Principles of Macroeconomics Ben Bernanke 5e – Test Bank

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

 

Chapter 05 Testbank

 

1. In the market for labour, the price of labour is the:
2. same as the price of the product produced by the labour
3. real wage
4. average product of labour
5. number of hours employed per year

 

2. The demand for labour depends on the price of output and:
3. the marginal product of labour
4. the supply of labour
5. the rate of inflation
6. the real wage

 

3. The marginal product of labour is the additional:
4. wage paid for an additional hour of work
5. wage paid for an additional worker employed
6. labour employed to produce one more unit of output
7. output produced by one more worker

 

4. According to the principle of diminishing returns to labour, if the amount of capital and other inputs are held constant, employing additional workers:
5. increases output at an increasing rate
6. increases output at a constant rate
7. increases output at a decreasing rate
8. decreases output at an increasing rate

 

5. The principle of diminishing returns to labour is based on the:
6. scarcity principle
7. cost–benefit principle
8. principle of comparative advantage
9. principle of increasing opportunity cost

 

6. The value of the marginal product of labour equals the marginal product of labour times the:
7. real wage
8. nominal wage
9. price of output
10. quantity of output

 

7. The following table provides information about production at the XYZ-TV Company.

 

Number of workers	TVs produced	Marginal product	Value of marginal product
0	0	–	–
1	35	35	$35 000
2	68	33	$33 000
3	99	31	$31 000
4	128	29	$29 000
5	155	27	$27 000

 

How many workers will the XYZ-TV Company hire if the going wage for TV production workers is $34 000?

1. 1
2. 2
3. 3
4. 4

 

8. Firms will hire additional workers as long as the wage:
9. is less than the marginal product of labour
10. equals the marginal product of labour
11. is greater than the marginal product of labour
12. is less than the value of the marginal product of labour

 

9. A decrease in the price of the output produced by labour will:
10. increase the supply of labour
11. decrease the supply of labour
12. increase the demand for labour
13. decrease the demand for labour

 

10. If the price of TVs produced by the XYZ-TV Company increases from $1000 to $1250 per TV set, then the:
11. supply of labour to the XYZ-TV Company increases
12. supply of labour to the XYZ-TV Company decreases
13. demand for labour by the XYZ-TV Company increases
14. demand for labour by the XYZ-TV Company decreases

 

11. The demand for labour increases when the:
12. real wage increases
13. real wage decreases
14. value of the marginal product of labour increases
15. value of the marginal product of labour decreases

 

12. Production data for Jo’s Pizza Parlour are as follows. For simplicity, assume that labour is the only input. Each pizza sells for $5.

 

Number of workers	Pizzas baked per day
0	0
1	10
2	18
3	24
4	30
5	32

 

How many workers will Jo hire if she must pay each one $35 per day?

1. 1
2. 2
3. 3
4. 4

 

13. Production data for Jo’s Pizza Parlour are as follows. For simplicity, assume that labour is the only input. Each pizza sells for $5.

 

Number of workers	Pizzas baked per day
0	0
1	10
2	18
3	24
4	30
5	32

 

How many workers will Jo hire if she must pay each one $45 per day?

1. 1
2. 2
3. 3
4. 4

 

14. The minimum payment you are willing to accept to do a job is your:
15. nominal wage
16. real wage
17. reservation price
18. value of marginal product

 

15. The decision whether to work at any given wage is an application of the:
16. cost–benefit principle
17. equilibrium principle
18. principle of increasing opportunity cost
19. principle of comparative advantage

 

16. An increase in the size of the working-age population:
17. increases labour demand
18. decreases labour demand
19. increases labour supply
20. decreases labour supply

 

17. The two most important factors contributing to increased productivity in industrialised countries in the twentieth century were:
18. higher relative prices and a larger labour supply
19. higher relative prices and technological progress
20. technological progress and increases in the capital stock
21. technological prices and increases in the labour supply

 

18. Large productivity gains in the twentieth century increased labour _____, leading to _____ real wages.
19. demand; higher
20. demand; lower
21. demand; no change in the
22. supply; higher

 

