Question 1

Most of the economy's structural unemployment problem is attributable to:

Accepted Answer

A)   relatively large numbers of workers who are jobless for relatively long periods of time
B)   relatively large numbers of workers who are jobless for relatively short periods of time
C)   relatively few workers who are jobless for relatively long periods of time
D)   relatively few workers who are jobless for relatively short periods of timeE) A) and B)
F) A) and C)

Question 2

Surplus labour in the market creates pressure to increase market wages, in the absence of minimum-wage legislation.

Accepted Answer

A) True 
 B)False

Question 3

According to the theory of efficiency wages, firms operate less efficiently if wages are above the equilibrium level.

Accepted Answer

A) True 
 B)False

Question 4

If David recently graduated and is looking for a job, then, ceteris paribus, the unemployment rate will fall and the labour-force participation rate will fall.

Accepted Answer

A) True 
 B)False

Question 5

The natural rate of unemployment is:

Accepted Answer

A)   unchanging
B)   inevitable
C)   always increasing
D)   affected by minimum wage lawsE) A) and B)
F) C) and D)

Question 6

Which of the following equations is correct?

Accepted Answer

A)   Labour force = Population - Labour not in the labour force
B)   Labour force = Population - Number of unemployed
C)   Labour force = Number of employed + Number of unemployed
D)   Labour force = Adult population - Number of unemployedE) A) and C)
F) B) and C)

Question 7

What is the theory of efficiency wages?

Accepted Answer

According to the theory of efficiency wa...

Question 8

Explain when minimum laws are binding and result in unemployment.

Accepted Answer

When the minimum wage is set a...

Question 9

If an unemployed person stops looking for work, then, ceteris paribus:

Accepted Answer

A)   the labour-force participation rate decreases
B)   the size of the labour force falls
C)   the labour-force participation rate increases
D)   both A and B are correctE) B) and C)
F) A) and B)

Question 10

In each of the following situations, explain why there is asymmetric information, and identify the problem of adverse selection.
a. The sale of life insurance
b. The sale of used computers

Accepted Answer

a. Individuals know more about the risks...

Question 11

In 2010 in Australia, 11.1497 million people were employed, and 0.629 million people were unemployed. The adult population was 18.014.150 million. Therefore, the labour force was:

Accepted Answer

A)   5.92 million
B)   11.012 million
C)   11.778 million
D)   16.324 millionE) A) and D)
F) None of the above

Question 12

Which of the following contributes to the natural rate of unemployment?

Accepted Answer

A)   Unions
B)   Efficiency wages
C)   Job search
D)   All of the aboveE) All of the above
F) A) and C)

Question 13

If the minimum wage is set above the equilibrium wage level, then less people could be hired compared with the equilibrium level.

Accepted Answer

A) True 
 B)False

Question 14

Suppose that a firm is faced with an excess supply of workers. What would the firm do? Explain with standard economic theory and with efficiency wage theory.

Accepted Answer

a. Standard economic theory: assuming a ...

Question 15

According to the theory of efficiency wages:

Accepted Answer

A)   firms may choose to pay a wage above the competitive equilibrium level to reduce worker turnover
B)   firms will pay a higher wage to impose a cost on shirking
C)   firms will pay a high wage to provide an incentive to work hard
D)   all of the aboveE) B) and C)
F) A) and B)

Question 16

What is the distinction between the natural rate of unemployment and cyclical unemployment?

Accepted Answer

The natural rate of unemployment is the ...

Question 17

An economy's natural rate of unemployment refers to the lowest rate of unemployment the economy experiences over the business cycle.

Accepted Answer

A) True 
 B)False

Question 18

Unemployment rate is:

Accepted Answer

A)   Number of unemployed × 100Population
B)   Number of unemployed × 100Adult population
C)   Number of unemployed × 100Labour force
D)   Number of unemployed × 100Number of employedE) All of the above
F) A) and B)

Question 19

Identify the principal, the agent and the moral hazard inherent in each of the following situations.
a. In order to reduce personal injury claims, insurance companies successfully lobby legislators to pass laws requiring the use of seatbelts in automobiles.
b. A university provides free employee health insurance, which reduces the direct cost to the faculty and staff of visiting the doctor and the dentist.

Accepted Answer

a. The principal is the insurance compan...

Exam 28: The Natural Rate of Unemployment

Surplus labour in the market creates pressure to increase market wages, in the absence of minimum-wage legislation.

Correct Answer
verified

Explain when minimum laws are binding and result in unemployment.

Correct Answer
verified
When the minimum wage is set a...
View Answer

If the minimum wage is set above the equilibrium wage level, then less people could be hired compared with the equilibrium level.

