Macro. Chapter 15 【Unemployment】, Exercises of Macroeconomics

Download Macro. Chapter 15 【Unemployment】 and more Exercises Macroeconomics in PDF only on Docsity! Macro. Chapter 15 【Unemployment】 1. Measuring employment, unemployment, and labor force participation Consider a small economy composed of six people: Person Status Shen is a 21-year-old professional tennis player. When he's not competing, he works Employed ¥ as a coach at a local tennis club. Valerie is a 42-year-old autoworker who was just laid off by her employer. She is trying Unemployed v to find any kind of job to help make ends meet. Antonia is a 42-year-old accountant who has been out of work for almost a year. He became so discouraged that, a couple of months ago, he gave up on his job search, Frances is a 29-year-old who lost her job as an associate producer for a radio station. After spending a few weeks out of work and interviewing for several ather positions, she gave up on her job search and decided to go back to grad school, She made that decision a few months ago. Dmitri is a famous novelist. He is spending the summer at his lake house in upstate New York, doing a little writing each day but mostly spending his time gardening and reading. Caroline is a 11-year-old student at West Valley Middle School. She baby-sits her younger sister and does other chores for which her parents give her an allowance of $25 per week. Not in the labor force _¥. Not in the labor force v Employed ~ Not in the adult population ¥ Jacques is a 75-year-old professor, He teaches only one or two courses a year, but he's still pursuing an active research agenda. Kyoko is a 33-year-old professional basketball player. She finished her last season as a player 3 weeks ago and is currently interviewing for a coaching position. Musashi is 2 35-year-old graphic designer who is taking 2 years off from work to care for his small daughter. Yvette is a 31-year-old science teacher who taught at West Valley Middle School last year. Due to budget cuts, she was laid off at the end of the school year. It’s the summer now, and after a few weeks of vacation with her family, she is looking for a part-time job as a tutor. Sean is a 20-year-old American studies major at the University of Tennessee. It's summer now, and he is working as a lifeguard in Mobile, Alabama. Lorenzo is a 78-year-old retired professor. He enjays volunteering at the local public library. Employed v Unemployed v Not in the labor force Unemployed v Employed v Not in the labor force actively looked for work during the preceding 4 weeks. a person to be unemployed if he or she Is in the adult population, did not work for pay in the previous week, and has people who are not activel seeking employment, they are not considered part of the labor force. 2. Discouraged workers 4. Sectoral shifts, frictional unemployment, and job searches Suppose the world price of steeffalls{substantially. Tre demand for labor among stee!-producing firms in Pennsylvania will decrease ¥_. The demand for labor among automobile-praducing firms in Michigan, for which steel is an input, will_increase ¥_. The zemporary unemployment resulting from cuch sectoral shifts in the economy is best described as frictional ¥ unemployment, Suppose the world price of cottorffisegfsubstentially. The demand for labor among cotton-producing firms in Texas will increase ¥ . The demanc for labor among textile-producing firms in South Carolina, for which cotton is an input, will decrease ¥_. Tre temporary uremployment “esulting from such seczoral shifts in the econcmy is best described as_frictional_¥_unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve tris goal? Check all that apply. Offerng recipients of unemployment insurance benefits a cash bonus if they find anew job within a specified number of weeks v [1 Increasing the benefits offered to unemployed workers thraugh the government's unemp oyment insurance program Improving a widely used job-search website so that it matches workers to job vacancies more effectively Establishing governnent-run employment agencies to connect unemployed workers to job vacancies ¥ (1 Extending the number of weeks for which unemployed workers are eligible for unemployment insurance benefits from the government ¥ CO Taxing the price of pacing a resume or posting a job opening on a job-seerch website 5. Minimum-wage laws and unemployment For Questions #5. Demand example: +— First, look at the number of the graph 1400 in the lower leff corner right il 0 120q/140q}1600 workel Make sure the number is right. Ihave 875 / 1050 / 1400  um wage laws and unemployment Consider the market for labor depicted by the demand anc supply curves that follow. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. 875 = Input Tool Market for Labor a wage ve (Dollars per hour) 450 Labor Demendec (Thousands of workers) 100 + VIAGE (Dollars pe“ hour) 0 125 250 375 500 628 750 fs75]1000 LADOR (Thousands of work 2.50| — first box Labor Supplied 875 Cinqusanas of workers) 125 Suppose a senato: introduces a bill to legis ate a minimum hourly wegq if your #is 7.5, go | ope the following table with the quantity of labor supplied and demanded at this wage, and indicate whether this represents a shortage or 2 ‘sufplds. Note: Be sure to pay attention to the units used on the graph and in the table. For example, :ype in 100,000 for 100 thousand workers. Labor Demanded —_Labor Supplied wage (workers) (Workers) Shortage or Surplus? $12.50 375,000 |W 625,000 |v Surplus ¥. To get these, you plug the 12.5 into the First Box above , and times 1,000 Whch of the following statements are true? Check all that apply. ¥ @ Inthe apsence of price controls, a surplus puts downward pressure on wages until they tall to the equilibrium. ¥ © Ifthe minimum wage is set at $12.50, the market will not reach equilibrium. ¥ & Binding minimum wages cause st-uctural unemp oyment. ¥ C1 inthis labor market, a