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Chapter 06 TestBank - new
Student: ___________________________________________________________________________
2. In the United Sates, the average annual rate of growth of real wages was fastest in the period:
A. 1960-1973.
B. 1960-1995.
C. 1996-2010.
D. 1973-1995.
3. The growth rate of average annual earnings in the United States from 1973 to 1995was:
A. higher than it was from 1960 to 1973.
B. lower than it was from 1960 to 1973.
C. the same as it was from 1960 to 1973.
D. roughly equal to zero.
4. Compared to the 1960 and 1973 period, average real earnings of workers ______ from 1973 to 1995 and then
______ from 1996 to 2010.
A. declined; grew more slowly
B. declined; declinedeven more
C. slowly; grew at about the same rate
D. grew more rapidly; declined
5. In the United States the real wages of the least-skilled, least educated workers have ______ and the wages of
best-educated, highest skilled workers have ______.
A. increased; increased
B. declined; increased
C. increased; declined
D. declined; remained constant
7. Since the year2000, the share of the populationholding or actively looking forjobs have _______ in the United
States:
A. been record high.
B. increased.
C. remained approximately constant.
D. decreased.
11. All of the following describe trends in U.S. labor markets except:
A. growing wage inequality in the United States in recent decades.
B. a slowdown in real wage growth since the 1970s.
C. substantial growth in the level of employment in the United States since 2000.
D. substantial growth in real ages during the last century..
15. According to the principle of diminishing returns to labor, if the amount of capital and other inputs are held
constant, employing additional workers:
A. increases output at an increasing rate.
B. increases output at a constant rate.
C. increases output at a decreasing rate.
D. decreases output at an increasing rate
16. The value of the marginal product of labor equals the marginal product of labor times the:
A. real wage.
B. nominal wage.
C. price of output.
D. quantity of labor.
17.
The following table provides information about production at the XYZ-TV Company.
0 0 --- ---
1 35 35 $35,000
2 68 33 $33,000
3 99 31 $31,000
4 128 29 $29,000
5 155 27 $27,000
How many workers will XYZ-TV Company hire if the going wage for TV production workers is $32,000?
A. 0
B. 1
C. 2
D. 3
18.
The following table provides information about production at the XYZ-TV Company.
0 0 --- ---
1 35 35 $35,000
2 68 33 $33,000
3 99 31 $31,000
4 128 29 $29,000
5 155 27 $27,000
How many workers will XYZ-TV Company hire if the going wage for TV production workers is $30,000?
A. 0
B. 1
C. 2
D. 3
19.
The following table provides information about production at the XYZ-TV Company.
0 0 --- ---
1 35 35 $35,000
2 68 33 $33,000
3 99 31 $31,000
4 128 29 $29,000
5 155 27 $27,000
How many workers will XYZ-TV Company hire if the going wage for TV production workers is $28,000?
A. 1
B. 2
C. 3
D. 4
20.
The following table provides information about production at the XYZ-TV Company.
0 0 --- ---
1 35 35 $35,000
2 68 33 $33,000
3 99 31 $31,000
4 128 29 $29,000
5 155 27 $27,000
How many workers will XYZ-TV Company hire if the going wage for TV production workers is $60,000?
A. 0
B. 4
C. 5
D. More than 5
21.
High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about
how many plastic chairs can be produced per hour.
0 0
1 10
2 18
3 24
4 28
5 30
How many workers will be hired if the hourly wage for workers is $70?
A. 1
B. 2
C. 3
D. 4
22.
High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about
how many plastic chairs can be produced per hour.
0 0
1 10
2 18
3 24
4 28
5 30
How many workers will be hired if the hourly wage for workers is $30?
A. 1
B. 2
C. 3
D. 4
23.
High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about
how many plastic chairs can be produced per hour.
0 0
1 10
2 18
3 24
4 28
5 30
How many workers will be hired if the hourly wage for workers is $120?