19. Which of the following contributed to the Accord system of centralised wage bargaining being abandoned in the 1990s?
20. Low employment growth in the 1980s
21. High inflation due to high real wage growth in the 1980s
22. Falling labour productivity in the 1980s
23. Low labour productivity growth in the 1980s

 

20. Initially workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, so domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, the demand for labour in the shoe industry ____ and the demand for labour in the computer industry ______.
21. increases; increases
22. increases; decreases
23. decreases; increases
24. decreases; remains unchanged

 

21. An increase in the demand for workers producing computers for export versus producing agricultural products that can be imported more cheaply from abroad is an example of how increasing wage inequality can result from:
22. the diminishing marginal product of labour
23. the diminishing marginal product of capital
24. skill-biased technological change
25. globalisation

 

22. Government assistance to workers whose employment prospects have worsened is called:
23. worker mobility payments
24. transition aid
25. social security
26. the minimum wage

 

23. Worker mobility and transition aid to workers are two ways to offset some of the impacts of:
24. increasing wage inequality
25. the slowdown in productivity growth
26. the slowdown in real-wage growth
27. the long-term increase in real wages

 

24. Who of the following would be counted as unemployed?
25. A person with a part-time job
26. A person with a full-time job
27. A person willing to work who has looked for a job in the preceding week
28. A person willing to work who has not looked for a job in two months

 

25. The official unemployment rate is calculated as:
26. the number of working-age people 15 years of age or older who are employed, divided by the number of people in the labour force
27. all people 18 years of age or older who are employed, plus all those unemployed who are actively seeking work
28. the percentage of the working-age population 15 years or older who are not working but are actively seeking work
29. the number of people 15 years or older who are not employed and are actively seeking work, divided by the number of people in the labour force

 

26. Jamie lost his job when the typewriter factory closed down five years ago and has been unemployed ever since. Nigella lost her job at the day care centre when the economy turned down, but thinks they will rehire her when the economy picks up again. Jamie is _____ unemployed and Nigella is _____ unemployed.
27. frictionally; frictionally
28. structurally; frictionally
29. cyclically; structurally
30. structurally; cyclically

 

27. Martha did not like her job as a receptionist, so she quit the job and is looking for one that better suits her artistic talents. Ting Pei would like to work, but employers are not willing to hire him because he does not speak English. Martha is ____ unemployed and Ting Pei is _____ unemployed.
28. frictionally; structurally
29. structurally; frictionally
30. cyclically; structurally
31. structurally; cyclically

 

28. When unemployment benefits exceed the wages that a worker could earn when employed, the worker will typically:
29. remain unemployed longer than otherwise
30. have their unemployment insurance benefits cancelled
31. accept the first job offered
32. decrease their reservation price

 

29. Government regulations that increase the cost to the employer of hiring workers will:
30. increase the demand for labour
31. decrease the demand for labour
32. increase the supply of labour
33. decrease the supply of labour

 

30. Unemployment that occurs when workers’ skills are no longer needed in the economy is called:
31. structural unemployment
32. frictional unemployment
33. seasonal unemployment
34. cyclical unemployment

 

31. A person quits their job in order to spend time looking for a better paying job. This is an example of:
32. frictional unemployment
33. cyclical unemployment
34. seasonal unemployment
35. structural unemployment

 

32. An appropriate policy for reducing structural unemployment would be:
33. a tax cut
34. an increase in government spending
35. programs for the retraining and relocating of labour
36. an increase in the money supply

 

33. The supply of labour curve:
34. has a negative slope
35. is independent of the wage rate
36. shows how many workers are willing to work at various real wage rates
37. is usually vertical

 

34. In the labour market under competitive conditions, the real wage rate is determined by:
35. administered pricing
36. government minimum-wage laws
37. the forces of supply and demand
38. the extent to which unions can counteract the power of firms’ management

 

35. The demand for labour curve:
36. determines the amount employers will pay workers
37. shows the amount of labour firms plan to hire at various real wage rates
38. slopes upward to the right
39. has a slope equal to -1

 

36. The quantity of labour demanded depends on the ____________ because firms want to _____________.
37. real wage; make sure that money wages and output prices are equal
38. real wage; compare the price paid for their output and the nominal wage
39. money wage; pay as low a wage as possible
40. money wage; pay an efficiency wage

 

