Question 1

In 2017, the city of Seattle passed legislation implementing a $15 per hour minimum wage. Critics of the plan argued that this legislation would increase:

Accepted Answer

A)   frictional unemployment.
B)   real-wage unemployment.
C)   cyclical unemployment.
D)   structural unemployment.E) A) and B)
F) C) and D)

Question 2

Unemployment:

Accepted Answer

A)   exists at any time during the business cycle.
B)   only occurs during times of recession.
C)   is highest during times of peak economic activity.
D)   tends to increase during times of economic recovery.E) B) and C)
F) B) and D)

Question 3

In 2018, the labor force participation rate was 63.1 percent. This means that:

Accepted Answer

A)   63.1 percent of all working-age people wanted a job.
B)   there was 36.9 percent unemployment.
C)   63.1 percent of all working-age people were employed.
D)   only 63.1 percent of the labor force was of working age.E) All of the above
F) B) and C)

Question 4

Some people drop out of the labor force during times of recession:

Accepted Answer

A)   to go back to college, because the opportunity cost is lower during a recession.
B)   because they age out of the workforce.
C)   because the cost of living is lower.
D)   All of these are true.E) All of the above
F) A) and B)

Question 5

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

Accepted Answer

A)   Real-wage unemployment
B)   Cyclical unemployment
C)   Unemployment of government workers
D)   All of these contribute to the natural rate of unemploymentE) A) and B)
F) A) and C)

Question 6

Unemployment caused by efficiency wages:

Accepted Answer

A)   is minimal.
B)   is quite large in markets that have mostly minimum-wage workers.
C)   is larger in sectors that have higher rates of less-skilled workers.
D)   has little conclusive evidence in economic research.E) A) and D)
F) A) and B)

Question 7

Frictional unemployment:

Accepted Answer

A)   occurs when there is a mismatch between the skills workers can offer and the skills that are in demand.
B)   is caused by workers changing their locations, jobs, or careers.
C)   is the effect of wages remaining persistently above the market-clearing level.
D)   is not connected to natural rate of unemployment.E) A) and B)
F) A) and C)

Question 8

Barbara has been working in a coffee shop full-time while she attends college. When she graduates, she quits the coffee shop and begins to search for full-time employment related to her college degree. Barbara is:

Accepted Answer

A)   frictionally unemployed.
B)   structurally unemployed.
C)   cyclically unemployed.
D)   classically unemployed.E) B) and D)
F) A) and B)

Question 9

Unemployment insurance income:

Accepted Answer

A)   allows people to prolong their unemployment until they find a better match.
B)   increases seasonal employment because people can live on unemployment insurance between jobs.
C)   decreases the amount of money people spend on leisure goods.
D)   All of these are true.E) C) and D)
F) B) and D)

Question 10

The unemployment rate tells us:

Accepted Answer

A)   what percentage of the labor force wants to work but can't find a job.
B)   what will happen in the labor market in the future.
C)   why the unemployed can't find work.
D)   the number of people who don't want to work.E) B) and C)
F) B) and D)

Question 11

The table shown displays employment statistics for two years.  What was the unemployment rate in 2019?

Accepted Answer

A)   1.1 percent
B)   20 percent
C)   16 percent
D)   11 percentE) All of the above
F) B) and C)

Question 12

Unemployment is a lagging indicator because firms:

Accepted Answer

A)   always limit their responses to changes in the economy.
B)   do not look at economic conditions when making hiring decisions.
C)   may first try to decrease or increase the hours of existing employees before changing levels of employment.
D)   often wait for government subsidies before changing levels of employment.E) A) and B)
F) None of the above

Question 13

The natural rate of unemployment is the normal level of unemployment:

Accepted Answer

A)   in an economy in the short run.
B)   in an economy in the long run.
C)   that exists without government intervention.
D)   in an economy with a high labor force participation rate.E) A) and D)
F) All of the above

Question 14

Underemployment occurs when someone:

Accepted Answer

A)   is employed part-time, but wants full-time employment.
B)   is paid under the table for their work.
C)   is hired for an entry-level position.
D)   is paid less than the median wage in a specific profession.E) B) and D)
F) A) and B)

Question 15

In the United States, to count as unemployed, you must be:

Accepted Answer

A)   younger than 65 years of age.
B)   actively looking for work.
C)   skilled enough to hold a job.
D)   All of these are true.E) A) and B)
F) A) and D)

Question 16

Policies that protect workers could:

Accepted Answer

A)   lead to greater unemployment.
B)   lead to less unemployment.
C)   never impact unemployment.
D)   affect the seasonally unemployed more profoundly than other unemployed workers.E) None of the above
F) B) and C)

Question 17

The business cycle:

Accepted Answer

A)   affects the demand for labor.
B)   affects the supply of labor.
C)   affects both the supply of and demand for labor.
D)   does not affect the market for labor.E) A) and B)
F) A) and C)

Question 18

Don, who has worked as a machinist all his life, was recently laid off because the plant where he worked shut down and the jobs were outsourced. There don't seem to be any machinist jobs in the area anymore. Don is:

Accepted Answer

A)   frictionally unemployed.
B)   structurally unemployed.
C)   real-wage unemployed.
D)   a discouraged worker.E) A) and D)
F) B) and C)

Question 19

Which of the following is a reason why wages might stay above the equilibrium rate?

Accepted Answer

A)   Minimum-wage legislation
B)   Contracts with labor unions
C)   Efficiency wages paid to employees
D)   All of these are reasons why wages may not fall below equilibrium.E) All of the above
F) C) and D)

Question 20

Sanjeev just graduated from college and has landed his first job with an accounting firm, which will start in one month. Sanjeev plans to use the next month adjusting to the new area. Sanjeev currently is:

Accepted Answer

A)   frictionally unemployed.
B)   employed.
C)   structurally unemployed.
D)   not in the labor force.E) None of the above
F) A) and D)

Exam 9: Unemploymentand the Labor Market

Some people drop out of the labor force during times of recession:

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Unemployment is a lagging indicator because firms:

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Which of the following is a reason why wages might stay above the equilibrium rate?

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Frictional unemployment:

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In 2018, the labor force participation rate was 63.1 percent. This means that:

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Sanjeev just graduated from college and has landed his first job with an accounting firm, which will start in one month. Sanjeev plans to use the next month adjusting to the new area. Sanjeev currently is:

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In 2017, the city of Seattle passed legislation implementing a $15 per hour minimum wage. Critics of the plan argued that this legislation would increase:

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Underemployment occurs when someone:

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Policies that protect workers could:

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The business cycle:

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The table shown displays employment statistics for two years. What was the unemployment rate in 2019?

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Don, who has worked as a machinist all his life, was recently laid off because the plant where he worked shut down and the jobs were outsourced. There don't seem to be any machinist jobs in the area anymore. Don is:

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The natural rate of unemployment is the normal level of unemployment:

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Unemployment caused by efficiency wages:

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The unemployment rate tells us:

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Barbara has been working in a coffee shop full-time while she attends college. When she graduates, she quits the coffee shop and begins to search for full-time employment related to her college degree. Barbara is:

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Unemployment:

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

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In the United States, to count as unemployed, you must be:

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Unemployment insurance income:

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