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Exam 9: Unemployment and Its Natural Rate

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Question 31

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April is the CEO of a toy company that hires non-union labour. According to the theory of efficiency wages, if she decides to pay her workers more than the competitive equilibrium wage, what is most likely to happen?

A) The profits of her firm may increase.
B) The higher wages will induce her workers to shirk their responsibilities.
C) The turnover of her workers may increase.
D) She will face a shortage of quality workers.

E) A) and D)
F) B) and C)

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Question 32

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How is a college student who is not working or looking for a job counted?

A) as neither employed nor part of the labour force
B) as unemployed and in the labour force
C) as unemployed, but not in the labour force
D) as employed and in the labour force

E) C) and D)
F) B) and D)

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Question 33

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Suppose the market for landscape workers in Kitchener, Ontario, can be described by the following labour demand and supply equations: LD = 340 - 10w and LS = 100 + 20w. a) Calculate the equilibrium wage and employment in this market. b) Suppose the local government passes a bill requiring all employers in this industry to provide bottled water to each worker to protect them from hot weather. This has been estimated to cost employers $1 per worker per hour. This way, workers do not need to purchase water by themselves, so that the bill effectively increases the wage by $1 per hour. What are the new labour demand and supply equations? c) Calculate the new equilibrium wage and employment. Draw a graph to show the change.

Suppose the summer labour market for construction workers in the city of Red Deer is described by the equations LD = 500 - 10w and LS = -100 + 10w, where L is the number of workers and w is hourly wage. a) Draw the labour supply and demand curves. b) Find the equilibrium wage and employment. c) How much is the unemployment rate in equilibrium? d) Suppose that 50 less workers are needed in winter in equilibrium compared to the summer equilibrium employment. Calculate the winter equilibrium wage, and show in a graph the winter labour market model compared to the summer one.

How does Statistics Canada define the unemployment rate?

The government operates programs for job training and job information intended to reduce unemployment. Which statement best describes how economists feel about such programs?

-Refer to Table 9-1. What is the adult female labour-force participation rate in Bolivar?

What is most likely to happen when someone becomes unemployed?

In a year when net employment growth is zero, approximately how many employees are moving from failing to growing firms?

Prime Minister Bigego is running for re-election against Finance Minister Pander. Bigego proclaims that more people are working now than when he took office. Pander says that the unemployment rate is higher now than when Bigego took office. What can you conclude?

What do the laws governing the activity of labour unions achieve?

In 1914, Henry Ford began paying his workers $5 per day, about twice the going wage. As a result, turnover and absenteeism fell, and productivity and profits rose.

Consider the following labour data compiled by a government agency: June 2019 July 2019 June to July 2019 July 2018 to July 2019 Seasonally adjusted in thousands in thousands change in thousands Both sexes, 15 years and over Population 30 466.3 30 508.7 42.4 449.9 Labour force 20 531.5 20 541.0 9.5 340.0 Employment 18 908.8 18898.6 -10.2 443.1 Unemployment 1 622.7 1 642.3 19.6 -93.1 a. Between July 2018 and July 2019, employment has increased by 443,100 workers, but the labour force increased by only 340,000 workers. Explain the difference in these numbers. Is it possible that the increase in labour force is greater than the increase in employment? b. During the same period, employment increased by 443,100 workers, but unemployment decreased by only 93,100. Are these data plausible? How could this difference be explained?

What does the theory of efficiency wages explain?

What is cyclical unemployment closely associated with?

-Refer to Table 9-1. What is the adult female population in Bolivar?

Which cause of unemployment is NOT associated with an excess supply of labour?

Unemployment due to job search is best classified as cyclical unemployment.

-Refer to Table 9-1. What is the adult male population in Bolivar?

-Refer to Table 9-1. What is the adult female labour force in Bolivar?