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Exam 28: Unemployment and Its Natural Rate

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Question 41

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The natural rate of unemployment is impervious to economic policy.

A) True
B) False

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Question 42

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Right-to-work laws

A) guarantee workers the right to form unions.
B) give workers in a unionized firm the right to choose whether to join the union.
C) prevent employers from hiring permanent replacements for workers who are on strike.
D) prevent workers from being fired because of increases in wages brought about by collective bargaining.

E) A) and B)
F) A) and C)

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Question 43

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Most job search in the U.S. economy takes place without intervention by the government.

The process by which unions and firms agree on the terms of employment is called collective bargaining.

Minimum-wage laws affect all workers.

An American worker who becomes unemployed typically receives 100% of her former salary during the first six months she is unemployed.

Today, unions play a larger role in Europe than they do in the U.S.

When job search is the explanation for unemployment, workers are searching for the jobs that best suit their tastes and skills, but when the wage is above the equilibrium level, the quantity of labor supplied exceeds the quantity of labor demanded, and workers are unemployed because they are waiting for jobs to open up.

Unemployment insurance reduces hardships of unemployment but also increases the amount of structural unemployment.

Because people move into and out of the labor force so often, statistics on unemployment are difficult to interpret.

Following the recession of 2001, there was a month in which employment and the unemployment rate both rose. Assuming the computations were correct, how is it possible for both to have increased?

List the four ways to explain unemployment in the long run.

The normal rate of unemployment around which the unemployment rate fluctuates is called cyclical unemployment.

The Bureau of Labor Statistics' U-5 measure of joblessness is the official unemployment rate.

The Bureau of Labor Statistics' U-3 measure of joblessness is the official unemployment rate.

Over the past several decades in the United States, the labor-force participation rate of women has increased and the labor-force participation rate of men had decreased.

In an ideal labor market, wages would adjust to balance the quantity of labor supplied and the quantity of labor demanded, ensuring that all workers are always fully employed.

It is best to view the official unemployment rate as a useful but imperfect measure of joblessness.

Within the U.S. population, teenagers (ages 16-19) have lower rates of labor-force participation than adults of prime working age (ages 25-54), regardless of race or gender.

Changes in the composition of demand among industries or regions are called sectoral shifts.