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Multiple Choice Quiz
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1

One of the lessons of economics regarding unemployment is that:
A)only inefficient markets have unemployment.
B)even in a well-functioning competitive economy, where the number of workers equals the number of jobs, some workers will be out of work while they search for jobs.
C)while there appears to be a number of different types of unemployment, there is only really one type of unemployment once economic factors have been taken into account.
D)the equilibrium level of unemployment in a competitive labor market is zero.
2

From 1950 to the late 1980s, the unemployment rate:
A)was relatively constant.
B)has been trending upwards.
C)has been trending downwards.
D)has varied randomly.
3

Unemployment tends to:
A)target all workers equally.
B)be concentrated among particular demographic groups.
C)be concentrated among workers in specific sectors.
D)both (B) and (C).
4

Education tends to lower the unemployment rate because:
A)educated workers invest more in specific training that marries firms and workers together and makes them less likely to be laid off in adverse economic conditions.
B)educated workers have better networks for learning about alternative job opportunities.
C)both (A) and (B).
D)neither (A) nor (B).
5

Workers are unemployed when they:
A)have lost their job due to layoffs or plant closings.
B)leave their job.
C)reenter the labor market after spending time in the nonmarket sector.
D)are new entrants, such as recent high school or college graduates.
E)all of the above.
6

Frictional unemployment arises:
A)when the worker and firm have a disagreement that leads to the worker being let go.
B)because the number of workers looking for work exceeds the number of jobs.
C)because skills are specific to a job and there is some inertia in workers acquiring new skills.
D)when workers and firms need time to locate each other and to digest the information about the value of the job match.
7

Structural unemployment occurs because:
A)the economy predictable goes through good times and bad.
B)information about available jobs for which the worker is qualified takes time to accumulate.
C)skills that workers are supplying and the skills that the firms are demanding do not always match.
D)both (A) and (B).
E)both (B) and (C).
8

The steady-state rate of unemployment:
A)is the rate of unemployment that is observed in the short run as a result of labor flows.
B)is the rate of unemployment that is observed in the long-run as a result of labor flows.
C)occurs when the number of workers who lose there jobs is less than the number of workers who find them.
D)both (A) and (C).
E)both (B) and (C).
9

According to search theory, unemployment is:
A)a human capital investment in information.
B)involuntary.
C)illusory.
D)permanent.
E)all of the above.
10

In the sequential model of search, the worker:
A)searches for work among high and low wage firms randomly.
B)chooses a non optimal stopping rule.
C)does not terminate the search if he or she finds a good job on the first try.
D)stops searching when the wage offer is greater than his or her asking wage (reservation wage).
E)none of the above.





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