The natural rate of unemployment is higher in many European countries than in the
United States largely because
A. European countries tend to offer more generous unemployment benefits than in the
United States.
B. European countries tend to place fewer conditions on employers regarding working
conditions and firing workers than in the United States.
C. the labor force is smaller in European countries than in the United States.
D. more European workers are paid an annual salary rather than an hourly wage
compared to workers in the United States.
E. many European countries have recently targeted policies to fight hyperinflation
rather than worrying about unemployment.
Which of the following statements about self-selection and immigration flows into the
United States is false?
A. If the flow of immigrants is currently positively selected, increasing the costs to
immigration will likely make the future flow of immigrants even more positively
selected.
B. Negative selection results in low skilled workers coming to the United States.
C. High-skilled workers in foreign countries will not always choose to migrate to the
United States.
D. Negative selection occurs when the United States offers a greater return to skill at
high skill levels than the source country.
E. Positive selection results in highly skilled workers coming to the United States.
According to the added worker effect, what happens during a recession?
A. Households consume less.
B. More inferior goods are purchased.
C. Capital earns a lower rate of return.
D. There is an increase in the labor force participation rate of secondary workers.
E. There is a decrease in the labor force participation rate as many unemployed workers
give up looking for a job.
The labor demand curve is
A. the same as the marginal cost curve.
B. composed of the peaks of isoprofit curves.
C. upward sloping.
D. derived solely from the price of the firms good.
E. determined completely by the firms technology.
If one looks at U.S. Census data and finds that the average white salary is $39,000
while the average black salary is $36,000, which of the following is not likely to be a
significant cause of this difference given U.S. labor market demographics?
A. Whites are more inclined than blacks to work part-time.
B. Blacks have less education than whites.
C. Labor market discrimination.
D. Whites are more likely than blacks to hold positions in upper management.
E. Whites are more likely than blacks to own their own business.
Which of the following is likely to result in the least amount of dead weight loss?
A. A payroll tax.
B. Employer-provided health care insurance.
C. A legislated minimum wage that is substantially above the competitive wage.
D. A non-competitive labor market.
E. A male-dominated society that doesnt allow young girls access to education.
Economic theory suggests that discriminating employers will be driven from the
marketplace when the output market is competitive. Why?
A. Customers will refuse to purchase from a discriminating employer.
B. Workers will refuse to work for a discriminating employer.
C. The government mandates that the employer not act on his or her desire to
discriminate.
D. Discrimination imposes an additional cost on the employer; and high-cost firms are
eventually driven out of a competitive output market.
E. A competitive output market requires all workers to be paid the same wage.
All of the following represent an increase in non-labor income except for:
A. A decrease in the income tax rate.
B. Receiving higher dividends from a stock portfolio.
C. An increase in a spouses wage.
D. Receiving an inheritance from a long-lost uncle who recently passed away.
E. Having ones property tax bill fall by $1,000.
Large disparities in wages could possibly result from all but which one of the
following?
A. Parental investment in a childs human capital.
B. Increases in the amount of middle class jobs.
C. Skill-biased technological change.
D. Globalization.
E. An increase in the demand for highly skilled labor.
Which of the following is not associated with strikes?
A. Strikes are costly to the firm.
B. Strikes are costly to the union.
C. The probability of striking is generally pro-cyclical.
D. Strike duration is generally pro-cyclical.
E. If the union makes wage offers, it will likely do so according to a downward-sloping
resistance curve.
A firm that finds it extremely expensive to monitor the output of each worker will likely
pay its workers
A. with piece rates.
B. with time rates.
C. with incentive pay.
D. according to how much each worker produces.
E. on commission.
If the minimum wage applies to one sector (the covered sector) but not another sector
(the uncovered sector), an increase in the minimum wage in the covered sector is likely
to result in which of the following?
A. Greater employment in the covered sector.
B. Less employment in the uncovered sector.
C. A lower wage in the covered sector.
D. A lower wage in the uncovered sector.
E. Workers willingly leaving the covered sector for the uncovered sector in search of
higher wages.
Which of the following causes a difference in wages but does not necessarily qualify as
discrimination?
A. Differences in schooling.
B. Differences in skills.
C. Differences in experience.
D. Differences in language.
E. All of the above lead to differences in wages but none of them necessarily qualifies
as discrimination.
Suppose labor supply can be described as ES = 0.1w – 1,000 where w is yearly salary.
How many workers are willing to work when the yearly salary is $20,000?
A. 100
B. 200
C. 500
D. 1,000
E. 2,000
The distribution of skills is the same in Low Rock as it is in High Rock. The return to
each unit of skill is the same in Low Rock, regardless of how much skill one has. The
returns to skill in High Rock, however, depend on ones skill level. Workers at the low
end of the skill distribution in High Rock receive very little return on their skills (less
than they would receive in Low Rock), while workers at the high end of the skill
distribution in High Rock receive a very high return on their skills (more than they
would receive in Low Rock). Assuming that people are free to migrate from Low Rock
to High Rock but not the other way around, the Roy model predicts which of the
following outcomes?
A. The average skill level in Low Rock will increase, while the average skill level in
High Rock will decrease.
B. The average skill level in Low Rock will decrease, while the average skill level in
High Rock will increase.
C. The average skill level in Low Rock will remain unchanged, but the average skill
level in High Rock will increase.
D. The average skill level will increase in both locations.
E. The average skill level will decrease in both locations.
Incentive pay schemes generally refer to
A. firms paying as low wages as possible.
B. college-educated workers being paid more than non college-educated workers.
C. workers retiring later in life.
D. any pay scheme in which all workers are paid equally according to tenure with the
firm.
E. paying workers according to production or effort.
Which of the following do unions usually advertise to their members and potential
members?
A. High wages.
B. Steady employment.
C. An exit voice.
D. A powerful political lobby.
E. All of the above.
There are three firms in an industry, all of which hire comparably skilled workers. One
firm is unionized and pays its 80 workers $11 per hour. Of the two non-union firms, one
pays its 40 workers $12 per hour while the other pays its 160 workers $9.50 per hour.
What is the union wage gap?
A. -8 percent
B. 0 percent
C. 10 percent
D. 12.5 percent
E. 27 percent
A standard hedonic wage function might show what relationship?
A. The relationship between the wage and a workers age.
B. The relationship between the wage and a workers race.
C. The relationship between the wage and a workers gender.
D. The relationship between the wage and the probability of injury faced by the worker.
E. The relationship between the wage and a workers skill level.
According to the substitution effect, an increase in the wage rate will lead the worker to
A. work more hours if leisure is a normal good.
B. work more hours if leisure is an inferior good.
C. work fewer hours if leisure is a normal good.
D. work fewer hours if leisure is an inferior good.
E. work more hours regardless of whether leisure is normal or inferior.