Consider the following data for men and women:
If a regression estimates the
return to experience for men, ²M, to be 0.25, how much of the average difference in
wages can be attributed to differences in work experience and how much can be
attributed to discrimination and/or unobservable characteristics?
A. $0.00 to differences in work experience; $2.50 to discrimination/unobservable
characteristics.
B. $1.20 to differences in work experience; $1.30 to discrimination/unobservable
characteristics.
C. $1.30 to differences in work experience; $1.20 to discrimination/unobservable
characteristics.
D. $1.50 to differences in work experience; $1.00 to discrimination/unobservable
characteristics.
E. $2.50 to differences in work experience; $0.00 to discrimination/unobservable
characteristics.
Over the last 30 years in the United States, the black-white earnings ratio for women
has __________ and for men has __________.
A. been relatively flat; steadily increased
B. been relatively flat; steadily decreased
C. steadily increased; steadily increased
D. steadily increased; steadily decreased
E. steadily increased; been relatively flat
Suppose there are two types of jobs-safe and risky. Safe jobs currently pay $10 per
hour. Risky jobs currently pay $20 per hour. The government intervenes in the market,
mandating that all firms offer safe jobs and pay a wage of $10 per hour. Which of the
following is true?
A. Workers who originally worked safe jobs are helped by the policy.
B. Firms that originally offered safe jobs are hurt by the policy.
C. Workers who originally worked risky jobs are helped by the policy.
D. Firms that originally offered risky jobs are hurt by the policy.
E. No one is hurt by the new policy.
Consider an economy with a labor force of 200 million people-180 million are
employed while 20 million are unemployed. Each period, 45% of the unemployed
population finds a job. If the economy is in a steady-state of unemployment, what
percent of the employed population lose their job each period?
A. 5%
B. 10%
C. 15%
D. 20%
E. 25%
In the United States, the average replacement ratio associated with unemployment
insurance benefits is
A. 10%
B. 35%
C. 50%
D. 80%
E. 100%
The wage-employment outcomes described by the contract curve
A. fail to exhaust all bargaining opportunities between the employer and the union,
except for the single point on the contract curve that is associated with maximum
wages.
B. are associated with the firm hiring more workers at a higher wage than they would
under a monopoly union outcome.
C. are Pareto optimal and result in an efficient contract.
D. must be located below and to the left of the outcome that would result in the absence
of a union.
E. must be located above and to the left of the outcome that results when there is a
monopoly union.
An outward shift in the labor demand curve implies that.
A. employers are now looking to hire more workers at any given wage.
B. employers are now looking to hire more workers if the wage increases.
C. employers are now looking to hire fewer workers regardless of the wage.
D. demand for the firms output likely fell.
E. a greater number of workers are now more willing to work at any given wage.
What is the difference between normative and positive economics?
A. Normative economics concerns the how and why of economic activity while positive
economics concerns what should be.
B. Positive economics concerns what is, while normative economics concerns what
should be.
C. Both concern the how and why of economic activity, while only positive economics
also concerns what should be.
D. Neither deals with the how and why of economic activity, but normative economics
concerns what should be.
E. Positive economics is used in Microeconomics, while normative economics is used
in Macroeconomics.
A firm that discriminates against black labor will certainly
A. hire all white workers.
B. hire all black workers.
C. hire no workers.
D. hire a mix of black and white workers.
E. earn less profit than it could earn if it did not discriminate.
Prior to the New Deal legislation of the 1930s that expanded the rights of unions, firms
were successful in suppressing union pressures by arguing in court that unions would
A. restrict interstate commerce, which was prohibited by the Sherman Act.
B. use coercive tactics to force workers to join the union.
C. illegally spend dues on political activities.
D. reduce the United States competitive advantage it had over Germany.
E. fail to protect the rights of children who could not legally join a union.
A standard efficiency wage model pays workers higher wages in order to increase
worker efficiency. As a result, firm profits increase and there is a pool of involuntarily
unemployed workers. This equilibrium comes about in part because
A. the firm pays workers according to a tournament.
B. workers are less likely to shirk when there is a pool of unemployed workers who are
willing to take their job.
