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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 between the ages of 25 and 55. |
| | B) | increases continuously over their working life. |
| | C) | decreases continuously over their working life. |
| | D) | closely follows the pattern of female labor supply participation. |
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2 | |
The household production model predicts that |
| | A) | a spouse who has a low wage, all else equal, tends to specialize in household production. |
| | B) | a spouse who has a relatively high marginal product in household production, all else equal, 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. |
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3 | |
The intertemporal substitution hypothesis implies that the elasticity of labor supply should be |
| | A) | positive. |
| | B) | negative. |
| | C) | zero. |
| | D) | indeterminate. |
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4 | |
Over the course of the business cycle, the added worker effect tends to be _____, while the discouraged worker effect tends to be _____. |
| | A) | procyclical; counter-cyclical |
| | B) | counter-cyclical; procyclical |
| | C) | procyclical; procyclical |
| | D) | counter-cyclical; counter-cyclical |
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5 | |
Empirically, the discouraged worker effect dominates the added worker effect. Therefore, |
| | A) | more of the unemployed are taking advantage of the unemployment insurance program than the government knows. |
| | B) | official unemployment rate statistics are too low. |
| | C) | official unemployment rate statistics are too high. |
| | D) | both (A) and (B). |
| | E) | both (A) and (C). |
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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. |
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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. |
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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 a substitution effect whereby parents substitute away from children towards other goods. |
| | C) | both (A) and (B). |
| | D) | neither (A) nor (B). |
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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) | didn't believe anyone would choose to leisure rather than work. |
| | D) | believed people didn't know how to make economic decisions. |
| | E) | none of the above. |
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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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