Question 1

The slowdown in the growth of real wages in the United States since 1973 is consistent with a concurrent:

Accepted Answer

The slowdown in the growth of real wages in the United States since 1973 is consistent with a concurrent slowdown in productivity gains. When productivity growth slows down, businesses generate less output per hour of work and, as a result, have less room to increase wages. This has been the case in the US since the mid-1970s, leading to a relatively stagnant wage growth for most workers.

Question 2

An increase in the demand for workers producing computers for export versus producing agricultural products that can be imported more cheaply from abroad is an example of how increasing wage inequality can result from:

Accepted Answer

The scenario described is a result of globalization, where international trade allows for cheaper imports of some products, leading to a shift in demand for certain types of labor. This can result in increasing wage inequality as workers in some industries may see decreased demand for their labor while workers in other industries may see increased demand for their labor.

Question 3

Two explanations for increasing wage inequality are ______ and ________.

Accepted Answer

Globalization and skill-biased technological change are two commonly cited explanations for the increasing wage inequality. Globalization has led to outsourcing of low-skilled jobs to countries with lower labor costs, resulting in a decrease in demand for low-skilled workers in developed countries. At the same time, skill-biased technological change has increased the demand for highly skilled workers who are able to operate and manage advanced technologies, while reducing the demand for low-skilled workers whose jobs are easily automated. Together, these factors have contributed to a widening wage gap between skilled and unskilled workers.

Question 4

Factors increasing the U.S.labor supply and thereby contributing to the slowdown in real-wage growth that began in the 1970s include ______ and _____.

Accepted Answer

Increased labor force participation by women and the coming-of-age of the baby-boom generation are factors that increased the U.S. labor supply in the 1970s and contributed to the slowdown in real-wage growth.

Question 5

The two most important factors contributing to increased productivity in industrialized countries in the twentieth century were:

Accepted Answer

Technological progress and increases in the capital stock were the two most important factors contributing to increased productivity in industrialized countries in the twentieth century. The advances in technology and the accumulation of capital goods (such as machinery and equipment) allowed for greater efficiency and output in production. Increases in the labor supply and higher relative prices were also important, but not as significant as technological progress and capital accumulation.

Question 6

Long-term increases in productivity that have increased the demand for labor, and raised real wages, have resulted primarily from ______ and _____.

Accepted Answer

Long-term increases in productivity have been primarily driven by technological progress and a modernized capital stock. Technological progress has led to the introduction of new and more efficient production methods, which has increased output per hour of labor. A modernized capital stock, which includes better machinery and equipment, facilitates the implementation of these new production methods, leading to further increases in productivity. The increased demand for labor and higher real wages are both outcomes of these changes.

Question 7

Macroland produces dishes and glassware.Before trade, a set of dishes sells for $100 and a set of glasses sells for $50.When Macroland opens to trade, foreign demand for domestically produced china is strong, raising the price of a set of dishes to $125.But foreign competition reduces the demand for domestically produced glasses, so they now sell for $25 a set.Assuming workers cannot move between industries, the wages of workers producing dishes will ______ and the wages of workers producing glasses will ____.

Accepted Answer

The increase in demand for dishes results in an increase in the production of dishes, which causes an increase in the demand for labor in the dish industry. This increase in demand for labor will result in an increase in wages for workers producing dishes. On the other hand, the decrease in demand for glasses will cause a decrease in the production of glasses, which reduces the demand for labor in the glass industry. This decrease in demand for labor will result in a decrease in wages for workers producing glasses. Therefore, the wages of workers producing dishes will increase and the wages of workers producing glasses will decrease.

Question 8

As a result of a war in the country of Omega, refugees flee to the country of Alpha to seek employment.Holding other factors constant, the influx of refugees will ______ the real wage in Alpha and ______ employment in Alpha.

Accepted Answer

The work force in Alpha has increased, which increases the supply of labor and puts downward pressure on real wages but increases employment levels in Alpha.

Question 9

Initially, workers in the shoe industry and the computer industry earn the same wage.Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, which causes domestic shoe prices fall.At the same time, foreign consumers purchase more computers, raising the relative price of computers.As a result of these changes, the demand for labor in the shoe industry ______ and the demand for labor in the computer industry ______.

Accepted Answer

The reduction in trade barriers has led to cheaper shoes being imported, which reduces the demand for domestic shoe production and causes the demand for labor in the shoe industry to decrease. On the other hand, foreign consumers are buying more computers, which increases the demand for labor in the computer industry. Therefore, the demand for labor in the shoe industry decreases, and the demand for labor in the computer industry increases. Option C is the only one that reflects this.

Question 10

Increasing wage inequality results when international trade leads to ______ wages for workers in exporting industries and ______ wages for workers in importing industries.

Accepted Answer

International trade often leads to higher wages for workers in the exporting industries due to increased demand for their goods and services in foreign markets. At the same time, workers in importing industries may face competition from cheaper foreign imports and may see their wages decrease, leading to an increase in wage inequality.

Question 11

Globalization ______ the wages of workers in the exporting industries and ______ the wages of workers in the import-competing industries.

Accepted Answer

Globalization leads to increased competition, which may lead to increased wages for workers in exporting industries due to increased demand for their products. However, it may also lead to decreased wages for workers in import-competing industries due to increased competition from cheaper imports. Therefore, option B, which states that globalization raises the wages of workers in the exporting industries and lowers the wages of workers in the import-competing industries, is the best choice.

