Consider a proposed law to deregulate the hair-care industry. Barbers would be allowed
to do work previously confined to stylists, and the latter would no longer be required to
pass strict licensure exams. Which outcome would you expect to result from this
deregulation?
a.A decrease in economic rent to current stylists
b.A decrease in economic rent to current barbers
c.An increase in economic rent to beauty school operators
d.An increase in economic rent to workers in occupations in which displaced stylists
find jobs
A union wage advantage is less likely to occur where:
a.the ‘spillover effect” outweighs the “threat effect”
b.product markets are characterized by substantial monopoly power
c.only a few firms within a competitive industry are unionized
d.there is a distinct ‘shock effect”
On-the-job training contributes to the skewness in the distribution of earnings because:
a.formal schooling and on-the-job training are positively correlated
b.those with more training generally work longer hours
c.both a. and b. are correct
d.neither a. nor b. are correct
Which of the following is an example of a nonexhaustive (transfer) government
expenditure?
a.Government payroll expenditures
b.Government purchase of a weather satellite
c.Farm price supports
d.Public school construction
Under what conditions would we expect to find the greatest growth of output and
employment in a specific industry?
a.High productivity growth, price-elastic product demand, income-elastic product
demand
b.High productivity growth, price-elastic product demand, income-inelastic product
demand
c.Low productivity growth, price-inelastic product demand, income-inelastic product
demand
d.High productivity growth, price-inelastic product demand, income-elastic product
demand
One criticism of the cobweb model is that:
a. students form rational expectations of the effect of changes in labor demand and
adjust their supply responses accordingly
b. the prediction of chronic boom-bust cycles is not borne out in the real world
c. students adjust career decisions based on starting salaries rather lifetime earnings
d. demand is likely to shift as the market approaches equilibrium, so that equilibrium is
never achieved
Males in the labor force 100 million
Unemployed males 5 million
Non-institutionalized females, age 16 and over 110 million
Employed or unemployed females 88 million
Given the information in the table above, the male labor force participation rate _____
and the female labor force participation rate _____.
a. is 95%; is 80%
b. is 95%; is 88%
c. cannot be calculated from the data; is 80%
d. cannot be calculated from the data; cannot be calculated from the data
In the U.S. volunteer army, a typical male enlistee’s pay over his military career is
comparable to the median wage of a full-time worker who:
a.is a high school dropout
b.is a high school graduate
c.has some college education
d.is a college graduate
Suppose a proposed law will ban migration into the U.S.. Considering who gains and
who loses from migration, economic theory suggests that, in general:
a.U.S. businesses and U.S. workers would support the law
b.U.S. businesses and U.S. workers would object to the law
c.U.S. businesses would support the law while U.S. workers would object to it
d.U.S. businesses would object to the law and U.S. workers would support it
If persons of greater ability also tend to invest more in human capital, then the impact
of human capital on earnings will be:
a.understated
b.overstated
c.unaffected
d.a direct impact
General training:
a. will be paid for by the employee in the form of a reduced wage
b. raises the trainee’s value only to the firm that is providing the training
c. helps to make labor a quasi-fixed resource
d. reduces the worker’s value to the firm, because the worker’s wage rate would have to
rise
Because a lottery draft selects individuals with opportunity costs randomly drawn from
the general population while an all-volunteer military enlists only those with
opportunity costs less than the military wage:
a.the true economic costs of a draft exceeds that of a voluntary system
b.the true economic costs of a draft are less than that of a voluntary system
c.the taxpayer costs of a draft exceed that of a voluntary system
d.the true economic costs of a draft equal the taxpayer costs of a voluntary system
All else equal, a worker is less likely to move:
a.the smaller the wage differential between the destination and the origin
b.the lower the discount rate
c.the greater the number of years one expects to remain in the new location
d.the lower the indirect costs of migrating
Which of the following best describes the growth of public-sector employment since
1950? As a percentage of total employment:
a.state and local employment have fallen, but federal employment has risen sufficiently
to cause overall public-sector employment to rise
b.both federal and state and local employment have grown
c.public-sector employment has fallen, but the absolute level has grown
d.federal employment has fallen, but state and local employment have risen sufficiently
to cause overall public-sector employment to rise
Which of the following is not a source of wait unemployment?
