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7072 Unemployment
239. What is the theory of efficiency wages? Provide four reasons that employers might pay
efficiency wages.
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Problems
1. An important determinant of a country’s standard of living is the amount of it
typically experiences.
2. Some degree of unemployment is in a complex economy.
3. Define the natural rate of unemployment and cyclical unemployment.
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4. How does the government measure the economy’s rate of unemployment?
5. Compare the 2012 unemployment rates and labor-force participation rates of whites, blacks, adults
of prime working age (ages 25-54), and teenagers (ages 16-19).
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6. Discuss the labor-force participation trends for men and women since 1950.
7. What problems arise in interpreting unemployment data?
8. Almost half of all spells of unemployment end when the unemployed person .
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9. How are discouraged workers counted in the unemployment rate?
10. Explain how the following apparently contradictory statement can be true: Most spells of
unemployment are short, and most unemployment observed at any given time is long-term.
11. List the four ways to explain unemployment in the long run.
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12. Write the formula for calculating the unemployment rate.
13. Write the formula for calculating the labor force participation rate.
Table 28-9
The table below lists the number of people by labor force classification for the country of
Shelbyville.
Employed
80 million
Unemployed
20 million
Not in the Labor Force
60 million
14. Refer to Table 28-9. What is the size of the labor force, and the size of the adult population?
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15. Refer to Table 28-9. What is the unemployment rate?
16. Refer to Table 28-9. What is the labor force participation rate?
17. The adult population in the town of Bedrock is 75 thousand. Within Bedrock, 5 thousand are
unemployed, and 40 thousand are employed. Calculate the number of people not in the labor
force.
18. In the town of Gotham the adult population is 560 thousand, the number unemployed is 25
thousand, and 185 thousand are not in the labor force. Calculate the unemployment rate.
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Table 28-10
The table below lists the number of people by labor force classification for the country of
Springfield.
Employed
78 million
Part-time employed
22 million
Unemployed
12 million
Marginally attached
3 million
Not in the Labor Force
30 million
Discouraged
4 million
19. Refer to Table 28-10. Calculate the number in the labor force, and the unemployment rate.
20. Refer to Table 28-10. Calculate the number in the adult population, and the labor force
participation rate.
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21. Refer to Table 28-10. Calculate the U-4 unemployment rate.
22. Refer to Table 28-10. Calculate the U-5 unemployment rate.
23. Provide a definition of the natural rate of unemployment.
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Figure 28-6
24. Refer to Figure 28-6. What type of unemployment is measured by the differences between
lines A and B?
25. In terms of duration, how does cyclical unemployment differ from structural unemployment?
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26. Minimum wage laws, labor unions, and efficiency wages all generate unemployment by what
common mechanism?
27. Give a few examples of how sectoral shifts temporarily cause unemployment.
28. The Internet my reduce frictional unemployment because it .
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29. Unemployment insurance the amount of unemployment.
30. Briefly summarize the advantages and disadvantages of unemployment insurance.
31. Ignoring the differences across states, explain the benefit provided to the typical worker in the
United States from unemployment insurance.
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32. List a few of the characteristics of workers who typically earn at or below the minimum wage.
33. Briefly compare the structural unemployment that arises from minimum-wage laws to the
frictional unemployment that arises from the process of job search.
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Figure 28-7
34. Refer to Figure 28-7. If the minimum wage is set at $100, how many will be unemployed?
35. Refer to Figure 28-7. If the minimum wage increases from $100 to $125, how many additional
workers will be unemployed?
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36. Refer to Figure 28-7. If the minimum wage is equal to $125, what is the quantity of labor
supplied, the quantity of labor demanded, and number unemployed?
37. Refer to Figure 28-7. Without a minimum wage, what is the equilibrium level of employment?
Explain what happens to the level of employment if the minimum wage is equal to $125.
38. Refer to Figure 28-7. At a minimum wage of $125, how much is the surplus of labor?
39. A labor union is similar to a .
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40. List the main employment characteristics over which a labor union negotiates for its workers.
41. Briefly describe how labor unions can affect wages in non-unionized industries.
42. Do economists believe that labor unions are good or bad for the U.S. economy?
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43. Explain how the actions of labor unions generate greater unemployment.
44. Explain the effect of right-to-work laws on the collective bargaining power of labor unions.
45. List the four types of efficiency-wage theory.
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46. Briefly explain the four rationales for efficiency wages.
47. Define efficiency wages.
48. Give an historical example of an efficiency wage that was considered by the firm to be “one of
the finest cost- cutting moves we ever made.”
