Question 1

Assume that a country experiences a reduction in productivity that shifts the labour demand curve downward and to the left.If the real wage were rigid,this would lead to:
A) no change in the real wage and a rise in unemployment.
B) no change in the real wage and no change in unemployment.
C) no change in the real wage and a fall in unemployment.
D) a decrease in the real wage.

Accepted Answer

If the real wage is rigid or does not adjust, then it cannot decrease to accommodate the decrease in productivity. This means that there is a surplus of labor at the higher real wage, leading to a rise in unemployment. Therefore, the answer is A, no change in the real wage and a rise in unemployment.

Question 2

In recent years,Europe has experienced ______ unemployment than the United States,and employed Europeans work ______ hours than employed Americans.
A) more; more
B) more; fewer
C) less; fewer
D) less; more

Accepted Answer

Europe has generally experienced higher unemployment rates compared to the United States, and employed Europeans typically work fewer hours than their American counterparts, reflecting differences in labor market policies and work culture.

Question 3

I: Skill-biased technical change has lowered the demand for unskilled labour in both Europe and North America.
II: Unemployment has risen more in Europe as a result,because this shift in demand has been bigger there.
A) I is true; II is not.
B) II is true; I is not.
C) Both I and II are true.
D) Neither I nor II is true.

Accepted Answer

Skill-biased technical change has indeed lowered the demand for unskilled labor in both regions, but the rise in unemployment in Europe is more attributed to labor market rigidities rather than the shift being bigger there.

Question 4

If the economy were at a steady-state unemployment rate with a separation rate of 0.02 per month and a job-finding rate of 0.10 per month,and the labour force was 100 million,how many individuals would lose their jobs each month?

Accepted Answer

The answer of If the economy were at a steady-state...

Question 5

Which of the following hypotheses is consistent with fewer hours worked per year in Europe than in the United States?
A) fewer mandated holidays in Europe than in the United States
B) higher employment-to-population ratios in Europe than in the United States
C) higher tax rates in Europe than in the United States
D) a smaller underground economy in Europe than in the United States

Accepted Answer

Higher tax rates in Europe than in the United States can lead to fewer hours worked per year in Europe because higher taxes reduce the net benefit of working additional hours, potentially making individuals less inclined to work more.

Question 6

According to Blanchard,Europeans are more likely to use increases in real wages resulting from technological progress to increase _______, and Americans are more likely to use these increases in real wages to increase ______. A) hours of work; hours of leisure B) consumption of goods and services; hours of leisure C) hours of leisure; consumption of goods and services D) unemployment insurance benefits; efficiency wages

Accepted Answer

Blanchard argues that Europeans are more likely to value leisure time and will use increases in real wages resulting from technological progress to increase their leisure time (_,), while Americans are more likely to value consumption of goods and services and will use increases in real wages resulting from technological progress to increase their consumption of these goods and services, with less emphasis on leisure time. Therefore, option C, hours of leisure; consumption of goods and services, is the best choice.

Question 7

Which of the following is not a proposed explanation for that fact that Americans on average work 20 percent more hours than the typical resident of western Europe?
A) Europeans have more taste for leisure than Americans.
B) Americans have a lower unionization rate than Europeans.
C) Europeans face higher tax rates than Americans.
D) The underground economy is larger in America than in Europe.

Accepted Answer

The underground economy being larger in America than in Europe is not a proposed explanation for why Americans work more hours. The other options (A, B, C) relate to cultural preferences, labor organization, and tax implications, which are commonly discussed factors influencing work hours between these regions.

Question 8

According to efficiency-wage theory 
I: cutting the employer payroll tax paid for hiring skilled workers leads to a smaller unemployment rate,and
II: cutting the employer payroll tax for hiring unskilled workers leads to a smaller unemployment rate.
A) I is true; II is not.
B) II is true; I is not.
C) Both I and II are true.
D) Neither I nor II is true.

Accepted Answer

The answer of According to efficiency-wage theory 
I: cutting the...