a.Temporary layoffs
b.Union job queues
c.Efficiency wages
d.Changes in the structure of the economy
According to efficiency wage models, the firm’s profits will increase whenever the
wage causes:
a. worker productivity to increase by a larger proportion than the wage increase
b. worker productivity to increase
c. worker turnover to fall
d. worker nutrition to increase
In their study of beauty and earnings, Hamermesh and Biddle report that:
a. attractive people enter into occupations where appearance is productive, but also earn
more than plain people in jobs where beauty does not affect productivity
b. attractive people enter into occupations where appearance is productive, but earn no
more than plain people in jobs where beauty does not affect productivity
c. less attractive people compensate for lower individual earnings by marrying persons
with higher than average earnings
d. beauty appears to have no impact on a person’s earnings
The MCs curve is upward sloping because: . (MCs is the firm’s marginal cost of
providing safety, while MBs is the marginal benefit to society of a one more unit of
safety. Because of imperfect information and costly worker mobility, MBs‘ is the firm’s
perceived marginal benefit of safety.):
a.firms initially use relatively low-cost techniques to improve worker safety
b.workers’ marginal utility of safety is increasing
c.wages must be increased the more safety is increased
d.more safety allows the firm to pay lower wages, which makes it harder and more
costly to recruit workers
In a particular family, both spouse A and spouse B could earn $20 per hour in market
work. However, spouse A has a comparative advantage in the production of
home-produced goods. Becker’s model of time allocation predicts that:
a. spouse B will be better able to substitute time for goods in the production of
commodities
b. spouse A and spouse B will divide market work and home production equally
c. spouse A will tend to specialize in market work; spouse B in home production
d. spouse A will tend to specialize in home production; spouse B in market work
Which of the following is not considered a source of increased labor efficiency?
a.Technological progress
b.Reallocation of labor from less to more productive uses
c.Changes in society’s institutional and cultural setting and resulting public policies
d.Increases in the capital-labor ratio
An economy-wide increase in productivity caused by improved technology would most
likely:
a.increase unemployment, because any given output could be produced with less labor
b.increase inflation, thereby decreasing profits and investment
c.increase output, but decrease employment
d.increase real incomes, thereby increasing aggregate demand and reducing
unemployment
Prior to the 1930s, union membership growth was relatively:
a.slow, due to the use of blacklisting, injunctions, and yellow dog contracts
b.slow, due to the widespread use of lockouts and strikebreakers authorized under the
Norris-LaGuardia act
c.rapid, due to the favorable court treatment of union activity provided by passage of
the Sherman Act of 1890
d.rapid, due to favorable court interpretations concerning workers’ property rights
Which one of the following will tend to decrease the perceived costs of a move relative
to the perceived benefits?
a.Renting, as opposed to owning, one’s home
b.A higher unemployment rate in the destination
c.Larger family size
d.Increased federal grants and defense contracts in the origin
Which function currently accounts for the greatest percentage of state and local
workers?
a.General administration
b.Police and fire protection
c.Public welfare
d.Education
Which of the following exemplifies occupational discrimination?
a. 97% of all secretaries are women
b. women secretaries make, on average, 40% of their boss’ pay while male secretaries
average 50% of their boss’ pay
c. women secretaries average 12 years of education and obtain little on-the-job training;
male secretaries average 12.5 years of education and usually qualify for advanced
training programs
d. the unemployment rate for women secretaries is typically 2% higher than that for
male secretaries
Which of the following required firms holding federal contracts to establish
“affirmative action” programs?
a. Equal Pay Act of 1963
b. Civil Rights Act of 1964
c. A 1968 Executive Order
d. Landrum-Griffin Act of 1959
Research by Solon on intergenerational mobility across countries indicates that:
a.countries with greater earnings inequality tend to have less intergenerational earnings
mobility
b.less developed countries tend to have greater intergenerational earnings mobility
c.countries with higher returns to investment in human capital have greater
intergenerational earnings mobility
d.intergenerational earnings mobility is greater in the U.S. than in the United Kingdom
Crowding out occurs when:
a.unemployment rises as a result of downward wage rigidity
b.unemployment rises because workers are displaced
c.government borrowing pushes up interest rates, causing private investment to fall
d.government borrowing pushes up interest rates, causing fiscal policy to overshoot the
expansion of aggregate demand
The small town of East MacNeil has 1000 residents age 16 or older. During the survey
week, 200 adult residents did not work20 workers were home sick from their jobs, 10
shopkeepers were unable to open their stores due to bad weather, 50 were actively
seeking work, 25 others had previously given up actively looking, and the others were
either full-time students or home-makers. Of the 800 at work, 80 worked part-time but
would have preferred full-time work.
The size of the labor force in East MacNeil is:
a.800 persons
b.850 persons
c.880 persons
d.1000 persons
All else equal, the acceptance wage:
a.is lower for union workers than nonunion workers
b.is lower for African American youths than for white youths
c.falls when unemployment benefits expire
d.falls with increased education