of )nemployment is meas)red as the n)mber of people )nemployed divided by the labor force. If the n)mber of people in the labor force rises5 b)t a significant portion of the rise in the labor force is people 4ho are )nemployed5 then both employment and )nemployment co)ld rise. >%his li3ely happened beca)se as the economy 4as improving5 more people began see3ing employment5 b)t not all immediately fo)nd employment.? DIF: / R F: !"#1 &'(: .nemployment and inflation MS(: Analytical /. NA%: Analytic %'*: mployment + .nemployment rate

2hy have labor#force participation rates for 4omen in the .nited States increased since 2orld 2ar II 4hile labor#force participation rates for men have decreasedH

ANS: (a)ses of the increase in the ..S. 4omen8s labor#force participation rate over the past several decades incl)de ne4 technologies that have red)ced the amo)nt of time reB)ired to complete ro)tine ho)sehold tas3s5 improved birth control5 and changing political and social attit)des. (a)ses of the decline in the ..S. men8s labor#force participation rate over the past several decades incl)de yo)ng men no4 staying in school longer than their fathers and grandfathers did5 older men no4 retiring earlier and living longer5 and more fathers no4 staying at home to raise their children. DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive 0. Most spells of )nemployment are short5 and most )nemployment observed at any given time is long term. Fo4 can this beH

ANS: Most )nemployed people in the economy are )nemployed for relatively short periods of time5 4hile fe4er people are )nemployed for relatively long periods of time. If yo) 4ere to total the 4ee3s spent )nemployed5 most of those 4ee3s 4o)ld be acco)nted for by people 4ho had been )nemployed a long time. DIF: ! R F: !"#1 &'(: .nemployment and inflation MS(: Interpretive NA%: Analytic %'*: .nemployment

(hapter !";.nemployment
1.

1$!

2hy might a favorable change in the economy5 s)ch as technological improvement or a decrease in the price of imported oil5 be associated 4ith an increase in frictional )nemploymentH

ANS: ven generally favorable changes 4ill )s)ally involve some sort of sectoral shoc3 that changes the demand for labor among different firms. For e,ample5 a decrease in the price of imported oil 4o)ld li3ely red)ce the demand for ..S. oil 4or3ers and increase the demand for a)tomobile 4or3ers. Similarly5 technological progress ma3es some ind)stries decline and others advance5 creating frictional )nemployment. DIF: ! R F: !"#! &'(: .nemployment and inflation MS(: Interpretive 7. NA%: Analytic %'*: Frictional )nemployment + Sectoral shifts ,plain 4hy economists

%eenage )nemployment is higher than )nemployment of people ages !$ and over. 4o)ld attrib)te at least part of this difference to minim)m#4age la4s.

ANS: *eople 4ho are e,perienced and ed)cated are li3ely to find <obs 4here the eB)ilibri)m 4age is above the minim)m 4age. In labor mar3ets 4here the eB)ilibri)m 4age is above the minim)m 4age5 the minim)m 4age does not create )nemployment. Since people ages !$ and over tend to have more e,perience and ed)cation than teenagers5 the minim)m 4age matters less and so creates less )nemployment. DIF: ! R F: !"#/ &'(: .nemployment and inflation MS(: Interpretive 9. NA%: Analytic %'*: Minim)m 4age + .nemployment

Since )nemployment rates are consistently higher in (anada and some 2estern )ropean co)ntries than in the .nited States5 it appears that the nat)ral rate of )nemployment is lo4er in the .nited States. 2hat might e,plain this differenceH

ANS: %he te,t offers t4o e,planations for the nat)ral rate of )nemployment. %he first is frictional )nemployment5 4hich res)lts from people and employers ta3ing time to search for the best match. Frictional )nemployment 4o)ld be higher in co)ntries that have freB)ent and large sectoral shifts and genero)s )nemployment compensation. It seems )nli3ely that (anada and 2estern )ropean co)ntries 4o)ld have greater sectoral shifts than the .nited States5 so some of the difference might be d)e to more genero)s )nemployment compensation in (anada and 2estern )rope. %he second e,planation for the nat)ral rate of )nemployment is that 4ages in some labor mar3ets are above eB)ilibri)m. 'ne rationale for setting 4ages above eB)ilibri)m is to attract and retain prod)ctive 4or3ers. %here is no obvio)s reason 4hy these efficiency 4ages sho)ld contrib)te to )nemployment more in (anada and 2estern )rope than in the .nited States. 2ages can also be above eB)ilibri)m in some mar3ets beca)se of minim)m#4age la4s. So5 some )nemployment in (anada and 2estern )rope might res)lt from higher minim)m 4ages. Finally5 )nions may negotiate higher 4ages for their members ca)sing a rise in )nemployment. *ossibly5 (anada and 2estern )rope have greater )nion membership rates or more po4erf)l )nions. DIF: ! R F: !"#1 &'(: .nemployment and inflation MS(: Interpretive ". NA%: Analytic %'*: Nat)ral rate of )nemployment

S)ppose that there is an e,cess s)pply of economics professors. Sho)ld )niversities necessarily red)ce salariesH 2hat does standard economic theory s)ggestH 2hat does efficiency#4age theory s)ggestH

ANS: Standard economic theory s)ggests that if )niversities are interested in ma,imiCing profits or minimiCing costs5 they sho)ld red)ce salaries )ntil the B)antity s)pplied of 4or3ers is eB)al to the B)antity demanded. %he red)ction in 4ages 4o)ld red)ce the costs of prod)ction and raise profits 4hile still allo4ing )niversities to fill fac)lty positions. fficiency#4age theory s)ggests that it might be profitable for )niversities to 3eep 4ages above the eB)ilibri)m level in order to red)ce 4or3er t)rnover5 increase 4or3er B)ality5 increase 4or3er effort >red)ce shir3ing? and therefore 4or3er prod)ctivity. >Fort)nately5 salaries of economics professors are )s)ally a bit above 4hat is necessary to eat n)tritio)s diets5 so the 4or3er#health variant of the efficiency 4age is not li3ely to be important here.? DIF: ! R F: &'(: &abor mar3ets MS(: Interpretive !"#1 NA%: Analytic %'*: fficiency 4ages

1$/

(hapter !";.nemployment

:. 2hat is the theory of efficiency 4agesH *rovide fo)r reasons that employers might pay efficiency 4ages. ANS: According to the theory of efficiency 4ages5 firms operate more efficiently if 4ages are above the eB)ilibri)m level. %herefore5 it may be profitable for firms to 3eep 4ages high even in the presence of an e,cess s)pply of labor. If so5 firms 4ill 3eep 4ages above the eB)ilibri)m level5 creating )nemployment. >1? 2or3er Fealth: =etter#paid 4or3ers eat a more n)tritio)s diet5 and 4or3ers 4ho eat a better diet are healthier and more prod)ctive. A firm may find it profitable to pay higher 4ages in order to have healthier5 more prod)ctive 4or3ers. >!? 2or3er %)rnover: %he more a firm pays its 4or3ers5 the less often its 4or3ers choose to leave the firm. Since it is costly to hire and train ne4 4or3ers5 it may be profitable for an employer to pay higher than eB)ilibri)m 4ages in order to red)ce 4or3er t)rnover rates. >/? 2or3er ffort: In <obs 4here 4or3ers have some discretion over ho4 hard they 4or35 4or3ers may shir3. As a res)lt5 firms monitor the effort of their 4or3ers5 and those ca)ght shir3ing are fired. Fo4ever5 it is costly to monitor 4or3ers5 and monitoring is often imperfect. =y paying higher 4ages5 firms ma3e it more e,pensive for 4or3ers to shir35 since if they are ca)ght they 4ill not readily find other employment at their c)rrent 4age. It may be profitable for a firm to pay higher than mar3et 4ages in order to red)ce shir3ing. >0? 2or3er I)ality: 2hen a firm hires ne4 4or3ers5 it cannot perfectly ga)ge the B)ality of the applicants. =y paying a higher 4age5 the firm attracts a better pool of 4or3ers to apply for its <obs. It may be profitable for a firm to pay higher than mar3et 4ages in order to increase the probability that it 4ill hire good#B)ality 4or3ers. DIF: ! R F: &'(: &abor mar3ets MS(: Interpretive !"#1 NA%: Analytic %'*: fficiency 4ages

Se*$$ - Unemployment
+ULT,-LE CHO,CE 1. %o maintain their standard of living5 most people rely on a. government assistance. b. their personal savings. c. their labor earnings. d. rental income.

ANS: ( DIF: 1 R F: !"#$ NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Income + Standard of living MS(: Definitional !. 2hich of the follo4ing is correctH a. %he amo)nt of )nemployment that a co)ntry typically e,periences is a determinant of that co)ntry-s standard of living5 and some degree of )nemployment is inevitable in a comple, economy. b. %he amo)nt of )nemployment that a co)ntry typically e,periences is a determinant of that co)ntry-s standard of living5 and a comple, economy can achieve Cero )nemployment. c. %he amo)nt of )nemployment that a co)ntry typically e,periences is not a determinant of that co)ntry-s standard of living5 and a comple, economy can achieve Cero )nemployment. d. %he amo)nt of )nemployment that a co)ntry typically e,periences is not a determinant of that co)ntry-s standard of living5 and some degree of )nemployment is inevitable in a comple, economy.

ANS: A DIF: ! R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment + Standard of living

MS(: Interpretive

(hapter !";.nemployment
/. %he amo)nt of )nemployment varies a. little over time and across co)ntries. b. little over time5 b)t s)bstantially across co)ntries. c. s)bstantially over time5 b)t little across co)ntries. d. s)bstantially over time and across co)ntries. DIF: ! R F: !"#$ &'(: .nemployment and inflation %'*: .nemployment

1$0

ANS: D NA%: Analytic MS(: Interpretive 0.

%he amo)nt of )nemployment that an economy normally e,periences is called the a. average rate of )nemployment. b. nat)ral rate of )nemployment. c. cyclical rate of )nemployment. d. typical rate of )nemployment.

ANS: = DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 1. An economy8s nat)ral rate of )nemployment is a. the economy8s long#r)n target level of )nemployment. b. the amo)nt of )nemployment that the economy normally e,periences. c. the lo4est rate of )nemployment the economy can achieve. d. All of the above are correct.

ANS: = DIF: ! R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Interpretive 7. %he nat)ral rate of )nemployment is the a. )nemployment rate that 4o)ld prevail 4ith Cero inflation. b. rate associated 4ith the highest possible level of 6D*. c. difference bet4een the long#r)n and short#r)n )nemployment rates. d. amo)nt of )nemployment that the economy normally e,periences.

ANS: D DIF: 1 R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 9. %he deviation of )nemployment from its nat)ral rate is called a. the )nnat)ral rate of )nemployment. b. str)ct)ral )nemployment. c. frictional )nemployment. d. cyclical )nemployment. DIF: 1 R F: !"#$ &'(: .nemployment and inflation %'*: (yclical )nemployment

ANS: D NA%: Analytic MS(: Definitional ".

(yclical )nemployment refers to a. the relationship bet4een the probability of )nemployment and a 4or3er-s changing level of e,perience. b. ho4 often a 4or3er is li3ely to be employed d)ring her lifetime. c. year#to#year fl)ct)ations of )nemployment aro)nd its nat)ral rate. d. long#term trends in )nemployment. DIF: 1 R F: !"#$ &'(: .nemployment and inflation %'*: (yclical )nemployment

ANS: ( NA%: Analytic MS(: Definitional

1$1
:.

(hapter !";.nemployment
(yclical )nemployment a. has a different e,planation than does the nat)ral rate of )nemployment. b. refers to the year#to#year fl)ct)ation in )nemployment aro)nd an economy8s nat)ral rate of )nemployment. c. is closely associated 4ith short#r)n )ps and do4ns of economic activity. d. All of the above are correct. DIF: ! R F: !"#$ &'(: .nemployment and inflation %'*: (yclical )nemployment

ANS: D NA%: Analytic MS(: Interpretive 1$.

(yclical )nemployment is closely associated 4ith a. long#term economic gro4th. b. short#r)n )ps and do4ns of the economy. c. fl)ct)ations in the nat)ral rate of )nemployment. d. changes in the minim)m 4age. DIF: ! R F: !"#$ &'(: .nemployment and inflation %'*: (yclical )nemployment

ANS: = NA%: Analytic MS(: Interpretive 11.

%he designation Jnat)ralJ implies that the nat)ral rate of )nemployment a. is desirable. b. is constant over time. c. is impervio)s to economic policy. d. does not go a4ay on its o4n even in the long r)n.

ANS: D DIF: ! R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Interpretive 1!. %he nat)ral rate of )nemployment a. is the economy8s desirable level of )nemployment. b. cannot be affected by economic policy. c. =oth >a? and >b? are correct. d. None of the above is correct.

ANS: D DIF: ! R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Interpretive 1/. %he nat)ral rate of )nemployment a. arises from a single problem that has a single sol)tion. b. is easy for policyma3ers to red)ce. c. =oth >a? and >b? are correct. d. None of the above is correct.

ANS: D DIF: ! R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Interpretive 10. %he nat)ral rate of )nemployment a. is a constant. b. is the desirable rate of )nemployment. c. cannot be altered by economic policy. d. None of the above is correct.

ANS: D DIF: ! R F: !"#$ NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Interpretive

(hapter !";.nemployment

1$7

Se*$% - Unemployment - ,.ent/fy/n0 Unemployment


+ULT,-LE CHO,CE 1. Meas)ring )nemployment is the <ob of the a. (ongressional =)dget 'ffice. b. Department of (ommerce. c. (o)ncil of conomic Advisers. d. =)rea) of &abor Statistics. DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics

ANS: D NA%: Analytic MS(: Definitional !.

%he =)rea) of &abor Statistics is part of the ..S. Department of a. the %reas)ry. b. (ommerce. c. &abor. d. the Interior.

ANS: ( DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics MS(: Definitional /. %he =)rea) of &abor Statistics prod)ces data on )nemployment a. 4ee3ly. b. monthly. c. B)arterly. d. yearly. DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics

ANS: = NA%: Analytic MS(: Definitional 0.

%he =)rea) of &abor Statistics prod)ces data on a. )nemployment. b. types of employment. c. length of the average 4or34ee3. d. All of the above are correct. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics

ANS: D NA%: Analytic MS(: Interpretive 1.

%he =)rea) of &abor Statistics prod)ces data on )nemployment and other aspects of the labor mar3et from a reg)lar s)rvey of abo)t a. 7$$ ho)seholds. b. 75$$$ ho)seholds. c. 7$5$$$ ho)seholds. d. 75$$$5$$$ ho)seholds. DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics

ANS: ( NA%: Analytic MS(: Definitional 7.

%he =)rea) of &abor Statistics prod)ces data on )nemployment and other aspects of the labor mar3et from a reg)lar s)rvey of abo)t 7$5$$$ ho)seholds5 called the a. (ens)s. b. &abor S)rvey. c. S)rvey of conomic Indicators. d. ()rrent *op)lation S)rvey. DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics

ANS: D NA%: Analytic MS(: Definitional

1$9
9.

(hapter !";.nemployment
.nemployment data are collected a. from )nemployment ins)rance claims. b. thro)gh a reg)lar s)rvey of abo)t 7$5$$$ ho)seholds. c. thro)gh a reg)lar s)rvey of abo)t !$$5$$$ firms. d. .nemployment data are collected )sing all of the above. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

ANS: = NA%: Analytic MS(: Interpretive ".

2hich of the follo4ing is not one of the categories into 4hich the =)rea) of &abor Statistics places each ad)lt of each s)rveyed ho)seholdH a. employed b. )nemployed c. )nderemployed d. not in the labor force DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics

ANS: ( NA%: Analytic MS(: Definitional :.

%he =)rea) of &abor Statistics co)nts a member of a s)rveyed ho)sehold as an ad)lt if that person is at least a. 10 years old. b. 17 years old. c. 1" years old. d. !1 years old.

ANS: = DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics MS(: Definitional 1$. 2ho of the follo4ing is not incl)ded in the =)rea) of &abor Statistics- @employedA categoryH a. those 4ho 4or3ed as paid employees b. those 4ho 4or3ed in their o4n b)siness c. those 4ho 4or3ed as )npaid 4or3ers in a family member-s b)siness d. those 4aiting to be recalled to a <ob from 4hich they had been laid off

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive 11. %he =)rea) of &abor Statistics places people in the @employedA category if they a. are 4itho)t a <ob5 b)t are available for 4or3 and have tried to find a <ob d)ring the previo)s 0 4ee3s. b. 4or3 4itho)t pay in a family member8s b)siness. c. are 4aiting to be recalled to a <ob from 4hich they had been laid off. d. All of the above are correct.

