HW CH 7

Question 1

Suppose that over the course of a year 100 people are unemployed for 4 weeks each (the short-term unemployed), while 10 people are unemployed for 52 weeks each (the long-term unemployed). Approximately what percentage of the total spells of unemployment were attributable to the long-term unemployed?

Answer 1

9 percent.

Question 2

The earned income tax credit:

Answer 2

does not raise labor costs.

Question 3

Assume that a country experiences a reduction in productivity that lowers the marginal product of labor for any given level of labor. In this case, the:

Answer 3

labor demand curve shifts downward and to the left.

Question 4

More frequent holidays for workers in Europe than in the United States contribute to:

Answer 4

fewer hours worked per year by the average employed person in Europe than the average employed person in the United States.

Question 5

Workers unemployed as a result of wage rigidity are:

Answer 5

waiting for a job to become available

Question 6

Differences in unemployment rates across demographic groups are most closely correlated with differences in:

Answer 6

job-separation rates.

Question 7

Unemployment insurance increases the amount of frictional unemployment by:

Answer 7

softening the economic hardship of unemployment.

Question 8

The unemployment rate in the United States since 1952 has:

Answer 8

never been close to zero.

Question 9

All of the following are reasons for frictional unemployment except:

Answer 9

unemployed workers accept the first job offer that they receive.

Question 10

When insiders have a much greater impact on the wage-bargaining process than do outsiders, the negotiated wage is likely to be ______ the equilibrium wage.

Answer 10

much greater than

Question 11

Data on unemployment in the United States show that:

Answer 11

most weeks of unemployment are attributable to the long-term unemployed.

Question 12

European unemployment rates are positively correlated with each of the following except

Answer 12

the amount of coordination among employers in bargaining with unions.

Question 13

If the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.01 and the fraction of the unemployed who find a job each month is 0.09 (the rate of job findings), then the natural rate of unemployment is

Answer 13

10 percent.

Question 14

In a steady state:

Answer 14

the number of people finding jobs equals the number of people losing jobs.

Question 15

Government policies directed at reducing frictional unemployment include:

Answer 15

making unemployment insurance 100 percent experience rated.