Question

1) What is the effect of anything that makes the efficiency wage rise relative to the market-clearing wage?

A	It decreases both the quantity demanded and the quantity supplied of labour.
B	It decreases the quantity demanded and increases the quantity supplied of labour.
C	It increases the quantity demanded and decreases the quantity supplied of labour.
D	It increases both the quantity demanded and the quantity supplied of labour.

2) What might increase the natural rate of unemployment?

A	an increased access to the Internet
B	an aging population
C	an increase in the legal retirement age
D	a natural increase in population

3) In 2019, Mark opens up a new vehicle detailing business and creates six additional jobs in his company. If net employment growth in 2019 was 2 percent, what was a likely explanation for this?

A	job creation was less than job destruction in 2019
B	the number of jobs created by new firms was less than jobs created in established firms in 2019
C	job creation was greater than job destruction in 2019
D	the number of jobs created by new firms was greater than jobs created in established firms in 2019

4) Suppose that consumers decide to buy more 4K players and fewer Blu-Ray players. As a result, 4K companies expand production while Blu-Ray companies lay off workers. What is this an example of?

A	structural unemployment created by efficiency wages
B	cyclical unemployment created by a recession
C	frictional unemployment created by a sectoral shift in supply
D	frictional unemployment created by a sectoral shift in demand

Answer 1

1 - Option B.

It decreases quantity demanded and increases quantity supplied.

Quantity demanded will rise when wages fall. Supply will fall then.

2 - Option A.

An increased access to internet

This is because it shows the imperfection in the labor market thus will increase NRU

3 - Option D.

Number of jobs created by new firm was greater than 2019

Employment rate woupd have dropped and not risen if new jobs would have dropped

4 - Option B

Cyclical unemployment created by recesion

The fall in demand led unemployment is called cyclical unemployment.