A. 0
B. 3
C. 5
D. More than 5
26. The introduction of a new technology that increases the productivity of labor will:
A. increase the supply of labor.
B. decrease the supply of labor.
C. increase the demand for labor.
D. decrease the demand for labor
27. If the price of TVs produced by XYZ-TV Company falls from $1,000 to $750 per TV set, then the:
A. supply of labor to the XYZ-TV Company increases.
B. supply of labor to the XYZ-TV Company decreases.
C. demand for labor by the XYZ-TV Company increases.
D. demand for labor by the XYZ-TV Company decreases.
28. The demand for labor increases when the:
A. real wage increases.
B. real wage decreases.
C. value of the marginal product of labor increases.
D. value of the marginal product of labor decreases.
29. If the price of tables sold by All-Oak Table Co. increases from $400 to $500, then the:
A. supply of labor to All-Oak Table Co. increases.
B. supply of labor to All-Oak Table Co. decreases.
C. demand for labor by All-Oak Table Co. decreases.
D. demand for labor by All-Oak Table Co. increases.
30.
Production data for Joe's Pizza Parlor are as follows. For simplicity assume that labor is the only input. Each pizza
sells for $5.
0 0
1 10
2 18
3 24
4 30
5 32
A. 1
B. 2
C. 3
D. 4
31.
Production data for Joe's Pizza Parlor are as follows. For simplicity assume that labor is the only input. Each pizza
sells for $5.
0 0
1 10
2 18
3 24
4 30
5 32
A. 1
B. 2
C. 3
D. 4
32. The minimum payment you are willing to accept to do a job is your:
A. nominal wage.
B. real wage.
C. reservation price.
D. value of marginal product.
34. As the real wage decreases, the quantity of labor demanded ______ and the quantity of labor supplied
_______.
A. increases; increases
B. increases; decreases
C. decreases; decreases
D. decreases; increases
35. Holding other factors constant, if food prices decline relative to the prices of other products, then the real wages of
agricultural workers will ______ and employment of agricultural workers will _____.
A. increase; increase
B. increase; decrease
C. decrease; not change
D. decrease; decrease
36. Holding other factors constant, if computers allow factory workers to manufacture more products per hour, then the
real wages of factory workers will ______ and employment of factory workers will _____.
A. increase; increase
B. increase; decrease
C. decrease; not change
D. decrease; increase
37. Holding other factors constant, if a larger proportion of the population enters the labor force as a result of a growing
social acceptance of women working, then the real wages of workers will ______ and employment of workers will
_____.
A. increase; increase
B. increase; decrease
C. decrease; not change
D. decrease; increase
38. Holding other factors constant, if oil prices rise relative to the prices of other products, then the real wages of oil
workers will ______ and employment of oil workers will _____.
A. increase; increase
B. increase; decrease
C. decrease; not change
D. decrease; increase
39. Holding other factors constant, if the education and skills of the typical worker in an economy increases, then the
real wages of workers will ______ and employment of workers will _____.
A. increase; increase
B. increase; decrease
C. decrease; not change
D. decrease; increase
40. If the existence of alternative opportunities makes people become less willing to work in poultry processing
plants, then the real wage of unskilled workers in poultry processing plants is predicted to ______ and the
employment of unskilled workers in poultry processing plants is predicted to ______.
A. increase; increase
B. increase; decrease
C. increase; not change
D. decrease; decrease
41. Real wages increased in industrialized countries in the twentieth century because the demand for labor:
A. increased more rapidly than the supply of labor increased.
B. increased more slowly than the supply of labor increased.
C. increased, while the supply of labor decreased.
D. decreased, while the supply of labor increased.
42. Holding other factors constant, technological progress ______ the real wage and ______ employment.
A. increases; increases
B. increases; decreases
C. increases; does not change
D. decreases; increases
43. The two most important factors contributing to increased productivity in industrialized countries in the twentieth
century were:
A. higher relative prices and a larger labor supply.
B. higher relative prices and technological progress.
C. technological progress and increases in the capital stock.
D. technological progress and increases in the labor supply.
44. Long-term increases in productivity that have increased the demand for labor, and raised real wages, have
resulted primarily from ______ and _____.
A. technological progress; a modernized capital stock
B. technological progress; an increased labor supply
C. a modernized capital stock; skill-biased technological change
D. a modernized capital stock; an increased labor supply
45. Larger increases in the demand for labor than in the supply of labor explain:
A. the substantial increase in real wages.
B. the slowdown in real wage growth.
C. increasing wage inequality.
D. skill-biased technological change.
46. Slower growth in labor demand in combination with increases in labor supply explains ____________
accompanied by __________.
A. a slowdown in real wage growth; a decline in employment
B. a slowdown in real wage growth; rapid employment growth
C. a slowdown in real wage growth; increasing wage inequality
D. accelerated real wage growth; a decline in employment
47. Holding other factors constant, an increase in the capital stock ______ the real wage and ______ employment.
A. increases; increases
B. increases; decreases
C. increases; does not change
D. decreases; increases
48. 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 ______.