37. Which of the following does the labour market determine?
38. The level of employment and the real wage rate
39. The level of employment and the inflation rate
40. The real wage rate and the inflation rate
41. The inflation rate

 

38. If both the quantity of labour employed and the real wage rate have increased, then:
39. labour productivity may have increased
40. the population grew in size
41. there has been no movement along the labour supply curve
42. labour productivity has increased or the population grew in size

 

39. Structural change in an economy:
40. will cause labour reallocation to occur
41. will cause all wage rates to increase
42. causes only the labour supply curve to shift
43. will cause labour reallocation to occur AND will cause all wage rates to increase

 

40. Which of the following is most likely to explain a rightward shift in the supply of labour curve?
41. A recession
42. The government raises the minimum school leaving age
43. The government raises the minimum retirement age
44. A decline in the birth rate

 

41. Frictional unemployment may be economically beneficial if it leads to a better match between worker and job.

True   False

 

42. Australia has experienced stronger jobs growth than Europe in recent decades.

True   False

 

43. Structural unemployment is associated with general downturns in the economy.

True   False

 

44. The labour demand curve slopes downward because as the real wage falls, workers demand to work fewer hours.

True   False

 

45. A minimum wage, set above the market equilibrium wage, will create an excess supply of labour.

True   False

 

46. If the Government lowers the school leaving age, this will shift the labour ______ curve to the _________.

______________________________________________________________________________

 

47. During what decade(s) was the average annual rate of growth of real wages in Australia fastest?

______________________________________________________________________________

 

48. What are two major reasons for increasing wage inequality?

______________________________________________________________________________

 

49. Why is the labour supply curve upward-sloping and what factors could shift the labour supply curve to the right?

______________________________________________________________________________

 

50. Changes that reduce the value of labour’s marginal product shift the labour demand curve __________.

______________________________________________________________________________

Chapter 05 Testbank Key

 

1. In the market for labour, the price of labour is the:
2. same as the price of the product produced by the labour
3. real wage
4. average product of labour
5. number of hours employed per year

Ans: B

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.2 What have been the five major trends in the labour market in the post-war era?
Topic: The perfectly competitive model of the labour market

 

2. The demand for labour depends on the price of output and:
3. the marginal product of labour
4. the supply of labour
5. the rate of inflation
6. the real wage

Ans: A

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

3. The marginal product of labour is the additional:
4. wage paid for an additional hour of work
5. wage paid for an additional worker employed
6. labour employed to produce one more unit of output
7. output produced by one more worker

Ans: D

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

4. According to the principle of diminishing returns to labour, if the amount of capital and other inputs are held constant, employing additional workers:
5. increases output at an increasing rate
6. increases output at a constant rate
7. increases output at a decreasing rate
8. decreases output at an increasing rate

Ans: C

AACSB: Reflective thinking
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

5. The principle of diminishing returns to labour is based on the:
6. scarcity principle
7. cost–benefit principle
8. principle of comparative advantage
9. principle of increasing opportunity cost

Ans: D

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

6. The value of the marginal product of labour equals the marginal product of labour times the:
7. real wage
8. nominal wage
9. price of output
10. quantity of output

Ans: C

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

7. The following table provides information about production at the XYZ-TV Company.

 

Number of workers	TVs produced	Marginal product	Value of marginal product
0	0	–	–
1	35	35	$35 000
2	68	33	$33 000
3	99	31	$31 000
4	128	29	$29 000
5	155	27	$27 000

 

How many workers will the XYZ-TV Company hire if the going wage for TV production workers is $34 000?

1. 1
2. 2
3. 3
4. 4

Ans: A

AACSB: Knowledge application
Blooms: Application
Difficulty: Hard
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

8. Firms will hire additional workers as long as the wage:
9. is less than the marginal product of labour
10. equals the marginal product of labour
11. is greater than the marginal product of labour
12. is less than the value of the marginal product of labour

Ans: D

AACSB: Analytical thinking
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

9. A decrease in the price of the output produced by labour will:
10. increase the supply of labour
11. decrease the supply of labour
12. increase the demand for labour
13. decrease the demand for labour

Ans: D

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

10. If the price of TVs produced by the XYZ-TV Company increases from $1000 to $1250 per TV set, then the:
11. supply of labour to the XYZ-TV Company increases
12. supply of labour to the XYZ-TV Company decreases
13. demand for labour by the XYZ-TV Company increases
14. demand for labour by the XYZ-TV Company decreases

Ans: C

AACSB: Reflective thinking
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

11. The demand for labour increases when the:
12. real wage increases
13. real wage decreases
14. value of the marginal product of labour increases
15. value of the marginal product of labour decreases

Ans: C

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

12. Production data for Jo’s Pizza Parlour are as follows. For simplicity, assume that labour is the only input. Each pizza sells for $5.

