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The natural rate of unemployment is constant over time.

A) True
B) False

Correct Answer

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Which of the following is an explanation for the existence of frictional unemployment?


A) efficiency wages
B) minimum-wage laws
C) unions
D) job search

E) None of the above
F) A) and D)

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Suppose that dental hygienists are unionized in the eastern region of the country but not in the western region. If the unionized workers in the eastern region abolished their unions, employment


A) and wages of dental hygienists in the eastern region would rise.
B) of dental hygienists in the eastern region would rise, but wages of dental hygienists in the eastern region would fall.
C) and wages of dental hygienists in the eastern region would fall.
D) of dental hygienists in the eastern region would fall, but wages of dental hygienists in the eastern region would rise.

E) None of the above
F) A) and D)

Correct Answer

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A firm may pay efficiency wages in an attempt to


A) reduce incentives to shirk.
B) reduce turnover.
C) attract a well-qualified pool of applicants.
D) All of the above are correct.

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

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When job search is the explanation for unemployment, workers are searching for the jobs that best suit their tastes and skills, but when the wage is above the equilibrium level, the quantity of labor supplied exceeds the quantity of labor demanded, and workers are unemployed because they are waiting for jobs to open up.

A) True
B) False

Correct Answer

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Noah is an unpaid stay-at-home father who is not currently searching for paid work. Pete is a full-time student who is not looking for a job. Who is included in the labor force by the Bureau of Labor Statistics?


A) only Noah
B) only Pete
C) both Noah and Pete
D) neither Noah nor Pete

E) None of the above
F) All of the above

Correct Answer

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Anna recently graduated from college with a degree in electrical engineering, but she has not yet started working. To be counted as "unemployed" she


A) does not have to have looked for work.
B) must have looked for work no more than a week ago.
C) must have looked for work no more than four weeks ago.
D) must have looked for work no more than twelve weeks ago.

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

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The labor-force participation rate equals the percentage of the total adult population that is in the labor force.

A) True
B) False

Correct Answer

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It is only among the least skilled and least experienced members of the labor force that minimum-wage laws cause unemployment.

A) True
B) False

Correct Answer

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Sheila is on a temporary layoff from her automobile factory job but has not looked for work in the last four weeks. The Bureau of Labor Statistics counts Sheila as


A) unemployed and in the labor force.
B) unemployed and not in the labor force.
C) employed and in the labor force.
D) employed and not in the labor force.

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

Correct Answer

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Which of the following is not correct?


A) When a union is present in a labor market, wages may not be determined by the equilibrium of supply and demand.
B) Like any cartel, a union is a group of sellers acting together in the hope of exerting their joint market power.
C) When unions raise wages above equilibrium, the quantity of labor supplied decreases, and the quantity of labor demanded increases.
D) Most workers in the U.S. economy are not members of a union.

E) A) and D)
F) None of the above

Correct Answer

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Suppose that efficiency wages become more common in the economy. Imposing efficiency wages


A) increases the quantity demanded and decreases the quantity supplied of labor.
B) decreases the quantity demanded and increases the quantity supplied of labor
C) increases the quantity demanded and decreases the quantity supplied of labor
D) decreases the quantity demanded and. increases the quantity supplied of labor

E) B) and D)
F) None of the above

Correct Answer

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Which of the following is correct?


A) The Bureau of Labor Statistics uses data collected from those applying for unemployment insurance to compute the unemployment rate.
B) The labor force includes all adults who are able to work.
C) Unpaid homemakers are counted as "employed" by the Bureau of Labor Statistics.
D) People working part time are counted as "employed" by the Bureau of Labor Statistics.

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

Correct Answer

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The unemployment rate reported by the Bureau of Labor Statistics clearly understates the true unemployment rate.

A) True
B) False

Correct Answer

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Figure 28-3 Figure 28-3 -Refer to Figure 28-3. If the government imposes a minimum wage of $8, then unemployment will increase by A) 0 workers. B) 2,000 workers. C) 4,000 workers. D) 7,000 workers. -Refer to Figure 28-3. If the government imposes a minimum wage of $8, then unemployment will increase by


A) 0 workers.
B) 2,000 workers.
C) 4,000 workers.
D) 7,000 workers.

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

Correct Answer

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The deviation of unemployment from its natural rate is called


A) the normal rate of unemployment.
B) deviant unemployment.
C) cyclical unemployment.
D) fluctuating unemployment.

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

Correct Answer

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Unions contribute to


A) cyclical unemployment.
B) frictional unemployment.
C) seasonal unemployment.
D) structural unemployment.

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

Correct Answer

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Table 28-7 Below is data about the labor market in the city of Productionville. Table 28-7 Below is data about the labor market in the city of Productionville. -Refer to Table 28-7. If the local government imposed a minimum wage of $4 in Productionville, how many people would be unemployed? A) 0 B) 2,000 C) 3,000 D) 10,000 -Refer to Table 28-7. If the local government imposed a minimum wage of $4 in Productionville, how many people would be unemployed?


A) 0
B) 2,000
C) 3,000
D) 10,000

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

Correct Answer

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Because people move into and out of the labor force so often, statistics on unemployment are difficult to interpret.

A) True
B) False

Correct Answer

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Frictional unemployment can be the consequence of


A) workers leaving existing jobs to find ones they like better.
B) one industry declining while another is growing.
C) changes in the working conditions offered by competing firms.
D) All of the above are correct.

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

Correct Answer

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