Question 1

A construction worker who is not working due to a snow storm would be counted as ________ unemployed.

Accepted Answer

A construction worker who is not working due to a snow storm would be counted as seasonally unemployed. Seasonal unemployment refers to unemployment caused by changes in the demand for certain types of labor depending on the time of the year. In this case, construction work may not be possible during winter months due to weather conditions, resulting in seasonal unemployment for construction workers.

Question 2

Paying efficiency wages to reduce turnover may be profit-maximizing for companies, but it also contributes to ________ unemployment.

Accepted Answer

Efficiency wages are wages paid above the market equilibrium level in order to motivate employees and reduce turnover. This may be profit-maximizing for companies because it results in a more productive workforce, but it also contributes to structural unemployment because it creates a surplus of workers who are willing to work for the higher wage but cannot find employment at that wage level.

Question 3

A worker who has quit one job to have time to search for a similar position is counted as what type of unemployment?

Accepted Answer

A worker who has quit one job to have time to search for a similar position is considered frictionally unemployed because they are temporarily between jobs and searching for new employment.

Question 4

The stock of unemployed workers at any given time consists mostly of

Accepted Answer

According to the Bureau of Labor Statistics, the majority of unemployed workers are categorized as having "short-term" unemployment, which means they have been jobless for 27 weeks or less. Therefore, choice A is the best answer.

Question 5

Advance notice of lay-offs should help to reduce

Accepted Answer

Advance notice of lay-offs can help reduce frictional and structural unemployment by giving workers time to search for new job opportunities and acquire the necessary skills for employment in different industries. Cyclical unemployment, however, is primarily caused by economic downturns and may not be affected by advance notice of lay-offs.

Question 6

Experience rating is

Accepted Answer

Experience rating is the practice of assigning a higher or lower UI tax rate to employers based on their history of layoffs and unemployment claims by their workers. Employers who lay off workers frequently will have a higher UI tax rate as compared to those who do not, regardless of the level of experience of the workers.

Question 7

Most workers who are laid off

Accepted Answer

The answer of Most workers who are laid off
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Question 8

A worker who is laid off because his or her company chooses to move from Wisconsin to North Carolina is counted as ________ unemployment.

Accepted Answer

When a worker loses their job due to a change in the structure of the economy or industry, such as their company moving to a different state, it is considered structural unemployment. This is different from frictional unemployment, which occurs when workers are temporarily between jobs, and cyclical unemployment, which is caused by fluctuations in the overall economy. "Wait" is not a category of unemployment.

Question 9

Wait unemployment is a form of ________ unemployment.

Accepted Answer

The answer of Wait unemployment is a form of ________...

Question 10

A retraining program to teach unemployed auto workers how to program computers would help to reduce ________ unemployment.

Accepted Answer

Retraining unemployed auto workers to program computers would help them acquire new skills that are in demand in the current labor market. This would address structural unemployment, which occurs when there is a mismatch between the skills of available workers and the skills demanded by employers.

Question 11

The natural rate of unemployment

Accepted Answer

The answer of The natural rate of unemployment
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Question 12

The unemployment rate tells us

Accepted Answer

The unemployment rate is calculated as the percentage of the labor force that is not working but actively seeking employment. Therefore, option D "the percentage of the labor force that is not working" is the correct answer.

Question 13

Which of the following does NOT explain why firms and employees may prefer layoffs to wage reductions?

Accepted Answer

Employees with general training have skills that are applicable across various firms, so their willingness to accept wage reductions over layoffs is less about the loss of firm-specific skills and more about broader employment prospects. The other options (A, C, D) relate directly to reasons why layoffs might be preferred over wage reductions due to the impact on employee morale, the implicit promises made by firms, and the preference for income certainty.

Question 14

Which of these is NOT an implication of the model of job search?

Accepted Answer

The answer of Which of these is NOT an implication...

Question 15

The largest source of unemployed workers is ________ and the second largest is ________.

Accepted Answer

Job losers are the largest source of unemployed workers, while reentrants are the second largest. Job leavers and new entrants are also sources of unemployment, but they are not as significant as job losers and reentrants.

Question 16

If the unemployment rate increases

Accepted Answer

The answer of If the unemployment rate increases
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Question 17

European policies which make it difficult to dismiss workers and reduce wage flexibility have probably

Accepted Answer

European policies which make it difficult to dismiss workers and reduce wage flexibility have increased the costs of doing business, which could potentially discourage firms from hiring new workers and lead to higher unemployment rates.

Question 18

A reservation wage is

Accepted Answer

A reservation wage is the lowest wage a worker is willing to accept in order to work. It is determined by factors such as the worker's skills, education, experience, and the current market conditions. If a job is offered at a wage below the worker's reservation wage, they are likely to turn it down.

Question 19

If unemployment insurance were perfectly experience rated then

Accepted Answer

Experience rating refers to the practice of adjusting premiums paid by employers for unemployment insurance based on their history of laying off workers. Perfectly experience rated unemployment insurance would mean that higher premiums would be charged to employers who lay off more workers and lower premiums would be charged to those who lay off fewer workers. This would create an incentive for employers to avoid layoffs and therefore could potentially reduce unemployment.

Question 20

An increase in an individual's reservation wage

Accepted Answer

An increase in an individual's reservation wage means that they are now willing to accept only a higher wage than before. This means that they will turn down job offers that pay lower than their reservation wage and thus, it will take more time for them to find a suitable job, if at all. This increases the duration of their unemployment. At the same time, since the individual is now expecting a higher wage, their expected wage will increase as well. Thus, an increase in reservation wage affects both the duration of unemployment and the expected wage. Therefore, option D is the best choice.

Quiz 14: Unemployment