 

Number of workers	Pizzas baked per day
0	0
1	10
2	18
3	24
4	30
5	32

 

How many workers will Jo hire if she must pay each one $35 per day?

1. 1
2. 2
3. 3
4. 4

Ans: B

AACSB: Knowledge application
Blooms: Application
Difficulty: Hard
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

13. Production data for Jo’s Pizza Parlour are as follows. For simplicity, assume that labour is the only input. Each pizza sells for $5.

 

Number of workers	Pizzas baked per day
0	0
1	10
2	18
3	24
4	30
5	32

 

How many workers will Jo hire if she must pay each one $45 per day?

1. 1
2. 2
3. 3
4. 4

Ans: A

AACSB: Knowledge application
Blooms: Application
Difficulty: Hard
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

14. The minimum payment you are willing to accept to do a job is your:
15. nominal wage
16. real wage
17. reservation price
18. value of marginal product

Ans: C

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.2 What have been the five major trends in the labour market in the post-war era?
Topic: The perfectly competitive model of the labour market

 

15. The decision whether to work at any given wage is an application of the:
16. cost–benefit principle
17. equilibrium principle
18. principle of increasing opportunity cost
19. principle of comparative advantage

Ans: A

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

16. An increase in the size of the working-age population:
17. increases labour demand
18. decreases labour demand
19. increases labour supply
20. decreases labour supply

Ans: C

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.4 What factors influence workers’ supply of labour?
Topic: The perfectly competitive model of the labour market

 

17. The two most important factors contributing to increased productivity in industrialised countries in the twentieth century were:
18. higher relative prices and a larger labour supply
19. higher relative prices and technological progress
20. technological progress and increases in the capital stock
21. technological prices and increases in the labour supply

Ans: C

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: Explaining the trends in real wages and employment

 

18. Large productivity gains in the twentieth century increased labour _____, leading to _____ real wages.
19. demand; higher
20. demand; lower
21. demand; no change in the
22. supply; higher

Ans: A

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.3 What factors influence firms’ demand for labour?
Topic: Explaining the trends in real wages and employment

 

19. Which of the following contributed to the Accord system of centralised wage bargaining being abandoned in the 1990s?
20. Low employment growth in the 1980s
21. High inflation due to high real wage growth in the 1980s
22. Falling labour productivity in the 1980s
23. Low labour productivity growth in the 1980s

Ans: D

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: Explaining the trends in real wages and employment

 

20. Initially workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, so domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, the demand for labour in the shoe industry ____ and the demand for labour in the computer industry ______.
21. increases; increases
22. increases; decreases
23. decreases; increases
24. decreases; remains unchanged

Ans: C

AACSB: Knowledge application
Blooms: Application
Difficulty: Hard
LO: 5.3 What factors influence firms’ demand for labour?
Topic: Explaining the trends in real wages and employment

 

21. An increase in the demand for workers producing computers for export versus producing agricultural products that can be imported more cheaply from abroad is an example of how increasing wage inequality can result from:
22. the diminishing marginal product of labour
23. the diminishing marginal product of capital
24. skill-biased technological change
25. globalisation

Ans: D

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.2 What have been the five major trends in the labour market in the post-war era?
Topic: Explaining the trends in real wages and employment

 

22. Government assistance to workers whose employment prospects have worsened is called:
23. worker mobility payments
24. transition aid
25. social security
26. the minimum wage

Ans: B

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.2 What have been the five major trends in the labour market in the post-war era?
Topic: Explaining the trends in real wages and employment

 

23. Worker mobility and transition aid to workers are two ways to offset some of the impacts of:
24. increasing wage inequality
25. the slowdown in productivity growth
26. the slowdown in real-wage growth
27. the long-term increase in real wages

