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Focused topic practice

labour market MCQs

Practise focused labour market questions with marked answers for exam preparation and subject revision.

labour market Mcqs

1. A minimum wage law tends to ?
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A. Create more unemployment in low-skill job markets than in high-skill job markets

B. Create more Unemployment is high-skill job markets than in low-skill job markets

C. have no impact on unemployment as long as it is set above the competitive equilibrium wage

D. Help all teenagers because they receive a higher wage than they would otherwise

2. Supply side policies are most appropriate to cure ?
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A. Cyclical unemployment

B. Involuntary unemployment

C. A fall in aggregate demand

D. Voluntary unemployment

3. Union might increase efficiency in the case Where they ?
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A. Lower the wage of local outsiders

B. Raise the wage for insiders above the competitive equilibrium

C. Offset the market power of a large firm that is the dominant employer in a region

D. Threaten a strike but dont actually follow through so there are not lost hours of work

4. Which of the following government policies would fail to lower the unemployment rate ?
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A. Establishing employment agencies

B. Establishing right-to-work laws

C. Raising the minimum wage

D. Reducing unemployment benefits

E. Establishing worker training Programs

5. Reducing involuntary unemployment ?
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A. Helps the economy move along its Production Possibility Frontier

B. Helps the economy move on the to Production Possibility Frontier

C. Helps the economy move inside the Production Possibility Frontier

D. Helps shift the economys Production Possibility Frontier outwards

6. Occupational immobility of labour occurs if ?
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A. People cannot afford to move location

B. People do not have the right skills to work

C. People do not want to work

D. People lack information

7. Unions tend to increase the disparity in pay between insiders and outsiders by ?
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A. increasing the wage in the Unionized sector, Which may create a decrease in the supply of workers in the non-unionized sector

B. Increasing the demand for workers in the Unionized sector

C. Increasing the wage in the Unionized sector which may create an increase in the supply of workers in the non-unionized sector

D. decreasing the demand for workers in the Unionized sector

8. Which of the following is an example of a reason why firms might pay efficiency wages ?
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A. At equilibrium wages workers often quit to find better jobs.

B. At equilibrium wages workers sleep when the boss is not looking because workers are not deeply concerned about being fired

C. All of these answers

D. At equilibrium wages, workers cannot afford a healthy diet so they fall asleep at work due to a lack of energy

E. At equilibrium wages only minimally qualified workers apply for the job

9. Refer to Figure 1. The unemployment rate is ?
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A. Not Enough

B. 5.8 Percent

C. 5.7 Percent

D. 3.2 Percent

10. If the minimum wage is set above the equilibrium wage rate, then another thing unchanged ?
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A. More people will be employed

B. There will excess demand in the labour market

C. There will be equilibrium in the labour market

D. There will be excess supply in the labour market

11. According to the Office of National Statistics UK, a husband who chooses to stay home and take care of household is ?
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A. Employed

B. Not in the labour force

C. A discouraged worker

D. Unemployed

12. TO reduce cyclical unemployment the government might ?
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A. Increase the budget surplus

B. Reduce interest rates

C. Increase the balance of payment deficit

D. Reduce government expenditure

13. If, for any reason the wage is held above the competitive equilibrium wage?
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A. The quantity of labour supplied will exceed the quantity of labour demanded and there will be Unemployment

B. The quantity of labour demanded will exceed the quantity of labour supplied and there will be a labour shortage

C. The quality of workers in the applicant pool will tend to fall

D. Unions will likely Strike and the wage will fall to equilibrium

14. If the real wage is too high in the labour market ?
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A. The quantity demanded of labour is lower than the quantity supplied

B. The quantity demanded of labour is higher than the quantity supplied

C. The quantity demanded of labour equals the quantity supplied

D. It will automatically adjust in the short run to bring equilibrium

15. The Marginal Revenue Product is ?
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A. Upward sloping due to the law of demand

B. Upward sloping due to the law of marginal utility

C. Downward sloping due to the law of diminishing returns

D. Downward sloping due to the law of supply

16. Some frictional Unemployment is inevitable because ?
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A. Efficiency wages may hold the wage

B. of minimum wage laws

C. All of these answers

D. There are changes in the demand for labour among different firms.

E. Of unions

17. If there is cyclical unemployment in the economy the government might ?
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A. Reduce government spending

B. Cut taxes

C. Increase interest rates

D. Encourage savings

18. Less demand in the economy may increase unemployment; this may lead to less spending which may reduce demand further. This is called ?
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A. The downward mpc

B. The downward multiplier

C. The upward PPF

D. The upward accelerator

19. Sector shifts tend to raise which type of unemployment ?
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A. Unemployment due to unions