A. increase; increase
B. increase; decrease
C. increase; not change
D. decrease; decrease
49. 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.
A. increase; increase
B. increase; decrease
C. decrease; decrease
D. decrease; increase
50. Factors increasing the U.S. labor supply and thereby contributing to the slowdown in real-wage growth that began
in the 1970s include ______ and _____.
A. skill-biased technological change; globalization
B. increased labor force participation by women; the coming-of-age of the baby-boom generation
C. technological progress; diminishing returns to labor
D. increasing wage inequality; globalization
51. The slowdown in the growth of real wages in the United States since 1973 is consistent with a concurrent:
A. slowdown in productivity gains.
B. slowdown in the growth of the working age population.
C. slowdown in immigration into the country.
D. speedup in the rate of inflation.
52. Slower real wage growth in the U.S. since the 1970s accompanied by rapid job growth, can be explained by:
A. skill-biased technological change.
B. globalization.
C. a productivity slowdown accompanied by an increase in the labor supply.
D. a productivity slowdown accompanied by a decrease in the labor supply.
53. In recent decades, slower growth in the demand for labor accompanied by an accelerated growth in the supply
of labor in the U.S. explains:
A. negativereal wage growth and double-digit rates of unemployment. B negative real wage growth and increasing
wage inequality.
B. negative real wage growth and an increase in the number of people with jobs.
C. increasing wage inequality and double-digit rates unemployment.
54. Two explanations for increasing wage inequality are ______ and ________.
A. technological progress; a modernized capital stock
B. increased labor supply; a slowdown in productivity growth
C. increased worker mobility; transition aid
D. globalization; skill-biased technological change
55. 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 ______.
A. increases; increases
B. increases; decreases
C. decreases; increases
D. decreases; decreases
56. 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 ______.
A. increase; increase
B. increase; decrease
C. decrease; increase
D. decrease; decrease
57. 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 ____.
A. increase; increase
B. increase; not change
C. increase; decrease
D. decrease; increase
58. Globalization ______ the wages of workers in the exporting industries and ______ the wages of workers in
the import-competing industries.
A. raises; raises
B. raises; lowers
C. raises; does not change
D. lowers; raises
59. Increasing wage inequality results when international trade leads to ______ wages for workers in exporting
industries and ______ wages for workers in importing industries.
A. higher; higher
B. higher; lower
C. lower; no change in
D. lower; higher
60. 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:
A. the diminishing marginal product of labor.
B. the diminishing marginal product of capital.
C. increasing reservation prices.
D. globalization.
61. Globalization can increase wage inequality in the United States if international competition is primarily in industries
requiring ______ workers.
A. many
B. few
C. highly-skilled
D. low-skilled
62. The increase in wage inequality resulting from globalization can be reversed through:
A. revoking the principle of comparative advantage.
B. increases in worker mobility.
C. decreases in worker mobility.
D. making markets more competitive.
63. Technological change that affects the marginal products of high-skilled and low-skilled workers differently is called
______ technological change.
A. capital-labor
B. skill-biased
C. marginal-productivity
D. high-low
64. Skill-biased technological change increases wage inequality by altering the ______ high-skilled workers relative to
low-skilled workers.
A. reservation price of
B. mobility of
C. supply of
D. demand for
65. The introduction of word processing software that increases the demand for workers with computer skills relative to
those without such skills is an example of:
A. increasing reservation prices.
B. skill-biased technological change.
C. the diminishing marginal product of labor.
D. globalization.
66. Most economists generally argue ______ trying to block technological advances because these
technological advances ______.
A. in favor of; cause the economy to grow to rapidly
B. in favor of; increase wage inequality
C. against; are necessary for improved standards of living
D. against; promote wage equality
68. If the Luddites had succeeded in ______ the introduction of labor-saving machinery, economic growth in
Great Britain may have been ______.
A. blocking; slower
B. blocking; more rapid
C. promoting; slower
D. promoting; more rapid
69. Skill-biased technological has different effects on the marginal products of ______ workers and ______
workers.
