1. Because markets may not clear for several months or even several years, the classical model

a.is no longer considered valuable by mainstream economists

b.has no value when explaining a situation where excess supply exists

c.is irrelevant to any discussion of a market in which excess demand exists

d.does a better job of explaining short-term fluctuations than long-run growth

e.does a better job of explaining long-run growth than short-run fluctuations

2. In a labor market diagram, the point at which the labor supply curve crosses the labor demand curve is

a.the point at which all workers are employed at the salary at which they would prefer to be employed

b.the point at which all jobs are filled at the wage employers prefer to pay

c.the point at which everyone who wants to work is able to find a job

d.a point at which we have excess labor supply, causing unemployment

e.the point at which excess demand for labor drives the wage rate upward

3.The aggregate production function shows how much output the economy can produce

a.with different quantities of labor, land, capital and states of technology

b.with different quantities of labor and capital, for given amounts of land and a given state of technology

c.with different quantities of labor, for given amounts of land and capital, and a given state of technology

d.with a given amount of money

e.with different amounts of money and given amounts of land, labor, capital, and a given state of technology

4. What is the effect of diminishing returns to labor on the slope of the aggregate production function (where output is measured on the vertical axis and employment is measured on the horizontal axis)?

a.It implies that the slope of the curve increases as the number of workers employed increases

b.It implies that the slope of the curve becomes negative as the number of workers employed increases

c.It implies that the slope of the curve decreases (or becomes flatter) as the number of workers employed increases

d.It keeps the slope the same throughout

e.It shifts the aggregate production function downward

5. In the long run, the economy's level of output depends upon (1) the

a.amount of land and capital available for labor to use and (2) the state of technology (and types of inputs available)

b.cost of land and capital and (2) the cost of labor

c.availability of land and (2) the availability of capital

d.state of technology and (2) the cost of land

e.state of technology only

6. According to classical economists,

a.full employment means zero unemployment

b.as long as markets clear, no government action is needed to ensure full employment

c.even if all markets clear, government action is needed to correct labor market imperfections if the economy is to reach full employment

d.as long as markets clear and government provides jobs to those who need them, the economy will be at full employment

e.even if markets clear, cyclical unemployment will still persist in the long run

7. Which combination of government policies would be most likely increase labor demand?

a.Increasing subsidies to education and increasing subsidies to businesses for hiring new employees

b.Reducing income tax rates and cutting transfer payments to the needy

c.Raising income tax rates and cutting transfer payments to the needy

d.Reducing subsidies to education and increasing subsidies to businesses for hiring new employees

e.Increasing subsidies to education and reducing subsidies to businesses for hiring new employees

8. The table below shows the marginal product of each unit of labor. Suppose each unit of output sells for $5. Currently, the nominal wage rate is $400 per day. How many labors should be hired?

a.1 worker

b.2 workers

c.3 workers

d.4 workers

e.5 workers

9. The labor supply curve

a.slopes upward to illustrate that more people will want to work as the real wage increases

b.slopes upward to illustrate that changes in the real wage are directly proportional to changes in the nominal wage

c.may slope either upward or downward, depending upon the real wage

d.slopes downward to illustrate that a decrease in the real wage decreases the number of individuals willing to work

e.slopes downward to illustrate that the availability of workers is directly proportional to the real wage

10. Which of the following is a reason why the labor demand curve would shift rightward?

a.A decrease in the amount of capital equipment

b.An increase in educational attainment of the population

c.A shift to earlier retirement

d.An increase in population

e.An increase in the number of two-family households

Qunation 1 Because markets may not clear for several months or even several years, the classical model Not yet answered O a. is no longer considered valuable by mainstream economists Marked out of O b. has no value when explaining a situation where excess supply exists O c. is inelevant to any discussion of a market in which excess demand exists F Huy question O d. does a better job of explaining short-term fluctuations than long-run growth O e. does a better job of explaining long-run growth than short-run fluctuations Comation 2 In a labor market diagram, the point at which the labor supply curve crosses the labor demand curve is Anawer saved 0 a. the point at which all workers are employed at the salary at which they would prefer to be employed Marked out of ( b. the point at which all jobs are filled at the wage employers prefer to pay LOO D c. the point at which everyone who wants to work is able to find a job F Hug question O d. a point at which we have excess labor supply, causing unemployment O e the point at which excess demand for labor drives the wage rate upward Clear my choice Qunation 3 The aggregate production function shows how much output the economy can produce Not yet answered O a. with different quantities of labor, land, capital and states of technology Marked out of O b. with different quantities of labor and capital, for given amounts of land and a given state of technology O c. with different quantities of labor, for given amounts of land and capital, and a given state of technology F Flug question O d. with a given amount of money D e. with different amounts of money and given amounts of land, labor, capital, and a given state of technology Qunation 4 What is the effect of diminishing returns to labor on the slope of the aggregate production function (where output is measured on the vertical axis and employment is measured on the horizontal mis)? Not yet answered O a. It implies that the slope of the curve increases as the number of workers employed increases Marked out of O b. It implies that the slope of the curve becomes negative as the number of workers employed increases LOO 0 c. It implies that the slope of the curve decreases (or becomes flatter) as the number of workers employed increases F Hoy question O d. It keeps the slope the same throughout O e. It shifts the aggregate production function downward In the long run, the economy's level of output depends upon (I) the Nut yet answered a. amount of land and capital available for labor to use and (2) the state of technology (and types of inputs available) Marked out of O b. cost of land and capital and (2) the cost of labor O c availability of land and (2) the availability of capital F Hug neation O d. state of technology and (2) the cost of land O e. state of technology onlyQunation 6 According to classical economists, Not yet O a. full employment means zero unemployment Marked out of 0 b. as long as markets clear, no government action is needed to ensure full employment LOO 0 c. even if all markets clear, gov ment action is needed to correct labor market imperfections if the economy is to reach full employment O d. as long as markets clear and government provides jobs to those who need them, the economy will be at full employment O e. even if markets clear, cyclical unemployment will still persist in the long run Qnation 7 Which combination of government policies would be most likely increase labor demand? Not yet answered a. Increasing subsidies to education and increasing subsidies to businesses for hiring new employees Marked out of LOO 0 b. Reducing income tax rates and cutting transfer payments to the needy D G. Raising income tax rates and cutting transfer payments to the needy question 0 d. Reducing sub asidies to businesses for hiring new employees O e. Increasing subsidies to education and reducing sub: sees for hiring new employees Qunation 8 The table below shows the marginal product of each unit of labor. Suppose each unit of output sells for $5. Currently, the nominal wage rate is $400 per day. How many labors should be hired? Not yet Unit of labor Marginal Product answered Marked out of B LOO P Flag 120 on a w BO O a. I worker O b. 2 workers 0 c. 3 workers O d. 4 workers D e. 6 workers Qunation 9 The labor supply curve Not yet nawered a. slopes upward to illustrate that more people will want to work as the real wage increases Marked out of O b. slopes upward to illustrate that changes in the real wage are directly proportional to changes in the nominal wage LOO O c. may slope either upward or downward, depending upon the real wage question O d. slopes downward to illustrate that a decrease in the real wage decreases the number of individuals willing to work O e. slopes downward to illustrate that the availability of workers is directly proportional to the real wage Question 10 Which of the following is a reason why the labor demand curve would shift rightward? Not yet mawered a. A decrease in the amount of capital equipment Marked out of LOO O b. An increase in educational attainment of the population O c. A shift to earlier retirement F Flag O d. An increase in population O e. An increase in the number of two-family households