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive 1!. %he =)rea) of &abor Statistics places people in the @employedA category if they a. are temporarily absent from their <obs. b. are self#employed. c. 4or3 4itho)t pay in a family member8s b)siness. d. All of the above are correct.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive

(hapter !";.nemployment
1/. 2ho of the follo4ing are incl)ded in the =)rea) of &abor Statistics8 @employedA categoryH a. certain )npaid 4or3ers b. part#time 4or3ers c. 4or3ers on vacation d. All of the above are correct.

1$"

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive 10. gCon is 4or3ing part#time. Di<ana is on temporary layoff. 2ho is incl)ded in the =)rea) of &abor Statistics8 @employedA categoryH a. only gCon b. only Di<ana c. both gCon and Di<ana d. neither gCon nor Di<ana

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive 11. Adelina o4ns her o4n b)siness. 'dilon is an )npaid 4or3er in his family8s b)siness. 2ho is incl)ded in the =)rea) of &abor Statistics8 @employedA categoryH a. only Adelina b. only 'dilon c. both Adelina and 'dilon d. neither Adelina nor 'dilon

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + mployment MS(: Interpretive 17. For the =)rea) of &abor Statistics to place someone in the @)nemployedA category5 that person m)st a. be available for 4or3. b. have tried to find employment d)ring the previo)s 4ee3. c. have previo)sly been employed. d. All of the above are correct.

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment 19.

MS(: Interpretive

For the =)rea) of &abor Statistics to place someone in the @)nemployedA category5 that person m)st a. have 4or3ed 1$ or fe4er ho)rs d)ring the previo)s 4ee3. b. have tried to find employment d)ring the previo)s year. c. not have been laid off. d. None of the above is correct.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment 1".

MS(: Interpretive

2hich of the follo4ing is not a reB)irement for the =)rea) of &abor Statistics to place someone in the @)nemployedA categoryH a. %he person m)st not have been employed. b. %he person m)st not have been fired from their previo)s <ob. c. %he person m)st have tried to find employment d)ring the previo)s 0 4ee3s. d. %he person m)st have been available for 4or3.

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment

MS(: Interpretive

1$:
1:.

(hapter !";.nemployment
2ho of the follo4ing 4o)ld be incl)ded in the =)rea) of &abor Statistics8 @)nemployedA categoryH a. %))li5 4ho is 4aiting for her ne4 <ob to start b. Dyri5 4ho 4or3ed only 11 ho)rs last 4ee3 c. *an)5 4ho neither has a <ob nor is loo3ing for one d. None of the above is correct.

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment !$.

MS(: Interpretive

2ho of the follo4ing 4o)ld be incl)ded in the =)rea) of &abor Statistics8 @)nemployedA categoryH a. (emal5 a f)ll#time st)dent 4ho is not loo3ing for 4or3 b. Falim5 4ho is on temporary layoff c. Keynep5 4ho has retired and is not loo3ing for 4or3 d. All of the above are correct.

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment !1.

MS(: Interpretive

2ho of the follo4ing 4o)ld necessarily be incl)ded in the =)rea) of &abor Statistics8 @)nemployedA categoryH a. AniB)e5 4ho did not 4or3 d)ring the previo)s 0 4ee3s b. velien5 4ho tried to find ne4 employment d)ring the previo)s 0 4ee3s c. Renate5 4ho 4as an )npaid 4or3er d)ring the previo)s 0 4ee3s d. None of the above is correct.

ANS: D DIF: / R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment !!.

MS(: Analytical

2ho is incl)ded in the labor force by the =)rea) of &abor StatisticsH a. ACibo5 a homema3er not loo3ing for other 4or3 b. L4amie5 a f)ll#time st)dent not loo3ing for 4or3 c. 6eroy5 4ho does not have a <ob5 b)t is loo3ing for 4or3 d. None of the above is correct.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + &abor force MS(: Interpretive !/. 2ho is incl)ded in the labor force by the =)rea) of &abor StatisticsH a. Aibne5 4ho 4or3s most of the 4ee3 in a steel factory b. Modlen5 4ho is 4aiting for her ne4 <ob at the ban3 to start c. 2yclef5 4ho does not have a <ob5 b)t is loo3ing for 4or3 d. All of the above are incl)ded in the labor force.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + &abor force MS(: Interpretive !0. 2ho is not incl)ded in the labor force by the =)rea) of &abor StatisticsH a. La4anari5 4ho is on temporary layoff b. %a3)<i5 4ho has retired and is not loo3ing for 4or3 c. IC)mi5 4ho does not have a <ob5 b)t has applied for several in the last 4ee3 d. None of the above is correct.

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + &abor force MS(: Interpretive

(hapter !";.nemployment
!1.

11$

Acarapi is a f)ll#time homema3er not c)rrently searching for other 4or3. Mimena is a f)ll#time st)dent 4ho is not loo3ing for a <ob. 2ho is incl)ded in the labor force by the =)rea) of &abor StatisticsH a. only Acarapi b. only Mimena c. both Acarapi and Mimena d. neither Acarapi nor Mimena

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + &abor force MS(: Interpretive !7. A person 4ho is co)nted as )nemployed by the =)rea) of &abor Statistics a. is also in the labor force. b. m)st have recently loo3ed for 4or3 or be on temporary layoff. c. be at least 17 years old. d. All of the above are correct.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment + &abor force !9.

MS(: Interpretive

*e3elo o4ns his o4n b)siness. %he =)rea) of &abor Statistics co)nts *e3elo as a. )nemployed and in the labor force. b. )nemployed and not in the labor force. c. employed and in the labor force. d. employed and not in the labor force.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + mployment + &abor force !".

MS(: Interpretive

Nves is an )npaid 4or3er in his family8s ba3ery. %he =)rea) of &abor Statistics co)nts Nves as a. )nemployed and in the labor force. b. )nemployed and not in the labor force. c. employed and in the labor force. d. employed and not in the labor force.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + mployment + &abor force !:.

MS(: Interpretive

ponine 4or3s part#time as a babysitter. %he =)rea) of &abor Statistics co)nts ponine as a. )nemployed and in the labor force. b. )nemployed and not in the labor force. c. employed and in the labor force. d. employed and not in the labor force.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + mployment + &abor force /$.

MS(: Interpretive

Ipo did not 4or3 last 4ee3 beca)se flooding forced an evac)ation of her 4or3place. %he =)rea) of &abor Statistics co)nts Ipo as a. )nemployed and in the labor force. b. )nemployed and not in the labor force. c. employed and in the labor force. d. employed and not in the labor force.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + mployment + &abor force

MS(: Interpretive

111
/1.

(hapter !";.nemployment
Do)3e is on a temporary layoff from his factory <ob. %he =)rea) of &abor Statistics co)nts Do)3e as a. )nemployed and in the labor force. b. )nemployed and not in the labor force. c. employed and in the labor force. d. employed and not in the labor force.

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment + &abor force /!.

MS(: Interpretive

Dai &i <)st lost her <ob5 and she hasn8t yet started loo3ing for a ne4 one. %he =)rea) of &abor Statistics co)nts Dai &i as a. )nemployed and in the labor force. b. )nemployed5 b)t not in the labor force. c. in the labor force5 b)t not )nemployed. d. neither in the labor force nor )nemployed.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment + &abor force //.

MS(: Interpretive

Keeman is a college st)dent 4ho is not 4or3ing or loo3ing for a <ob. %he =)rea) of &abor Statistics co)nts Keeman as a. )nemployed and in the labor force. b. )nemployed5 b)t not in the labor force. c. in the labor force5 b)t not )nemployed. d. neither in the labor force nor )nemployed.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment + &abor force /0.

MS(: Interpretive

Neelt<e is an )npaid homema3er 4ho 4or3s as a vol)nteer at the local Red (ross and is c)rrently not loo3ing for a paid <ob. %he =)rea) of &abor Statistics co)nts Neelt<e as a. )nemployed and in the labor force. b. )nemployed5 b)t not in the labor force. c. in the labor force5 b)t not )nemployed. d. neither in the labor force nor )nemployed.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + .nemployment + &abor force /1.

MS(: Interpretive

%he s)m of 4hich of the follo4ing m)st be eB)al to the ad)lt pop)lationH a. employed5 )nemployed b. employed5 )nemployed5 labor force c. employed5 )nemployed5 not in the labor force d. employed5 )nemployed5 labor force5 not in the labor force

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Ad)lt pop)lation MS(: Interpretive /7. %he labor force eB)als the a. n)mber of people employed. b. n)mber of people )nemployed. c. n)mber of people employed pl)s the n)mber of people )nemployed. d. ad)lt pop)lation. DIF: 1 R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Definitional

ANS: ( NA%: Analytic %'*: &abor force

(hapter !";.nemployment
/9.

11!

S)ppose that a large n)mber of men 4ho )sed to 4or3 or see3 4or3 no4 no longer do either. 'ther things the same5 this ma3es a. the n)mber of people )nemployed rise b)t does not change the labor force. b. the n)mber of people )nemployed rise b)t ma3es the labor force fall. c. both the n)mber of people )nemployed and the labor force fall. d. the n)mber of people )nemployed fall b)t does not change the labor force. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment + &abor force

ANS: ( NA%: Analytic MS(: Interpretive /".

%he =)rea) of &abor Statistics defines the )nemployment rate as the percentage of a. those )nemployed relative to those employed. b. the labor force that is )nemployed. c. the ad)lt pop)lation that is )nemployed. d. the ad)lt pop)lation that is )nemployed or not in the labor force. DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: = NA%: Analytic MS(: Definitional /:.

%he )nemployment rate is comp)ted as the n)mber of )nemployed a. divided by the labor force5 all times 1$$. b. divided by the n)mber of employed5 all times 1$$. c. divided by the ad)lt pop)lation5 all times 1$$. d. times the labor#force participation rate5 all times 1$$. DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: A NA%: Analytic MS(: Definitional 0$.

2hich of the follo4ing is correctH a. &abor force O n)mber of employed. b. &abor force O pop)lation # n)mber of )nemployed. c. .nemployment Rate O n)mber of )nemployed >n)mber of employed P n)mber of )nemployed? 1$$. d. .nemployment Rate O n)mber of )nemployed ad)lt pop)lation 1$$.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate + &abor force MS(: Interpretive 01. %he labor#force participation rate meas)res the percentage of the a. total ad)lt pop)lation that is in the labor force. b. total ad)lt pop)lation that is employed. c. labor force that is employed. d. labor force that is either employed or )nemployed.

ANS: A DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional 0!. %he labor#force participation rate tells )s the fraction of the pop)lation that a. is able to participate in the labor mar3et. b. has ever been employed. c. has chosen to participate in the labor mar3et. d. has chosen not to participate in the labor mar3et.

ANS: ( DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional

11/
0/.

(hapter !";.nemployment
%he labor#force participation rate is comp)ted as a. > mployed Ad)lt *op)lation? 1$$. b. > mployed &abor Force? 1$$. c. >&abor Force Ad)lt *op)lation? 1$$. d. >Ad)lt *op)lation &abor Force? 1$$.

ANS: ( DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional 00. Satchel loses his <ob and immediately begins loo3ing for another. 'ther things the same , the )nemployment rate a. increases and the labor#force participation rate decreases. b. and the labor#force participation rate both increase. c. increases and the labor#force participation rate is )naffected. d. is )naffected and the labor#force participation rate decreases.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate + &abor#force participation rate 01.

MS(: Interpretive

Matilda <)st grad)ated from college. In order to devote all her efforts to college5 she didn8t hold a <ob. She is going to cr)ise aro)nd the co)ntry on her motorcycle for a month before she starts loo3ing for 4or3. 'ther things the same5 the )nemployment rate a. increases and the labor#force participation rate decreases. b. and the labor#force participation rate both increase. c. increases and the labor#force participation rate is )naffected. d. and the labor#force participation rate are both )naffected.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate + &abor#force participation rate 07.

MS(: Interpretive

Sheamo)s loses his <ob and decides to sit on the beach rather than loo3 for 4or3 d)ring the ne,t fe4 months. 'ther things the same, the )nemployment rate a. increases and the labor#force participation rate decreases. b. increases and the labor#force participation rate is )naffected. c. is )naffected and the labor#force participation rate decreases. d. and the labor#force participation rate are both )naffected.

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate + &abor#force participation rate 09.

MS(: Interpretive

Siri)s has <)st finished high school and started loo3ing for his first <ob5 b)t has not yet fo)nd one. 'ther things the same5 the )nemployment rate a. and the labor#force participation rate both increase. b. increases and the labor#force participation rate is )naffected. c. is )naffected and the labor#force participation rate increases. d. and the labor#force participation rate are both )naffected.

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate + &abor#force participation rate 0".

MS(: Interpretive

If an )nemployed person B)its loo3ing for 4or35 then5 other things the same5 the )nemployment rate a. decreases and the labor#force participation rate is )naffected. b. and the labor#force participation rate both decrease. c. is )naffected and the labor#force participation rate decreases. d. and the labor#force participation rate are both )naffected.

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate + &abor#force participation rate

MS(: Interpretive

(hapter !";.nemployment
0:. *resident =igego is r)nning for re#election against Senator *ander. =igego proclaims that more people are 4or3ing no4 than 4hen he too3 office. *ander says that the )nemployment rate is higher no4 than 4hen =igego too3 office. No) concl)de that a. one of them m)st be lying. b. both of them co)ld be telling the tr)th if the labor force and employment gre4 at the e,act same rate. c. both of them co)ld be telling the tr)th if the labor force gre4 slo4er than employment. d. both of them co)ld be telling the tr)th if the labor force gre4 faster than employment.

110

ANS: D DIF: / R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: mployment + .nemployment rate MS(: Analytical Table 28-1 &abor Data for 2re,ington 1ear Ad)lt pop)lation N)mber of employed N)mber of )nemployed 1$. 2$$' !$$$ 10$$ !$$ 2$$5 /$$$ 1/$$ 7$$ 2$$" /!$$ 17$$ !$$

Refer to Table 28-%. %he labor force of 2re,ington in !$$0 4as a. 10$$. b. 17$$. c. 1"$$. d. !$$$. DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

ANS: = NA%: Analytic %'*: &abor force 11.

Refer to Table 28-%. %he labor force of 2re,ington in !$$1 4as a. 1/$$. b. 1:$$. c. !0$$. d. /$$$. DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

ANS: = NA%: Analytic %'*: &abor force 1!.

Refer to Table 28-%. %he labor force of 2re,ington in !$$7 4as a. 17$$. b. 1"$$. c. /$$$. d. /!$$. DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

ANS: = NA%: Analytic %'*: &abor force 1/.

Refer to Table 28-%. %he labor force of 2re,ington a. increased from !$$0 to !$$1 and increased from !$$1 to !$$7. b. increased from !$$0 to !$$1 and decreased from !$$1 to !$$7. c. decreased from !$$0 to !$$1 and increased from !$$1 to !$$7. d. decreased from !$$0 to !$$1 and decreased from !$$1 to !$$7. DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

ANS: = NA%: Analytic %'*: &abor force

111
10.

(hapter !";.nemployment
Refer to Table 28-%. %he n)mber of ad)lts not in the labor force of 2re,ington in !$$0 4as a. !$$. b. 0$$. c. 7$$. d. 1"$$. DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

ANS: = NA%: Analytic %'*: &abor force 11.

Refer to Table 28-%. %he n)mber of ad)lts not in the labor force of 2re,ington in !$$1 4as a. 7$$. b. 11$$. c. 19$$. d. !0$$. DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

ANS: = NA%: Analytic %'*: &abor force 17.

Refer to Table 28-%. %he n)mber of ad)lts not in the labor force of 2re,ington in !$$7 4as a. !$$. b. 10$$. c. 17$$. d. /$$$. DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

ANS: = NA%: Analytic %'*: &abor force 19.

Refer to Table 28-%. %he n)mber of ad)lts not in the labor force of 2re,ington a. increased from !$$0 to !$$1 and increased from !$$1 to !$$7. b. increased from !$$0 to !$$1 and decreased from !$$1 to !$$7. c. decreased from !$$0 to !$$1 and increased from !$$1 to !$$7. d. decreased from !$$0 to !$$1 and decreased from !$$1 to !$$7. DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

ANS: A NA%: Analytic %'*: &abor force 1".

Refer to Table 28-%. %he )nemployment rate of 2re,ington in !$$0 4as a. 1$Q. b. 1!.1Q. c. 10./Q. d. "$Q. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: = NA%: Analytic MS(: Applicative 1:.

