Question 1

The real wage is the wage multiplied by the price level.

Accepted Answer

A) True 
 B)False

Question 2

When hyperinflation forces Pedro to change the price stickers on the books in his bookstore very frequently to keep up with the aggregate price level, economists say that Pedro has a:

Accepted Answer

A)   shoe-leather cost.
B)   menu cost.
C)   unit-of-account cost.
D)   debt deflation.E) A) and D)
F) B) and C)

Question 3

Over the past year, Eli has been working very hard. His employer has taken notice and is giving Eli a 6% raise in salary. During this past year, overall prices in the economy have increased by 4%. Given this information, Eli's real wage has:

Accepted Answer

A)   stayed constant.
B)   increased by 6%.
C)   increased by 2%.
D)   decreased by 4%.E) A) and B)
F) B) and D)

Question 4

If there are 100 million people in the total population, a labor force of 50 million, and 47 million employed workers, the unemployment rate is:

Accepted Answer

A)   3%.
B)   6%.
C)   8%.
D)   10%.E) B) and C)
F) A) and D)

Question 5

The official unemployment rate is a useful but not altogether accurate measure of joblessness.

Accepted Answer

A) True 
 B)False

Question 6

An efficiency wage:

Accepted Answer

A)   can be secured only with the help of a labor union.
B)   is one that causes greater frictional unemployment.
C)   is offered by an employer to encourage workers to work harder.
D)   results in a less productive work force.E) A) and C)
F) C) and D)

Question 7

Firms pay an efficiency wage because:

Accepted Answer

A)   it reduces the risk of losing the best workers.
B)   it is required by law.
C)   they don't have to offer health insurance if they pay efficiency wages.
D)   it reduces the employee's income tax liability.E) B) and C)
F) None of the above

Question 8

The labor supply curve is positively sloped because:

Accepted Answer

A)   more people are willing to work at low wages than at high wages.
B)   more people are willing to work at high wages than at low wages.
C)   employers are willing to hire more people at low wages.
D)   employers are willing to hire more people at high wages.E) B) and D)
F) A) and B)

Question 9

Long-term unemployment is usually frictional.

Accepted Answer

A) True 
 B)False

Question 10

A binding minimum wage results in:

Accepted Answer

A)   higher wages for those who were working prior to the minimum wage implementation.
B)   an increase in structural unemployment.
C)   a decrease in the amount of cyclical unemployment.
D)   lower actual unemployment rates, since higher wages encourage more people to enter the labor force.E) B) and C)
F) A) and D)

Question 11

Donna was laid off at the beginning of 2011. She looked for a job for three months but could not find anything suitable. She then decided to volunteer for a soup kitchen and stopped looking for a job. Donna is considered to be:

Accepted Answer

A)   unemployed.
B)   underemployed.
C)   a discouraged worker.
D)   a part-time worker.E) A) and D)
F) A) and C)

Question 12

The U.S. inflation rate was lower in the 2000s than it was in the 1970s.

Accepted Answer

A) True 
 B)False

Question 13

The minimum wage is higher in the United States than in most Western European countries.

Accepted Answer

A) True 
 B)False

Question 14

People who are counted as unemployed by the Bureau of Labor Statistics are:

Accepted Answer

A)   people without a job who are actively seeking a job.
B)   discouraged workers.
C)   workers who are underemployed.
D)   people without a job who are actively seeking a job, discouraged workers, and workers who are underemployed.E) B) and C)
F) B) and D)

Question 15

If the price level decreases, real income will:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   fluctuate randomly.E) A) and D)
F) None of the above

Question 16

If a country has a working-age population of 200 million, 120 million people with jobs, and 30 million people unemployed and seeking employment, then its unemployment rate is:

Accepted Answer

A)   5%.
B)   7.5%.
C)   15%.
D)   20%.E) A) and D)
F) A) and C)

Question 17

Frictional unemployment:

Accepted Answer

A)   occurs only during expansions.
B)   is due to time workers spend in job search.
C)   is the difference between cyclical unemployment and the natural rate of unemployment.
D)   hasn't occurred since the 1930s.E) B) and D)
F) A) and B)

Question 18

Use the following to answer questions : 
-(Table: Population Data for Estill County)  Look at the table Population Data for Estill County. How many people are in the labor force?

Accepted Answer

A)   6,000
B)   9,400
C)   7,400
D)   6,500E) None of the above
F) All of the above

Question 19

Use the following to answer questions 
Figure: The Effect of a Minimum Wage F, the government abolishes the minimum wage. Employment will: A)  decrease to QE. B)  increase to QE. C)  stay at QE. D)  be impossible to determine." class="answers-bank-image d-inline" rel="preload" >
-(Figure: The Effect of a Minimum Wage)  Look at the figure The Effect of a Minimum Wage. Suppose that after some time with a minimum wage of WF, the government abolishes the minimum wage. Employment will:

Accepted Answer

A)   decrease to QE.
B)   increase to QE.
C)   stay at QE.
D)   be impossible to determine.E) A) and C)
F) B) and C)

Question 20

Use the following to answer questions : 
-(Table: Population Data for Estill County)  Look at the table Population Data for Estill County. What is the labor force participation rate?

Accepted Answer

A)   64%
B)   81%
C)   17%
D)   79%E) B) and C)
F) None of the above

Exam 22: Unemployment and Inflation

The labor supply curve is positively sloped because:

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If a country has a working-age population of 200 million, 120 million people with jobs, and 30 million people unemployed and seeking employment, then its unemployment rate is:

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Use the following to answer questions : -(Table: Population Data for Estill County) Look at the table Population Data for Estill County. What is the labor force participation rate?

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Donna was laid off at the beginning of 2011. She looked for a job for three months but could not find anything suitable. She then decided to volunteer for a soup kitchen and stopped looking for a job. Donna is considered to be:

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Firms pay an efficiency wage because:

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The official unemployment rate is a useful but not altogether accurate measure of joblessness.

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A binding minimum wage results in:

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People who are counted as unemployed by the Bureau of Labor Statistics are:

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Long-term unemployment is usually frictional.

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If there are 100 million people in the total population, a labor force of 50 million, and 47 million employed workers, the unemployment rate is:

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Over the past year, Eli has been working very hard. His employer has taken notice and is giving Eli a 6% raise in salary. During this past year, overall prices in the economy have increased by 4%. Given this information, Eli's real wage has:

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If the price level decreases, real income will:

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Use the following to answer questions : -(Table: Population Data for Estill County) Look at the table Population Data for Estill County. How many people are in the labor force?

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The U.S. inflation rate was lower in the 2000s than it was in the 1970s.

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When hyperinflation forces Pedro to change the price stickers on the books in his bookstore very frequently to keep up with the aggregate price level, economists say that Pedro has a:

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Frictional unemployment:

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An efficiency wage:

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The minimum wage is higher in the United States than in most Western European countries.

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Use the following to answer questions Figure: The Effect of a Minimum Wage -(Figure: The Effect of a Minimum Wage) Look at the figure The Effect of a Minimum Wage. Suppose that after some time with a minimum wage of WF, the government abolishes the minimum wage. Employment will:

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The real wage is the wage multiplied by the price level.

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Use the following to answer questions Figure: The Effect of a Minimum Wage -(Figure: The Effect of a Minimum Wage) Look at the figure The Effect of a Minimum Wage. Suppose that after some time with a minimum wage of W_F, the government abolishes the minimum wage. Employment will:

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