B. Unemployment due to efficiency wages

C. Structural Unemployment

D. Frictional Unemployment

20. Which of the following types of unemployment will exist even if the wage is at the competitive equilibrium ?
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A. Unemployment due to minimum-wage laws

B. Unemployment due to efficiency wages

C. Frictional Unemployment

D. Unemployment due to unions

21. A profit maximising firm will employ labour up to the point where ?
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A. Marginal revenue product = average cost of labour

B. Marginal revenue product = marginal cost of labour

C. Marginal cost = marginal product

D. Marginal revenue = marginal product

22. If employees cannot accept a job because of the costs of moving this is known as ?
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A. Structural immobility

B. Geographical immobility

C. Occupational immobility

D. Cyclical unemployment

23. A miner who has been unable to find work for so long that he has stopped looking for work is considered to be ?
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A. Unemployed

B. Not in the adult population

C. Employed

D. Not in the labour force

24. Which of the following statements about efficiency wage theory is true ?
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A. Paying above the competitive equilibrium wage may improve worker health lower worker turnover improve worker quality and increase worker effort

B. Paying the lowest possible wage is always the most efficient (Profitable)

C. Paying above the competitive equilibrium wage tends to cause workers to shirk their responsibilities

D. Firms do not have a choice about whether they pay efficiency wages or not because these wages are determined by law

25. Demand for labour is more likely to be wage inelastic if ?
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A. It is easy to replace labour

B. Wages are a small proportion of total costs

C. Capital is a good substitute for labour

D. Demand for the final product is price elastic

26. If people are made unemployed because of a fall in aggregate demand this is known as ?
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A. Cyclical unemployment

B. Frictional unemployment

C. Seasonal unemployment

D. Structural unemployment

27. In a perfectly competitive labour market firms are wage takers and the marginal cost of labour equals?
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A. The marginal product

B. The marginal revenue

C. The total cost of labour

D. The average cost of labour

28. A decrease in the supply of labour is likely to lead to ?
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A. A lower equilibrium wage and lower quantity of labour

B. A higher equilibrium wage and higher quantity of labour

C. A lower equilibrium wage and higher quantity of labour

D. A higher equilibrium wage and lower quantity of labour

29. Which of the following is not a supply side measure ?
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A. Providing more information

B. Helping individuals to move location to find work

C. Increasing spending on existing industries

D. Increased training

30. The natural rate of unemployment is likely to fall if ?
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A. Geographical immobility increases

B. unemployment benefits increase

C. Income tax increases

D. More training is available for the unemployed

31. A reservation wage is the ?
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A. tip necessary to get a waiter to reserve a table

B. competitive equilibrium wage.

C. Maximum wage the firm is willing to pay

D. minimum wage the worker is willing to accept

32. An increase in the wage rate ?
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A. is illegal in a free market

B. Will decrease total earning if the demand for labour is wage elastic

C. Will usually lead to more people employed

D. will cause a shift in the demand for labour

33. The Marginal Revenue Product is likely to be wage inelastic if ?
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A. Labour costs are a high percentage of total costs

B. There are many substitutes for the final product

C. It is relatively easy to substitute capital for labour

D. Demand for the final product is price inelastic

34. Refer to Figure 1 The labour fouce is ?
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A. 134.0 million

B. 98.0 million

C. None of theses answers

D. 92.3 million

35. IF Unemployment insurance were so generous that it paid laid off workers 95 percent of their regular salary ?
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A. None of these answers

B. The official unemployment rate would probably overstate true unemployment

C. The official unemployment rate would probably understate true unemployment

D. Frictional Unemployment would fall

E. There would be no impact on the official unemployment rate

36. A fall in demand for labour is likely to lead to ?
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A. A higher equilibrium wage and lower quantity of labour

B. A lower equilibrium wage and higher quantity of labour

C. A lower equilibrium wage and lower quantity of labour

D. A higher equilibrium wage and higher quantity of labour

37. Which one of the following types of Unemployment results from the wage being held above the competitive equilibrium wage ?
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A. None of these answers

B. Sectoral Unemployment

C. Structural unemployment

D. Cyclical Unemployment

E. Frictional Unemployment

38. Refer to Figure 1. The labour force participation rate is ?
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A. 50.2 Percent

B. 70.2 Percent

C. 65.9 Percent

D. 47.1 Percent

39. The amount of unemployment that the economy normally experiences is known as ?
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A. The natural rate of unemployment

B. frictional unemployment

C. cyclical unemployment

D. efficiency wage unemployment

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