Question 1

In a particular labor market, the demand for labor is given by W = 20 - (1 / 100) L, and the supply of labor is given by W = 4 + (1 / 100) L, where W is the wage rate and L is the number of workers. The equilibrium wage is _____, and the equilibrium number of workers is _____.

Accepted Answer

A)   $10; 1,000
B)   $12; 800
C)   $8; 1,200
D)   $20; 1,000E) C) and D)
F) B) and D)

Question 2

Use the following to answer questions 
-(Table: Employment Data)  Look at the table Employment Data. The unemployment rate is:

Accepted Answer

A)   6.25%.
B)   6.45%.
C)   9.09%.
D)   9.37%.E) None of the above
F) B) and C)

Question 3

If the nominal interest rate is 4% and the inflation rate is 1%, then the real interest rate is 5%.

Accepted Answer

A) True 
 B)False

Question 4

Use the following to answer questions 
Figure: The Minimum Wage 3 leads to unemployment of: A)  Q3 - Q1. B)  Q3 - Q2. C)  Q4 - Q1. D)  Q4 - Q2." class="answers-bank-image d-inline" rel="preload" >
-(Figure: The Minimum Wage)  Look at the accompanying figure on the labor market. The binding minimum wage of P3 leads to unemployment of:

Accepted Answer

A)   Q3 - Q1.
B)   Q3 - Q2.
C)   Q4 - Q1.
D)   Q4 - Q2.E) B) and C)
F) A) and C)

Question 5

A person who has no job but is looking for one is:

Accepted Answer

A)   unemployed.
B)   a discouraged worker.
C)   part of the labor force.
D)   unemployed and part of the labor force.E) C) and D)
F) None of the above

Question 6

The nominal interest rate equals the real interest rate:

Accepted Answer

A)   times the rate of inflation.
B)   minus the rate of inflation.
C)   plus the rate of inflation.
D)   when inflation is correctly anticipated.E) B) and C)
F) A) and B)

Question 7

If deflation occurs and your income is fixed, your real income:

Accepted Answer

A)   will fall.
B)   will go up.
C)   will still be equal to your nominal income.
D)   is constant.E) B) and C)
F) A) and D)

Question 8

In general, for the U.S. economy, the relation between unemployment and economic growth is:

Accepted Answer

A)   positive.
B)   direct.
C)   neutral.
D)   negative.E) None of the above
F) A) and B)

Question 9

If the rate of unemployment is 10% and the labor force is 130 million, the number of unemployed workers is:

Accepted Answer

A)   1.3 million.
B)   13 million.
C)   10 million.
D)   8 million.E) All of the above
F) B) and D)

Question 10

Menu costs refer to the increased cost of:

Accepted Answer

A)   food in a time of inflation.
B)   eating out when inflation increases.
C)   changing listed prices.
D)   the minimum wage.E) B) and C)
F) A) and B)

Question 11

Internet employment agencies have simplified the job search for the applicants. They have also led to a(n)  _____ unemployment.

Accepted Answer

A)   increase in frictional
B)   increase in cyclical
C)   decrease in frictional
D)   decrease in structuralE) C) and D)
F) A) and B)

Question 12

Structural unemployment consists of people who are unemployed because of:

Accepted Answer

A)   temporary changes in jobs.
B)   more labor demanded than labor supplied.
C)   the time it takes for employers and workers to find each other.
D)   more job hunters than jobs.E) B) and D)
F) B) and C)

Question 13

Minimum wages and efficiency wages are both above the equilibrium market wage. Briefly describe each type of wage. Do they have similar results in the labor market?

Accepted Answer

The minimum wage is set by the governmen...

Question 14

During a recession:

Accepted Answer

A)   unemployment and the growth rate of real GDP both decrease.
B)   unemployment decreases and the growth rate of real GDP increases.
C)   unemployment increases and the growth rate of real GDP decreases.
D)   there is no relation between unemployment and the growth rate of real GDP.E) A) and C)
F) A) and B)

Question 15

The natural rate of unemployment changes when:

Accepted Answer

A)   the cyclical unemployment changes.
B)   the actual rate of unemployment changes.
C)   labor market institutions change.
D)   government policies remain the same.E) A) and D)
F) A) and C)

Question 16

Deflation is a(n) :

Accepted Answer

A)   decrease in the purchasing power of a unit of money.
B)   appreciation of the nation's currency.
C)   decrease in the average level of prices.
D)   increase in the average level of prices.E) A) and B)
F) All of the above

Question 17

Use the following to answer questions 
Figure: The Minimum Wage 3? A)  Q4 - Q1 B)  Q3 - Q2 C)  Q2 - Q1 D)  Q4 - Q2" class="answers-bank-image d-inline" rel="preload" >
-(Figure: The Minimum Wage)  Look at the figure The Minimum Wage. By how much does the quantity of labor supplied rise when the government imposes a binding minimum wage of P3?

