Chapter10

Question 1

Law of Diminishing Returns

Answer 1

As more labor is used, the extra output that an employee can produce declines at some point

Question 2

Value Marginal Product (VMP)

Answer 2

Marginal product of worker multiplied by price of output

Question 3

VMP is…

Answer 3

demand for labor.

Question 4

Human Capital

Answer 4

Education and training may raise individuals productivity

Question 5

Screening Theory

Answer 5

Education and training may be valuable to the individual, not because it increases productivity, but because it points out which employees will be good

Question 6

under human capital,

Answer 6

subject matter is important

Question 7

under screening theory,

Answer 7

subject matter is of no interest

Question 8

Make Work Fallacy

Answer 8

Idea that jobs have value, regardless of whether labor creates value

Question 9

Minimum Wage

Answer 9

State requires a minimum wage

Question 10

Establishment Survey

Answer 10

Asks large businesses about how many employees are on their payroll, to measure the number of jobs economy is creating

Question 11

Household Survey

Answer 11

Asks individuals about their employment status by phone

Question 12

Unemployment Rate

Answer 12

unemployed/civilian labor force

Question 13

Any unemployment rate over 5.5% is..

Answer 13

high

Question 14

Labor Force Participation Rate (LFPR)

Answer 14

LF/CNIP ; measures how many ppl are interested in holding jobs

Question 15

Discouraged Workers

Answer 15

Those who have looked for a job at some time during previous 12 months, but are no longer because they believe no jobs are available

Question 16

New Claims for Unemployment Insurance

Answer 16

Compiled by states and collected by Department of Labor weekly

Question 17

Friction Unemployment

Answer 17

Normal workings of labor force with people changing jobs and entering labor force with skills that will soon yield a job

Question 18

Structural Unemployment

Answer 18

Longer term problem which occurs due to changes in labor force that render some skill obsolete

Question 19

Cyclical Unemployment

Answer 19

What we usually think of as unemployment

Question 20

Cyclical Unemployment arises due to

Answer 20

contractions that occur during the business cycle.

Question 21

Full Employment

Answer 21

When there is no cyclical unemployment

Question 22

Frictional unemployment is

Answer 22

natural and not problematic.

Question 23

If economy is moving,

Answer 23

it is healthy.