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71 Cards in this Set

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The process by which unions and firms agree on the terms of employment:
collective bargaining
Above-equilibrium wages paid by firms to increase worker productivity:
efficiency wages
Individuals who would like to work but have given up looking for a job:
discouraged workers
The percentage of the adult population that is in the labor force:
labor-force participation rate
The deviation of unemployment from its natural rate:
cyclical unemployment
The process by which workers find appropriate jobs given their tastes and skills:
job search
A government program that partially protects workers’ incomes when they become unemployed:
unemployment insurance
The normal rate of unemployment around which the unemployment rate fluctuates:
natural rate of unemployment
The percentage of the labor force that is unemployed:
unemployment rate
Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills:
frictional unemployment
The total number of workers, including both the employed and the unemployed:
labor force
The organized withdrawal of labor from a firm by a union:
strike
A worker association that bargains with employers over wages, benefits, and working conditions:
union
Unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one:
structural unemployment
Which of the following would be officially classified as employed?

a. A school administrator who has been working as a substitute teacher one day per week while looking for a full-time job in administration.

b. A mathematician who returned to graduate school after failing to find a job during the last 4 months.
c. A 60-year-old former steel worker who would like to work but has given up actively searching for employment..
d. A 63 year old former auto worker who is currently looking for work in the computer industry.
a. A school administrator who has been working as a substitute teacher one day per week while looking for a full-time job in administration.
The deviation of unemployment from its natural rate is:
cyclical unemployment
XYZ Corporation pays an above-equilibrium wage in order to attract a better pool of applicants. This is an example of:
the efficiency wage theory
You work for a firm that wants to know what proportion of the population is in the labor force. You should examine:
The labor force participation rate.
Studies have found that most unemployment at a given point in time is:
long term
Suppose more men decided to stay at home to raise their pre-school age children. We would expect:
The labor force participation rate for males to decrease.
Which one of the following would be classified as unemployed?

a. A parent who works 50 to 60 hours per week caring for family members.

b. A former auto worker vacationing in Florida who secures a job while on vacation.

c. A 21-year-old full-time college student.

d. A 17-year-old high school student who would like to work part-time at the local newspaper.
d. A 17-year-old high school student who would like to work part-time at the local newspaper.
The total population (age 16 and over) of Pageland is 48 million. Of this total, 4 million are unemployed and 36 million currently hold jobs. What are the rates of unemployment and labor force participation of Pageland?
The rate of unemployment is 10 percent, and the rate of labor force participation is 83 percent.
The government of Enclosia enacts a minimum wage law that raises the wage above the equilibrium level. We would expect:
An increase in unemployment.
The amount of unemployment that the economy normally experiences:
Natural rate of unemployment
Structural unemployment is often thought to explain:
Longer spells of unemployment.
Most of the economy's unemployment problem is attributable to:
Relatively few workers who are jobless for long periods of time.
How is the unemployment rate calculated?
The pertentage of the labor force that is unemployed.

Unemployment rate =

(# unemployed / labor force) x 100
Who usually doesn't show up in unemployment statistics?
Discouraged workers
What type of unemployment is associated w/ short-term ups and downs of the business cycle?
Cyclical unemployment
How is unemployment measured?
- It is measured by the Bureau of Labor Statistics (BLS).

- The BLS surveys 60,000 randomly selected households every month in the Current Population Survey.
Unemployment that results from the time that is takes to match workers with jobs:
Frictional unemployment
Why is search unemployment inevitable?
Because the economy is always changing.
Changes in the composition of demand among industries or regions:
Sectoral shifts
What is often thought to explain longer spells of unemployment?
Structural unemployment
How long are most spells of unemployment?
Short, but unemployment observed at any given time is long-term.
How is the labor force participation rate calculated?
Labor force participation rate = (labor force / adult population) x 100
List 3 reasons that explain why structural unemployment exists:
1) minimum-wage laws
2) unions
3) efficiency wages
What is cyclical unemployment often associated with?
Short-term ups and downs of the business cycle.
About how much of the U.S. labor force was unionized in the 1940s and 1950s?
About 1/3 of the labor force.
What 3 things make it difficult for wages to go down when necessary?
1)minimum wage laws
2)unions and collective bargaining
3)efficiency wages
The labor force is the:
Sum of the employed and the unemployed.
What government policy would be most effective in reducing the unemployment rate?
Reducing the benefits to the unemployed (unemployment insurance).
The Bureau of Labor Statistics surveys households to determine whether the interviewees are:
Employed, unemployed or not in the labor force.
Compared with nonunion workers, how much more do union workers earn?
10 to 20 percent more.
The deviation of unemployment from its natural rate:
cyclical unemployment
The government of Enclosia enacts a minimum wage law that raises the wage above the equilibrium level. What will result?
An increase in unemployment
XYZ Corporation pays an above-equilibrium wage in order to attract a better pool of applicants. This is an example of:
The efficiency wage theory
You work for a firm that wants to know what proportion of the population is in the labor force. You should examine:
The labor force participation rate
When a union successfully raises the wages of its members, it will also:
Reduce the quantity of labor demanded.
Find the unemployment rate and the labor force participation rate:

