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Multiple Choice Quiz
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1

Empirical evidence of the labor supply over the life cycle suggests that the participation rate for men:
A)is relatively constant over their working life.
B)increases over their working life.
C)decreases over their working life.
D)initially increases and then decreases over their working life.
E)closely follows the pattern of female labor supply participation
2

The household production model predicts that:
A)a spouse who has a low wage tends to specialize in household production.
B)a spouse who has a relatively high marginal product in household production tends to specialize in household production.
C)the narrowing of the wage gap between men and women and improvements in household technology (e.g., microwaves) reduce the likelihood of specialization in household or market production.
D)both (B) and (C).
E)all of the above.
3

The intertemporal substitution hypothesis implies that the elasticity of intertemporal substitution should be:
A)positive.
B)negative.
C)zero.
D)indeterminate.
4

Over the course of the business cycle, the added worker effect tends to be _____, while the discouraged worker effect tends to be _____
A)A. procyclical; counter-cyclical.
B)counter-cyclical; procyclical.
C)relatively large; relatively small.
D)both (A) and (C).
E)both (B) and (C).
5

The discouraged-worker effect tends to outweigh the added-worker effect because the former:
A)works through the substitution effect, and the latter through the income effect: Empirical evidence suggest that the substitution effect will be stronger.
B)applies to all potential labor market entrants as well as those who are recently unemployed, while the latter applies only to those families with recently unemployed members.
C)C. occurs during both recession and recovery, while the latter only occurs during a recovery.
D)both (A) and (B).
E)both (A) and (C).
6

The labor force participation rate of older men in industrialized countries since World War II has:
A)been declining
B)been increasing
C)been constant
D)has exhibited no consistent pattern
E)reflected the deterioration in the health of this age group .
7

The decision to retire rather than to continue working:
A)involves an exchange of consumption for leisure.
B)is relatively less likely when the present value of earnings is high.
C)is relatively more likely to occur when pension benefits are greater.
D)is most likely to occur at the ages where there are "kinks" in benefits schedule for the Social Security system (e.g., ages 62-65).
E)all of the above.
8

In the fertility model, an increase in the mother’s wage:
A)has an income effect that reduces the number of children desired if children are a normal good.
B)induces parents to substitute away from children towards other goods
C)both (A) and (B).
D)neither (A) nor (B).
9

In the context of the fertility model, the reason why Malthus failed to predict what happened to fertility as countries became wealthier is because he:
A)neglected the substitution effect.
B)neglected the income effect.
C)argued the income effect dominated the substitution effect.
D)argued the substitution effect dominated the income effect.
E)none of the above.
10

Which of following was offered by Malthus as an explanation of why wages tended to move towards the subsistence wage through-out history:
A)people use up surplus production in celebrations and festivals.
B)people use up surplus production by supporting artists and artisans.
C)people use up surplus production by supporting a priesthood.
D)people use up surplus production by supporting a military.
E)people use up surplus production by having more children.





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