Question :
14.3 Explaining the Existence of Unemployment
1) Suppose the wage rate : 1381488
14.3 Explaining the Existence of Unemployment
1) Suppose the wage rate in the labor market is $20 and the demand for labor increases. If wages are sticky
A) unemployment decreases.
B) unemployment increases.
C) unemployment stays the same.
D) wages decrease to eliminate the surplus.
2) Suppose the equilibrium wage rate in the labor market is $20 and the demand for labor decreases. If wages are sticky, there will be a
A) surplus of labor and the wage rate declines.
B) shortage of labor and the wage rate increases.
C) surplus of labor and the wage rate stays the same.
D) surplus of labor and the wage rate increases.
3) If the wage rate in the labor market is $12 and more previously unemployed people exited the labor force, which of the following statements is correct?
A) If wages are flexible, then wages will decrease.
B) If wages are sticky, the unemployment rate decreases.
C) If wages are sticky, the unemployment rate stays the same.
D) If wages are flexible, the unemployment rate increases.
4) If the wage rate in the labor market is $17 and the productivity of workers decreases, which of the following statements is incorrect?
A) The labor demand curve shifts to the left.
B) If wages are flexible, there will be a decrease in wages.
C) If wages are sticky, there will be a shortage in the labor market.
D) If wages are sticky, there will be a surplus in the labor market.
5) If wages are sticky, a decrease in labor
A) supply decreases the wage rate.
B) demand increases the wage rate.
C) demand decreases the wage rate.
D) none of the above
6) The downward rigidity of wages as an explanation for the existence of unemployment is known as
A) sticky wages.
B) crashing wages.
C) locked wages.
D) minimum wages.
7) Social contracts are ________ agreements between workers and firms that firms will not cut wages.
A) formal
B) written
C) unspoken
D) union
8) General Motors saw the demand for its automobiles drop by 15%. Even though the demand for its automobiles decreased, GM did not cut the wages of its non-unionized workers. This is an example of
A) a relative-wage contract.
B) employment-at-will.
C) an explicit contract not to cut wages.
D) an implicit or social contract not to cut wages.
9) Apple experienced a 10% drop in its sales. Even though the demand for its computers decreased, Apple did not cut the wages of its non-unionized workers. This is an example of
A) an implicit or social contract not to cut wages.
B) employment-at-will.
C) poor management.
D) an explicit contract not to cut wages.
10) Suppose that flight attendants are laid off during a recession because of an unspoken agreement between the flight attendants and airline executives that wages will not be reduced. This example is consistent with the
A) relative-wage explanation of unemployment.
B) implicit contract explanation of unemployment.
C) explicit contract explanation of unemployment.
D) efficiency wage explanation of unemployment.
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