Refer to Table 28-%. %he )nemployment rate of 2re,ington in !$$1 4as a. !$Q. b. /1.7Q. c. 07.!Q. d. 7/./Q. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: = NA%: Analytic MS(: Applicative 7$.

Refer to Table 28-%. %he )nemployment rate of 2re,ington in !$$7 4as a. 7.!1Q. b. 11.1Q. c. 1!.1Q. d. 17.!1Q.

(hapter !";.nemployment
ANS: = NA%: Analytic MS(: Applicative 71. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

117

Refer to Table 28-%. %he )nemployment rate of 2re,ington a. increased from !$$0 to !$$1 and increased from !$$1 to !$$7. b. increased from !$$0 to !$$1 and decreased from !$$1 to !$$7. c. decreased from !$$0 to !$$1 and increased from !$$1 to !$$7. d. decreased from !$$0 to !$$1 and decreased from !$$1 to !$$7. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: = NA%: Analytic MS(: Applicative 7!.

Refer to Table 28-%. %he labor#force participation rate of 2re,ington in !$$0 4as a. 9$Q. b. 99."Q. c. "$Q. d. "9.1Q.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Applicative 7/. Refer to Table 28-%. %he labor#force participation rate of 2re,ington in !$$1 4as a. 0/./Q. b. 10.!Q. c. 7/./Q. d. 7".0Q.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Applicative 70. Refer to Table 28-%. %he labor#force participation rate of 2re,ington in !$$7 4as a. 1$Q. b. 1/./Q. c. 17.!1Q. d. "".:Q.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Applicative 71. Refer to Table 28-%. %he labor#force participation rate of 2re,ington a. increased from !$$0 to !$$1 and increased from !$$1 to !$$7. b. increased from !$$0 to !$$1 and decreased from !$$1 to !$$7. c. decreased from !$$0 to !$$1 and increased from !$$1 to !$$7. d. decreased from !$$0 to !$$1 and decreased from !$$1 to !$$7.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Applicative

119

(hapter !";.nemployment

Table 28-2 !$$: &abor Data for 2re,ington N)mber of ad)lts N)mber of ad)lts 4ho are paid employees N)mber of ad)lts 4ho 4or3 in their o4n b)sinesses N)mber of ad)lts 4ho are )npaid 4or3ers in a family member8s b)siness N)mber of ad)lts 4ho 4ere temporarily absent from their <obs beca)se of an earthB)a3e N)mber of ad)lts 4ho 4ere 4aiting to be recalled to a <ob from 4hich they had been laid off N)mber of ad)lts 4ho do not have a <ob5 are available for 4or35 and have tried to find a <ob 4ithin the past fo)r 4ee3s N)mber of ad)lts 4ho do not have a <ob5 are available for 4or35 b)t have not tried to find a <ob 4ithin the past fo)r 4ee3s N)mber of ad)lts 4ho are f)ll#time st)dents N)mber of ad)lts 4ho are homema3ers or retirees 77. Refer to Table 28-2. Fo4 many people 4ere employed in 2re,ington in !$$:H a. :57$$ b. 1$57$$ c. 115$$$ d. 115!$$ DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative !$5$$$ "5$$$ 157$$ 15$$$ 0$$ !$$ 150$$ 9"$ /5$$$ /57!$

ANS: ( NA%: Analytic %'*: mployment 79.

Refer to Table 28-2. Fo4 many people 4ere )nemployed in 2re,ington in !$$:H a. 150$$ b. 157$$ c. !5$$$ d. !59"$ DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

ANS: = NA%: Analytic MS(: Applicative 7".

Refer to Table 28-2. Fo4 many people 4ere in 2re,ington8s labor force in !$$:H a. 115$$$ b. 1!57$$ c. 1/5/"$ d. !$5$$$ DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

ANS: = NA%: Analytic %'*: &abor force 7:.

Refer to Table 28-2. Fo4 many people 4ere not in 2re,ington8s labor force in !$$:H a. 050$$ b. 757!$ c. 950$$ d. "57:$ DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

ANS: ( NA%: Analytic %'*: &abor force 9$.

Refer to Table 28-2. 2hat 4as 2re,ington8s )nemployment rate in !$$:H a. ".$ percent b. 1!.9 percent c. 11.: percent d. !!.1 percent

(hapter !";.nemployment
ANS: = NA%: Analytic MS(: Applicative 91. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

11"

Refer to Table 28-2. 2hat 4as 2re,ington8s labor#force participation rate in !$$:H a. 11 percent b. 7/ percent c. 77.: percent d. "9./ percent

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Applicative 9!. In !$$05 based on concepts similar to those )sed to estimate ..S. employment fig)res5 the (anadian ad)lt non# instit)tionaliCed pop)lation 4as !1.$!! million5 the labor force 4as 17.:17 million5 and the n)mber of people employed 4as 11."70 million. According to these n)mbers5 the (anadian labor#force participation rate and )nemployment rate 4ere abo)t a. 7/.0Q and 0.0Q. b. 7/.0Q and 7.0Q. c. 79."Q and 0.0Q. d. 79."Q and 7.0Q.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate 9/.

MS(: Applicative

In !$$05 based on concepts similar to those )sed to estimate ..S. employment fig)res5 the Dapanese ad)lt non# instit)tionaliCed pop)lation 4as 1$:.7"0 million5 the labor force 4as 71.97$ million5 and the n)mber of people employed 4as 7!.7/$ million. According to these n)mbers5 the Dapanese labor#force participation rate and )nemployment rate 4ere abo)t a. 19.1Q and !.:Q. b. 19.1Q and 0."Q. c. 7$Q and !.:Q. d. 7$Q and 0."Q.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate 90.

MS(: Applicative

In !$$05 based on concepts similar to those )sed to estimate ..S. employment fig)res5 the Italian ad)lt non# instit)tionaliCed pop)lation 4as 01.$!$ million5 the labor force 4as !0.$71 million5 and the n)mber of people employed 4as !!.1$1 million. According to these n)mbers5 the Italian labor#force participation rate and )nemployment rate 4ere abo)t a. 0:.1Q and 0.0Q. b. 0:.1Q and ".1Q. c. 1/.1Q and 0.0Q. d. 1/.1Q and ".1Q.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate 91.

MS(: Applicative

In !$$05 based on concepts similar to those )sed to estimate ..S. employment fig)res5 the S4edish ad)lt non# instit)tionaliCed pop)lation 4as 7.91! million5 the labor force 4as 0.197 million5 and the n)mber of people employed 4as 0.!97 million. According to these n)mbers5 the S4edish labor#force participation rate and )nemployment rate 4ere abo)t a. 7/.9Q and 0.1Q. b. 7/.9Q and 7.7Q. c. 7".!Q and 0.1Q. d. 7".!Q and 7.7Q.

11:

(hapter !";.nemployment

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate 97.

MS(: Applicative

%he =)rea) of &abor Statistics reported in !$$1 that there 4ere 1/.!/ million people over age !1 4ho had at least a bachelor8s degree5 0$.1: million of 4hom 4ere employed and .:" million of 4hom 4ere )nemployed. 2hat 4ere the labor#force participation rate and the )nemployment rate for this gro)pH a. 97./Q and 1."Q b. 97./Q and !.0Q c. 9".1Q and 1."Q d. 9".1Q and !.0Q

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate 99.

MS(: Applicative

%he =)rea) of &abor Statistics reported in !$$1 that there 4ere 1$.0$ million people over age !1 4hose highest level of ed)cation 4as some college or an associate degree5 //."7 million of 4hom 4ere employed and 1.!9 million of 4hom 4ere )nemployed. 2hat 4ere the labor#force participation rate and the )nemployment rate for this gro)pH a. 79.!Q and !.1Q b. 79.!Q and /.7Q c. 7:.9Q and !.1Q d. 7:.9Q and /.7Q

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate 9".

MS(: Applicative

%he =)rea) of &abor Statistics reported in !$$1 that there 4ere 1:.:" million people over age !1 4hose highest level of ed)cation 4as a high school degree or eB)ivalent5 /7.0$ million of 4hom 4ere employed and 1.:/ million of 4hom 4ere )nemployed. 2hat 4ere the labor#force participation rate and the )nemployment rate for this gro)pH a. 7$.9Q and /.!Q b. 7$.9Q and 1.$Q c. 7/.:Q and /.!Q d. 7/.:Q and 1.$Q

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate 9:.

MS(: Applicative

%he =)rea) of &abor Statistics reported in !$$1 that there 4ere !".1: million people over age !1 4ho had no high school degree or its eB)ivalent5 11.9/ million of 4hom 4ere employed and 1.$0 million of 4hom 4ere )nemployed. 2hat 4ere the labor#force participation rate and the )nemployment rate for this gro)pH a. 01.7Q and /.9Q b. 01.7Q and ".1Q c. 01./Q and /.9Q d. 01./Q and ".1Q

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate "$.

MS(: Applicative

S)ppose that the ad)lt pop)lation is 0 million5 the n)mber of )nemployed is $.!1 million5 and the labor#force participation rate is 91Q. 2hat is the )nemployment rateH a. 7.!1Q b. "./Q c. :.1Q d. 1".91Q DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: = NA%: Analytic MS(: Analytical

(hapter !";.nemployment
"1. S)ppose that the ad)lt pop)lation is 7 million5 the n)mber of employed is /." million5 and the labor#force participation rate is 9$Q. 2hat is the )nemployment rateH a. 7.9Q b. :.1Q c. 1$.1Q d. !"Q DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

1!$

ANS: = NA%: Analytic MS(: Analytical "!.

S)ppose some co)ntry had an ad)lt pop)lation of abo)t 1$ million5 a labor#force participation rate of 7$ percent5 and an )nemployment rate of 1 percent. Fo4 many people 4ere employedH a. 1.1 million b. !".1 million c. /$ million d. 09.1 million DIF: / R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Analytical

ANS: = NA%: Analytic %'*: mployment "/.

S)ppose some co)ntry had an ad)lt pop)lation of abo)t 1$ million5 a labor#force participation rate of 7$ percent5 and an )nemployment rate of 1 percent. Fo4 many people 4ere )nemployedH a. 1.0!1 million b. 1.1 million c. !.1 million d. 1 million DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

ANS: = NA%: Analytic MS(: Analytical "0.

S)ppose some co)ntry had an ad)lt pop)lation of abo)t !1 million5 a labor#force participation rate of 7$ percent5 and an )nemployment rate of 7 percent. Fo4 many people 4ere employedH a. $.: million b. 10.1 million c. 11 million d. !/.1 million DIF: / R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Analytical

ANS: = NA%: Analytic %'*: mployment "1.

S)ppose some co)ntry had an ad)lt pop)lation of abo)t !1 million5 a labor#force participation rate of 7$ percent5 and an )nemployment rate of 7 percent. Fo4 many people 4ere )nemployedH a. $."07 million b. $.: million c. 1.1 million d. 7 million DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

ANS: = NA%: Analytic MS(: Analytical "7.

S)ppose some co)ntry had an ad)lt pop)lation of abo)t 07 million5 a labor#force participation rate of 91 percent5 and an )nemployment rate of " percent. Fo4 many people 4ere employedH a. !.97 million b. /1.90 million c. /0.1 million d. 0!./! million DIF: / R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Analytical

ANS: = NA%: Analytic %'*: mployment

1!1
"9.

(hapter !";.nemployment
S)ppose some co)ntry had an ad)lt pop)lation of abo)t 07 million5 a labor#force participation rate of 91 percent5 and an )nemployment rate of " percent. Fo4 many people 4ere )nemployedH a. !.10 million b. !.97 million c. /.7" million d. " million DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

ANS: = NA%: Analytic MS(: Analytical "".

2hich of the follo4ing is correct for people ages !$ and overH a. Men have lo4er rates of labor#force participation and similar rates of )nemployment compared to 4omen. b. Men have lo4er rates of labor#force participation and higher rates of )nemployment compared to 4omen. c. 2omen have lo4er rates of labor#force participation and higher rates of )nemployment compared to men. d. 2omen have lo4er rates of labor#force participation and similar rates of )nemployment compared to men.

ANS: D DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate ":.

MS(: Definitional

2hich of the follo4ing is correct for people ages !$ and overH a. =lac3s have higher rates of labor#force participation and lo4er rates of )nemployment compared to 4hites. b. =lac3s have higher rates of labor#force participation and higher rates of )nemployment compared to 4hites. c. =lac3s have similar rates of labor#force participation and lo4er rates of )nemployment compared to 4hites. d. =lac3s have similar rates of labor#force participation and higher rates of )nemployment compared to 4hites.

ANS: D DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate :$.

MS(: Definitional

2hich of the follo4ing is correctH a. Ad)lts have higher labor#force participation rates and higher rates of )nemployment compared to teenagers. b. Ad)lts have higher labor#force participation rates and lo4er rates of )nemployment compared to teenagers. c. Ad)lts have lo4er labor#force participation rates and lo4er rates of )nemployment compared to teenagers. d. Ad)lts have lo4er labor#force participation rates and higher rates of )nemployment compared to teenagers.

ANS: = DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: &abor#force participation rate + .nemployment rate :1.

MS(: Definitional

According to !$$9 data on the ..S. pop)lation5 4hich of the follo4ing gro)ps of ad)lts >ages !$ and older? has the highest labor#force participation rateH a. 4hite males b. 4hite females c. blac3 males d. blac3 females

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive

(hapter !";.nemployment
:!.

1!!

According to !$$9 data on the ..S. pop)lation5 4hich of the follo4ing gro)ps of ad)lts >ages !$ and older? has the lo4est labor#force participation rateH a. 4hite males b. 4hite females c. blac3 males d. blac3 females

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive :/. According to !$$9 data on the ..S. pop)lation5 4hich of the follo4ing gro)ps of ad)lts >ages !$ and older? has the highest )nemployment rateH a. 4hite males b. 4hite females c. blac3 males d. blac3 females DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: ( NA%: Analytic MS(: Interpretive :0.

According to !$$9 data on the ..S. pop)lation5 4hich of the follo4ing gro)ps of ad)lts >ages !$ and older? has the lo4est )nemployment rateH a. 4hite males b. 4hite females c. blac3 males d. blac3 females DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: = NA%: Analytic MS(: Interpretive :1.

According to !$$9 data on the ..S. pop)lation5 4hich of the follo4ing gro)ps of teenagers >ages 17#1:? has the highest labor#force participation rateH a. 4hite males b. 4hite females c. blac3 males d. blac3 females

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive :7. According to !$$9 data on the ..S. pop)lation5 4hich of the follo4ing gro)ps of teenagers >ages 17#1:? has the lo4est labor#force participation rateH a. 4hite males b. 4hite females c. blac3 males d. blac3 females

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive :9. According to !$$9 data on the ..S. pop)lation5 4hich of the follo4ing gro)ps of teenagers >ages 17#1:? has the highest )nemployment rateH a. 4hite males b. 4hite females c. blac3 males d. blac3 females DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: ( NA%: Analytic MS(: Interpretive

1!/
:".

