Deck 28: Growth, Capital Accumulation, and the Economics of Ideas: Catching up Vs the Cutting Edge

Question 1

According to the accompanying labor data, the unemployment rate is _________ and the labor force participation rate is __________.

A) 7 percent; 60.4 percent
B) 0.7 percent; 99.3 percent
C) 5.6 percent; 69.4 percent
D) 7.5 percent; 75 percent

Answer 1

D

Question 2

What is the unemployment rate for a nation with 6 million employed and 2 million unemployed?

A) 10 percent
B) 15 percent
C) 20 percent
D) 25 percent

Answer 2

D

Question 3

An unemployed person is best defined as an adult who

A) does not have a job but is looking for work.
B) is working fewer hours than she wants to.
C) is a full-time homemaker or a full-time student and is therefore not working.
D) has given up looking for work after being laid off for a long period of time.

Answer 3

A

Question 4

Which of the following best defines a nation's labor force?

A) the total number of persons between the ages of 16 and 65
B) the total number of employed and unemployed persons
C) the total number of persons working full time and part time
D) the total number of persons who are willing and able to work but cannot find a job

Question 5

Adults who do not have a job but who are looking for work are

A) unemployed.
B) not part of the labor force.
C) unwilling to accept employment.
D) Each of these answers is correct.

Question 6

When workers lose their jobs and become officially unemployed, the number of people in the labor force

A) remains constant.
B) increases.
C) decreases.
D) becomes difficult to predict.

Question 7

Which of the following individuals can be counted as unemployed?

A) Hannah and Harold, who are serving time for armed robbery
B) Jason and Jill, who have not looked for work for the last two years
C) Stewart and Susan, who are currently housed in a mental institution
D) None of these answers is correct.

Question 8

A country has 24 million people in the labor force and 21.5 million of them are employed. What is the unemployment rate in this country?

A) 10.4 percent
B) 2.5 percent
C) 89.6 percent
D) 21.5 percent

Question 9

The percentage of adults in the labor force is the

A) unemployment rate.
B) employment rate.
C) labor force participation rate.
D) work force participation rate.

Question 10

Why is the unemployment rate considered to be an incomplete indicator of the health of the labor market? I. because it does not measure how well people are matched to the jobs they do II. because the definition of discouraged workers is not clear III. because it does not correctly define the adult population

A) I and II only
B) II and III only
C) I and III only
D) I, II, and III

Question 11

The labor force includes persons who are I. in prison. II. recently laid off and have given up looking for work. III. unemployed.

A) II only
B) III only
C) II and III only
D) I, II, and III

Question 12

Which of the following individuals can be counted as part of the labor force?

A) someone who retired four months ago
B) someone who is collecting unemployment benefits
C) someone who just celebrated a fifteenth birthday
D) someone who is on active military duty in Afghanistan

Question 13

When workers lose their jobs and become officially unemployed, the unemployment rate

A) remains constant.
B) increases.
C) decreases.
D) becomes difficult to predict.

Question 14

Which of the following individuals can be counted as unemployed?

A) a woman who works only part time
B) a temp worker, who is currently responding to job advertisements from the newspaper
C) a man who was laid off from an auto manufacturing plant in Detroit
D) Each of these answers is correct.

Question 15

What is the term for workers who have given up looking for a job but would still like one?

A) jobless workers
B) discouraged workers
C) laid off workers
D) discarded workers

Question 16

Which of the following individuals can be counted as unemployed?

A) Darren, a ten-year-old child
B) Moesha, a full-time college student
C) Nazma, a stay-at-home mom
D) None of the answers is correct.

Question 17

Which of the following is an example of an unemployed person?

A) a retiree working as a volunteer in a hospital
B) a worker who is willing to work more hours if available
C) a recent college graduate looking for her first job
D) a full-time student working part time at night

Question 18

In a country, where both the labor force participation rate and the unemployment rate are very low, which of the following answers explains why this may be the case?

A) A large percentage of the population consists of children.
B) A large percentage of the population is aging and thus has retired.
C) A large percentage of the population is unemployed.
D) None of these answers is correct.

Question 19

What population categories go into the formula for the unemployment rate?

A) unemployed and employed
B) civilian, military, and unemployed
C) adults not in labor force, employed, and unemployed
D) None of the answers is correct.

Question 20

The labor force is made up of

A) institutionalized people, the military, and employed workers.
B) employed and unemployed workers.
C) unemployed workers, employed workers, and students over 16.
D) all adult non-institutionalized civilians.