A. male; female
B. union; nonunion
C. government; private-sector
D. higher-skilled; lower-skilled
71. From an economic perspective, the best response to increased wage inequality is to:
A. block future technological change.
B. stop all international trade.
C. provide transition aid to disadvantaged workers.
D. make skill-biased technological change illegal.
72. Each person who is 16 years or older is considered to be in one of the following categories:
A. employed, unemployed, or discouraged worker.
B. part-time worker, full-time worker, or unemployed.
C. part-time worker, full-time worker, or out of the labor force.
D. employed, unemployed, or out of the labor force.
73. A person 16 years or older who does not work, but is actively looking for work, is officially classified as:
A. employed.
B. unemployed.
C. chronically unemployed.
D. out of the labor force.
75. Who from among the following would be classified as out of the labor force?
A. A person with a part-time job who wants and is looking for a full-time job.
B. A person who is willing to work and has looked for a job in the last week.
C. A person who is willing to work but has not looked for a job in two months.
D. None of these people would be classified as out of the labor force.
76. Which of the following events would increase the unemployment rate, if nothing else changed?
A. Unemployed workers leave the labor force.
B. Employed workers leave the labor force.
C. Workers from outside the labor force become employed.
D. Unemployed workers become employed.
77.
Based on the information in the table, how big is the labor force?
A. 576,000
B. 720,000
C. 800,000
D. 1,000,000
78.
A. 7.2%
B. 8.0%
C. 10.0%
D. 28.0%
79.
Based on the information in the table, how many people are out of the labor force?
A. 144,000
B. 200,000
C. 280,000
D. 576,000
81. Who from among the following would be classified as out of the labor force?
A. Brenda Smith, an 18 year old college student employed part-time at a fast food restaurant.
B. Mario Faubert, a NHL hockey player at home sick with the flu.
C. Jack Little, a 21 year old new college graduate actively looking for his first job.
D. Amanda Pie, a full-time homemaker.
82. The labor force equals the number of people:
A. employed.
B. aged 16 years and older.
C. both employed and unemployed.
D. employed, unemployed and discouraged.
85. In a country with 200 million people aged 16 years and older, 120 million are in the labor force, and 114 million are
employed, what is the participation rate?
A. 40 percent
B. 57 percent
C. 60 percent
D. 95 percent
86. In a small town of 100 people, there are 10 children under 16, 10 retired people, 60 people with full-time jobs, 3
people with part-time jobs, 3 full-time students over 16, and 4 full-time homemakers. The remaining people did not
have jobs, but wanted jobs. What is the unemployment rate in this town?
A. 10.0%
B. 11.0%
C. 13.7 %
D. 14.5%
87. In a small town of 100 people, there are 10 children under 16, 10 retired people, 60 people with full-time jobs, 3
people with part-time jobs, 3 full-time students over 16, and 4 full-time homemakers. The remaining people did not
have jobs, but wanted them.What is the participation rate in this town?
A. 63.0%
B. 72.0%
C. 81.1%
D. 87.5%
88. The number of unemployed divided by the labor force equals the:
A. labor-force participation rate.
B. employment rate.
C. unemployment rate.
D. duration rate.
89. The labor force divided by the working age population equals the:
A. unemployment rate.
B. employment rate.
C. participation rate.
D. population rate.
90. Data for an economy show that the unemployment rate is 6 percent, the participation rate is 60 percent, and 200
million people 16 years or older are not in the labor force. How many people are in the working-age population in
this economy?
A. 333 million
B. 500 million
C. 800 million
D. 1.20 billion
91. Data for an economy show that the unemployment rate is 6 percent, the participation rate 60 percent, and 200
million people 16 years or older are not in the labor force. How many people are unemployed this economy?
A. 12.0 million
B. 18.0 million
C. 28.8 million
D. 43.2 million
92. Data for an economy show that the unemployment rate is 6 percent, the participation rate 60 percent, and 200
million people 16 years or older are not in the labor force. How many people are employed in this economy?
A. 30 million
B. 188 million
C. 282 million
D. 300 million
93. Data for an economy shows that the unemployment rate is 10%, the participation rate 80 percent, and 200
million people 16 years or older are not in the labor force. How many people are in the working-age population in
this economy?
A. 250 million
B. 800 million
C. 1.0 billion
D. 1.6 billion
94. Data for an economy shows that the unemployment rate is 10%, the participation rate 80 percent, and 200 million
people 16 years or older are not in the labor force. How many people are in the labor force in this economy?
