1.In the wage setting relation W = PeF(u,z), the nominal wage tends to increase when:
a. unemployment benefits decrease
b. the unemployment rate decreases
c. the minimum wage decreases
2. For this question, assume that the production function is Y = N. Then a reduction in the markup will cause
a. a reduction in the natural level of output.
b. an increase in the natural level of output.
c. no change in the natural level of output.
Please help with these questions! Each question has only 1 correct answer and it would be so helpful to have explanation. Thank you!
1.In the wage setting relation W = PeF(u,z), the nominal wage tends to increase when:
a. unemployment benefits decrease
b. the unemployment rate decreases
c. the minimum wage decreases
2. For this question, assume that the production function is Y = N. Then a reduction in the markup will cause
a. a reduction in the natural level of output.
b. an increase in the natural level of output.
c. no change in the natural level of output.
Please help with these questions! Each question has only 1 correct answer and it would be so helpful to have explanation. Thank you!
Related textbook solutions
Related questions
(1) What is the effect of wage indexation on the relation between inflation and unemployment?
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(a) As indexation increases, inflation becomes less sensitive to the difference between the unemployment rate and the natural rate.
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(b) No effect
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(c) As indexation increases, inflation becomes more sensitive to the difference between the unemployment rate and the natural rate.
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(d) As indexation increases, inflation becomes less sensitive to the natural rate.
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(2) When inflation has been persistent, as was the case in the United States during the 1970s, low unemployment rates will likely be associated with:
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(a) low natural rates of unemployment. |
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(b) high but stable rates of inflation. |
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(c) high natural rates of unemployment. |
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(d) increases in the inflation rate. |
(3) For this question, assume that the Phillips curve equation is represented by the following equation:
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(a) a reduction in the markup over labor costs (i.e., a reduction in m). |
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(b) an increase in the markup over labor costs. |
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(c) an increase in the inflation rate over time. |
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(d) a decrease in the inflation rate over time. |
QUESTION 5
Which of the following statements has been proposed as a benefit of passive policy making?
| Passive policy making utilizes the rational expectations hypothesis. | ||
| Passive policy making allows for making immediate changes in response to an anticipated change in economic performance. | ||
| When using passive policy making there is no tradeoff between price stability and unemployment. | ||
| Passive policy making does not wait for the time lag between recognition of a problem and policy action before engaging in economic policies to stabilize the economy. |
1.47 points
QUESTION 6
The idea of policy making taking place in response to a predetermined set of rules is referred to as
| discretionary policy making. | ||
| passive policy making. | ||
| Keynesianism. | ||
| active policy making. |
1.47 points
QUESTION 7
What types of unemployment will still exist when the economy is at the natural rate of unemployment?
| frictional and cyclical unemployment only | ||
| frictional, structural, and cyclical unemployment | ||
| frictional and structural unemployment only | ||
| structural and cyclical unemployment only |
1.47 points
QUESTION 8
The natural rate of unemployment is
| the unemployment rate that exists in long-run equilibrium, after adjustments to all changes have occurred. | ||
| the unemployment rate when there is no structural unemployment. | ||
| the unemployment rate when there is no structural or cyclical unemployment. | ||
| zero. |
1.47 points
QUESTION 9
According to the text, minimum-wage laws cause increases in
| employment possibilities. | ||
| structural unemployment. | ||
| poverty. | ||
| productivity. |
1.47 points
QUESTION 10
During a recession, the overall unemployment rate
| exceeds the natural rate of unemployment. | ||
| falls below the natural rate of unemployment. | ||
| falls rapidly. | ||
| equals the inflation rate. |
1.47 points
QUESTION 11
Cyclical unemployment is
| the unemployment due to the unemployment benefits and welfare programs of the government. | ||
| the unemployment due to union activities and government-imposed restrictions to entry into specific occupations. | ||
| the difference between the actual unemployment rate and the natural rate of unemployment. | ||
| the difference between the unemployment rate when the economy is in a recession and the unemployment rate when the economy is at the peak of an expansion. |
1.47 points
QUESTION 12
Which of the following unemployment rates can be negative?
| the natural unemployment rate | ||
| the seasonal unemployment rate | ||
| the official unemployment rate reported by the Bureau of Labor Statistics | ||
| the cyclical unemployment rate |
1.47 points
QUESTION 13
An unexpected increase in aggregate demand typically causes
| the price level to increase but has no effect on the unemployment rate. | ||
| frictional unemployment to increase but structural unemployment to decrease. | ||
| the price level to increase and the unemployment rate to fall. | ||
| the price level to increase and the unemployment rate to increase. |
1.47 points
QUESTION 14
The rate of unemployment below which the rate of inflation tends to rise and above which the rate of inflation tends to fall is known as the
| non-accelerating-inflation rate of unemployment (NAIRU). | ||
| contrary rate of unemployment. | ||
| Phillips rate of unemployment. | ||
| menu cost rate of unemployment. |
1.47 points
QUESTION 15
Based on the work of economist A.W. Phillips, economists concluded that
| high inflation rates are associated with low unemployment rates. | ||
| higher rates of inflation are associated with higher rates of unemployment. | ||
| there is no trade-off between inflation and unemployment. | ||
| unemployment can be effectively combated by raising wages. |
