Chapter 3 - quiz practice PDF

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Macroeconomics Test Yourself Chapter3 For the next questions, assume the following: The U.S. non-institutional civilian population is 250 million, of which 100 million are employed and 10 million are unemployed. 1.

Based on the data above, the unemployment rate is a. 4%. b. 6.6%. c. 9.1%. d. 10%. e. 11.1%.

2.

Based on the data above, the labor force participation rate is a. 36%. b. 40%. c. 44%. d. 90.1%. e. 66%.

3.

Based on the data above, the non-employment rate is a. 4%. b. 9.1%. c. 10%. d. 60%. e. 66%.

4.

The labor market is primarily responsible for determining which of the following variables? a. wages b. prices c. interest rates d. all of the above e. none of the above

5.

Which of the following facts about wage setting is true? a. Most workers in the U.S. have their wages set by collective bargaining. b. Collective bargaining plays a more important role in Japan and Western Europe than in the United States. c. The minimum wage in the U.S. is about 75% of the average wage. d. Wages for entry level jobs at McDonalds are set by negotiation with the company. e. All of the above.

Page 2 6.

The reservation wage is a. the wage that an employer must pay workers to reduce turnover to a reasonable level. b. the wage that ensures a laid-off individual will wait for re-hire, rather than find another job. c. the wage that would make an individual indifferent between working or not working. d. the wage offer that will end a labor-strike. e. the bribe that must be paid to a maitre d' when you want a table but did not call in advance.

7.

Henry Ford's experiment with efficiency wages resulted in a. a dramatic drop in productivity. b. a dramatic drop in the turnover rate. c. a rise in the layoff rate. d. new problems with the work force, like drunkenness and reckless driving. e. no noticeable effects.

8.

In a. b. c. d. e.

the wage-setting relation, the nominal wage rate rises when the price level falls. the unemployment rate falls. unemployment benefits fall. the minimum wage falls. all of the above.

9.

In a. b. c. d. e.

the wage setting relation W = PeF(u,z), the variable z would include the minimum wage. unemployment benefits. the amount of structural change in the economy. all of the above. none of the above.

10. Labor productivity is a. output per worker. b. workers per unit of capital. c. capital per worker. d. output per dollar of wages. e. the effort a worker puts into the job. 11. If there were perfect competition, then m (in the price setting equation P = (1 + m)W would equal a. W. b. P. c. 1. d. 0. e. infinity.

Page 3 12. The natural level of output is the output level a country produces when it is a. producing according to its comparative advantage. b. operating at the natural rate of unemployment. c. about to come out of a recession. d. using all of its capital stock. e. employing every worker who wants a job. 13. In a graph with the real wage on the vertical axis, and the unemployment rate on the horizontal, the wage-setting relation will appear as a. a vertical line. b. a horizontal line. c. an upward sloping line. d. a downward sloping line. e. a curve that first slopes upward, then downward. 14. The labor force represents which of the following? a. employed plus unemployed b. the total number employed c. the total number of working age individuals in the population d. the total number of employed, unemployed and discouraged individuals 15. Based on wage setting behavior, we know that a reduction in the unemployment rate will cause: a. no change in the real wage b. a reduction in the real wage c. an increase in the real wage d. an upward shift of the WS curve 16. Suppose the aggregate production function is given by the following: Y = AN. Given this information, we know that labor productivity is represented by the following: a. 1/A b. A c. 1/N d. N/Y 17. In the United States today, an unemployment rate 1% above the natural rate for one year will cause a. a 1% rise in the inflation rate. b. a 1% fall in the inflation rate. c. a 3% rise in the inflation rate. d. a 3% fall in the inflation rate. e. the inflation rate to be negative. 18. Okun's a. the b. the c. the d. the e. the

law tells us the relationship between inflation rate and the unemployment rate. inflation rate and the change in the unemployment rate. money growth rate and the output growth rate. money growth rate and the inflation rate. growth rate of output and the change in the unemployment rate.

19. In the U.S., in order to prevent the unemployment rate from rising, output must grow by ____ per year. a. 1% b. 2% c. 3% d. 2.5% e. 6% 20. In the U.S., if output grows 1% faster than normal, the unemployment rate will fall by ____ percentage points. a. .5 b. 1 c. 3 d. 5 e. 6 21. "Labor hoarding" occurs when a firm a. provides top management with too much support staff. b. keeps the most productive workers for itself, and allows the least productive to quit. c. retains more workers than needed when demand is low. d. keeps the most productive workers for itself, and lays off the least productive. e. has more employees than necessary at all times. 22. When output and employment increase, a. the labor force participation rate tends to increase. b. the unemployment rate decreases. c. more discouraged workers begin looking for jobs. d. all of the above. e. none of the above. 23. Which of the following a. ut - ut-1 = -.5(DY/y b. ut - ut-1 = -.5(3% c. Pit - Pite = -.5(ut d. Dy/y = DM/M - .03

equations represents the Okun's law relation? - 3%) Dy/y) un)

Key 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.

c c d a b c b b d a d b d a c b b e c a c d a...