Question 12

Initially, workers in the shoe industry and the computer industry earn the same wage.Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, so domestic shoe prices fall.At the same time, foreign consumers purchase more computers, raising the relative price of computers.As a result of these changes, wages in the shoe industry ______ and wages in the computer industry ______.

Accepted Answer

With the reduction in trade barriers, domestic consumers have access to cheaper shoes produced abroad, resulting in a decrease in domestic shoe prices. This means that the domestic shoe industry will make less money, which will lead to a decrease in wages for the workers. On the other hand, foreign consumers will be purchasing more computers, raising the relative price of computers. This will lead to an increase in demand for computer workers, leading to an increase in wages for those workers. Therefore, wages in the shoe industry decrease and wages in the computer industry increase.

Question 13

Larger increases in the demand for labor than in the supply of labor explain:

Accepted Answer

When the demand for labor increases more than the supply of labor, competition for workers increases which puts upward pressure on wages leading to a substantial increase in real wages.

Question 14

Globalization can increase wage inequality in the United States if international competition is primarily in industries requiring ______ workers.

Accepted Answer

If international competition is primarily in industries that require low-skilled workers, then companies may choose to move jobs to countries with lower labor costs, resulting in job losses and lower wages for low-skilled workers in the United States. This can lead to an increase in wage inequality as high-skilled workers may not be as affected by international competition.

Question 15

Slower growth in labor demand in combination with increases in labor supply explains ____________ accompanied by __________.

Accepted Answer

When both labor supply and labor demand rise at the same time, it is certain that quantity will increase but uncertain whether wages will rise or fall. If the demand shift was smaller than the supply shift there is downward pressure on real wages but an increase in employment.

Question 16

A war destroys much of the capital stock in the country of Omega.As a result, holding other factors constant, the real wage in Omega will ______ and employment in Omega will ______.

Accepted Answer

Since capital stock has been destroyed, the productivity of workers in Omega would decrease. Therefore, firms will hire fewer workers at a lower real wage, resulting in a decrease in both the real wage and employment in Omega.

Question 17

Slower real wage growth in the U.S.since the 1970s accompanied by rapid job growth, can be explained by:

Accepted Answer

A productivity slowdown occurred in the early 1970's, reducing the increase in the demand for labor. Also, the expanded role of women in the labor force and huge numbers of baby-boomers increased labor supply and put downward pressure on wage rates in the U.S.

Question 18

Holding other factors constant, an increase in the capital stock ______ the real wage and ______ employment.

Accepted Answer

An increase in the capital stock leads to an increase in labor productivity, which in turn increases the demand for labor. This increase in labor demand results in an increase in employment and higher wages due to the resulting increase in labor scarcity.

Question 19

Technological change that affects the marginal products of high-skilled and low-skilled workers differently is called ______ technological change.

Accepted Answer

Skill-biased technological change refers to technological advancements that increase the relative demand for high-skilled workers and decrease the demand for low-skilled workers by increasing their marginal productivity. This can result in an increase in wage inequality as high-skilled workers command higher salaries due to their increased productivity, while low-skilled workers may see a decrease in demand for their labor and wages may stagnate or decline.

Question 20

The increase in wage inequality resulting from globalization can be reversed through:

Accepted Answer

Increasing worker mobility can help to reduce wage inequality resulting from globalization. This is because when workers have the ability to move to areas with higher wages, it creates a more competitive labor market that can put upward pressure on wages. Conversely, decreasing worker mobility (option C) can exacerbate wage inequality by limiting workers' ability to seek out higher-paying job opportunities. Revoking the principle of comparative advantage (option A) would not be feasible or desirable given its importance in facilitating trade and economic growth. Making markets more competitive (option D) can also be effective in reducing wage inequality, but increasing worker mobility is a more direct and immediate solution.

Quiz 6: Wages and Unemployment

The slowdown in the growth of real wages in the United States since 1973 is consistent with a concurrent:

An increase in the demand for workers producing computers for export versus producing agricultural products that can be imported more cheaply from abroad is an example of how increasing wage inequality can result from:

Two explanations for increasing wage inequality are and __.

Factors increasing the U.S.labor supply and thereby contributing to the slowdown in real-wage growth that began in the 1970s include __ and _.

The two most important factors contributing to increased productivity in industrialized countries in the twentieth century were:

Long-term increases in productivity that have increased the demand for labor, and raised real wages, have resulted primarily from __ and _.

As a result of a war in the country of Omega, refugees flee to the country of Alpha to seek employment.Holding other factors constant, the influx of refugees will the real wage in Alpha and employment in Alpha.

Increasing wage inequality results when international trade leads to wages for workers in exporting industries and wages for workers in importing industries.

Globalization the wages of workers in the exporting industries and the wages of workers in the import-competing industries.

Larger increases in the demand for labor than in the supply of labor explain:

Globalization can increase wage inequality in the United States if international competition is primarily in industries requiring ______ workers.

Slower growth in labor demand in combination with increases in labor supply explains __ accompanied by .

A war destroys much of the capital stock in the country of Omega.As a result, holding other factors constant, the real wage in Omega will and employment in Omega will .

Slower real wage growth in the U.S.since the 1970s accompanied by rapid job growth, can be explained by:

Holding other factors constant, an increase in the capital stock the real wage and employment.

Technological change that affects the marginal products of high-skilled and low-skilled workers differently is called ______ technological change.

The increase in wage inequality resulting from globalization can be reversed through: