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Name:
Class:
Date:
CHAPTER 7 Economic Issues
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Page 1
1. It is common for labor agreements to contain a cost-of-living adjustment (COLA) clause during the term of the
contract.
a.
True
b.
False
ANSWER:
True
2. The majority of private sector employees participate in a profit sharing plan as incentive.
a.
True
b.
False
ANSWER:
False
3. Most unions consider gain sharing plans as an adequate substitute for traditional negotiated hourly wage gains in their
labor contracts.
a.
True
b.
False
ANSWER:
False
4. Pressure from domestic and international competition has increased management’s ability to simply pass increased
labor costs on to the customer in the form of higher prices
a.
True
b.
False
ANSWER:
False
5. Skill-based pay (SBP) systems base compensation on the skills or knowledge an employee possesses that are valued by
the employer.
a.
True
b.
False
ANSWER:
True
6. Wages and other economic benefits represent income to employees, costs to an employer, and a basis for tax revenue to
the government.
a.
True
b.
False
ANSWER:
True
7. Contract language that specifies a newly hired employee will be paid less than other employees performing a similar
job is referred to as a Two-Tier Wage plan.
a.
True
b.
False
ANSWER:
True
8. Management prefers to include the union to conduct job evaluations for employees in a firm.
a.
True
b.
False
ANSWER:
False
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CHAPTER 7 Economic Issues
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9. If a union wishes to encourage solidarity within its membership at a particular firm, it should not negotiate for a two-
tier pay plan.
a.
True
b.
False
ANSWER:
True
10. Labor market wage surveys measure how the job content, method of payment, regularity of employment,
supplemental unemployment benefits, vacations, pensions, and holidays vary from company to company.
a.
True
b.
False
ANSWER:
False
11. Wage comparability is not given much importance in wage determination
a.
True
b.
False
ANSWER:
False
12. The monetary value of employee benefits provided by unionized employers exceeds the value of employee benefits
provided by nonunion employers.
a.
True
b.
False
ANSWER:
True
13. A Scanlon plan, Rucker plan, and Improshare plan are all examples of gain sharing plans.
a.
True
b.
False
ANSWER:
True
14. Supplemental unemployment benefits (SUB) are payments made by the federal government to unemployed workers
during a layoff.
a.
True
b.
False
ANSWER:
False
15. A higher degree of labor intensiveness increases management negotiators' resistance to bargaining proposals designed
to increase wage rates.
a.
True
b.
False
ANSWER:
True
16. Most union labor agreements specify daily or weekly work schedules and most provide premium pay for hours
worked beyond the normal hours.
a.
True
b.
False
ANSWER:
True
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CHAPTER 7 Economic Issues
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Page 3
17. Union leaders often view management-exclusive job evaluation with disfavor because it tends to limit bargaining
opportunities and freeze wage structure.
a.
True
b.
False
ANSWER:
True
18. Unions often prefer defined contribution plans because it limits their financial obligations to fund the plan.
a.
True
b.
False
ANSWER:
False
19. Unions generally favor the use of an employee stock ownership plan (ESOP) as a basic pension plan for employees.
a.
True
b.
False
ANSWER:
False
20. The term “value added” refers to the contribution of factors of production to the value of a final product or service.
a.
True
b.
False
ANSWER:
True
21. During economic downturns and recessions, management will often claim an inability to pay as a criterion for wage
determination.
a.
True
b.
False
ANSWER:
True
22. A deferred wage increase is a method used to adjust employee base wage rates during the term of a labor agreement.
a.
True
b.
False
ANSWER:
True
23. A major reason for a piece-rate compensation plan is that many production jobs are machine paced, so employees
have limited control over the pace of work and thus the number of items produced during scheduled work hours.
a.
True
b.
False
ANSWER:
False
24. The process of systematically securing information and facts about what employees do in various jobs is called a job
description.
a.
True
b.
False
ANSWER:
False
25. Job factors used in evaluating jobs include skill, effort, responsibility, and working conditions in varying degrees
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Page 4
depending on the type of organization.
a.
True
b.
False
ANSWER:
True
26. The federal agency responsible for enforcement of the Family and Medical Leave Act is:
a.
Family and Medical Leave Administration.
b.
Equal Employment Opportunity Commission.
c.
Department of Labor.
d.
Federal Standards Board.
e.
National Labor Relations Board.
ANSWER:
c
27. One of the most popular group incentive plan for sharing labor cost savings is the:
a.
Merit savings plan.
b.
Profit sharing plan.
c.
Piece rate plan.
d.
Scanlon plan.
e.
Premium pay plan.
ANSWER:
d
28. Under a cliff vesting schedule, an employee is considered fully vested after completing ____ years of service.
a.
10
b.
5
c.
15
d.
20
e.
30
ANSWER:
b
29.
The relative influence of job evaluation can be seen in the ___________, which represents the internal distribution of the
proposed or negotiated wage increase to the bargaining unit employees.
a.
Skill-based pay
b.
Skill pay differential
c.
Wage spread
d.
Management’s ability to pay
e.
Skill-based pay and wage spread
ANSWER:
c
30.
The process of systematically securing information and facts about what employees do in various jobs is called:
a.
Job evaluation.
b.
Job description.
c.
Job analysis.
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CHAPTER 7 Economic Issues
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d.
Job survey.
e.
Job specifications.
ANSWER:
c
31. The labor relations term for a written clause in a labor agreement which adjusts wages in accordance with changes in
the consumer price index at specified intervals during the contract’s term is the:
a.
Cost-of-living adjustment.
b.
Wage re-opener.
c.
Lump sum pay adjustments.
d.
Wage spread.
e.
Spillover effect.
ANSWER:
a
32. The labor relations term written to permit wages to be renegotiated at a specified point in time during the term of the
contract or whenever some predetermined event occurs is the:
a.
Lump-sum pay adjustments.
b.
Cost-of-living adjustment.
c.
Wage re-opener.
d.
Open-ended contract.
e.
Spillover effect.
ANSWER:
c
33. All of the following are group incentive plans except:
a.
Improshare.
b.
Scanlon plan.
c.
Piece-rate plan.
d.
Rucker plan.
e.
Gainsharing programs.
ANSWER:
c
34. The labor relations term for a one-time payment made to adjust wages which does not affect an employee's hourly
base wage rate is:
a.
Holiday pay.
b.
Wage re-opener.
c.
Vacation pay.
d.
Lump-sum pay adjustment.
e.
Spillover effect.
ANSWER:
d
35. The Family and Medical Leave Act of 1993 requires that private sector employers to provide eligible employees up to
12 weeks of unpaid leave if the firm has:
a.
25or more employees.
b.
50or more employees.
c.
100 or more employees.
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d.
500 or more employees.
e.
1,000 or more employees.
ANSWER:
b
36. The act that was amended in 1987 to prohibit any mandatory retirement age, with the exception of airline pilots, using
70 as a mandatory retirement age is the:
a.
Employee Retirement Income Security Act (ERISA) of 1974.
b.
Pension Protection Act of 2006.
c.
Affordable Care Act.
d.
Patient Protection Act.
e.
Age Discrimination in Employment Act (ADEA).
ANSWER:
e
37. The plan to which companies make monetary payments to a specific group or groups of employees for producing
more output or generating cost savings beyond some established goal is called a:
a.
Gain-sharing plan
b.
Profit sharing plan
c.
Fee-for-service plan
d.
Graded vesting schedule
e.
Liberty plan.
ANSWER:
a
38. The most common formula for adjusting wages to the cost of living is:
a.
Wages increased 3 cents for each 0.1 rise in the CPI-W.
b.
A percentage increase in wages for each percentage increase in the CPI-W.
c.
Wages increased 1 cent-per-hour increase for each 0.3 point increase in the CPI-W.
d.
Wages increased 1 cent for each 0.2 rise in the CPI-W.
e.
Wages increased 4 cent-per-hour increase for each 0.3 point increase in the CPI-W.
ANSWER:
c
39. Which federal agency is responsible for computing and reporting the Consumer Price Index (CPI)?
a.
Department of Agriculture.
b.
Department of Commerce.
c.
Department of State.
d.
Department of Labor.
e.
Bureau of Labor Statistics.
ANSWER:
d
40. The U.S. Bureau of Labor Statistics reports that both private sector union and nonunion workers receive a
median__________paid vacation days after one year of service
a.
6.
b.
7.
c.
10.
d.
14.
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CHAPTER 7 Economic Issues
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e.
15.
ANSWER:
c
41. On reaching retirement age, a retiree may generally choose to accept an annuity payment (e.g., $10,000 per year for
life) based on the value of the account balance or receive a;
a.
Golden parachutes distribution.
b.
Lump-sum distribution.
c.
Skill-based distribution.
d.
Secured-income distribution.
e.
Guaranteed-salary distribution
ANSWER:
b
42. The clause written into collective bargaining agreements which seeks to maintain pay comparability and pay
differentials within firms is called the:
a.
Ability to pay clause.
b.
Relevant contract clause.
c.
Re-opener clause.
d.
Nondiscrimination clause.
e.
Me-too clause.
ANSWER:
e
43. The following preliminary conclusions may be reported based on a research on the effects of ESOPs except:
a.
Labor–management cooperation does not emerge automatically when publicly traded companies move into
employee ownership.
b.
Employee ownership leads to greater identification of the employees with the company.
c.
The presence of an ESOP does not make a firm more productive, efficient, or profitable.
d.
Employees receive less information about the company.
e.
Generally, the role of the union does not change except when the union made an early and ongoing effort to
become involved in the change process.
ANSWER:
d
44.
In 2014, ___ percent of private-sector union members participated in some type of employer- or union-sponsored pension
plan compared to 45 percent of nonunion employees.
a.
18
b.
25
c.
63
d.
83
e.
93
ANSWER:
d
45. The Family and Medical Leave Act of 1993 provide eligible employees up to ____ weeks of unpaid leave for a serious
illness, birth or adoption of a child, or care of a seriously ill child, spouse, or parent.
a.
4
b.
6
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c.
8
d.
10
e.
12
ANSWER:
e
46. The process of systematically securing information and facts about what employees do in various jobs is called:
a.
Job description.
b.
Job specification.
c.
Job analysis.
d.
Job factor.
e.
Job classification.
ANSWER:
c
47. The expected employee output that is consistent with workmanship quality, operational efficiency, and reasonable
working capacities of normal operators is called:
a.
Production standards.
b.
Performance assessment.
c.
Negotiated provisions.
d.
Time studies.
e.
Job analysis.
ANSWER:
a
48. The plan based on a change in the ratio between labor costs and dollar value added is called the:
a.
Scanlon plan.
b.
Improshare plan.
c.
Skill-base pay plan.
d.
Rucker plan.
e.
Production plan.
ANSWER:
d
49. The plan which bases compensation on the skills or knowledge an employee possesses and is valued by the employer
is called the:
a.
Scanlon plan.
b.
Improshare plan.
c.
Skill-base pay plan.
d.
Rucker plan.
e.
Production plan.
ANSWER:
c
50. Contract language that specifies a newly hired employee will be paid less than other employees performing a similar
job is referred to as a:
a.
Skill pay differential.
b.
Two-tier Wage plan.
c.
Wage standard.
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d.
Wage comparability.
e.
Scanlon plan.
ANSWER:
b