Question 21

Oil shocks, the shift from manufacturing to service jobs, and the use of new technologies are reasons for _____unemployment.

A) frictional
B) cyclical
C) structural
D) permanent

Question 22

In a nonrecession year, the majority of U.S. unemployment is:

A) frictional.
B) structural.
C) cyclical.
D) recurrent.

Question 23

When not in a recession, the largest fraction of unemployment in the United States lasts

A) less than 5 weeks.
B) between 5 and 14 weeks.
C) between 15 and 26 weeks.
D) more than 27 weeks.

Question 24

Creative destruction occurs at the level of the

A) firm.
B) industry.
C) entire economy.
D) Each of these answers is correct.

Question 25

Discouraged workers are people who

A) have given up looking for work but would still like to work.
B) are willing and able to work but cannot find a job.
C) are looking for a job that pays more than they are currently earning.
D) are working for fewer hours than they want to.

Question 26

Several years ago, the rising popularity of Barnes & Noble and Borders shifted workers from independent bookshops to larger chains. What type of unemployment was associated with this reallocation of the work force?

A) frictional unemployment
B) technological substitution
C) creative destruction
D) structural unemployment

Question 27

Following the great recession in 2010, the largest fraction of unemployment in the United States had lasted:

A) less than 5 weeks.
B) between 5 and 14 weeks.
C) between 15 and 26 weeks.
D) more than 27 weeks.

Question 28

Someone who recently moved to Florida because of its warmer climate will need to spend some time looking for a new job. This is an example of

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

Question 29

What is one of the causes of frictional unemployment?

A) uneducated work force
B) willingness to take lower level jobs
C) scarcity of information
D) overabundance of job vacancies

Question 30

Why has technology lowered frictional unemployment over time? I. Many people who used to be frictionally unemployed are now employed in the technology sector. II. The Internet has made it easier and faster for people to search for jobs that require their particular skill sets. III. The Internet has made posting jobs easier and faster for employers.

A) I and II only
B) II and III only
C) I and III only
D) I, II, and III

Question 31

A worker repairing VHS cassette-tape players was laid off because most of his customers have started using DVD players. This worker is now

A) a discouraged worker.
B) frictionally unemployed.
C) cyclically unemployed.
D) structurally unemployed.

Question 32

According to the Bureau of Labor Statistics, unemployment includes I. discouraged workers. II. workers who are overqualified for their work. III. workers who have a part-time job but want a full-time job.

A) I and II only
B) II and III only
C) I, II, and III
D) None of the answers is correct.

Question 33

Frictional unemployment is caused by:

A) creative destruction.
B) recessions.
C) the transformation of the United States into a service economy.
D) the changing seasons of the year.

Question 34

According to the textbook, Joseph Schumpeter's "creative destruction" results in

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

Question 35

The short-term unemployment caused by the ordinary difficulties of matching employee to employer is called

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

Question 36

Frictional unemployment is best defined as

A) long-term unemployment caused by changing features of an economy.
B) short-term unemployment caused by difficulties of matching employees to employers.
C) unemployment caused by cyclical conditions of an economy.
D) a normal level of unemployment caused by high wages.

Question 37

Discouraged workers and underemployed workers are examples of

A) workers not included in the unemployment rate.
B) populations that cause higher unemployment taxes.
C) users of unemployment insurance.
D) poor national employment planning.

Question 38

The persistent, long-term unemployment caused by long-lasting shocks or permanent features of an economy is called

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

Question 39

Individuals who have given up looking for work but still would take a job are considered

A) unemployed workers.
B) displaced workers.
C) discouraged workers.
D) part of the labor force.

Question 40

The presence of discouraged workers causes the measured unemployment rate to be

A) correctly stated.
B) overstated.
C) understated.
D) either overstated, understated, or correctly stated.

Question 41

If the average wage is $9 in country X and $8 in country Y and both countries have similar elasticities of labor supply and demand, then a minimum wage of $4 in both countries will tend to

A) make unemployment higher in country X than in country Y.
B) make unemployment higher in country Y than in country X.
C) make unemployment the same in both countries.
D) have no effect in either country.

Question 42

Structural unemployment is more persistent in France than in the United States because

A) French workers have less incentive to quickly seek a new position since their unemployment benefits are much higher.
B) France's labor regulations require a mandatory waiting period before a worker can reapply for a new job.
C) American workers have many more job opportunities than French workers.
D) Labor unions are weaker in France than they are in the United States.