(hapter !";.nemployment
According to !$$9 data on the ..S. pop)lation5 4hich of the follo4ing gro)ps of teenagers >ages 17#1:? has the lo4est )nemployment rateH a. 4hite males b. 4hite females c. blac3 males d. blac3 females DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: = NA%: Analytic MS(: Interpretive Table 28-3

!$$/ &abor Data for Ad)lts >age 17 and older? in Meditor Males not in labor force Females not in labor force Males )nemployed Females )nemployed Males employed Females employed ::. 01 million /1 million 1 million 1 million "1 million 71 million

Refer to Table 28-&. 2hat is the ad)lt pop)lation in MeditorH a. :$ million b. 17$ million c. !/$ million d. !0$ million

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Ad)lt pop)lation MS(: Applicative 1$$. Refer to Table 28-&. 2hat is the ad)lt labor force in MeditorH a. :$ million b. 11$ million c. 17$ million d. !/$ million ANS: ( NA%: Analytic %'*: &abor force DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

1$1. Refer to Table 28-&. 2hat is the ad)lt )nemployment rate in MeditorH a. 0.! percent b. 7.!1 percent c. 7.9 percent d. 1$ percent ANS: = NA%: Analytic MS(: Applicative DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

1$!. Refer to Table 28-&. 2hat is the ad)lt labor#force participation rate in MeditorH a. /9.1 percent b. 7!.1 percent c. 77.9 percent d. :1." percent ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Applicative

(hapter !";.nemployment
1$/. Refer to Table 28-&. 2hat is the ad)lt male pop)lation in MeditorH a. 1$ million b. :$ million c. 1/$ million d. 1/1 million ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Ad)lt pop)lation MS(: Applicative 1$0. Refer to Table 28-&. 2hat is the ad)lt male labor force in MeditorH a. 1$ million b. "1 million c. :$ million d. 1/$ million ANS: ( NA%: Analytic %'*: &abor force DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

1!0

1$1. Refer to Table 28-&. 2hat is the ad)lt male )nemployment rate in MeditorH a. /.9 percent b. 1 percent c. 1.7 percent d. 1.: percent ANS: ( NA%: Analytic MS(: Applicative DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

1$7. Refer to Table 28-&. 2hat is the ad)lt male labor#force participation rate in MeditorH a. /9 percent b. 7/ percent c. 77.9 percent d. :7./ percent ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Applicative 1$9. Refer to Table 28-&. 2hat is the ad)lt female pop)lation in MeditorH a. 0$ million b. 9$ million c. 1$$ million d. 1$1 million ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Ad)lt pop)lation MS(: Applicative 1$". Refer to Table 28-&. 2hat is the ad)lt female labor force in MeditorH a. 0$ million b. 71 million c. 9$ million d. 1$$ million ANS: ( NA%: Analytic %'*: &abor force DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Applicative

1$:. Refer to Table 28-&. 2hat is the ad)lt female )nemployment rate in MeditorH a. 0." percent b. 1 percent c. 9.1 percent d. 9.9 percent

1!1

(hapter !";.nemployment
DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

ANS: ( NA%: Analytic MS(: Applicative

11$. Refer to Table 28-&. 2hat is the ad)lt female labor#force participation rate in MeditorH a. /".1 percent b. 71.: percent c. 77.9 percent d. :1.! percent ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Applicative 111. Data on the )nemployment rate in the ..S. since 1:7$ sho4 that the economy a. al4ays has some )nemployment and that the amo)nt stays constant from year to year. b. al4ays has some )nemployment and that the amo)nt changes from year to year. c. sometimes has some )nemployment and that the amo)nt stays constant from year to year. d. sometimes has some )nemployment and that the amo)nt changes from year to year. ANS: = NA%: Analytic MS(: Definitional DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

11!. Data on the )nemployment rate in the ..S. since 1:7$ sho4 that the )nemployment rate is a. al4ays Cero. b. sometimes Cero. c. rarely Cero. d. never Cero. ANS: D NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

11/. %he normal rate of )nemployment aro)nd 4hich the )nemployment rate fl)ct)ates is called a. the normal rate of )nemployment. b. the nat)ral rate of )nemployment. c. cyclical )nemployment. d. fl)ct)ating )nemployment. ANS: = DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 110. %he deviation of )nemployment from its nat)ral rate is called a. the normal rate of )nemployment. b. deviant )nemployment. c. cyclical )nemployment. d. fl)ct)ating )nemployment. ANS: ( DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional 111. conomists at the (ongressional =)dget 'ffice estimated that for !$$95 the ..S. nat)ral rate of )nemployment 4as a. !.7 percent. b. /.1 percent. c. 0." percent. d. 7 percent.

ANS: ( DIF: 1 R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Definitional

(hapter !";.nemployment
117. Since 1:7$5 the nat)ral rate of )nemployment in the ..S. has been bet4een a. $.0 and $.7 percent. b. 0 and 7 percent. c. 10 and 17 percent. d. 0$ and 7$ percent. ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Interpretive 119. 2hich list contains t4o periods 4hen the ..S. )nemployment rate 4as belo4 the nat)ral rate of )nemploymentH a. 1:71#1:7"5 1:"1#1:"0 b. 1:71#1:7"5 1::9#!$$$ c. 1:"1#1:"05 1::1#1::0 d. 1::1#1::05 1::9#!$$$ ANS: = NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

1!7

11". 2hich of the follo4ing is not a ca)se of the changing role of 4omen in American society over the past several decadesH a. ne4 technologies that have red)ced the amo)nt of time reB)ired to complete ro)tine ho)sehold tas3s b. improved birth control c. changing political and social attit)des d. scientists have sho4n that 4omen are better employees than men ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Role of 4omen MS(: Interpretive 11:. D)st after 2orld 2ar II5 the labor#force participation rate of 4omen 4as a. abo)t !1 percent5 and in !$$95 it 4as abo)t 1$ percent. b. abo)t // percent5 and in !$$95 it 4as abo)t 7$ percent. c. abo)t 1$ percent5 and in !$$95 it 4as abo)t 9$ percent. d. abo)t 7$ percent5 and in !$$95 it 4as abo)t "$ percent. ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive 1!$. 'ver the past several decades5 the difference bet4een the labor#force participation rates of men and 4omen in the ..S. has a. grad)ally increased. b. remained constant. c. grad)ally decreased. d. been eliminated. ANS: ( DIF: 1 R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Definitional 1!1. 'ver the past several decades in the .nited States5 the labor#force participation rate of 4omen has a. increased and the labor#force participation rate of men has increased. b. increased and the labor#force participation rate of men has decreased. c. decreased and the labor#force participation rate of men has increased. d. decreased and the labor#force participation rate of men has decreased. ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive

1!9

(hapter !";.nemployment

1!!. 2hich of the follo4ing is not a ca)se of the decline in the ..S. men8s labor#force participation rate over the past several decadesH a. yo)ng men no4 stay in school longer than their fathers and grandfathers did b. older men no4 retire earlier and live longer c. 4ith more 4omen employed5 there are fe4er <obs no4 available to men d. more fathers no4 stay at home to raise their children ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive 1!/. D)st after 2orld 2ar II5 the labor#force participation rate of men 4as a. abo)t // percent5 and in !$$95 it 4as abo)t 1$ percent. b. abo)t 1$ percent5 and in !$$95 it 4as abo)t 7$ percent. c. abo)t 71 percent5 and in !$$95 it 4as abo)t 7$ percent. d. abo)t "9 percent5 and in !$$95 it 4as abo)t 9/ percent. ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: &abor#force participation rate MS(: Interpretive 1!0. Recent entrants into the labor force acco)nt for abo)t a. 1;1 of those 4ho are )nemployed. b. 1;0 of those 4ho are )nemployed. c. 1;/ of those 4ho are )nemployed. d. 1;! of those 4ho are )nemployed. ANS: ( NA%: Analytic MS(: Definitional DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

1!1. Spells of )nemployment end abo)t a. 1;1 of the time 4ith the person leaving the labor force. b. 1;0 of the time 4ith the person leaving the labor force. c. 1;/ of the time 4ith the person leaving the labor force. d. 1;! of the time 4ith the person leaving the labor force. ANS: D NA%: Analytic MS(: Definitional DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

1!7. A person 4ho is not employed and claims to be trying hard to find a <ob b)t really is not trying hard to find a <ob a. is co)nted as o)t of the labor force b)t sho)ld be co)nted as )nemployed. b. is co)nted as )nemployed b)t sho)ld be co)nted as o)t of the labor force. c. is correctly co)nted as o)t of the labor force. d. is correctly co)nted as )nemployed. ANS: = NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment + &abor force

1!9. S)ppose that some people are co)nted as )nemployed 4hen5 to maintain )nemployment compensation5 they search for 4or3 only at places 4here they are )nli3ely to be hired. If these individ)als 4ere co)nted as o)t of the labor force instead of as )nemployed5 then a. both the )nemployment rate and labor#force participation rate 4o)ld be higher. b. both the )nemployment rate and labor#force participation rate 4o)ld be lo4er. c. the )nemployment rate 4o)ld be lo4er and the labor#force participation rate 4o)ld be higher. d. the )nemployment rate 4o)ld be higher and the participation rate 4o)ld be lo4er. ANS: = DIF: / R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate + &abor#force participation rate

MS(: Analytical

(hapter !";.nemployment
1!". S)ppose that some people report themselves as )nemployed 4hen5 in fact5 they are 4or3ing in the )ndergro)nd economy. If these persons 4ere co)nted as employed5 then a. both the )nemployment rate and labor#force participation rate 4o)ld be higher. b. both the )nemployment rate and labor#force participation rate 4o)ld be lo4er. c. the )nemployment rate 4o)ld be higher and the labor#force participation rate 4o)ld be higher. d. the )nemployment rate 4o)ld be lo4er and the labor#force participation rate 4o)ld be )naffected. ANS: D DIF: / R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate + &abor#force participation rate

1!"

MS(: Analytical

1!:. Some people 4ho are employed or 4ho are not ma3ing serio)s effort to find employment 4ill report themselves as )nemployed. Some people 4ho 4ant to find 4or3 4ill be co)nted as o)t of the labor force. a. =oth the first and the second fact tend to ma3e the reported )nemployment rate lo4er than the act)al )nemployment rate. b. =oth the first and the second fact tend to ma3e the reported )nemployment rate higher than the act)al )nemployment rate. c. %he first fact tends to ma3e the reported )nemployment rate higher than the act)al )nemployment rate5 4hile the second fact tends to ma3e the reported )nemployment rate lo4er than the act)al )nemployment rate. d. %he first fact tends to ma3e the reported )nemployment rate lo4er than the act)al )nemployment rate5 4hile the second fact tends to ma3e the reported )nemployment rate higher than the act)al )nemployment rate. ANS: ( NA%: Analytic MS(: Analytical DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

1/$. Some persons are co)nted as o)t of the labor force beca)se they have made no serio)s or recent effort to loo3 for 4or3. Fo4ever5 some of these individ)als may 4ant to 4or3 even tho)gh they are too disco)raged to ma3e a serio)s effort to loo3 for 4or3. If these individ)als 4ere co)nted as )nemployed instead of o)t of the labor force5 then a. both the )nemployment rate and labor#force participation rate 4o)ld be higher. b. the )nemployment rate 4o)ld be higher and the labor#force participation rate 4o)ld be lo4er. c. the )nemployment rate 4o)ld be lo4er and the labor#force participation rate 4o)ld be higher. d. both the )nemployment rate and labor#force participation rate 4o)ld be lo4er. ANS: A DIF: / R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment rate + &abor#force participation rate

MS(: Analytical

1/1. Disco)raged 4or3ers a. are co)nted as o)t of the labor force b)t sho)ld be co)nted as )nemployed. b. are co)nted as )nemployed b)t sho)ld be co)nted as o)t of the labor force. c. are correctly co)nted as o)t of the labor force. d. are correctly co)nted as )nemployed. ANS: A NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: Disco)raged 4or3ers

1/!. Some individ)als 4o)ld li3e to have a <ob5 b)t they have given )p loo3ing for a <ob after an )ns)ccessf)l search. %hese individ)als are called a. )nattached 4or3ers5 and they are classified by the =)rea) of &abor Statistics as )nemployed. b. )nattached 4or3ers5 and they are not classified by the =)rea) of &abor Statistics as )nemployed. c. disco)raged 4or3ers5 and they are classified by the =)rea) of &abor Statistics as )nemployed. d. disco)raged 4or3ers5 and they are not classified by the =)rea) of &abor Statistics as )nemployed. ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: =)rea) of &abor Statistics + Disco)raged 4or3ers

MS(: Interpretive

1!:

(hapter !";.nemployment

1//. 2ho 4o)ld be incl)ded in the labor forceH a. Fomer5 4ho is 4aiting for his ne4 <ob to start b. Michelle5 4ho has become disco)raged loo3ing for a <ob and has B)it loo3ing c. Derric35 an )npaid homema3er d. None of the above 4o)ld be incl)ded in the labor force. ANS: A NA%: Analytic %'*: &abor force DIF: ! R F: !"#1 &'(: %he st)dy of economics and definitions of economics MS(: Interpretive

1/0. %he reported )nemployment rate sho)ld be vie4ed as a. a )sef)l b)t imperfect meas)re of <oblessness. b. clearly smaller than the tr)e )nemployment rate. c. clearly larger than the tr)e )nemployment rate. d. being very close to the tr)e )nemployment rate. ANS: A NA%: Analytic MS(: Definitional DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment rate

1/1. Marginally attached 4or3ers are people 4ho a. are loo3ing for a better <ob than they c)rrently have. b. are not 4or3ing and are not loo3ing for 4or35 b)t 4o)ld 4or3 if as3ed. c. are 4or3ing part#time 4hile they go to school or get training for a better <ob. d. are only a fe4 years from retirement. ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: Marginally attached 4or3ers MS(: Interpretive 1/7. (onsider t4o people 4ho are c)rrently o)t of 4or3. %im is not loo3ing for 4or3 beca)se there have been many <ob c)ts 4here he lives and he doesn-t thin3 it li3ely that he 4ill find 4or3. =ev is not c)rrently loo3ing for 4or35 b)t she 4o)ld li3e a <ob and she has loo3ed for 4or3 in the past. %he =)rea) of &abor Statistics considers a. both %im and =ev to be marginally attached 4or3ers. b. neither %im nor =ev to be marginally attached 4or3ers. c. only %im to be a marginally attached 4or3er. d. only =ev to be a marginally attached 4or3er. ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + Marginally attached 4or3ers MS(: Interpretive Table 28-4 (ivilian labor force *ersons )nemployed 11 4ee3s or longer Dob losers and persons 4ho have completed temporary <obs >e,cl)des <ob leavers? %otal )nemployed %otal )nemployed pl)s disco)raged 4or3ers %otal )nemployed pl)s all marginally attached 4or3ers %otal )nemployed pl)s all marginally attached 4or3ers pl)s total employed part#time for economic reasons 1/9. Refer to Table 28-'. 2hat is the .#1 meas)re of labor )nder)tiliCationH a. 1.7 percent b. /.1 percent c. 7.! percent d. 9.$ percent ANS: A NA%: Analytic MS(: Analytical DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .#1 1$$ million 1.7 million /.1 million 7.! million 9.$ million ".1 million :.! million

(hapter !";.nemployment
1/". Refer to Table 28-'. 2hat is the .#! meas)re of labor )nder)tiliCationH a. 1.1 percent b. /.1 percent c. 0.9 percent d. 7.! percent ANS: = NA%: Analytic MS(: Analytical DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .#!

1/$

1/:. Refer to Table 28-'. 2hat is the .#/ meas)re of labor )nder)tiliCationH a. 0.9 percent b. 7.! percent c. 9.$ percent d. 1$.: percent ANS: = NA%: Analytic MS(: Analytical DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .#/

10$. Refer to Table 28-'. 2hat is the .#0 meas)re of labor )nder)tiliCationH a. 7.1 percent b. 7.: percent c. 9.$ percent d. 19.: percent ANS: = NA%: Analytic MS(: Analytical DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .#0

101. Refer to Table 28-'. 2hat is the .#1 meas)re of labor )nder)tiliCationH a. 9.1 percent b. 9.: percent c. ".1 percent d. !7 percent ANS: = NA%: Analytic MS(: Analytical DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .#1

10!. Refer to Table 28-'. 2hat is the .#7 meas)re of labor )nder)tiliCationH a. ".0 percent b. :.$ percent c. :.! percent d. /1.! percent ANS: = NA%: Analytic MS(: Analytical DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .#7

10/. Most spells of )nemployment are a. long5 and most )nemployment observed at any given time is long term. b. long5 b)t most )nemployment observed at any given time is short term. c. short5 b)t most )nemployment observed at any given time is long term. d. short5 and most )nemployment observed at any given time is short term. ANS: ( NA%: Analytic MS(: Definitional DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

1/1

(hapter !";.nemployment

100. If yo) 4ere told that someone yo) 3ne4 nothing else abo)t had <)st become )nemployed5 yo)r best g)ess 4o)ld be a. that they 4o)ld be )nemployed for a long time5 and that most of the )nemployed they8ve <oined have been )nemployed for a long time. b. that they 4o)ld be )nemployed for a long time5 even tho)gh most of the )nemployed they8ve <oined have been )nemployed for a short time. c. that they 4o)ld be )nemployed for a short time5 even tho)gh most of the )nemployed they8ve <oined have been )nemployed for a long time. d. that they 4ill be )nemployed for a short time5 and that most of the )nemployed they8ve <oined have been )nemployed for a short time. ANS: ( NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

101. In one year5 yo) meet 1! people 4ho are each )nemployed for one 4ee3 and eight people 4ho are each )nemployed for the 4hole year. 2hat percentage of the )nemployment spells yo) enco)ntered 4as short# term5 and 4hat percentage of the )nemployment yo) enco)ntered in a given 4ee3 4as long#termH a. 1! percent and 1/./ percent b. 1! percent and "".: percent c. "7.9 percent and 1/./ percent d. "7.9 percent and "".: percent ANS: D NA%: Analytic MS(: Analytical 107. DIF: / R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

vidence provided by economists indicates that the typical person 4ho becomes )nemployed a. 4ill soon find a <ob. b. 4ill find a <ob5 b)t not before a year or more has gone by. c. 4ill leave the labor force and never ret)rn. d. does so d)e to retirement. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

ANS: A NA%: Analytic MS(: Interpretive

109. 2hich of the follo4ing is not correctH a. Most people 4ho become )nemployed 4ill soon find <obs. b. In an ideal labor mar3et5 4ages 4o)ld ad<)st to ens)re that all 4or3ers are al4ays f)lly employed. c. %he )nemployment rate occasionally falls to Cero. d. %here are al4ays some 4or3ers 4itho)t <obs5 even 4hen the overall economy is doing 4ell. ANS: ( NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

10". .nemployment that res)lts beca)se it ta3es time for 4or3ers to search for the <obs that best s)it their tastes and s3ills is called a. the nat)ral rate of )nemployment. b. cyclical )nemployment. c. str)ct)ral )nemployment. d. frictional )nemployment. ANS: D NA%: Analytic MS(: Definitional DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: Frictional )nemployment

10:. .nemployment that res)lts beca)se the n)mber of <obs available in some labor mar3ets may be ins)fficient to give a <ob to everyone 4ho 4ants one is called a. the nat)ral rate of )nemployment. b. cyclical )nemployment. c. str)ct)ral )nemployment. d. frictional )nemployment.