Question 9

If the underground economy is larger in Europe than in the United States,then the difference in the _____ number of hours worked between Europe and the United States may be smaller than the difference in the _____ numbers of hours worked.
A) measured; actual
B) actual; measured
C) annual; monthly
D) monthly; annual

Accepted Answer

The underground economy, which is the portion of the economy that is not reported to the government, often involves unreported work and income. Therefore, if the underground economy is larger in Europe than in the United States, it is likely that there is more unreported work and income in Europe. This means that the actual number of hours worked in Europe may be closer to the measured number of hours worked (i.e. reported to the government), compared to the difference between the actual and measured number of hours worked in the United States. Therefore, the difference in the actual number of hours worked between Europe and the United States may be smaller than the difference in the measured number of hours worked. Hence, option B is the correct answer.

Question 10

According to efficiency-wage theory 
I: high income tax rates lead to high unemployment; and
II: this effect of high tax rates is not a proportional one-a doubling of the tax rate more than doubles the unemployment rate.
A) I is true; II is not.
B) II is true; I is not.
C) Both I and II are true.
D) Neither I nor II is true.

Accepted Answer

Efficiency-wage theory suggests that high income tax rates can lead to high unemployment because they reduce the incentive for workers to work. This effect is not proportional, meaning that a doubling of the tax rate will lead to more than a doubling of the unemployment rate.

Question 11

Which of the following statements correctly describes European labour markets?
A) In recent years,the unemployment rate in every European country has been higher than the unemployment rate in the United States.
B) In recent years,the average unemployment rate in Europe has been higher than the unemployment rate in the United States.
C) Within Europe the short-term unemployment rate shows greater variability across countries than does the long-term unemployment rate.
D) European countries with more generous unemployment insurance tend to have lower unemployment rates.

Accepted Answer

In recent years, the average unemployment rate in Europe has been higher than the unemployment rate in the United States. While some European countries may have lower unemployment rates than the US, on average, Europe has a higher unemployment rate. Therefore, options A, C, and D are incorrect.

Question 12

Assume that a country experiences a reduction in productivity that shifts the labour demand curve downward and to the left.If the labour market were always in equilibrium,this would lead to:
A) a lower real wage and a rise in unemployment.
B) a lower real wage and no change in unemployment.
C) a lower real wage and less unemployment.
D) no change in real wage or in unemployment.

Accepted Answer

The answer of Assume that a country experiences a reduction...

Question 13

Assume that a country experiences a reduction in productivity that lowers the marginal product of labour for any given level of labour.In this case,the:
A) labour supply curve shifts to the right.
B) labour supply curve shifts to the left.
C) labour demand curve shifts upward and to the right.
D) labour demand curve shifts downward and to the left.

Accepted Answer

A reduction in productivity results in a decrease in output for any given level of labour input. This will lead to a decrease in the demand for labour, causing the labour demand curve to shift downward and to the left. It will also result in a decrease in the marginal product of labour, making it less attractive for individuals to supply labour. Therefore, the labour supply curve may shift to the left as well. However, the decrease in demand for labour is the dominant effect.

Question 14

Earlier retirement in Europe than in the United States contributes to:
A) higher employment-to-population ratios in Europe than in the United States.
B) lower employment-to-population ratios in Europe than in the United States.
C) more hours worked per year by the average employed person in Europe than the average employed person in the United States.
D) fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

Accepted Answer

Earlier retirement in Europe means that fewer people are in the labor force, which leads to a lower employment-to-population ratio compared to the United States. This also means that the average employed person in Europe may have fewer hours worked per year than the average employed person in the United States, but this is not necessarily true for all individuals.

Question 15

If the rate of separation is 0.02 and the rate of job finding is 0.08 but the current unemployment rate is 0.10,then the current unemployment rate is ______ the equilibrium rate,and in the next period it will move ______ the equilibrium rate.
A) above; toward
B) above; away from
C) below; toward
D) below; away from

Accepted Answer

The answer of If the rate of separation is 0.02...

