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| 1 | |
A person who is made redundant because of the contraction of an industry is a victim of ____________. |
| | A) | frictional unemployment |
| | B) | demand-deficient unemployment |
| | C) | classical unemployment |
| | D) | structural unemployment |
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| 2 | |
The _____________ rate is the fraction of the population of working age who are in the labour force. |
| | A) | labour market |
| | B) | employment rate |
| | C) | participation rate |
| | D) | discouraged workers |
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| 3 | |
Discouraged workers, pessimistic about finding a job, join the labour force. |
| | A) | True |
| | B) | False |
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| 4 | |
Frictional unemployment is the irreducible _________ unemployment in a dynamic society |
| | A) | minimum |
| | B) | maximum |
| | C) | average |
| | D) | zero |
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| 5 | |
Demand-deficient unemployment occurs when output is _____ full capacity |
| | A) | above |
| | B) | equal to |
| | C) | below |
| | D) | converging to |
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| 6 | |
__________ unemployment describes the unemployment created when the wage is deliberately maintained above the level at which the labour supply and labour demand schedules intersect. |
| | A) | classical |
| | B) | Keynesian |
| | C) | Structural |
| | D) | Cyclical |
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| 7 | |
Equilibrium unemployment is entirely voluntary |
| | A) | True |
| | B) | False |
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| 8 | |
When the economy is experiencing only voluntary unemployment, reductions in unemployment and increases in output are mainly accomplished by ___________ policies. |
| | A) | demand-side |
| | B) | supply-side |
| | C) | incomes |
| | D) | inflationary |
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| 9 | |
The substitution effect of a ___ in the marginal tax rates encourages people to __________ work for leisure. |
| | A) | cut, substitute |
| | B) | cut, complement |
| | C) | rise, substitute |
| | D) | rise, complement |
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| 10 | |
An advocate of the classical model of the economy would claim that unemployment is created when the ________ is above its equilibrium level in the ____________. |
| | A) | price level, aggregate economy |
| | B) | tax rate, government budget |
| | C) | wage rate, labour market |
| | D) | interest rate, market for loanable funds |
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| 11 | |
The natural rate of unemployment, (equilibrium unemployment), will always be zero. |
| | A) | True |
| | B) | False |
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| 12 | |
We would normally expect the size of the labour force to be __________ than the number of workers willing to accept job offers at any real wage rate. |
| | A) | smaller |
| | B) | larger |
| | C) | the same size |
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| 13 | |
The natural rate of unemployment, at any real wage, is the difference between ____________ and _________. |
| | A) | those willing to work at the going wage, labour demand |
| | B) | labour demand, those willing to work at the going wage |
| | C) | abour demand, labour supply |
| | D) | those willing to work at the going wage, labour supply |
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| 14 | |
If somebody is prepared to work at the going wage rate but cannot find work then they are victims of ___________. |
| | A) | demand-deficient unemployment |
| | B) | classical unemployment |
| | C) | Keynesian or voluntary unemployment |
| | D) | frictional unemployment |
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| 15 | |
Policies to reduce unemployment by reducing union power, tax cuts, reductions in unemployment benefit and investment subsidies are examples of _________. |
| | A) | Keynesian policies |
| | B) | Supply-side policies |
| | C) | Monetarist policies |
| | D) | Classical policies |
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| 16 | |
If the income tax rate changes from 30% to 40% on incomes over £30,000 and a person’s income is £31,000 then her marginal tax rate is _________. |
| | A) | 30% |
| | B) | 10% |
| | C) | 70% |
| | D) | 40% |
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| 17 | |
The abolition of income tax would probably ___________ the number of workers in employment and __________ the natural rate of unemployment. |
| | A) | increase, reduce |
| | B) | increase, increase |
| | C) | educe, increase |
| | D) | reduce, reduce |
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| 18 | |
In booms and slumps recorded employment data change by more than recorded unemployment data because of the discouraged worker effect. |
| | A) | True |
| | B) | False |
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| 19 | |
If the long run equilibrium of an economy depends upon its short run path, the economy is experiencing ___________. |
| | A) | involuntary unemployment |
| | B) | hysteresis
the natural rate of unemployment
structural unemployment |
| | C) | the natural rate of unemployment |
| | D) | structural unemployment |
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| 20 | |
All of the following may contribute to hysteresis except ___________. |
| | A) | the insider outsider distinction |
| | B) | discouraged workers |
| | C) | the scrapping of old machinery during recessions |
| | D) | imperfections in the capital market |
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