(hapter !";.nemployment
ANS: ( NA%: Analytic MS(: Definitional DIF: 1 R F: !"#1 &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment

1/!

11$. *eople 4ho are )nemployed beca)se of <ob search are best classified as a. cyclically )nemployed. b. str)ct)rally )nemployed. c. frictionally )nemployed. d. disco)raged 4or3ers. ANS: ( NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: Frictional )nemployment

111. *eople 4ho are )nemployed beca)se 4ages are5 for some reason5 set above the level that brings labor s)pply and demand into eB)ilibri)m are best classified as a. cyclically )nemployed. b. str)ct)rally )nemployed. c. frictionally )nemployed. d. disco)raged 4or3ers. ANS: = NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment

11!. If the nat)ral rate of )nemployment is 1.! percent and the act)al rate of )nemployment is 1.9 percent5 then by definition there is a. cyclical )nemployment amo)nting to $.1 percent of the labor force. b. frictional )nemployment amo)nting to $.1 percent of the labor force. c. str)ct)ral )nemployment amo)nting to $.1 percent of the labor force. d. search )nemployment amo)nting to $.1 percent of the labor force. ANS: A NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: (yclical )nemployment

11/. .nemployment that e,ists beca)se it ta3es time for 4or3ers to search for the <obs that s)it them best is a. frictional )nemployment5 4hich contrib)tes to the nat)ral rate of )nemployment. b. frictional )nemployment5 4hich does not contrib)te to the nat)ral rate of )nemployment. c. str)ct)ral )nemployment5 4hich contrib)tes to the nat)ral rate of )nemployment. d. str)ct)ral )nemployment5 4hich does not contrib)te to the nat)ral rate of )nemployment. ANS: A DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Nat)ral rate of )nemployment

MS(: Interpretive

110. .nemployment that e,ists beca)se there is a shortage of <obs is a. frictional )nemployment5 4hich contrib)tes to the nat)ral rate of )nemployment. b. frictional )nemployment5 4hich does not contrib)te to the nat)ral rate of )nemployment. c. str)ct)ral )nemployment5 4hich contrib)tes to the nat)ral rate of )nemployment. d. str)ct)ral )nemployment5 4hich does not contrib)te to the nat)ral rate of )nemployment. ANS: ( DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment + Nat)ral rate of )nemployment

MS(: Interpretive

111. 2hich of the follo4ing is not an e,planation for the e,istence of )nemployment in the long r)nH a. it ta3es time for 4or3ers to search for the <obs that are best s)ited for them b. minim)m#4age la4s c. )nions d. the b)siness cycle ANS: D NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

1//

(hapter !";.nemployment

117. 2hich of the follo4ing is an e,planation for the e,istence of frictional )nemploymentH a. efficiency 4ages b. minim)m#4age la4s c. )nions d. <ob search ANS: D NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: Frictional )nemployment

119. 2hich of the follo4ing is not an e,planation for the e,istence of str)ct)ral )nemploymentH a. efficiency 4ages b. <ob search c. minim)m#4age la4s d. )nions ANS: = NA%: Analytic MS(: Interpretive DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment

11". Frictional )nemployment is tho)ght to e,plain a. relatively short spells of )nemployment5 as is str)ct)ral )nemployment. b. relatively long spells of )nemployment5 as is str)ct)ral )nemployment. c. relatively short spells of )nemployment5 4hile str)ct)ral )nemployment is tho)ght to e,plain relatively long spells of )nemployment. d. relatively long spells of )nemployment5 4hile str)ct)ral )nemployment is tho)ght to e,plain relatively short spells of )nemployment. ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Str)ct)ral )nemployment 11:. %he nat)ral )nemployment rate incl)des a. both frictional and str)ct)ral )nemployment. b. neither frictional nor str)ct)ral )nemployment. c. str)ct)ral5 b)t not frictional )nemployment. d. frictional5 b)t not str)ct)ral )nemployment. ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Nat)ral rate of )nemployment MS(: Interpretive 17$. Dohn is a stoc3bro3er. Fe has had several <ob offers5 b)t he has t)rned them do4n beca)se he thin3s he can find a firm that better matches his tastes and s3ills. ()rtis has loo3ed for 4or3 as an acco)ntant for some time. 2hile the demand for acco)ntants doesn8t appear to be falling5 there seems to be more people applying than <obs available. a. Dohn and ()rtis are both frictionally )nemployed. b. Dohn and ()rtis are both str)ct)rally )nemployed. c. Dohn is frictionally )nemployed5 and ()rtis is str)ct)rally )nemployed. d. Dohn is str)ct)rally )nemployed5 and ()rtis is frictionally )nemployed. ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Str)ct)ral )nemployment

MS(: Interpretive

MS(: Interpretive

171. Meredith is loo3ing for 4or3 as a comp)ter programmer. Altho)gh her prospects are good5 she hasn-t yet ta3en a <ob. D)lie is loo3ing for 4or3 in a steel mill. very time she sho4s )p for an intervie45 there are more people loo3ing for 4or3 than their are openings. Someone 4aiting in line 4ith her tells her it has been that 4ay for a long time. a. Meredith and D)lie are both frictionally )nemployed. b. Meredith and D)lie are both str)ct)rally )nemployed. c. Meredith is frictionally )nemployed5 and D)lie is str)ct)rally )nemployed. d. Meredith is str)ct)rally )nemployed5 and D)lie is frictionally )nemployed.

(hapter !";.nemployment
ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Str)ct)ral )nemployment

1/0

MS(: Interpretive

17!. Denna is searching for a <ob that s)its her tastes abo)t 4here to live and co4or3ers. Mary is loo3ing for a <ob that ma3es best )se of her s3ills. a. Denna and Mary are both frictionally )nemployed. b. Denna and Mary are both str)ct)rally )nemployed. c. Denna is frictionally )nemployed5 and Mary is str)ct)rally )nemployed. d. Denna is str)ct)rally )nemployed5 and Mary is frictionally )nemployed. ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Str)ct)ral )nemployment

MS(: Interpretive

17/. =ob is loo3ing for 4or3 after school5 b)t every4here he fills o)t an application5 the managers say they al4ays have a lot more applications than open positions. %om has a la4 degree. Several firms have made him offers5 b)t he thin3s he might be able to find a firm 4here his talents co)ld be p)t to better )se. a. =ob and %om are both frictionally )nemployed. b. =ob and %om are both str)ct)rally )nemployed. c. =ob is frictionally )nemployed5 and %om is str)ct)rally )nemployed. d. =ob is str)ct)rally )nemployed5 and %om is frictionally )nemployed. ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Str)ct)ral )nemployment 170.

MS(: Interpretive

very month5 the =)rea) of &abor Statistics s)rveys 17$5$$$ b)siness establishments to help determine a. the n)mber of people )nemployed. b. the n)mber of <obs the economy has gained or lost. c. the siCe of the labor force. d. the n)mber of people 4ho o4n their o4n b)sinesses.

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: %he st)dy of economics and definitions of economics %'*: =)rea) of &abor Statistics + Dobs n)mber MS(: Interpretive

Se*$2 - Unemployment - 2ob Sear*h


+ULT,-LE CHO,CE 1. Dob search a. is one reason economies al4ays e,perience some )nemployment. b. is the process of matching 4or3ers 4ith appropriate <obs. c. 4o)ld not be a problem if all 4or3ers and all <obs 4ere the same. d. All of the above are correct. DIF: ! R F: !"#! &'(: .nemployment and inflation %'*: Dob search

ANS: D NA%: Analytic MS(: Interpretive !.

If all 4or3ers and all <obs 4ere the same s)ch that all 4or3ers 4ere eB)ally 4ell s)ited for all <obs5 then there 4o)ld be no a. cyclical )nemployment. b. frictional )nemployment. c. nat)ral rate of )nemployment. d. str)ct)ral )nemployment. DIF: ! R F: !"#! &'(: .nemployment and inflation %'*: Frictional )nemployment

ANS: = NA%: Analytic MS(: Interpretive

1/1
/.

(hapter !";.nemployment
Sectoral shifts in demand for o)tp)t a. create str)ct)ral )nemployment. b. immediately red)ce )nemployment. c. increase )nemployment d)e to <ob search. d. do not affect demand for labor.

ANS: ( DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Sectoral shifts + Frictional )nemployment 0.

MS(: Interpretive

From time to time5 the demand for 4or3ers has risen in one region of the .nited States and fallen in another. %his ill)strates a. frictional )nemployment created by efficiency 4ages. b. str)ct)ral )nemployment created by efficiency 4ages. c. frictional )nemployment created by sectoral shifts. d. str)ct)ral )nemployment created by sectoral shifts.

ANS: ( DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Sectoral shifts 1.

MS(: Interpretive

(ons)mers decide to b)y more comp)ters and fe4er type4riters. As a res)lt5 comp)ter companies e,pand prod)ction 4hile type4riter companies lay#off 4or3ers. %his is an e,ample of a. frictional )nemployment created by efficiency 4ages. b. frictional )nemployment created by sectoral shifts. c. str)ct)ral )nemployment created by efficiency 4ages. d. str)ct)ral )nemployment created by sectoral shifts.

ANS: = DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Sectoral shifts 7.

MS(: Interpretive

S)ppose that beca)se of the pop)larity of the lo4#carb diet5 ba3eries need fe4er 4or3ers and stea3 ho)ses need more 4or3ers. %his is an e,ample of a. frictional )nemployment created by efficiency 4ages. b. frictional )nemployment created by sectoral shifts. c. str)ct)ral )nemployment created by efficiency 4ages. d. str)ct)ral )nemployment created by sectoral shifts.

ANS: = DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Sectoral shifts 9.

MS(: Interpretive

In !$$!5 the demand for constr)ction 4or3ers increased and the demands for te,tile and steel 4or3ers diminished. %his is an e,ample of a. frictional )nemployment created by efficiency 4ages. b. str)ct)ral )nemployment created by efficiency 4ages. c. frictional )nemployment created by sectoral shifts. d. str)ct)ral )nemployment created by sectoral shifts.

ANS: ( DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Sectoral shifts ".

MS(: Interpretive

%he =)rea) of &abor Statistics predicts that the n)mber of <obs for veterinary technicians 4ill gro4 faster than most occ)pations 4hile the n)mber of <obs for telephone operators 4ill decline. %his change in the labor mar3et co)ld lead to a. frictional )nemployment created by efficiency 4ages. b. str)ct)ral )nemployment created by efficiency 4ages. c. frictional )nemployment created by sectoral shifts. d. str)ct)ral )nemployment created by sectoral shifts.

ANS: ( DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Sectoral shifts

MS(: Interpretive

(hapter !";.nemployment
:. Frictional )nemployment is inevitable beca)se a. sectoral shifts are al4ays happening. b. there is a federal minim)m#4age la4 in the ..S. c. some people do not 4ant to be employed. d. )nions are very pop)lar in the ..S.

1/7

ANS: A DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: Frictional )nemployment + Sectoral shifts 1$.

MS(: Interpretive

2hich of the follo4ing 4as not among the fo)r ind)stries 4ith the largest employment in the .nited States a cent)ry agoH a. cotton goods b. men8s clothing c. corn d. l)mber DIF: ! R F: !"#! &'(: %he st)dy of economics and definitions of economics MS(: Interpretive

ANS: ( NA%: Analytic %'*: mployment 11.

2hich of the follo4ing is not among the fo)r ind)stries 4ith the largest employment in the .nited States todayH a. l)mber b. aircraft c. comm)nications d. electrical components DIF: ! R F: !"#! &'(: %he st)dy of economics and definitions of economics MS(: Interpretive

ANS: A NA%: Analytic %'*: mployment 1!.

2hich of the follo4ing is not correctH a. Frictional )nemployment is inevitable in a dynamic economy. b. Altho)gh the )nemployment created by sectoral shifts is )nfort)nate5 in the long r)n s)ch changes lead to higher prod)ctivity and higher living standards. c. At least 1$ percent of ..S. man)fact)ring <obs are destroyed every year. d. More than 1/ percent of ..S. 4or3ers leave their <obs in a typical month. DIF: ! R F: !"#! &'(: .nemployment and inflation %'*: .nemployment

ANS: D NA%: Analytic MS(: Interpretive 1/.

Frictional )nemployment can be the conseB)ence of a. 4or3ers leaving e,isting <obs to find ones they li3e better. b. one ind)stry declining 4hile another is gro4ing. c. changes in the 4or3ing conditions offered by competing firms. d. All of the above are correct. DIF: ! R F: !"#! &'(: .nemployment and inflation %'*: Frictional )nemployment

ANS: D NA%: Analytic MS(: Interpretive 10.

2hich of the follo4ing is not a ca)se of frictional )nemploymentH a. the destr)ction of man)fact)ring <obs b. a 4or3er leaving a <ob to find one 4ith better benefits c. minim)m#4age la4s d. )nemployment ins)rance DIF: ! R F: !"#! &'(: .nemployment and inflation %'*: Frictional )nemployment

ANS: ( NA%: Analytic MS(: Interpretive

1/9
11.

(hapter !";.nemployment
*)blic policy a. can red)ce both frictional )nemployment and the nat)ral rate of )nemployment. b. can red)ce frictional )nemployment5 b)t it cannot red)ce the nat)ral rate of )nemployment. c. cannot red)ce frictional )nemployment5 b)t it can red)ce the nat)ral rate of )nemployment. d. cannot red)ce either frictional )nemployment or the nat)ral rate of )nemployment. A DIF: ! R F: !"#! Analytic &'(: .nemployment and inflation *)blic policy + Frictional )nemployment + Nat)ral rate of )nemployment Interpretive

ANS: NA%: %'*: MS(: 17.

*olicies that red)ce the time it ta3es )nemployed 4or3ers to find ne4 <obs a. can red)ce both frictional )nemployment and the nat)ral rate of )nemployment. b. can red)ce frictional )nemployment5 b)t it cannot red)ce the nat)ral rate of )nemployment. c. cannot red)ce frictional )nemployment5 b)t it can red)ce the nat)ral rate of )nemployment. d. cannot red)ce either frictional )nemployment or the nat)ral rate of )nemployment. A DIF: ! R F: !"#! Analytic &'(: .nemployment and inflation *)blic policy + Frictional )nemployment + Nat)ral rate of )nemployment Interpretive

ANS: NA%: %'*: MS(: 19.

2hich of the follo4ing does not help red)ce frictional )nemploymentH a. government#r)n employment agencies b. p)blic training programs c. )nemployment ins)rance d. All of the above help red)ce frictional )nemployment.

ANS: ( DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: *)blic policy + Frictional )nemployment MS(: 1".

Interpretive

*roviding training for )nemployed individ)als is primarily intended to red)ce a. frictional )nemployment. b. seasonal )nemployment. c. str)ct)ral )nemployment. d. cyclical )nemployment.

ANS: A DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: *)blic policy + Frictional )nemployment MS(: 1:.

Interpretive

6overnment#r)n employment agencies and p)blic training programs are operated by the government to try to facilitate <ob search and red)ce )nemployment. a. Almost all economists agree that s)ch programs are of no )se. b. Almost all economists agree that s)ch programs 4or3 very 4ell. c. Some economists claim that the government can do these things no better than firms and individ)als co)ld do them for themselves. d. Some economists claim that these programs increase frictional )nemployment.

ANS: ( DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: conomists + *)blic policy + .nemployment !$.

