Question 1

What is the general relationship between race and unemployment rates in the United States?

A. Whites have the lowest rate of unemployment; Hispanics have the highest rate of unemployment.

B. Whites have the lowest rate of unemployment; blacks have the highest rate of unemployment.

C. Hispanics have the lowest rate of unemployment; whites have the highest rate of unemployment.

D. Hispanics have the lowest rate of unemployment; blacks have the highest rate of unemployment. E. Blacks have the lowest rate of unemployment; Hispanics have the highest rate of unemployment.

Question 2

According to the neo-classical model, what would not result from the government levying a tax on firms for each worker the firm lays off?

A. Firms would be less likely to lay off workers.

B. Firms would be less likely to hire workers.

C. Moral hazard would encourage workers to not work as hard as before.

D. The long-run employment rate would increase.

E. Unemployed workers would remain unemployed for longer periods of time.

Question 3

Centerville has 200 unemployed people. Of these 200 people, 35 are unemployed for two weeks before finding a new job, 55 are unemployed for four weeks before finding a new job, 30 are unemployed for six weeks before finding a new job, 15 are unemployed for ten weeks before finding a new job, and 65 are unemployed for fifteen weeks before finding a new job. Approximately what is the average spell of unemployment in Centerville?

A. 2 weeks

B. 5 weeks

C. 8 weeks

D. 11 weeks

E. 14 weeks

Question 4

Compared to a labor market that has no unemployment benefit system, the unemployment insurance system of the United States probably

A. leads to shorter spells of unemployment.

B. increases the unemployment rate.

C. leads to lower post-unemployment wages.

D. provides for a lower standard of living while unemployed.

E. is less costly for firms.

Question 5

Which one of the following statements regarding the intertemporal substitution hypothesis is false?

A. Workers are willing to reduce labor supplied during a recession.

B. Increases in unemployment may be voluntary as workers collect UI benefits.

C. Increases in unemployment may be voluntary as workers trade income for leisure during low-wage periods.

D. Wages and hours of leisure will tend to move together over the course of the life-cycle.

E. Labor supply responds to changes in the real wage.