minimum wage of $¢.50 would be binding. Suppose a senator introduces a bill to legis ate a minimum hourly wea] 8 —- $7.50. ——— vis the following table with the quantity of labor supplied and demanded at Cs wage, and indicate whether this repreents a shortage or a f Note: Be sure to pay attention to the units used on the graph and ir the cable. For example, type n 100,000 for 200 thousand workers. ied Labor Demanded —_Labor Sup) wage (workers) (workers) Shortage or Surplu: eso [s25000 NV [275000 shortage Wh ch of the following statements are true? Check all that apply. ¥ @ Inthe assance of price controls, a shortage puts upward pressure cn wages until they rise to the equilibrium. ¥ C2 Binding minimum wages cause frictional unemployment. ¥ & Ifthe minimum wage is set at $10.50, the market will not reach equilibrium. ¥ (1 inthis labor market, a minirrum wage of $7.50 is binding. Consider two states that adopt different laws concerning labor unions. The followng graph shows the labor market in a state in the North. Initially, the market-clearing wage thee is $10.00 per hour. Suppose tnat the legislature in this northern state passes laws that make it easy for workers to jain a union. Throuah collective baraainina, the union negotiates a wage of $12.50 per hour. Use the graph input too! to help you answer the folowing questions. Yeu will not be graded on any changes you make to this graph 875 Graph Input Tool @® Merket for Labor "2 WEEE pernowy [280 gn spears ars ipbasepnies as 3 425 workers) workers) 100 25 i fit | | | 0 128 260 375 600 625 75I LABOR (Thousands of worke Enter $12.50 into the box labeled Wage on the previous graph. it: Be sure to pay attention to the units used on the graph. At the union wage, [375,000 |v union workers will be employed. The following graph shows the labor market in a state in the South. The legislature in this state passes strong “righ:-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Except for ths difference in legislation, tne two states are very similar. ‘The initial position o* the graph corresponds to the initial labor market condition in the southern state before the labor union negotiated the rew, higher wage for workers in the nerthern state. Suppose that after the wage goes up in the northem state, some workers in the northam state lose their jobs and decide to move to the southem state. Adjust the graph te show what happens to employment and wages in the southern state. O v ey Demand 8, Oo v supply g = Demand LABOR 6. Contrasting labor union laws in two states Cons der two states that adost differen: laws concerning labor unions. ‘The following graph snews the labor market ir a szate in the North. Inkially, the market-dearing wage there is $8.09 per hour. ‘Suppose that the legislature in chs northern state passes laws that make it easy for workers to :oin a union. Through collective bargainng, the unior negotiates a wage of $1C.00 per acu. 14 0Q.. tool to help vou enswer the followine questions. You will rot be araded on any changes vou make to this araah, Graph Input Teol ® Markel for Labor wage z (ols per hour} £0 Lzbor Demanced Lator Suppied 2 (Thousands of 4460 Cingusends of 208 workers, workers) Fs pe" hour) WAGE (Dol 3 200 490 60¢ 800 1c00 1200f}420f1609 LABOR (Thousands of worker Enter $10.00 into the box atelea Wage on the previous grapn, Hint: Be sure to pay attentior to the unts used on the graph. At the unon wage, 600,000 |v union workers will be Explan: mpoyed. Clese Explanation © You ran read from the ‘hor demand curve shat, at 3 wage of $°0.00, firms demand 60,000 workers, despite the fact shat 1,000,090 workers are willing to supely labor. Thus, 600,000 workers find employment at this wage rate. ‘Thc following graph shows the labor markat in a staze in the South. The gielature in this state passes streng ‘right to work" laws chat make it very diffiault for unions to organze workers, so the wage is always equa to the market-cearing value. Except for this difference in legislation, the two states are very similar. The inital position cf the graph corresacnds to tre inital labor market condition in the southern state before the lator union regotiated the new, higher wage for workers in the rortrem state. jer state lose their joks and decde to move zo the 2 wage gces up in the norther state, scme workers in the north Suppose that ater 2 southem state. Adjust the graph to chow what happens to employment and wages in the southern state. o v Demand oO ¥ suppy WAGE LAEOR  Which cf the following groups pre better offs a resut of the union ection in the northern state? Check all that apply. ¥ 7 All workers in the northern state v Workers in the nortrem staze employed at the union wage ¥ (The original workers in the southern state v ( Employers in the northern state ¥ © Workers who find new jobs n the southern state Which of the folowing group: 's a result of the union action in the northern state? Check all that appl. Employers in the northern sate Workers who find new jobs in Ue southern stale The original workers in the southern state vO Workers in the northern state employed at the union wage ¥ (] All workers in the northern state 7. The theory of efficiency wages 7. The theory of eff ncy wages Why might some firms voluntarily pay workers a wage above the market equilibrium, even ir the presence of surplus labor? Check all that apply. v Higher wages attract a more competent pool of workers. Higher wages cause workers to shirk more of their responsibilities, Paying higher wages increases worcer turnover. Paying higher wages can reduce a firm's training ccsts. Paying higher wages encourages workers to be more productive. Paying higher wages helps workers to be healthier in some develcping countries. Paying higher wages tends to reduce the average experience level of a firm's workers. Paying higher wages enhances workers to adopt healthier lifestyles, enhancing their productivity.