Ans: A

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.2 What have been the five major trends in the labour market in the post-war era?
Topic: Explaining the trends in real wages and employment

 

24. Who of the following would be counted as unemployed?
25. A person with a part-time job
26. A person with a full-time job
27. A person willing to work who has looked for a job in the preceding week
28. A person willing to work who has not looked for a job in two months

Ans: C

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.5 What are the three different types of unemployment?
Topic: Unemployment

 

25. The official unemployment rate is calculated as:
26. the number of working-age people 15 years of age or older who are employed, divided by the number of people in the labour force
27. all people 18 years of age or older who are employed, plus all those unemployed who are actively seeking work
28. the percentage of the working-age population 15 years or older who are not working but are actively seeking work
29. the number of people 15 years or older who are not employed and are actively seeking work, divided by the number of people in the labour force

Ans: D

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.5 What are the three different types of unemployment?
Topic: Unemployment

 

26. Jamie lost his job when the typewriter factory closed down five years ago and has been unemployed ever since. Nigella lost her job at the day care centre when the economy turned down, but thinks they will rehire her when the economy picks up again. Jamie is _____ unemployed and Nigella is _____ unemployed.
27. frictionally; frictionally
28. structurally; frictionally
29. cyclically; structurally
30. structurally; cyclically

Ans: D

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.5 What are the three different types of unemployment?
Topic: Unemployment

 

27. Martha did not like her job as a receptionist, so she quit the job and is looking for one that better suits her artistic talents. Ting Pei would like to work, but employers are not willing to hire him because he does not speak English. Martha is ____ unemployed and Ting Pei is _____ unemployed.
28. frictionally; structurally
29. structurally; frictionally
30. cyclically; structurally
31. structurally; cyclically

Ans: A

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.5 What are the three different types of unemployment?
Topic: Unemployment

 

28. When unemployment benefits exceed the wages that a worker could earn when employed, the worker will typically:
29. remain unemployed longer than otherwise
30. have their unemployment insurance benefits cancelled
31. accept the first job offered
32. decrease their reservation price

Ans: A

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.6 For what reasons do some countries find it difficult to achieve full employment?
Topic: Impediments to full employment

 

29. Government regulations that increase the cost to the employer of hiring workers will:
30. increase the demand for labour
31. decrease the demand for labour
32. increase the supply of labour
33. decrease the supply of labour

Ans: B

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.6 For what reasons do some countries find it difficult to achieve full employment?
Topic: Impediments to full employment

 

30. Unemployment that occurs when workers’ skills are no longer needed in the economy is called:
31. structural unemployment
32. frictional unemployment
33. seasonal unemployment
34. cyclical unemployment

Ans: A

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.5 What are the three different types of unemployment?
Topic: Unemployment

 

31. A person quits their job in order to spend time looking for a better paying job. This is an example of:
32. frictional unemployment
33. cyclical unemployment
34. seasonal unemployment
35. structural unemployment

Ans: A

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.5 What are the three different types of unemployment?
Topic: Unemployment

 

32. An appropriate policy for reducing structural unemployment would be:
33. a tax cut
34. an increase in government spending
35. programs for the retraining and relocating of labour
36. an increase in the money supply

Ans: C

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.5 What are the three different types of unemployment?
Topic: Unemployment

 

33. The supply of labour curve:
34. has a negative slope
35. is independent of the wage rate
36. shows how many workers are willing to work at various real wage rates
37. is usually vertical

Ans: C

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.4 What factors influence workers’ supply of labour?
Topic: The perfectly competitive model of the labour market

 

34. In the labour market under competitive conditions, the real wage rate is determined by:
35. administered pricing
36. government minimum-wage laws
37. the forces of supply and demand
38. the extent to which unions can counteract the power of firms’ management

Ans: C

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.3 What factors influence firms’ demand for labour?
Topic: Explaining the trends in real wages and employment

 

35. The demand for labour curve:
36. determines the amount employers will pay workers
37. shows the amount of labour firms plan to hire at various real wage rates
38. slopes upward to the right
39. has a slope equal to -1

