EC4710-M2-S08

EC4710-M2-S08 - NAME: ECONOMICS 4710 MIDTERM-II Louisiana...

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NAME: ECONOMICS 4710 MIDTERM-II Louisiana State University Instructor: Bulent Unel Date: April 3, 2008 Important: This is a closed book exam. The exam has two parts. The first part consists of 20 multiple choice questions and the second part consists of 2 quantitative questions. Check that you have them all. Do not take any part of this exam with you when you leave.
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Part I: Multiple Choice Questions (Each 2.5 pts). 1. Justin is looking for a factory work, but everywhere he fills out an application he is told that so have lots of others. Erica has a law degree. Several firms have made her offers, but she thinks she might be able to find a firm where her talents could be put to better use. a. Justin and Erica are both frictionally unemployed. b. Justin and Simon are both structurally unemployed. c. Justin is frictionally unemployed, and Erica is structurally unemployed. d. Justin is structurally unemployed, and Erica is frictionally unemployed. Answer : d 2. Sally is on a temporary layoff from the factory where she makes plastic tableware. If Sally participates in the BLS survey, she will be classified as a. unemployed and in the labor force. b. unemployed and out of the labor force. c. employed and in the labor force. d. employed and out of the labor force. Answer: a 3. Consider a hypothetical economy where all workers have the same skills and all firms hire workers with these skills. Labor supply and demand are described by L s = 5 W and L d = 100 - 5 W, where L s and L d are labor supply and demand, respectively, and W denotes real wage rate. Which of the following is true? a. the equilibrium real wage rate is 20; at this wage rate, the unemployment rate is 5%. b. the equilibrium real wage rate is 10; at this wage rate, the unemployment rate is 5%. c. the equilibrium real wage rate is 20; at this wage rate, the unemployment rate is 0%. 2
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d. the equilibrium real wage rate is 10; at this wage rate, the unemployment rate is 0%. Answer: d 4. Consider the same economy described in the previous question. Suppose that the gov- ernment of this economy sets a minimum wage rate equal to $12. The unemployment rate will be a. 15% b. 20% c. 33% d. 40% Answer: c 5. Unemployment insurance a. creates structural unemployment and unions create frictional unemployment. b. creates frictional unemployment and unions create structural unemployment.
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EC4710-M2-S08 - NAME: ECONOMICS 4710 MIDTERM-II Louisiana...

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