Question 16

More frequent holidays for workers in Europe than in the United States contribute to:
A) higher employment-to-population ratios in Europe than in the United States.
B) lower employment-to-population ratios in Europe than in the United States.
C) more hours worked per year by the average employed person in Europe than the average employed person in the United States.
D) fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

Accepted Answer

While workers in Europe have more frequent holidays, they also work fewer hours per year on average than workers in the United States. Therefore, the answer is D, fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

Question 17

If the rate of job separation is 0.02 per month and the rate of job finding is 0.10 per month,what is the natural rate of unemployment?

Accepted Answer

The answer of If the rate of job separation is...

Question 18

Which of the following statements most closely describes the variation in unemployment rates across countries in Europe?
A) Countries with higher rates of unionization tend to have higher unemployment rates,but this is partially mitigated if wage negotiations are coordinated among employers.
B) Countries with higher rates of unionization tend to have higher unemployment rates,and this tendency is exacerbated if wage negotiations are coordinated among employers.
C) Countries with more generous unemployment insurance benefits tend to have higher unemployment rates,but this is partially mitigated if the benefits are offered for a longer period.
D) Countries with more generous unemployment insurance tend to have lower unemployment rates,but this effect is completely offset if benefits are offered for a longer period.

Accepted Answer

Higher unionization can lead to higher unemployment due to wage rigidity, but coordinated wage negotiations can help mitigate this by aligning wages with economic conditions.

Question 19

Results from the Euro-Barometer Survey series suggest that people are happier when inflation is ______ and unemployment is ______.
A) high; high
B) high; low
C) low; high
D) low; low

Accepted Answer

People tend to be happier when both inflation and unemployment are low because low inflation maintains purchasing power and low unemployment increases job security and income stability.

Question 20

Much of the difference in unemployment rates across Europe is attributable to differences in:
A) short-term unemployment.
B) long-term unemployment.
C) frictional unemployment.
D) the natural rate of unemployment.

Accepted Answer

Long-term unemployment refers to those who have been unemployed for an extended period of time, typically over six months. Countries with higher levels of long-term unemployment tend to have higher overall unemployment rates.

Quiz 6: Unemployment

Assume that a country experiences a reduction in productivity that shifts the labour demand curve downward and to the left.If the real wage were rigid,this would lead to:

In recent years,Europe has experienced unemployment than the United States,and employed Europeans work hours than employed Americans.

I: Skill-biased technical change has lowered the demand for unskilled labour in both Europe and North America. II: Unemployment has risen more in Europe as a result,because this shift in demand has been bigger there.

If the economy were at a steady-state unemployment rate with a separation rate of 0.02 per month and a job-finding rate of 0.10 per month,and the labour force was 100 million,how many individuals would lose their jobs each month?

Which of the following hypotheses is consistent with fewer hours worked per year in Europe than in the United States?

According to Blanchard,Europeans are more likely to use increases in real wages resulting from technological progress to increase _, and Americans are more likely to use these increases in real wages to increase .

Which of the following is not a proposed explanation for that fact that Americans on average work 20 percent more hours than the typical resident of western Europe?

According to efficiency-wage theory I: cutting the employer payroll tax paid for hiring skilled workers leads to a smaller unemployment rate,and II: cutting the employer payroll tax for hiring unskilled workers leads to a smaller unemployment rate.

If the underground economy is larger in Europe than in the United States,then the difference in the _ number of hours worked between Europe and the United States may be smaller than the difference in the _ numbers of hours worked.

According to efficiency-wage theory I: high income tax rates lead to high unemployment; and II: this effect of high tax rates is not a proportional one-a doubling of the tax rate more than doubles the unemployment rate.

Which of the following statements correctly describes European labour markets?

