Econ-Chapter 10

Question 1

The 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 of marginal product

Answer 2

which is the marginal product of a worker multiplied by the price of the output
-demand for labor

Question 3

when employees spend time on the job,

Answer 3

they first sacrifice the least valuable the use of there time

Question 4

If less is being produced overall,

Answer 4

the nation cannot be better off even with the higher wages

Question 5

when government places taxes or higher regulations on employers that raises labor costs, but

Answer 5

cause the demand for labor to fall and allow for unemployment and low wages

Question 6

human capital

Answer 6

education and training may improve productivity, and the demand for the individuals labor

Question 7

screening theory

Answer 7

say that education and training may be value to the individual, not because the training increases productivity, but because to points out which employees will be good

Question 8

screening vs. human capital

Answer 8

human capital- matters what the subject matter is

screening theory-only cares about earning a degree requires mental and physical effort, the signal is value

Question 9

make work fallacy

Answer 9

the idea that jobs have value regardless of whether the labor actually creates value

Question 10

minimum wage

Answer 10

the state requires people not to be paid below a certain price, 2.3% workers work for this wage

Question 11

establishment survey

Answer 11

large businesses are asked how many employees are on their payroll, to measure the number of jobs the economy is creating. BUT- this excludes operating expenses from contractors and self employed people

Question 12

household survey

Answer 12

asks individuals about their employment status by telephone, then the BLS compiles the unemployment rate and other statistics

Question 13

US population :

Answer 13

civilian Non-institutional population-not in military, over the age of 16, about 248.5 mil
employed-working at least one hour, 146.6 mil
unemployed-9.3mil
civilian labor force-employed + unemployed, 155.8 mil

Question 14

the unemployment rate

Answer 14

is the unemployed divided but the civilian labor force, 5.9% for US

if it is over 5.5%, it is considered high

Question 15

the labor force participation rate

Answer 15

is the LF divided by the CNIP. it measures how many people are interested in holding a job
62.8%

Question 16

young women had 8% higher incomes than

Answer 16

younger men

Question 17

young women in atlanta earned 20% more than

Answer 17

young men

Question 18

in 1980 , 40% of the university graduates were

Answer 18

female

now 60% of graduates are female

Question 19

discouraged workers

Answer 19

are those who have looked for a job at some time during the previous 12 months but are no longer looking because they think no jobs are available , they are not listed as unemployed

Question 20

it takes 250,000 new jobs each month to slightly lower the

Answer 20

unemployment rate by adding jobs

Question 21

U-6

Answer 21

includes people who have stopped looking for jobs and those who are part time, but want to be full time

Question 22

new claims for unemployment insurance

Answer 22

are compiled by the states and collected by the Department of Labor on a weekly basis,

we might see new claims fall , but its because they are usually exhausted, not because the economy is getting better

Question 23

casey mulligan proved that

Answer 23

half of the increase in unemployment in the recession and recovery came from extending unemployment benefits

Question 24

frictional unemployment

Answer 24

occurs because of the moral workings of the labor force with people changing jobs and entering the labor force with the skills that will likely soon yield a job.

this rises during good economic times as opposed to falling

Question 25

structural unemployment

Answer 25

is a longer term problem which occurs due to changes in the labor force that render some skills obsolete, may be due to taste, training/education, technology….

Question 26

cyclical unemployment

Answer 26

is what we usually think of a unemployment-it arises due to contractions that occur during the business cycle

Question 27

since the government is rational ignorant, this then cases the cyclical unemployment, making the issues of unemployment even worse, examples..

Answer 27

• the great depression
• the fed monetization of the US governments debt due to the vietnam war and the great society welfare programs
• Paul volcker tightening the money supply
• gov. interferring the housing market

Question 28

full unemployment

Answer 28

when there is no cyclical unemployment, but there is structural and frictional unemployment