Ch 6 Wages and Unemployment

Question 1

Diminishing returns to labor

Answer 1

if the amount of capital and other inputs in use is held constant, then the greater the quantity of labor already employed, the less each additional worker adds to production

Question 2

Worker mobility

Answer 2

the movement of workers between jobs, firms, and industries

Question 3

Skill0biased technological change

Answer 3

technological change that affects the marginal products of higher-skilled workers differently from those of lower-skilled workers

Question 4

Unemployment rate

Answer 4

the number of unemployed people divided by the labor force

Question 5

Participation rate

Answer 5

the percentage of the working-age population in the labor force (that is, the percentage that is either employed or looking for work)

Question 6

Unemployment spell

Answer 6

a period during which an individual is continuously unemployed

Question 7

Duration

Answer 7

the length of an unemployment spell

Question 8

Discouraged workers

Answer 8

people who say they would like to have a job but have not made an effort to find one in the past four weeks

Question 9

Frictional unemployment

Answer 9

the short-term unemployment associated with the process of matching workers with jobs

Question 10

Structural unemployment

Answer 10

the long-term and chronic unemployment that exists even when the economy is producing at a normal rate

Question 11

Cyclical unemployment

Answer 11

the extra unemployment that occurs during periods of recession