Question 43

Legal and cultural issues contribute significantly to what category of unemployment?

A) structural
B) cyclical
C) short-term
D) frictional

Question 44

(Figure: Labor Supply and Demand) Figure: Labor Supply and Demand What is the unemployment rate caused by the labor union's action of increasing its wage demands to $11 an hour?

A) 66.7 percent
B) 75.6 percent
C) 40 percent
D) 60 percent

Question 45

Reference: Ref 11-1 (Figure: Labor Market) Refer to the figure. What is the number of people who are employed at the market clearing wage? How many people end up unemployed due to the implementation of a $10 minimum wage?

A) 40 thousand; 20 thousand
B) 40 thousand; 40 thousand
C) 60 thousand; 40 thousand
D) 60 thousand; 20 thousand

Question 46

Both __________ and _________ reduce the quantity of labor demanded.

A) minimum wages; unemployment benefits
B) minimum wages; union wages
C) union wages; unemployment benefits
D) retraining programs; union wages

Question 47

Reference: Ref 11-1 (Figure: Labor Market) Refer to the figure. What is the unemployment rate in this market as a result of the implementation of a $10 minimum wage?

A) 20 percent
B) 50 percent
C) 100 percent
D) 25 percent

Question 48

Which of the following programs could help overcome structural unemployment?

A) worker retraining
B) limitations to unemployment benefits
C) job search assistance programs
D) Each of these answers is correct.

Question 49

An increase in unemployment benefits tends to

A) lower the incentive to search for a job and raise frictional unemployment.
B) lower the incentive to search for a job and lower frictional unemployment.
C) raise the incentive to search for a job and raise frictional unemployment.
D) raise the incentive to search for a job and lower frictional unemployment.

Question 50

Which of the following elements reduces structural unemployment?

A) the enhancement of worker retraining programs
B) the extension of unemployment benefits
C) the growth of labor unions
D) the existence of employment protection laws

Question 51

A minimum wage is

A) an employment protection law.
B) a labor market price ceiling.
C) the equilibrium wage in an unskilled labor market.
D) None of these answers is correct.

Question 52

Compared to the United States, unemployment rates in Western Europe tend to be

A) lower because of more labor regulations.
B) lower because of fewer labor regulations.
C) higher because of more labor regulations.
D) higher because of fewer labor regulations.

Question 53

Which of the following tend to increase unemployment?

A) unemployment benefits
B) minimum wages
C) labor unions
D) Each of these answers is correct.

Question 54

Which of the following raises structural unemployment? I. higher union membership II. more unemployment benefits III. higher minimum wages

A) I and II only
B) II and III only
C) I and III only
D) I, II, and III

Question 55

Which of the following elements increases structural unemployment?

A) active labor market policies
B) bonuses for early employment
C) job-search assistance programs
D) employment protection laws

Question 56

Higher unemployment benefits tend to

A) increase the unemployment rate.
B) reduce the unemployment rate.
C) have no impact on the unemployment rate.
D) increase, decrease, or leave the unemployment rate unchanged. It's not possible to tell without further information.

Question 57

Countries in Western Europe have

A) higher minimum wages than the United States.
B) higher median wages than the United States.
C) higher unemployment rates than the United States.
D) Each of these answers is correct.

Question 58

The United States' shift toward more of a service economy and less of a manufacturing economy has caused an increase in

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

Question 59

France, Germany, Italy, and Spain have experienced ______ unemployment compared to the United States since 1980.

A) less
B) more
C) the same
D) None of these answers is correct. Germany experienced less unemployment, while the other nations experienced more.

Question 60

If a national government improves its unemployment benefits, its unemployment rate will most likely

A) increase.
B) decrease.
C) remain the same.
D) follow the global trend, regardless of national policy.

Question 61

Refer to the figure. Given this view of the real business cycle for the United States over the time period 1970 to 2008, when would you expect cyclical unemployment to have been the highest?

A) 1972
B) 1982
C) 1985
D) 2000

Question 62

What does the World Bank's "rigidity of employment index" provide for us?

A) a summary of the average length of unemployment of over a five-year period
B) a measure of the effects of shrinking manufacturing firms in developed nations
C) a summary of firms costs for hiring, firing, and adjusting employment hours
D) a measure of the available government assistance for workers seeking employment

Question 63

The Keynesian explanation for cyclical unemployment is

A) that labor is reallocated across different industries.
B) the same as that for frictional and structural unemployment.
C) that wage demands are too high relative to falling prices.
D) that it is a normal response to real shocks in the economy.