Ans: B

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

36. The quantity of labour demanded depends on the ____________ because firms want to _____________.
37. real wage; make sure that money wages and output prices are equal
38. real wage; compare the price paid for their output and the nominal wage
39. money wage; pay as low a wage as possible
40. money wage; pay an efficiency wage

Ans: B

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

37. Which of the following does the labour market determine?
38. The level of employment and the real wage rate
39. The level of employment and the inflation rate
40. The real wage rate and the inflation rate
41. The inflation rate

Ans: A

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

38. If both the quantity of labour employed and the real wage rate have increased, then:
39. labour productivity may have increased
40. the population grew in size
41. there has been no movement along the labour supply curve
42. labour productivity has increased or the population grew in size

Ans: A

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

39. Structural change in an economy:
40. will cause labour reallocation to occur
41. will cause all wage rates to increase
42. causes only the labour supply curve to shift
43. will cause labour reallocation to occur AND will cause all wage rates to increase

Ans: A

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.5 What are the three different types of unemployment?
Topic: Unemployment

 

40. Which of the following is most likely to explain a rightward shift in the supply of labour curve?
41. A recession
42. The government raises the minimum school leaving age
43. The government raises the minimum retirement age
44. A decline in the birth rate

Ans: C

AACSB: Knowledge application
Blooms: Application
Difficulty: Hard
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

41. Frictional unemployment may be economically beneficial if it leads to a better match between worker and job.

Ans: True

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.5 What are the three different types of unemployment?
Topic: Unemployment

 

42. Australia has experienced stronger jobs growth than Europe in recent decades.

Ans: True

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.6 For what reasons do some countries find it difficult to achieve full employment?
Topic: Impediments to full employment

 

43. Structural unemployment is associated with general downturns in the economy.

Ans: False

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.5 What are the three different types of unemployment?
Topic: Unemployment

 

44. The labour demand curve slopes downward because as the real wage falls, workers demand to work fewer hours.

Ans: False

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

45. A minimum wage, set above the market equilibrium wage, will create an excess supply of labour.

Ans: True

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.6 For what reasons do some countries find it difficult to achieve full employment?
Topic: Impediments to full employment

 

46. If the Government lowers the school leaving age, this will shift the labour ______ curve to the _________.

Ans: supply; right

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

47. During what decade(s) was the average annual rate of growth of real wages in Australia fastest?

Ans: 1960s and 1970s

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.2 What have been the five major trends in the labour market in the post-war era?
Topic: The perfectly competitive model of the labour market

 

48. What are two major reasons for increasing wage inequality?

Ans: globalisation; skill-biased technological change

AACSB: Reflective thinking
Blooms: Knowledge
Difficulty: Easy
LO: 5.2 What have been the five major trends in the labour market in the post-war era?
Topic: Explaining the trends in real wages and employment

 

49. Why is the labour supply curve upward-sloping and what factors could shift the labour supply curve to the right?

Ans: More people will work at a higher real wage; an increase in the working-age population (caused by some demographic changes) and increased participation of women in the labour force.

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

 

50. Changes that reduce the value of labour’s marginal product shift the labour demand curve __________.

Ans: to the left

AACSB: Knowledge application
Blooms: Comprehension
Difficulty: Medium
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?
Topic: The perfectly competitive model of the labour market

Chapter 05 Testbank Summary

Category	# of Questions
AACSB: Analytical thinking	1
AACSB: Knowledge application	27
AACSB: Reflective thinking	22
Blooms: Application	5
Blooms: Comprehension	25
Blooms: Knowledge	20
Difficulty: Easy	19
Difficulty: Hard	5
Difficulty: Medium	26
LO: 5.1 How can the perfectly competitive model be used to understand trends in the labour market?	24
LO: 5.2 What have been the five major trends in the labour market in the post-war era?	7
LO: 5.3 What factors influence firms’ demand for labour?	3
LO: 5.4 What factors influence workers’ supply of labour?	2
LO: 5.5 What are the three different types of unemployment?	10
LO: 5.6 For what reasons do some countries find it difficult to achieve full employment?	4
Topic: Explaining the trends in real wages and employment	9
Topic: Impediments to full employment	4
Topic: The perfectly competitive model of the labour market	27
Topic: Unemployment	10