Accepted Answer

A)   Q4 - Q1
B)   Q3 - Q2
C)   Q2 - Q1
D)   Q4 - Q2E) A) and B)
F) All of the above

Question 18

Between 1921 and 1923 Germany underwent a period of hyperinflation.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is a LIKELY response to inflation?

Accepted Answer

A)   People choose to carry higher money balances.
B)   People tend to make fewer transactions.
C)   People tend to make more transactions.
D)   People tend to hold on to fewer interest-bearing assets.E) B) and C)
F) A) and B)

Question 20

The real interest rate is the nominal interest rate less the rate of inflation.

Accepted Answer

A) True 
 B)False

Exam 22: Unemployment and Inflation

In a particular labor market, the demand for labor is given by W = 20 - (1 / 100) L, and the supply of labor is given by W = 4 + (1 / 100) L, where W is the wage rate and L is the number of workers. The equilibrium wage is _____, and the equilibrium number of workers is _____.

Correct AnswerverifiedShow Answer

The real interest rate is the nominal interest rate less the rate of inflation.

Correct AnswerverifiedShow Answer

Use the following to answer questions -(Table: Employment Data) Look at the table Employment Data. The unemployment rate is:

Correct AnswerverifiedShow Answer

Between 1921 and 1923 Germany underwent a period of hyperinflation.

Correct AnswerverifiedShow Answer

If deflation occurs and your income is fixed, your real income:

Correct AnswerverifiedShow Answer

Structural unemployment consists of people who are unemployed because of:

Correct AnswerverifiedShow Answer

Use the following to answer questions Figure: The Minimum Wage -(Figure: The Minimum Wage) Look at the figure The Minimum Wage. By how much does the quantity of labor supplied rise when the government imposes a binding minimum wage of P3?

Correct AnswerverifiedShow Answer

Menu costs refer to the increased cost of:

Correct AnswerverifiedShow Answer

Use the following to answer questions Figure: The Minimum Wage -(Figure: The Minimum Wage) Look at the accompanying figure on the labor market. The binding minimum wage of P3 leads to unemployment of:

Correct AnswerverifiedShow Answer

A person who has no job but is looking for one is:

Correct AnswerverifiedShow Answer

The nominal interest rate equals the real interest rate:

Correct AnswerverifiedShow Answer

Minimum wages and efficiency wages are both above the equilibrium market wage. Briefly describe each type of wage. Do they have similar results in the labor market?

Correct AnswerverifiedThe minimum wage is set by the governmen...View AnswerShow Answer

Deflation is a(n) :

Correct AnswerverifiedShow Answer

If the nominal interest rate is 4% and the inflation rate is 1%, then the real interest rate is 5%.

Correct AnswerverifiedShow Answer

In general, for the U.S. economy, the relation between unemployment and economic growth is:

Correct AnswerverifiedShow Answer

Which of the following is a LIKELY response to inflation?

Correct AnswerverifiedShow Answer

If the rate of unemployment is 10% and the labor force is 130 million, the number of unemployed workers is:

Correct AnswerverifiedShow Answer

During a recession:

Correct AnswerverifiedShow Answer

The natural rate of unemployment changes when:

Correct AnswerverifiedShow Answer

Internet employment agencies have simplified the job search for the applicants. They have also led to a(n) _____ unemployment.

Correct AnswerverifiedShow Answer

In a particular labor market, the demand for labor is given by W = 20 - (1 / 100) L, and the supply of labor is given by W = 4 + (1 / 100) L, where W is the wage rate and L is the number of workers. The equilibrium wage is _, and the equilibrium number of workers is _.

Correct Answer
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Use the following to answer questions Figure: The Minimum Wage -(Figure: The Minimum Wage) Look at the figure The Minimum Wage. By how much does the quantity of labor supplied rise when the government imposes a binding minimum wage of P₃?

Correct Answer
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Use the following to answer questions Figure: The Minimum Wage -(Figure: The Minimum Wage) Look at the accompanying figure on the labor market. The binding minimum wage of P₃ leads to unemployment of:

Correct Answer
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The minimum wage is set by the governmen...
View Answer

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