Question 64

Which of the following statements about the employment-at- will doctrine is TRUE?

A) The doctrine helps raise labor hiring and firing costs, leading to lower unemployment rates.
B) The doctrine helps raise labor hiring and firing costs, leading to higher unemployment rates.
C) The doctrine helps lower labor hiring and firing costs, leading to lower unemployment rates.
D) The doctrine helps lower labor hiring and firing costs, leading to higher unemployment rates.

Question 65

Unemployment correlated with the business cycle is called

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

Question 66

Comparing current real GDP growth to _______ will give a good indication of the change in the unemployment rate.

A) nominal GDP growth
B) average real GDP growth
C) real growth rates for the past two years
D) None of these answers is correct.

Question 67

Examples of active labor market policies include I. job-retraining programs. II. job-search assistance. III. early re-employment bonuses.

A) I and II only
B) II and III only
C) I and III only
D) I, II, and III

Question 68

Employment protection laws tend to I. increase the duration of unemployment. II. increase labor market flexibility. III. increase the job security of workers.

A) I and II only
B) II and III only
C) I and III only
D) I, II, and III

Question 69

During recessions the unemployment rate

A) decreases.
B) increases.
C) remains relatively constant.
D) fluctuates randomly.

Question 70

What allows an employee to quit at any time and an employer to fire at any time for any reason?

A) employment-at-will
B) contractual autonomy
C) right-to-hire
D) termination sovereignty

Question 71

Job search programs and work tests for unemployed workers are likely to be sponsored by

A) firms.
B) unions.
C) governments.
D) workers.

Question 72

In 2005, immigrant youth rioted in Paris and throughout France giving high unemployment as one of their main reasons. Who were their most vocal opponents?

A) the workers with the most seniority at their jobs
B) university students
C) corporate executives and managers
D) older unemployed workers from rural regions

Question 73

Long-term unemployment tends to be higher when the government I. raises job security. II. raises hiring and firing costs. III. lowers restrictions for firms to adjust work hours.

A) I and II only
B) II and III only
C) I and III only
D) I, II, and III

Question 74

Which of the following best describes the effects of a major labor union that maintains a union wage above the market equilibrium wage?

A) The quantity of labor demanded exceeds the quantity of labor supplied, and the unemployment rate increases.
B) The quantity of labor demanded exceeds the quantity of labor supplied, and the unemployment rate decreases.
C) The quantity of labor supplied exceeds the quantity of labor demanded, and the unemployment rate increases.
D) The quantity of labor supplied exceeds the quantity of labor demanded, and the unemployment rate decreases.

Question 75

Why does unemployment rise during recessions? I. because of labor reallocation among affected industries in response to real economic shocks II. because wages do not fall as fast as prices, and firms cannot afford to employ as many workers III. because of increases in aggregate demand

A) I and II only
B) II and III only
C) I and III only
D) I, II, and III

Question 76

Higher GDP growth

A) decreases the unemployment rate.
B) increases the unemployment rate.
C) leaves the unemployment rate unchanged.
D) makes the unemployment rate fluctuate randomly.

Question 77

What type of laws affects young, minority, and unemployed workers most negatively?

A) employment-at-will
B) employment protection
C) constructive discharge
D) fair labor

Question 78

Which one of the following reasons explains why the French at- will employment proposal for the younger population failed?

A) Elitist French youth viewed at-will employment as an infringement of their rights.
B) Riots among the immigrant youth got the government to reconsider.
C) High unemployment among immigrant youth made the proposal intractable.
D) France did not want to adopt the same laws that the United States follows.

Question 79

What problem do employment protection laws create?

A) They encourage workers to change jobs more frequently.
B) They are costly for governments to maintain.
C) Employers have difficulty keeping qualified workers.
D) Employers are reluctant to hire new workers.

Question 80

Which one of the following statements regarding the rigidity of employment index discussed in the text is NOT correct?

A) The U.S. labor market experiences more rigidity, thus ranking higher, than most European countries.
B) Countries that rank higher on the index tend to have more long-term unemployment.
C) Countries that rank higher on the index tend to have less flexible and dynamic labor markets.
D) The index ranks countries based on a summary of hiring and firing costs as well as the ease of work hour adjustments.