C. the firm agrees to not replace labor with capital.
D. workers are unaware of the pool of unemployed workers as long as they keep their
job.
E. workers will do anything to be paid a higher wage.
Time out of the labor force reduces current earnings as well as future earnings. This
suggests that
A. general training does not exist.
B. on-the-job experience is a form of human capital.
C. firms will not invest in specific job training.
D. workers never willingly exit the labor force when young.
E. productivity is unrelated to job experience.
What is likely to happen to the supply of firemen as building codes change to require
firewalls and sprinklers to be included in all new construction?
A. The supply of firemen will fall because there will be fewer fires.
B. The supply of firemen will increase because there will be fewer fires.
C. The supply of firemen will remain unchanged because the supply curve relates the
number of fire fighters to the wage, not to the number of fires.
D. The supply of firemen will increase as long as wages paid to workers on new
construction projects is also increasing.
E. The supply of firemen will decrease as long as the property tax-base increases when
the new construction projects are completed.
What is meant by the skill-bias technological explanation of increasing inequality?
A. There has been increasing inequality over the last 40 years because unskilled
workers use no technology.
B. There has been increasing inequality over the last 40 years among high-skilled
workers.
C. Inequality has increased because technological advances have not kept pace with the
demand for education.
D. Inequality has increased because technological advances over the last 40 years have
complemented the productivity of skilled labor relative to unskilled labor.
E. Inequality has increased because technological advances over the last 40 years have
complemented the productivity of unskilled labor relative to foreign labor.
One piece of evidence in favor of the efficiency wage model is that some sectors of the
economy pay relatively high wages, whereas other sectors pay lower wages. This
supports the efficiency wage model as it seems to provide evidence of what?
A. The existence of dual labor markets.
B. There are compensating differentials being paid depending on the type of work being
done.
C. Unemployment is constant across sectors.
D. High-wage firms take advantage of delayed-compensation contracts.
E. Workers voluntarily provide bonds in case they are caught shirking.
Which of the following best defines final-offer arbitration?
A. After a short strike, the union offers a final contract to the firm which the firm must
accept.
B. An arbitrator produces a contract that the union and firm are both encouraged to
accept.
C. Final-offer arbitration occurs when the firm threatens to shut-down unless the union
accepts the firms final offer.
D. An arbitrator chooses the firms last offer or the unions last offer, and both sides must
abide by whichever contract is chosen.
E. An arbitrator facilitates a discussion between the union and firm after the cool-down
period has expired.
From 1980 to 2009, the female-male wage ratio in the United States
A. held constant at about 0.7.
B. fell steadily from about 1.0 in 1980 to 0.5 in 2009.
C. increased modestly from 0.5 in 1980 to almost 0.6 in 2009.
D. increased substantially from 0.6 in 1980 to almost 0.8 in 2009.
E. increased substantially from 0.4 in 1980 to over 0.7 in 2009.
The supply curve of labor to risky jobs reveals.
A. how many workers are willing to offer their labor to the risky job as a function of the
wage differential between the risky job and the safe job.
B. how many workers are willing to offer their labor to the risky job as a function of the
wage paid to workers of the risky job.
C. how many workers are willing to offer their labor to the safe job as a function of the
wage paid to workers of the risky job.
D. the number of workers who dislike risky jobs.
E. the fraction of workers who dislike risky jobs.
The imposition of a minimum wage on a competitive labor market will likely
A. create additional employment opportunities because some low-skilled workers will
now see their wage increase.
B. lower the wages of workers earning more than the minimum wage.
C. create unemployment as some people enter the labor market while some firms
reduce the quantity of labor they are willing to employ due to the increased wage.
D. increase unemployment of high-skilled workers as firms substitute high-skilled labor
for low-skilled labor.
E. lower the unemployment rate of low-income families.