MS(: Interpretive

'f the follo4ing gro)ps5 4ho is eligible for )nemployment ins)rance benefitsH a. the )nemployed 4ho B)it their <obs b. the )nemployed 4ho 4ere laid off beca)se their previo)s employers no longer needed their s3ills c. the )nemployed 4ho 4ere fired for ca)se d. the )nemployed 4ho <)st entered the labor force DIF: ! R F: !"#! &'(: .nemployment and inflation %'*: .nemployment ins)rance

ANS: = NA%: Analytic MS(: Interpretive

(hapter !";.nemployment
!1. A typical American 4or3er covered by )nemployment ins)rance receives a. 1$ percent of his former 4ages for !7 4ee3s. b. 1$ percent of his former 4ages for 1! 4ee3s. c. 1$$ percent of his former 4ages for !7 4ee3s. d. 1$$ percent of his former 4ages for 1! 4ee3s. DIF: 1 R F: !"#! &'(: .nemployment and inflation %'*: .nemployment ins)rance

1/"

ANS: A NA%: Analytic MS(: Definitional !!.

.nemployment ins)rance a. red)ces search effort and raises )nemployment. b. red)ces search effort and lo4ers )nemployment. c. increases search effort and raises )nemployment. d. increases search effort and decreases )nemployment. DIF: ! R F: !"#! &'(: .nemployment and inflation %'*: .nemployment ins)rance

ANS: A NA%: Analytic MS(: Interpretive !/.

vidence from research st)dies by economists a. sho4s that increased )nemployment benefits decrease the <ob search efforts of the )nemployed. b. sho4s that increased )nemployment benefits have virt)ally no effect on the <ob search efforts of the )nemployed. c. sho4s that increased )nemployment benefits increase the <ob search efforts of the )nemployed. d. is conflicting on 4hat increased )nemployment benefits do to the <ob search efforts of the )nemployed.

ANS: A DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: conomists + .nemployment ins)rance MS(: !0. More genero)s )nemployment ins)rance 4o)ld a. raise str)ct)ral )nemployment. b. raise frictional )nemployment. c. lo4er str)ct)ral )nemployment. d. lo4er frictional )nemployment.

Interpretive

ANS: = DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance + Frictional )nemployment !1.

MS(: Interpretive

conomists 4o)ld predict that5 other things the same5 the more genero)s )nemployment compensation a co)ntry has5 a. the shorter the d)ration of each spell of )nemployment5 and the higher the )nemployment rate. b. the shorter the d)ration of each spell of )nemployment5 and the lo4er the )nemployment rate. c. the longer the d)ration of each spell of )nemployment5 and the higher the )nemployment rate. d. the longer the d)ration of each spell of )nemployment5 and the lo4er the )nemployment rate.

ANS: ( DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: conomists + .nemployment ins)rance MS(: !7.

Interpretive

.nemployment ins)rance a. red)ces the hardship of )nemployment5 b)t it also increases the amo)nt of )nemployment. b. red)ces the incentive for the )nemployed to find and ta3e ne4 <obs. c. ca)ses 4or3ers to be less li3ely to see3 g)arantees of <ob sec)rity 4hen they negotiate 4ith employers over the terms of employment. d. All of the above are correct.

ANS: D DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment ins)rance + Incentives MS(:

Interpretive

1/:
!9.

(hapter !";.nemployment
.nemployment ins)rance a. may improve the ability of the economy to match 4or3ers 4ith appropriate <obs. b. red)ces the <ob search efforts of the )nemployed. c. increases the amo)nt of frictional )nemployment in the economy. d. All of the above are correct. DIF: ! R F: !"#! &'(: .nemployment and inflation %'*: .nemployment ins)rance

ANS: D NA%: Analytic MS(: Interpretive !".

2hich of the follo4ing is correctH a. .nemployment ins)rance raises str)ct)ral )nemployment beca)se it red)ces the <ob search efforts of the )nemployed. b. Most economists are s3eptical of the val)e of )nemployment ins)rance primarily beca)se they believe that it res)lts in a poorer match bet4een 4or3ers and <obs. c. St)dies sho4 that 4hen the )nemployed become ineligible for benefits5 the probability of their finding a <ob rises mar3edly. d. All of the above are correct. DIF: ! R F: !"#! &'(: .nemployment and inflation %'*: .nemployment ins)rance

ANS: ( NA%: Analytic MS(: Interpretive !:.

Frictional )nemployment is a. not inevitableE rather5 it can be red)ced to Cero by 4ell#designed p)blic policies. b. not inevitableE rather5 it co)ld be red)ced to Cero if by the elimination of )nemployment ins)rance. c. inevitable5 beca)se at any given time5 <obs are being created in some firms and destroyed in other firms. d. inevitable5 beca)se in some ind)stries5 4ages are al4ays set above the level that brings s)pply and demand into eB)ilibri)m. DIF: ! R F: !"#! &'(: .nemployment and inflation %'*: Frictional )nemployment

ANS: ( NA%: Analytic MS(: Interpretive /$.

2hich of the follo4ing is not correctH a. %he )nemployment rate is an imperfect meas)re of a nation8s overall level of economic 4ell#being. b. Most <ob search in the ..S. economy ta3es place 4itho)t intervention by the government. c. Most economists agree that eliminating )nemployment ins)rance 4o)ld increase the nation8s overall level of 4ell#being. d. 'ther things the same5 co)ntries that offer more genero)s and longer#lasting )nemployment ins)rance benefits are li3ely to have higher )nemployment rates.

ANS: ( DIF: ! R F: !"#! NA%: Analytic &'(: .nemployment and inflation %'*: conomists + .nemployment ins)rance + conomic 4ell#being MS(: Interpretive

Se*$& - Unemployment - +/n/m3m-!a0e La45


+ULT,-LE CHO,CE 1. 2hich of the follo4ing is not correctH a. Frictional )nemployment res)lts from the process of matching 4or3ers and <obs. b. Str)ct)ral )nemployment res)lts 4hen the n)mber of <obs is ins)fficient for the n)mber of 4or3ers. c. Minim)m 4ages are the predominant reason for )nemployment in the ..S. economy. d. 2hen a minim)m#4age la4 forces the 4age to remain above the level that balances s)pply and demand5 it raises the B)antity of labor s)pplied and red)ces the B)antity of labor demanded compared to the eB)ilibri)m level. DIF: ! R F: !"#/ &'(: .nemployment and inflation %'*: .nemployment

ANS: ( NA%: Analytic MS(: Interpretive

(hapter !";.nemployment
!. 2hen a minim)m#4age la4 forces the 4age to remain above the level that balances s)pply and demand5 it a. raises the B)antity of labor s)pplied and raises the B)antity of labor demanded compared to the eB)ilibri)m level. b. raises the B)antity of labor s)pplied and red)ces the B)antity of labor demanded compared to the eB)ilibri)m level. c. red)ces the B)antity of labor s)pplied and raises the B)antity of labor demanded compared to the eB)ilibri)m level. d. red)ces the B)antity of labor s)pplied and red)ces the B)antity of labor demanded compared to the eB)ilibri)m level. DIF: 1 R F: &'(: &abor mar3ets !"#/ %'*: Minim)m 4age

10$

ANS: = NA%: Analytic MS(: Definitional /.

2hen a minim)m#4age la4 forces the 4age to remain above the level that balances s)pply and demand5 the res)lt is a a. shortage of labor and a shortage of <obs. b. shortage of labor and a s)rpl)s of <obs. c. s)rpl)s of labor and a shortage of <obs. d. s)rpl)s of labor and a s)rpl)s of <obs. DIF: ! R F: &'(: &abor mar3ets !"#/ %'*: Minim)m 4age

ANS: ( NA%: Analytic MS(: Interpretive 0.

2hen a minim)m#4age la4 forces the 4age to remain above the level that balances s)pply and demand5 there are a. more 4or3ers 4illing to 4or3 than there are <obs5 so some 4or3ers are )nemployed. b. fe4er 4or3ers 4illing to 4or3 than there are <obs5 so some 4or3ers are )nemployed. c. more 4or3ers 4illing to 4or3 than there are <obs5 so )nemployment decreases. d. fe4er 4or3ers 4illing to 4or3 than there are <obs5 so )nemployment decreases.

ANS: A DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Minim)m 4age + .nemployment MS(: Interpretive 1. Minim)m#4age la4s can 3eep 4ages a. above eB)ilibri)m and ca)se a s)rpl)s of labor. b. above eB)ilibri)m and ca)se a shortage of labor. c. belo4 eB)ilibri)m and ca)se a s)rpl)s of labor. d. belo4 eB)ilibri)m and ca)se a shortage of labor. DIF: ! R F: &'(: &abor mar3ets !"#/ %'*: Minim)m 4age

ANS: A NA%: Analytic MS(: Interpretive 7.

An increase in the minim)m 4age 4o)ld a. increase both the B)antity demanded and the B)antity s)pplied of labor. b. decrease both the B)antity demanded and the B)antity s)pplied of labor. c. increase the B)antity of labor demanded b)t decrease the B)antity of labor s)pplied. d. decrease the B)antity of labor demanded b)t increase the B)antity of labor s)pplied. DIF: ! R F: &'(: &abor mar3ets !"#/ %'*: Minim)m 4age

ANS: D NA%: Analytic MS(: Interpretive 9.

If the minim)m 4age 4ere c)rrently above the eB)ilibri)m 4age5 than a decrease in the minim)m 4age 4o)ld a. increase both the B)antity demanded and the B)antity s)pplied of labor. b. decrease both the B)antity demanded and the B)antity s)pplied of labor. c. increase the B)antity of labor demanded b)t decrease the B)antity of labor s)pplied. d. decrease the B)antity of labor demanded b)t increase the B)antity of labor s)pplied.

101

(hapter !";.nemployment
DIF: ! R F: &'(: &abor mar3ets !"#/ %'*: Minim)m 4age

ANS: ( NA%: Analytic MS(: Interpretive Figure 28-1

".

Refer to F/03re 28-%. At the eB)ilibri)m 4age5 ho4 many 4or3ers are )nemployedH a. $ b. 0$$$ c. 1$$$ d. "$$$ DIF: ! R F: !"#/ &'(: .nemployment and inflation %'*: .nemployment

ANS: A NA%: Analytic MS(: Applicative :.

Refer to F/03re 28-%. At the eB)ilibri)m 4age5 ho4 many 4or3ers are employedH a. $ b. 1$$$ c. 1$$$ d. :$$$ DIF: ! R F: !"#/ &'(: .nemployment and inflation %'*: mployment

ANS: ( NA%: Analytic MS(: Applicative 1$.

Refer to F/03re 28-%. If the government imposes a minim)m 4age of G05 then ho4 many 4or3ers 4ill be )nemployedH a. $ b. /$$$ c. 0$$$ d. 9$$$

ANS: A DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment + Minim)m 4age MS(: Applicative 11. Refer to F/03re 28-%. If the government imposes a minim)m 4age of G05 then ho4 many 4or3ers 4ill be employedH a. /$$$ b. 0$$$ c. 1$$$ d. 9$$$

(hapter !";.nemployment
ANS: ( DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: mployment + Minim)m 4age MS(: Applicative 1!.

10!

Refer to F/03re 28-%. If the government imposes a minim)m 4age of G05 then )nemployment 4ill increase by a. $ 4or3ers. b. !$$$ 4or3ers. c. 0$$$ 4or3ers. d. 1$$$ 4or3ers.

ANS: A DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment + Minim)m 4age MS(: Applicative 1/. Refer to F/03re 28-%. If the government imposes a minim)m 4age of G05 then employment 4ill decrease by a. $ 4or3ers. b. !$$$ 4or3ers. c. /$$$ 4or3ers. d. 0$$$ 4or3ers.

ANS: A DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: mployment + Minim)m 4age MS(: Applicative 10. Refer to F/03re 28-%. If the government imposes a minim)m 4age of G"5 then ho4 many 4or3ers 4ill be )nemployedH a. $ b. /$$$ c. 0$$$ d. 9$$$

ANS: ( DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment + Minim)m 4age MS(: Applicative 11. Refer to F/03re 28-%. If the government imposes a minim)m 4age of G"5 then ho4 many 4or3ers 4ill be employedH a. /$$$ b. 0$$$ c. 1$$$ d. 9$$$

ANS: A DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: mployment + Minim)m 4age MS(: Applicative 17. Refer to F/03re 28-%. If the government imposes a minim)m 4age of G"5 then )nemployment 4ill increase by a. $ 4or3ers. b. !$$$ 4or3ers. c. 0$$$ 4or3ers. d. 9$$$ 4or3ers.

ANS: ( DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment + Minim)m 4age MS(: Applicative 19. Refer to F/03re 28-%. If the government imposes a minim)m 4age of G"5 then employment 4ill decrease by a. $ 4or3ers. b. !$$$ 4or3ers. c. /$$$ 4or3ers. d. 0$$$ 4or3ers.

10/

(hapter !";.nemployment

ANS: = DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: mployment + Minim)m 4age MS(: Applicative 1". Refer to F/03re 28-%. If )nemployment is !$$$ 4or3ers5 then the minim)m 4age m)st be a. G0. b. G1. c. G9. d. G".

ANS: ( DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: .nemployment + Minim)m 4age MS(: Applicative 1:. 2hich of the follo4ing is not correctH a. Minim)m#4age la4s are one reason there is al4ays some )nemployment in the ..S. economy. b. Minim)m#4age la4s affect all 4or3ers. c. Most ..S. 4or3ers have 4ages 4ell above the legal minim)m5 so minim)m#4age la4s do not prevent the 4age from ad<)sting to balance s)pply and demand. d. Minim)m#4age la4s matter most for the least s3illed and least e,perienced members of the labor force5 s)ch as teenagers. DIF: ! R F: &'(: &abor mar3ets !"#/ %'*: Minim)m 4age

ANS: = NA%: Analytic MS(: Interpretive !$.

2hich of the follo4ing is not correctH a. It is only among the least s3illed and least e,perienced members of the labor force that minim)m# 4age la4s ca)se )nemployment. b. %he eB)ilibri)m 4ages of the least s3illed and least e,perienced members of the labor force tend to be lo45 and5 therefore5 are more li3ely to fall belo4 the legal minim)m 4age. c. If the 4age is 3ept belo4 the eB)ilibri)m level for any reason5 the res)lt is )nemployment. d. Minim)m#4age la4s5 )nions5 and efficiency 4ages are all reasons 4ages may be 3ept above the eB)ilibri)m level.

ANS: ( DIF: ! R F: !"#/ NA%: Analytic &'(: &abor mar3ets %'*: Minim)m 4age + .nemployment MS(: Interpretive !1. If the 4age is 3ept above the eB)ilibri)m 4age for any reason5 the res)lt is a. cyclical )nemployment. b. frictional )nemployment. c. seasonal )nemployment. d. str)ct)ral )nemployment. DIF: ! R F: !"#/ &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment

ANS: D NA%: Analytic MS(: Interpretive !!.

2ages in e,cess of their eB)ilibri)m level help e,plain a. frictional b)t not str)ct)ral )nemployment. b. str)ct)ral b)t not frictional )nemployment. c. both frictional and str)ct)ral )nemployment. d. neither frictional nor str)ct)ral )nemployment.

ANS: = DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment + Frictional )nemployment !/.

MS(: Interpretive

2ages in e,cess of their eB)ilibri)m level help e,plain a. str)ct)ral )nemployment b)t not the nat)ral rate of )nemployment. b. the nat)ral rate of )nemployment b)t not str)ct)ral )nemployment. c. both str)ct)ral )nemployment and the nat)ral rate of )nemployment. d. neither str)ct)ral )nemployment nor the nat)ral rate of )nemployment.

(hapter !";.nemployment
ANS: ( DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment + Nat)ral rate of )nemployment !0.

100

MS(: Interpretive

'ther things the same5 an increase in 4ages above their eB)ilibri)m level a. increases frictional )nemployment b)t leaves the nat)ral rate of )nemployment )nchanged. b. increases frictional )nemployment and increases the nat)ral rate of )nemployment. c. increases str)ct)ral )nemployment b)t leaves the nat)ral rate of )nemployment )nchanged. d. increases str)ct)ral )nemployment and increases the nat)ral rate of )nemployment.

ANS: D DIF: ! R F: !"#/ NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment + Nat)ral rate of )nemployment !1.

MS(: Interpretive

2hich of the follo4ing does not create )nemployment by 3eeping 4ages above the eB)ilibri)m levelH a. efficiency 4ages b. <ob search c. minim)m#4age la4s d. )nions DIF: ! R F: !"#/ &'(: .nemployment and inflation %'*: .nemployment

ANS: = NA%: Analytic MS(: Interpretive !7.