Assume that a country experiences a reduction in productivity that shifts the labour demand curve downward and to the left.If the labour market were always in equilibrium,this would lead to:

Assume that a country experiences a reduction in productivity that lowers the marginal product of labour for any given level of labour.In this case,the:

Earlier retirement in Europe than in the United States contributes to:

If the rate of separation is 0.02 and the rate of job finding is 0.08 but the current unemployment rate is 0.10,then the current unemployment rate is the equilibrium rate,and in the next period it will move the equilibrium rate.

More frequent holidays for workers in Europe than in the United States contribute to:

If the rate of job separation is 0.02 per month and the rate of job finding is 0.10 per month,what is the natural rate of unemployment?

Which of the following statements most closely describes the variation in unemployment rates across countries in Europe?

Results from the Euro-Barometer Survey series suggest that people are happier when inflation is and unemployment is .

Much of the difference in unemployment rates across Europe is attributable to differences in:

Quiz 6: Unemployment

Assume that a country experiences a reduction in productivity that shifts the labour demand curve downward and to the left.If the real wage were rigid,this would lead to:

In recent years,Europe has experienced ______ unemployment than the United States,and employed Europeans work ______ hours than employed Americans.

I: Skill-biased technical change has lowered the demand for unskilled labour in both Europe and North America. II: Unemployment has risen more in Europe as a result,because this shift in demand has been bigger there.

If the economy were at a steady-state unemployment rate with a separation rate of 0.02 per month and a job-finding rate of 0.10 per month,and the labour force was 100 million,how many individuals would lose their jobs each month?

Which of the following hypotheses is consistent with fewer hours worked per year in Europe than in the United States?

According to Blanchard,Europeans are more likely to use increases in real wages resulting from technological progress to increase ______, and Americans are more likely to use these increases in real wages to increase ______.

Which of the following is not a proposed explanation for that fact that Americans on average work 20 percent more hours than the typical resident of western Europe?

According to efficiency-wage theory I: cutting the employer payroll tax paid for hiring skilled workers leads to a smaller unemployment rate,and II: cutting the employer payroll tax for hiring unskilled workers leads to a smaller unemployment rate.

If the underground economy is larger in Europe than in the United States,then the difference in the _____ number of hours worked between Europe and the United States may be smaller than the difference in the _____ numbers of hours worked.

According to efficiency-wage theory I: high income tax rates lead to high unemployment; and II: this effect of high tax rates is not a proportional one-a doubling of the tax rate more than doubles the unemployment rate.

Which of the following statements correctly describes European labour markets?

Assume that a country experiences a reduction in productivity that shifts the labour demand curve downward and to the left.If the labour market were always in equilibrium,this would lead to:

Assume that a country experiences a reduction in productivity that lowers the marginal product of labour for any given level of labour.In this case,the:

Earlier retirement in Europe than in the United States contributes to:

If the rate of separation is 0.02 and the rate of job finding is 0.08 but the current unemployment rate is 0.10,then the current unemployment rate is ______ the equilibrium rate,and in the next period it will move ______ the equilibrium rate.

More frequent holidays for workers in Europe than in the United States contribute to:

If the rate of job separation is 0.02 per month and the rate of job finding is 0.10 per month,what is the natural rate of unemployment?

Which of the following statements most closely describes the variation in unemployment rates across countries in Europe?

Results from the Euro-Barometer Survey series suggest that people are happier when inflation is ______ and unemployment is ______.

Much of the difference in unemployment rates across Europe is attributable to differences in:

In recent years,Europe has experienced unemployment than the United States,and employed Europeans work hours than employed Americans.

According to Blanchard,Europeans are more likely to use increases in real wages resulting from technological progress to increase _, and Americans are more likely to use these increases in real wages to increase .

If the underground economy is larger in Europe than in the United States,then the difference in the _ number of hours worked between Europe and the United States may be smaller than the difference in the _ numbers of hours worked.

If the rate of separation is 0.02 and the rate of job finding is 0.08 but the current unemployment rate is 0.10,then the current unemployment rate is the equilibrium rate,and in the next period it will move the equilibrium rate.

Results from the Euro-Barometer Survey series suggest that people are happier when inflation is and unemployment is .