Chapter 07 Practice Test

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Written: Oct 27, 2013 7:23 PM - Oct 27, 2013 8:06 PM

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Chapter 07 Practice Test Question 1 nominal real minimum normal Question 2

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Firms consider the ________ wage when considering whether to hire additional units of labor.

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The real business cycle theory emphasizes that in today's modern age, ________ technology plays a significant role in causing economic fluctuations.

shocks to advances in obsolete ideas in duplications in Question 3

An increase in the demand for labor means that

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the demand for labor increases as a result of an increase in the real wage rate. the demand for labor increases as a result of a decrease in the real wage rate. the demand for labor increases at any real wage rate.

the supply of labor must also be increasing. Question 4 0 / 5 points

Recall the Application about the differences in hours worked, taxes, and government benefits for Americans, Europeans and the Japanese to answer the following question(s). On average, Europeans work one-third fewer hours than do Americans and the Japanese. European workers also pay higher taxes and receive more government benefits than do their American and Japanese counterparts. According to this Application, compared to American and Japanese workers, Europeans work fewer hours, leaving them with more leisure time. Increased leisure time for European workers would tend to shift the European

labor supply curve to the left. labor supply curve to the right. labor demand curve to the left. labor demand curve to the right. Question 5 0 / 5 points
Recall the Application about the level of real wages for laborers in England from 1350 to 1550 to answer the following question(s). In 1348, the bubonic plague, also known as the Black Death, arrived in England from Asia and caused a long decline in total population through the 1450s. According to this Application, the decline in population resulting from the Black Death caused the ________ curve for labor to shift to the ________.

demand; right demand; left supply; right supply; left Question 6 0 / 5 points
If current unemployment is close to the natural rate of unemployment, the level of the ________ GDP is likely to be close to the level of potential output.

nominal structural real estimated Question 7 increases; increases increases; decreases 0 / 5 points
If the demand for labor ________, real wages fall and the amount of labor employed ________.

decreases; increases decreases; decreases Question 8 5 / 5 points

Purchasing additional equipment for more people to use or share in a production environment usually results in a ________ of output.

more expensive level higher level backlog of production worker sharing his or her load Question 9 0 / 5 points
Consider a two-input production function, one of which is increasing while the other is fixed. At the point of diminishing returns, output will

increase at an increasing rate. increase at a decreasing rate. decrease at an increasing rate. decrease at a decreasing rate. Question 10 0 / 5 points
The ________ curve shows a(n) ________ relationship between the real wage and the number of workers who are willing to work.

labor demand; positive labor demand; direct labor supply; positive labor supply; inverse Question 11 5 / 5 points
Recall the Application about the level of real wages for laborers in England from 1350 to 1550 to answer the following question(s). In 1348, the bubonic plague, also known as the Black Death, arrived in England from Asia and caused a long decline in total population through the 1450s. According to this Application, economist Thomas Malthus observed that social maladies such as the Black Death would temporarily ________ living standards until ________ living standards led to increased population growth.

raise; lower raise; higher lower; lower lower; higher

Question 12

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Refer to Figure 7.1 . Start from initial equilibrium. If firms reduce their capital stock, the new wage could be ________ and the new amount of labor employed could be ________.

Z; C Y; C X; C X; A Question 13 0 / 5 points
The natural rate of unemployment is the estimated rate of unemployment that would prevail when ________ unemployment is zero.

frictional cyclical structural seasonal Question 14

A closed economy refers to an economy with

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no immigration. no international trade. tariffs and import quotas.

government control of all factors of production. Question 15

The marginal principle states that one should

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increase the level of an activity if the marginal benefit exceeds its marginal cost. decrease the level of an activity if the marginal cost exceeds the marginal benefit. if possible pick the level at which the marginal benefit equals the marginal cost. All of these Question 16
In practice, increases in government spending in an open economy can crowd out

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consumption. investment. net exports. All of these Question 17

Additional Application Summary of the article: Shortage of citrus pickers looms The Miami Herald Herald.com From The Associated Press July 10, 2006 Florida citrus growers have reported difficulty in finding enough labor to pick this years' citrus crop. Fears stemming from potential changes in immigration laws have resulted in a large portion of the Hispanic labor force leaving the state. Hispanic immigrants make up a major segment of Florida's agricultural work force, and the possibility of stricter immigration-law enforcement coupled with the belief that workers needed to return home if they want to obtain future jobs in the U.S. has left Florida with a severe labor shortage. In light of this labor shortage, growers are extending the citrus season by at least one month in order to harvest as much fruit as possible. Even with the extended harvest, orange production could prove to be the worst in the state since 1992, with as many as 6 million boxes of oranges left unharvested. The decrease in labor supply in Florida would tend to cause the labor supply curve to shift

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right, increasing wages. right, decreasing wages. left, increasing wages. left, decreasing wages. Question 18 5 / 5 points

Suppose the stock of capital remains constant. By adding more labor, perhaps a second work shift, output

decreases. increases. remains the same. becomes more costly.

Full-employment output is also called

Question 19

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natural output. national output. potential output. target output. Question 20 Cyclical Frictional Structural Inflationary Attempt Score: 30 / 100 Overall Gr 0 / 5 points
________ unemployment rises and falls with economic fluctuations.