2hen the 4age is above the eB)ilibri)m level5 a. the labor mar3et is f)nctioning more efficiently than it other4ise 4o)ld f)nction. b. there is a shortage of labor. c. the B)antity of labor s)pplied e,ceeds the B)antity of labor demanded. d. <ob search is the primary e,planation for the )nemployment that is observed. DIF: ! R F: &'(: &abor mar3ets !"#/ %'*: 2ages

ANS: ( NA%: Analytic MS(: Interpretive !9.

2or3ers searching for <obs that best s)it them is most closely associated 4ith a. cyclical )nemployment. b. frictional )nemployment. c. seasonal )nemployment. d. str)ct)ral )nemployment. DIF: ! R F: !"#/ &'(: .nemployment and inflation %'*: Frictional )nemployment

ANS: = NA%: Analytic MS(: Interpretive !".

2or3ers 4aiting for <obs to open )p is most closely associated 4ith a. cyclical )nemployment. b. frictional )nemployment. c. seasonal )nemployment. d. str)ct)ral )nemployment. DIF: ! R F: !"#/ &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment

ANS: D NA%: Analytic MS(: Interpretive !:.

..S. Department of &abor data sho4 that minim)m#4age 4or3ers tend to be a. yo)ng and less ed)cated. b. yo)ng and more ed)cated. c. old and less ed)cated. d. old and more ed)cated. DIF: 1 R F: !"#/ &'(: .nemployment and inflation %'*: Minim)m 4age

ANS: A NA%: Analytic MS(: Definitional

101
/$.

(hapter !";.nemployment
..S. Department of &abor data sho4 that minim)m#4age 4or3ers tend to be a. more li3ely to be 4or3ing part time and in the comm)nication ind)stry. b. more li3ely to be 4or3ing part time and in the leis)re and hospitality ind)stry. c. more li3ely to be 4or3ing f)ll time and in the comm)nication ind)stry. d. more li3ely to be 4or3ing f)ll time and in the leis)re and hospitality ind)stry. DIF: 1 R F: !"#/ &'(: .nemployment and inflation %'*: Minim)m 4age

ANS: = NA%: Analytic MS(: Definitional

Se*$' - Unemployment - Un/on5 an. Colle*t/6e 7ar0a/n/n0


+ULT,-LE CHO,CE 1. 2hich of the follo4ing is not correctH a. A )nion is a 4or3er association that bargains 4ith employers over 4ages5 benefits5 and 4or3ing conditions. b. .nions play a m)ch larger role in the ..S. labor mar3et no4 than they did in the past. c. .nions play a large role in many )ropean co)ntries. d. A )nion is a type of cartel. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions

ANS: = NA%: Analytic MS(: Interpretive !.

=et4een the 1:0$s and today5 )nion membership in the ..S. a. rose from abo)t one#eighth to one#third of the labor force. b. rose from abo)t one#third to one#half of the labor force. c. fell from abo)t one#half to one#third of the labor force. d. fell from abo)t one#third to one#eighth of the labor force. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions

ANS: D NA%: Analytic MS(: Interpretive /.

In =elgi)m5 Nor4ay5 and S4eden5 the percentage of 4or3ers 4ho belong to )nions is a. almost Cero. b. less than it is in the .nited States. c. abo)t the same as it is in the .nited States. d. greater than it is in the .nited States. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions

ANS: D NA%: Analytic MS(: Interpretive 0.

2hich of the follo4ing is not correctH a. 2hen a )nion is present in a labor mar3et5 4ages are not determined by the eB)ilibri)m of s)pply and demand. b. &i3e any cartel5 a )nion is a gro)p of sellers acting together in the hope of e,erting their <oint mar3et po4er. c. %he process by 4hich )nions and firms agree on the terms of employment is called a stri3e. d. Most 4or3ers in the ..S. economy are not members of a )nion. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions

ANS: ( NA%: Analytic MS(: Interpretive 1.

(ollective bargaining refers to a. the process by 4hich the government sets e,emptions from the minim)m 4age la4. b. setting the same 4age for all employees to prevent conflict among 4or3ers. c. firms coll)ding to set the 4ages of employees in order to 3eep them belo4 eB)ilibri)m. d. the process by 4hich )nions and firms agree on the terms of employment.

(hapter !";.nemployment
ANS: D DIF: 1 R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + (ollective bargaining MS(: Definitional 7. 2hich of the follo4ing is not correctH a. An organiCed 4ithdra4al of labor from a firm by a )nion is called a stri3e. b. %he po4er of a )nion comes from its ability to stri3e if the )nion and the firm do not agree on the terms of employment. c. conomists 4ho st)dy the effects of )nions typically find that )nion 4or3ers earn abo)t !1 to /1 percent more than similar 4or3ers 4ho do not belong to )nions. d. 2or3ers in )nions reap the benefit of collective bargaining5 4hile 4or3ers not in )nions bear some of the cost. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions + Stri3es + conomists

107

ANS: ( NA%: Analytic MS(: Interpretive 9.

conomists have fo)nd that )nion 4or3ers earn 4hat percent more than similar non)nion 4or3ersH a. $ to 1 b. 1 to 1$ c. 1$ to !$ d. !$ to /$ DIF: 1 R F: &'(: &abor mar3ets !"#0 %'*: conomists + .nions + 2ages

ANS: ( NA%: Analytic MS(: Definitional ".

2hen a )nion raises the 4age above the eB)ilibri)m level5 it a. red)ces both the B)antity of labor s)pplied and the B)antity of labor demanded5 res)lting in )nemployment. b. red)ces the B)antity of labor s)pplied and raises the B)antity of labor demanded5 res)lting in )nemployment. c. raises the B)antity of labor s)pplied and red)ces the B)antity of labor demanded5 res)lting in )nemployment. d. raises both the B)antity of labor s)pplied and the B)antity of labor demanded5 res)lting in )nemployment. DIF: 1 R F: &'(: &abor mar3ets !"#0 %'*: .nions + .nemployment

ANS: ( NA%: Analytic MS(: Definitional :.

2hen a )nion bargains s)ccessf)lly 4ith employers5 in that ind)stry5 a. both the B)antity of labor s)pplied and the B)antity of labor demanded increase. b. both the B)antity of labor s)pplied and the B)antity of labor demanded decrease. c. the B)antity of labor s)pplied increases and the B)antity of labor demanded decreases. d. the B)antity of labor demanded increases and the B)antity of labor s)pplied decreases. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions

ANS: ( NA%: Analytic MS(: Interpretive 1$.

2hen a )nion bargains s)ccessf)lly 4ith employers5 in that ind)stry5 a. )nemployment and 4ages increase. b. )nemployment and 4ages decrease. c. )nemployment decreases and 4ages increase. d. )nemployment increases and 4ages decrease.

ANS: A DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + .nemployment + 2ages MS(: Interpretive

109
11.

(hapter !";.nemployment
%he introd)ction of a )nion into an ind)stry a. raises 4ages and employment in that ind)stry. b. lo4ers 4ages and employment in that ind)stry. c. lo4ers 4ages and raises employment in that ind)stry. d. raises 4ages and lo4ers employment in that ind)stry.

ANS: D DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + 2ages + mployment MS(: Interpretive 1!. .nions do not ca)se 4hich of the follo4ingH a. frictional )nemployment b. the 4age to rise above the eB)ilibri)m level c. conflict bet4een insiders 4ho benefit from high )nion 4ages and o)tsiders 4ho do not get the )nion <obs d. red)ced 4ages in non)nioniCed ind)stries

ANS: A DIF: ! R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: .nions + Str)ct)ral )nemployment MS(: Interpretive 1/. .nions contrib)te to a. cyclical )nemployment. b. frictional )nemployment. c. seasonal )nemployment. d. str)ct)ral )nemployment.

ANS: D DIF: ! R F: !"#0 NA%: Analytic &'(: .nemployment and inflation %'*: .nions + Str)ct)ral )nemployment MS(: Interpretive 10. .nions contrib)te to a. frictional b)t not str)ct)ral )nemployment. b. str)ct)ral b)t not frictional )nemployment. c. both frictional and str)ct)ral )nemployment. d. neither frictional nor str)ct)ral )nemployment. = DIF: ! R F: !"#0 Analytic &'(: .nemployment and inflation .nions + Str)ct)ral )nemployment + Frictional )nemployment Interpretive

ANS: NA%: %'*: MS(: 11.

.nions contrib)te to a. str)ct)ral )nemployment b)t not the nat)ral rate of )nemployment. b. the nat)ral rate of )nemployment b)t not str)ct)ral )nemployment. c. both str)ct)ral )nemployment and the nat)ral rate of )nemployment. d. neither str)ct)ral )nemployment nor the nat)ral rate of )nemployment. ( DIF: ! R F: !"#0 Analytic &'(: .nemployment and inflation .nions + Str)ct)ral )nemployment + Nat)ral rate of )nemployment Interpretive

ANS: NA%: %'*: MS(: 17.

.nions a. do not affect the nat)ral rate of )nemployment. b. lo4er the 4ages of )nioniCed 4or3ers. c. raise the profits of )nioniCed firms. d. lo4er the 4ages of non)nioniCed 4or3ers. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions + 2ages

ANS: D NA%: Analytic MS(: Interpretive

(hapter !";.nemployment
19.

10"

2hen )nions raise 4ages in some sectors of the economy5 the s)pply of labor in other sectors of the economy a. decreases5 raising 4ages in ind)stries that are not )nioniCed. b. decreases5 red)cing 4ages in ind)stries that are not )nioniCed. c. increases5 raising 4ages in ind)stries that are not )nioniCed. d. increases5 red)cing 4ages in ind)stries that are not )nioniCed. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions + 2ages

ANS: D NA%: Analytic MS(: Interpretive 1".

S)ppose that telemar3eters are not )nioniCed. If they )nioniCe5 then the s)pply of labor in other sectors of the economy 4ill a. decrease5 raising 4ages in ind)stries that are not )nioniCed. b. decrease5 red)cing 4ages in ind)stries that are not )nioniCed. c. increase5 raising 4ages in ind)stries that are not )nioniCed. d. increase5 red)cing 4ages in ind)stries that are not )nioniCed. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions + 2ages

ANS: D NA%: Analytic MS(: Interpretive 1:.

S)ppose that neither te,tile 4or3ers nor shoema3ers are )nioniCed. If te,tile 4or3ers )nioniCe5 then the s)pply of shoema3ers 4ill a. rise and their 4ages 4ill rise. b. rise and their 4ages 4ill fall. c. fall and their 4ages 4ill fall. d. fall and their 4ages 4ill rise. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions + 2ages

ANS: = NA%: Analytic MS(: Interpretive !$.

S)ppose that b)tchers and ba3ers have no )nions. No4 s)ppose the b)tchers form a )nion. 2hat does this do the labor s)pply of and 4ages of ba3ersH a. It increases the labor s)pply and 4ages of ba3ers. b. It increases the labor s)pply and decreases the 4ages of ba3ers. c. It decreases the labor s)pply and increases the 4ages of ba3ers. d. It decreases the labor s)pply and 4ages of ba3ers. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions + 2ages

ANS: = NA%: Analytic MS(: Interpretive !1.

(onsider t4o labor mar3ets in 4hich <obs are eB)ally attractive in all respects other than the 4age rate. All 4or3ers are eB)ally able to do either <ob. Initially5 both labor mar3ets are perfectly competitive. If a )nion organiCes 4or3ers in one of the mar3ets5 then the 4age rates 4ill tend to a. rise in both mar3ets. b. fall in both mar3ets c. rise for the )nion <obs5 b)t remain )nchanged for the non)nion <obs. d. rise for the )nion <obs and fall for the non)nion <obs. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions + 2ages

ANS: D NA%: Analytic MS(: Interpretive !!.

S)ppose that grocery cler3s and n)rses are not )nioniCed. If the n)rses )nioniCe5 then a. the 4ages of both grocery cler3s and n)rses 4ill rise. b. the 4ages of both grocery cler3s and n)rses 4ill fall. c. the 4ages of grocery cler3s 4ill rise and the 4ages of n)rses 4ill fall. d. the 4ages of n)rses 4ill rise and the 4ages of grocery cler3s 4ill fall. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions + 2ages

ANS: D NA%: Analytic MS(: Interpretive

10:
!/.

(hapter !";.nemployment
2hich of the follo4ing is not correctH a. .nions are e,empt from ..S. antitr)st la4s. b. %he 2agner Act of 1:/1 prevents ..S. employers from interfering 4hen 4or3ers try to organiCe )nions. c. %he National &abor Relations =oard is the ..S. government agency that enforces 4or3ers8 right to )nioniCe. d. Right#to#4or3 la4s prevent firms from hiring permanent replacements for 4or3ers 4ho are on stri3e. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions + Right#to#4or3 la4s

ANS: D NA%: Analytic MS(: Interpretive !0.

%he 2agner Act of 1:/1 a. prevents )nions from acting as cartels. b. allo4s 4or3ers <oining a )nioniCed firm to choose not to <oin the )nion. c. prevents employers from interfering 4hen 4or3ers try to organiCe a )nion. d. prevents firms from hiring permanent replacements for 4or3ers 4ho are on stri3e. DIF: 1 R F: &'(: &abor mar3ets !"#0 %'*: 2agner Act

ANS: ( NA%: Analytic MS(: Definitional !1.

%he National &abor Relations =oard a. enforces antitr)st la4s against )nions. b. enforces 4or3ers- rights to )nioniCe. c. acts as a )nion-s representative in collective bargaining. d. is reB)ired to approve all collective bargaining agreements before they can be enforced.

ANS: = DIF: 1 R F: !"#0 NA%: Analytic &'(: &abor mar3ets %'*: National &abor Relations =oard MS(: Definitional !7. Right#to#4or3 la4s a. g)arantee 4or3ers the right to form )nions. b. give 4or3ers in a )nioniCed firm the right to choose 4hether to <oin the )nion. c. prevent employers from hiring permanent replacements for 4or3ers 4ho are on stri3e. d. prevent 4or3ers from being fired beca)se of increases in 4ages bro)ght abo)t by collective bargaining. DIF: 1 R F: &'(: &abor mar3ets !"#0 %'*: Right#to#4or3 la4s

ANS: = NA%: Analytic MS(: Definitional !9.

In the absence of right#to#4or3 la4s5 4or3ers a. that 4ent on stri3e co)ld be permanently replaced. b. might be reB)ired to <oin the )nion if they 4or3ed for a )nioniCed firm. c. 4o)ld not be able to )nioniCe. d. 4o)ld not be able to stri3e. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: Right#to#4or3 la4s

ANS: = NA%: Analytic MS(: Interpretive !".

2hich of the follo4ing is correctH a. %here is consens)s among economists that )nions are good for the economy. b. %here is consens)s among economists that )nions are bad for the economy. c. %here is consens)s among economists that5 on net5 )nions have almost no impact on macroeconomic variables. d. %here is no consens)s among economists abo)t 4hether )nions are good or bad for the economy. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: conomists + .nions

ANS: D NA%: Analytic MS(: Interpretive

(hapter !";.nemployment
!:. %here is a clear consens)s among economists that )nions are a. good for the economy beca)se they res)lt in higher 4ages for most 4or3ers. b. good for the economy beca)se they are a necessary antidote to the mar3et po4er of employers. c. bad for the economy beca)se they are cartels and therefore detrimental to an efficient allocation of reso)rces. d. None of the above is correctE there is no clear consens)s among economists abo)t 4hether )nions are good or bad for the economy. DIF: ! R F: !"#0 &'(: .nemployment and inflation %'*: conomists + .nions

11$

ANS: D NA%: Analytic MS(: Interpretive /$.

2hich of the follo4ing is not correctH a. .nions raise the 4ages above the level that 4o)ld prevail in competitive mar3ets. b. .nions red)ce the B)antity of labor demanded5 ca)se some 4or3ers to be )nemployed5 and red)ce the 4ages in the rest of the economy. c. (ritics arg)e that the allocation of labor res)lting from )nions is both inefficient and ineB)itable. d. All of the above are correct. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions

ANS: D NA%: Analytic MS(: Interpretive /1.

2hich of the follo4ing is not a contention of advocates of )nionsH a. .nions are a necessary antidote to the mar3et po4er of the firms that hire 4or3ers. b. In the case of a @company to4n5A a )nion may balance the firm8s mar3et po4er and protect the 4or3ers from being at the mercy of the firm8s o4ners. c. %he introd)ction of a )nion benefits all 4or3ers in a firm. d. .nions are important for helping firms respond efficiently to 4or3ers8 concerns. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions

ANS: ( NA%: Analytic MS(: Interpretive /!.