The total population (age 16 and over) of Pageland is 48 million. Of this total, 4 million are unemployed and 36 million currently hold jobs. What are the rates of unemployment and labor force participation of Pageland?
The rate of unemployment is 10 percent, and the rate of labor force participation is 83 percent.
John Brown stops looking for work because he believes his prospects are so poor he is unlikely to find a job. The Bureau of Labor Statistics would classify John as:
Not in the labor force.
Suppose more men decided to stay at home to raise their pre-school age children. We would expect:
The labor force participation rate for males to decrease.
Discouraged workers are:
Not counted among the unemployed.
Worker associations that bargain with employers over wages and working conditions:
Labor unions
The total population (age 16 and over) of Irkutsk is 100 million. Of this total, 10 million are unemployed and 50 million currently hold jobs. What are the rates of unemployment and labor force participation of Irkutsk?
The rate of unemployment is 16.7, percent and the rate of labor force participation is 60 percent.
Why do higher unemployment insurance benefits tend to increase the level of unemployment?
The higher benefits reduce the opportunity cost of job search thus increasing the search time.
A homemaker who volunteers at the local school is considered:
A non-participant in the labor force.
The unemployment rate may NOT accurately reflect the true rate of unemployment because of what 3 things?
1) Some discouraged individuals aren't looking for work.
2) Some individuals counted among the unemployed are working in the underground economy.
3) In order to qualify for financial assistance, some individuals may say they are looking for work even though they would be reluctant to accept a job.
Find the unemployment rate and the labor force participation rate:

If a country's total population (age 16 and over) is 40 million, with 1 million unemployed and 24 million currently holding jobs.
The unemployment rate is 4 percent, and the labor force participation rate is 62.5 percent.
What is a consequences of unemployment?
A decline in output and income
If the national minimum wage was increased above its current level, the probable impact of the higher minimum wage would be:
An increase in the unemployment rate of teenagers.
When people speak of the labor force participation rate, they are actually talking about:
The percentage of the adult population that is in the labor force.
What group has the lowest labor-force participation rate?
white females
According to the theory of efficiency wages, above equilibrium wages are paid by the firm in order to:
Increase worker productivity
Helen cannot get along with other people. If she has a job, she disrupts the work of all who are around her. Helen can no longer find work even though she is searching very hard. Helen is example of:
Structural unemployment
What effect would a reduction in the number of new entrants into the labor force have on the natural rate of unemployment?
It would result in lower rate of frictional unemployment and thus lower long-term natural unemployment overall.
When a union successfully raises the wages of its members, it will also:
REDUCE THE QUANTITY OF LABOR DEMANDED. An increase in wage rates will move up the labor demand curve and reduce the quantity of labor demanded.
Assume that as a result of an improvement in technology, the work done by Smith (who works on an assembly line) can be done more efficiently by a machine. According to the definitions of unemployment, Smith would be considered to be:
Structurally unemployed
Of the different types of unemployment, which one can actually benefit the economy and why?
FRICTIONAL UNEMPLOYMENT consists of people looking for their first job and people voluntarily between jobs. Assuming that people are looking for the best paying jobs, this implies that resources are going to their most highly-valued uses, which is one of the conditions for economic efficiency.
The type of unemployment that is characterized by a mismatch between the skills possessed by people looking for work and currently available jobs:
Structural unemployment
What is the most difficult type of unemployment to attempt to deal with and why?
STRUCTURAL UNEMPLOYMENT is due to changes in the economy and socio-demographic characteristics that are very difficult to change.