Correct Answer
verified

Unemployment rate is:

Correct Answer
verified

What is the distinction between the natural rate of unemployment and cyclical unemployment?

Correct Answer
verified
The natural rate of unemployment is the ...
View Answer

The natural rate of unemployment is:

Correct Answer
verified

Which of the following contributes to the natural rate of unemployment?

Correct Answer
verified

Which of the following equations is correct?

Correct Answer
verified

In 2010 in Australia, 11.1497 million people were employed, and 0.629 million people were unemployed. The adult population was 18.014.150 million. Therefore, the labour force was:

Correct Answer
verified

Correct Answer
verified
a. The principal is the insurance compan...
View Answer

If an unemployed person stops looking for work, then, ceteris paribus:

Correct Answer
verified

According to the theory of efficiency wages:

Correct Answer
verified

An economy's natural rate of unemployment refers to the lowest rate of unemployment the economy experiences over the business cycle.

Correct Answer
verified

What is the theory of efficiency wages?

Correct Answer
verified
According to the theory of efficiency wa...
View Answer

In each of the following situations, explain why there is asymmetric information, and identify the problem of adverse selection. a. The sale of life insurance b. The sale of used computers

Correct Answer
verified
a. Individuals know more about the risks...
View Answer

If David recently graduated and is looking for a job, then, ceteris paribus, the unemployment rate will fall and the labour-force participation rate will fall.

Correct Answer
verified

Suppose that a firm is faced with an excess supply of workers. What would the firm do? Explain with standard economic theory and with efficiency wage theory.

Correct Answer
verified
a. Standard economic theory: assuming a ...
View Answer

Most of the economy's structural unemployment problem is attributable to:

Correct Answer
verified

According to the theory of efficiency wages, firms operate less efficiently if wages are above the equilibrium level.

Correct Answer
verified

Exam 28: The Natural Rate of Unemployment

Surplus labour in the market creates pressure to increase market wages, in the absence of minimum-wage legislation.

Correct AnswerverifiedShow Answer

Explain when minimum laws are binding and result in unemployment.

Correct AnswerverifiedWhen the minimum wage is set a...View AnswerShow Answer

If the minimum wage is set above the equilibrium wage level, then less people could be hired compared with the equilibrium level.

Correct AnswerverifiedShow Answer

Unemployment rate is:

Correct AnswerverifiedShow Answer

What is the distinction between the natural rate of unemployment and cyclical unemployment?

Correct AnswerverifiedThe natural rate of unemployment is the ...View AnswerShow Answer

The natural rate of unemployment is:

Correct AnswerverifiedShow Answer

Which of the following contributes to the natural rate of unemployment?

Correct AnswerverifiedShow Answer

Which of the following equations is correct?

Correct AnswerverifiedShow Answer

In 2010 in Australia, 11.1497 million people were employed, and 0.629 million people were unemployed. The adult population was 18.014.150 million. Therefore, the labour force was:

Correct AnswerverifiedShow Answer

Correct Answerverifieda. The principal is the insurance compan...View AnswerShow Answer

If an unemployed person stops looking for work, then, ceteris paribus:

Correct AnswerverifiedShow Answer

According to the theory of efficiency wages:

Correct AnswerverifiedShow Answer

An economy's natural rate of unemployment refers to the lowest rate of unemployment the economy experiences over the business cycle.

Correct AnswerverifiedShow Answer

What is the theory of efficiency wages?

Correct AnswerverifiedAccording to the theory of efficiency wa...View AnswerShow Answer

In each of the following situations, explain why there is asymmetric information, and identify the problem of adverse selection. a. The sale of life insurance b. The sale of used computers

Correct Answerverifieda. Individuals know more about the risks...View AnswerShow Answer

If David recently graduated and is looking for a job, then, ceteris paribus, the unemployment rate will fall and the labour-force participation rate will fall.

Correct AnswerverifiedShow Answer

Suppose that a firm is faced with an excess supply of workers. What would the firm do? Explain with standard economic theory and with efficiency wage theory.

Correct Answerverifieda. Standard economic theory: assuming a ...View AnswerShow Answer

Most of the economy's structural unemployment problem is attributable to:

Correct AnswerverifiedShow Answer

According to the theory of efficiency wages, firms operate less efficiently if wages are above the equilibrium level.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
When the minimum wage is set a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The natural rate of unemployment is the ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. The principal is the insurance compan...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
According to the theory of efficiency wa...
View Answer

Correct Answer
verified
a. Individuals know more about the risks...
View Answer

Correct Answer
verified

Correct Answer
verified
a. Standard economic theory: assuming a ...
View Answer

Correct Answer
verified

Correct Answer
verified