2hich of the follo4ing is correctH a. Nearly all economists believe that )nions are bad for the economy as a 4hole. b. .nions raise 4ages above the competitive eB)ilibri)m level. c. .nions increase the level of employment in )nioniCed firms. d. .nions decrease the level of employment in non)nioniCed firms. DIF: ! R F: &'(: &abor mar3ets !"#0 %'*: .nions

ANS: = NA%: Analytic MS(: Interpretive

Se*$5 - Unemployment - The Theory of Eff/*/en*y !a0e5


+ULT,-LE CHO,CE 1. 2hich of the follo4ing is not a reason economies al4ays e,perience some )nemploymentH a. <ob search b. )nions c. scarcity of reso)rces d. efficiency 4ages DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: .nemployment

ANS: ( NA%: Analytic MS(: Interpretive !.

2hich of the follo4ing is not a reason economies e,perience str)ct)ral )nemploymentH a. <ob search b. )nions c. minim)m#4age la4s d. efficiency 4ages

111

(hapter !";.nemployment
DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment

ANS: A NA%: Analytic MS(: Interpretive /.

2hich of the follo4ing ca)ses of )nemployment is associated 4ith a 4age rate above the mar3et eB)ilibri)m levelH a. minim)m#4age la4s b. )nions c. efficiency 4ages d. All of the above are correct. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment

ANS: D NA%: Analytic MS(: Interpretive 0.

2hich of the follo4ing ca)ses of )nemployment is not associated 4ith a 4age rate above the mar3et eB)ilibri)m levelH a. efficiency 4ages b. <ob search c. minim)m#4age la4s d. )nions DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment

ANS: = NA%: Analytic MS(: Interpretive 1.

If minim)m#4age la4s5 )nions5 efficiency 4ages5 and all other factors that co)ld prevent 4ages from reaching eB)ilibri)m 4ere eliminated5 then there 4o)ld be no a. cyclical )nemployment. b. frictional )nemployment. c. str)ct)ral )nemployment. d. nat)ral rate of )nemployment. DIF: ! R F: !"#1 &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment

ANS: ( NA%: Analytic MS(: Interpretive 7.

Minim)m#4age la4s5 )nions5 and efficiency 4ages contrib)te to a. both str)ct)ral )nemployment and the nat)ral rate of )nemployment. b. neither str)ct)ral )nemployment nor the nat)ral rate of )nemployment. c. str)ct)ral )nemployment5 b)t not the nat)ral rate of )nemployment. d. the nat)ral rate of )nemployment5 b)t not str)ct)ral )nemployment.

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: Str)ct)ral )nemployment + Nat)ral rate of )nemployment 9.

MS(: Interpretive

S)ppose that efficiency 4ages become more common in the economy. conomists 4o)ld predict that this 4o)ld a. increase the B)antity demanded and decrease the B)antity s)pplied of labor5 thereby decreasing the nat)ral rate of )nemployment. b. decrease the B)antity demanded and increase the B)antity s)pplied of labor5 thereby increasing the nat)ral rate of )nemployment. c. increase the B)antity demanded and decrease the B)antity s)pplied of labor5 thereby increasing the nat)ral rate of )nemployment. d. decrease the B)antity demanded and increase the B)antity s)pplied of labor5 thereby decreasing the nat)ral rate of )nemployment.

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: fficiency 4ages + Nat)ral rate of )nemployment

MS(: Interpretive

(hapter !";.nemployment
". fficiency 4ages a. increase frictional )nemployment by 3eeping 4ages above eB)ilibri)m. b. decrease frictional )nemployment by 3eeping 4ages at eB)ilibri)m. c. increase str)ct)ral )nemployment by 3eeping 4ages above eB)ilibri)m. d. decrease str)ct)ral )nemployment by 3eeping 4ages at eB)ilibri)m.

11!

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: fficiency 4ages + Str)ct)ral )nemployment MS(: :.

Interpretive

Sectoral changes a. create frictional )nemployment5 4hile firms paying 4ages above eB)ilibri)m to attract a better pool of candidates creates str)ct)ral )nemployment. b. create str)ct)ral )nemployment5 4hile firms paying 4ages above eB)ilibri)m to attract a better pool of candidates creates frictional )nemployment. c. and firms paying 4ages above eB)ilibri)m to attract a better pool of candidates both create str)ct)ral )nemployment. d. and firms paying 4ages above eB)ilibri)m to attract a better pool of candidates both create frictional )nemployment.

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: fficiency 4ages + Sectoral shifts + Frictional )nemployment + Str)ct)ral )nemployment MS(: Interpretive 1$. Dob search a. and firms paying 4ages above eB)ilibri)m to improve 4or3er health both create frictional )nemployment. b. creates frictional )nemployment5 4hile firms paying 4ages above eB)ilibri)m to improve 4or3er health creates str)ct)ral )nemployment. c. creates str)ct)ral )nemployment5 4hile firms paying 4ages above eB)ilibri)m to improve 4or3er health creates frictional )nemployment. d. and firms paying 4ages above eB)ilibri)m to improve 4or3er health both create str)ct)ral )nemployment.

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: fficiency 4ages + Dob search + Frictional )nemployment + Str)ct)ral )nemployment MS(: Interpretive 11. Minim)m#4age la4s a. create frictional )nemployment5 4hile firms paying 4ages above eB)ilibri)m to red)ce 4or3er t)rnover creates str)ct)ral )nemployment. b. create str)ct)ral )nemployment5 4hile firms paying 4ages above eB)ilibri)m to red)ce 4or3er t)rnover creates frictional )nemployment. c. and firms paying 4ages above eB)ilibri)m to red)ce 4or3er t)rnover both create str)ct)ral )nemployment. d. and firms paying 4ages above eB)ilibri)m to red)ce 4or3er t)rnover both create frictional )nemployment.

ANS: ( DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: fficiency 4ages + Minim)m 4age + Frictional )nemployment + Str)ct)ral )nemployment MS(: Interpretive

11/
1!.

(hapter !";.nemployment
.nions a. and firms paying 4ages above eB)ilibri)m to improve 4or3er effort both create frictional )nemployment. b. creates frictional )nemployment5 4hile firms paying 4ages above eB)ilibri)m to improve 4or3er effort creates str)ct)ral )nemployment. c. creates str)ct)ral )nemployment5 4hile firms paying 4ages above eB)ilibri)m to improve 4or3er effort creates frictional )nemployment. d. and firms paying 4ages above eB)ilibri)m to improve 4or3er effort both create str)ct)ral )nemployment.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: .nemployment and inflation %'*: fficiency 4ages + .nions + Frictional )nemployment + Str)ct)ral )nemployment MS(: Interpretive 1/. %he theory of efficiency 4ages e,plains 4hy a. setting 4ages at the eB)ilibri)m level may increase )nemployment. b. it may be in the best interest of firms to offer 4ages that are above the eB)ilibri)m level. c. the most efficient 4ay to pay 4or3ers is to pay them according to their s3ills. d. it is efficient for firms to set 4ages at the eB)ilibri)m level. DIF: ! R F: &'(: &abor mar3ets !"#1 %'*: fficiency 4ages

ANS: = NA%: Analytic MS(: Interpretive 10.

%he theory of efficiency 4ages provides a possible e,planation as to 4hy a. 4or3ers form )nions. b. firms sho)ld try to red)ce s)rpl)ses of labor. c. firms may be inclined to 3eep their 4or3ers8 4ages above the eB)ilibri)m level. d. firms may be inclined to 3eep their 4or3ers8 4ages belo4 the eB)ilibri)m level. DIF: ! R F: &'(: &abor mar3ets !"#1 %'*: fficiency 4ages

ANS: ( NA%: Analytic MS(: Interpretive 11.

fficiency 4ages5 minim)m#4age la4s5 and )nions all a. 3eep 4ages belo4 the eB)ilibri)m level5 ca)sing a shortage of labor. b. 3eep 4ages belo4 the eB)ilibri)m level5 ca)sing a s)rpl)s of labor. c. 3eep 4ages above the eB)ilibri)m level5 ca)sing a shortage of labor. d. 3eep 4ages above the eB)ilibri)m level5 ca)sing a s)rpl)s of labor. !"#1 MS(: Interpretive

ANS: D DIF: ! R F: NA%: Analytic &'(: &abor mar3ets %'*: Minim)m 4age + .nions + fficiency 4ages 17.

Minim)m#4age la4s and )nions are similar to each other b)t different from efficiency 4ages in that minim)m#4age la4 and )nions a. ca)se )nemployment5 b)t efficiency 4ages do not. b. ca)se the B)antity of labor s)pplied to e,ceed the B)antity of labor demanded5 b)t efficiency 4ages do not. c. ca)se 4ages to be above the eB)ilibri)m level. d. prevent firms from lo4ering 4ages in the presence of a s)rpl)s of 4or3ers. !"#1 MS(: Interpretive

ANS: D DIF: ! R F: NA%: Analytic &'(: &abor mar3ets %'*: Minim)m 4age + .nions + fficiency 4ages 19.

fficiency#4age theory s)ggests that paying a. lo4 4ages might be profitable beca)se they raise the efficiency of a firm8s 4or3ers. b. lo4 4ages might be profitable beca)se they lo4er the efficiency of a firm8s 4or3ers. c. high 4ages might be profitable beca)se they raise the efficiency of a firm8s 4or3ers. d. high 4ages might be profitable beca)se they lo4er the efficiency of a firm8s 4or3ers.

(hapter !";.nemployment
ANS: ( NA%: Analytic MS(: Interpretive 1". DIF: ! R F: &'(: &abor mar3ets !"#1 %'*: fficiency 4ages

110

I)inn5 the ( ' of a corporation operating in a relatively poor co)ntry 4here 4ages are lo45 decides to raise the 4ages of her 4or3ers even tho)gh she faces an e,cess s)pply of labor. Fer decision a. might increase profits if it means that the 4age is high eno)gh for her 4or3ers to eat a n)tritio)s diet that ma3es them more prod)ctive. b. 4ill help eliminate the e,cess s)pply of labor. c. may ca)se her 4or3ers to increase shir3ing. d. All of the above are correct.

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er health MS(: Applicative 1:. %he efficiency#4age theory of 4or3er health is a. more relevant for e,plaining )nemployment in less developed co)ntries than in rich co)ntries. b. more relevant for e,plaining )nemployment in rich co)ntries than in less developed co)ntries. c. eB)ally relevant for e,plaining )nemployment in less developed co)ntries and in rich co)ntries. d. not relevant for e,plaining )nemployment.

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er health MS(: Interpretive !$. (harlie is the o4ner of a firm that prod)ces bottled 4ater in 2ashington state. %here are many other s)ch firms in the area. (harlie decides that if he pays his 4or3ers a 4age higher than the going mar3et 4age5 his profits 4ill increase. 2hich of the follo4ing is a li3ely e,planation for his decisionH a. %he higher the 4age5 the less often his 4or3ers 4ill choose to leave his firm. b. %he higher the 4age5 the lo4er 4ill be the cost of obtaining needed s)pplies. c. %he higher the 4age5 the more he can charge for his 4ater. d. %he higher the 4age5 the more he 4ill have to monitor his 4or3ers for shir3ing. !"#1 MS(: Applicative

ANS: A DIF: ! R F: NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er t)rnover !1.

%he efficiency#4age theory of 4or3er t)rnover s)ggests that firms 4ith a. higher t)rnover 4ill have higher prod)ction costs and higher profits. b. higher t)rnover 4ill have higher prod)ction costs and lo4er profits. c. higher t)rnover 4ill have lo4er prod)ction costs and higher profits. d. higher t)rnover 4ill have lo4er prod)ction costs and lo4er profits. !"#1 MS(: Interpretive

ANS: = DIF: ! R F: NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er t)rnover !!.

Ma,ine5 the o4ner of a f)rnit)re company5 decides to raise the 4ages of her 4or3ers even tho)gh she faces an e,cess s)pply of labor. Fer decision a. might increase profits if it attracts a better pool of 4or3ers to apply for her firm8s <obs. b. 4ill increase the e,cess s)pply of labor. c. may increase the B)ality of her 4or3 force. d. All of the above are correct.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er B)ality MS(: Applicative

111
!/.

(hapter !";.nemployment
llen decides to hire some additional 4or3ers for her vinyl siding factory. %he eB)ilibri)m 4age is G10 per ho)r. fficiency 4age theory s)ggests that it is reasonable for llen to offer a. G10 per ho)r. b. less than G10 per ho)r5 since some people 4o)ld be 4illing to 4or3 for less. c. less than G10 an ho)r to prevent shir3ing. d. more than G10 per ho)r5 so as to attract a better pool of applicants.

ANS: D DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er B)ality MS(: Applicative !0. %he efficiency#4age theory of 4or3er B)ality s)ggests that if firms respond to a s)rpl)s of labor by red)cing the 4age5 then a. the most competent applicants 4ill li3ely apply for that firm8s <obs. b. the most competent applicants 4ill li3ely not apply for that firm8s <obs. c. )nemployment 4ill increase. d. the B)ality of the firm8s 4or3 force 4ill increase.

ANS: = DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er B)ality MS(: Interpretive !1. Daisy is the ne4ly appointed ( ' of a company that man)fact)res (D drives on an assembly line. Fer staff has told her that the o)tp)t the firm prod)ces5 given the n)mber of 4or3ers employed5 indicates that some 4or3ers may be shir3ing. According to efficiency 4age theory5 4hat sho)ld she doH a. pay all 4or3ers more than the eB)ilibri)m 4age rate b. pay all 4or3ers belo4 the eB)ilibri)m 4age rate to ma3e )p for the loss from shir3ing c. ma3e s)re that 4or3ers are getting paid e,actly the eB)ilibri)m 4age rate d. pay bon)ses to 4or3ers 4ho report the shir3ing of other 4or3ers

ANS: A DIF: ! R F: !"#1 NA%: Analytic &'(: &abor mar3ets %'*: fficiency 4ages + 2or3er effort MS(: Applicative !7. A firm may pay efficiency 4ages in an attempt to a. red)ce incentives to shir3. b. red)ce t)rnover. c. attract a 4ell#B)alified pool of applicants. d. All of the above are correct. DIF: ! R F: &'(: &abor mar3ets !"#1 %'*: fficiency 4ages

ANS: D NA%: Analytic MS(: Interpretive !9.

2hich of the follo4ing is not a reason that paying efficiency 4ages may increase a firm-s profitH a. fficiency 4ages increase 4or3er health and therefore increase 4or3er prod)ctivity. b. fficiency 4ages decrease 4or3er t)rnover and therefore decrease hiring and training costs. c. fficiency 4ages decrease 4or3er shir3ing and therefore increase 4or3er prod)ctivity. d. fficiency 4ages decrease a co)ntry-s nat)ral rate of )nemployment and therefore increase its standard of living. DIF: ! R F: &'(: &abor mar3ets !"#1 %'*: fficiency 4ages

ANS: D NA%: Analytic MS(: Interpretive !".

*ollee is the ( ' of a corporation that hires non)nion labor. According to the theory of efficiency 4ages5 if she decides to pay her 4or3ers more than the competitive eB)ilibri)m 4age5 then a. the profits of her firm might increase. b. the higher 4ages 4ill ind)ce her 4or3ers to shir3. c. the t)rnover of her 4or3ers may increase. d. she 4ill face a shortage of labor. DIF: ! R F: &'(: &abor mar3ets !"#1 %'*: fficiency 4ages

ANS: A NA%: Analytic MS(: Applicative

(hapter !";.nemployment
!:. Fo)r employers have <)stified their actions as follo4s. 2hose logic is not consistent 4ith the logic of efficiency 4age theoryH a. Day develops a ne4 assembly line technology that limits the amo)nt of shir3ing 4or3ers can do5 so he red)ces 4hat he pays his employees so as to ma3e it closer to the eB)ilibri)m 4age. b. Lay pays her 4or3ers less than the eB)ilibri)m 4age so they 4on-t have the time or money to loo3 for 4or3 some4here else. c. Ray pays his 4or3ers in a developing co)ntry more than the going 4age hoping that they 4ill get a better diet and so be more prod)ctive. d. None of the above is consistent 4ith the logic of efficiency 4age theory. DIF: ! R F: &'(: &abor mar3ets !"#1 %'*: fficiency 4ages

117

ANS: = NA%: Analytic MS(: Applicative /$.

In the early 1:$$s5 Fenry Ford introd)ced a. a high#4age policy5 and this policy prod)ced many of the effects predicted by efficiency#4age theory. b. a high#4age policy5 and this policy prod)ced none of the effects predicted by efficiency#4age theory. c. a lo4#4age policy5 and this policy prod)ced many of the effects predicted by efficiency#4age theory. d. a lo4#4age policy5 and this policy prod)ced none of the effects predicted by efficiency#4age theory. DIF: ! R F: &'(: &abor mar3ets !"#1 %'*: fficiency 4ages

ANS: A NA%: Analytic MS(: Interpretive