A. 80 million
B. 200 million
C. 800 million
D. 1.0 billion
95. Income lost by the unemployed is an example of the ______ cost of unemployment, while the additional spending
to control crime is an example of the _____ cost of unemployment.
A. social; psychological
B. economic; social
C. economic; psychological
D. psychological; economic
96. Depression and lost self-esteem are examples of the ______ costs of unemployment, while the lost income and
tax revenue are examples of the ______ costs of unemployment.
A. social; psychological
B. economic; social
C. economic; psychological
D. psychological; economic
98. Leaving the labor force or finding a job are two ways that:
A. a person can become a discouraged worker.
B. a person can become an involuntary part-time worker.
C. an unemployment spell can begin.
D. an unemployment spell can end.
99. The towns of Jekyll and Hyde each have a labor force of 2,000 people. In Jekyll, 500 people were
unemployed for the entire year, while the rest of the labor force was employed continuously. In Hyde, every
member of the labor force was unemployed for three months and was employed for nine months. The average
duration of unemployment spells over the year was ______ months in Jekyll and ______ months in Hyde.
A. 3; 3
B. 3; 9
C. 12; 3
D. 12; 9
102. In an economy of 100 people in the labor force, if 10 people are unemployed for 4 weeks during the year, and 30
people are unemployed for 8 weeks during the year, and the rest are employed continuously throughout the
year, then the average duration of unemployment in this economy is:
A. 5 weeks.
B. 6 weeks.
C. 7 weeks.
D. 8 weeks.
103. People who say that they would like to have a job, but have not made an effort to find a job in the past four weeks,
are called ______ workers.
A. unemployed
B. involuntary part-time
C. discouraged
D. chronically unemployed
104. Jim Brown would like to work, but has not looked for work in the past four weeks because he does not believe
any jobs are available. In the official employment statistics, Jim is classified as:
A. employed.
B. unemployed.
C. out of the labor force.
D. underemployed.
105. Susan Suarez would like to work forty hours per week, but can only find twenty hours per week of work. In the
official employment statistics, Susan is classified as:
A. employed.
B. unemployed.
C. out of the labor force.
D. underemployed.
109. Two groups of workers not counted as unemployed in the official unemployment statistics are ______ workers.
A. chronically unemployed and short-term unemployed
B. chronically-unemployed and discouraged
C. chronically unemployed and involuntary part-time
D. discouraged and involuntary part-time
“Shortly after ten o’clock last night,” the article ran, “the
Farrelton Fire House was entered by one or more burglars who
forced the little, old-fashioned safe and stole a sum slightly less
than four hundred dollars. Most of this money constituted the
fund belonging partly to the exempt firemen’s organization and
partly to the active service men, and was intended to be used to
finance the Firemen’s Carnival to be held in Stebbin’s Field. No
one was in the fire-house when the robbery occurred.
“A few minutes after ten last night, an alarm was sent in from
the fire-box in the outlying section of town where New Street
was lately extended. It was a false alarm and there is no clew
which affords any hope of identifying the sender.
“It is thought by the police that the alarm may have been sent
by a confederate of the burglars in order to empty the fire-house
of its occupants at a particular time. If this was the case, it would
argue that the crime was executed by men familiar with facts
about the fire-house.
“Charlie Winthrop, driver of the engine, is on vacation and his
place is being filled by one of the other men, Fred Corway.
Corway, who was injured in the McElroy fire last year, usually
remains in the fire-house when an alarm is received.
“But last night, there being still another man absent because
of illness, Corway went out with the others. It is believed that the
robbery was planned by some one who knew that the fire
company was short-handed. The robbers may have sent in the
alarm in the hope of completely emptying the building, or at the
worst of having but one crippled occupant to deal with.
“The police are following up several rather unpromising clews
which they refuse to divulge. Chief Bordman persists in the
belief that the job was done by local talent and points to the fact
that very little money is kept in fire-houses and also that the
projected carnival is not known about outside of Farrelton.
“When seen this morning, County Detective Burr said, ‘It
looks to me like a home town affair. Burglars don’t ransack fire
headquarters, because there usually isn’t anything worth
stealing in such places. They must have known about this
money. And they probably had some hopes of clearing out the
place for a while with a false alarm. It looks to me as if they had
inside knowledge. They probably knew the safe was an out-of-
date affair, too. They had to work quick. And the quicker we
work clearing a lot of young loafers away from the neighborhood
of the fire-houses and other hang-out spots in this town, the
better it will be.’”