Chapter 07

Question 1

Natural rate of unemployment

Answer 1

The steady-state rate of unemployment ; the rate of unemployment; the rate of unemployment toward which the economy gravitates in the long run

Question 2

Frictional unemployment

Answer 2

The unemployment that results because it takes time for workers to search for the jobs that suit their skills and tastes.

Question 3

Sectoral shift

Answer 3

A change in the composition of demand among industries or regions.

Question 4

Unemployment insurance

Answer 4

A government program under which unemployed workers can collect benefits for a specific period of time after losing their jobs.

Question 5

Wage rigidity

Answer 5

The failure of wages to adjust to equilibrate labor supply and labor demand.

Question 6

Structural unemployment

Answer 6

The unemployment resulting from wage rigidity and job rationing.

Question 7

Insiders

Answer 7

Workers who are already employed and therefore have an influence on wage bargaining.

Question 8

Outsiders

Answer 8

Workers who are not employedand therefore have no influence on wage bargaining.

Question 9

Efficiency wages

Answer 9

Theories of real-wage rigidity and unemployment according to which firms raise labor productivity and profits by keeping real wages above the equilibrium level.

Question 10

Discouraged workers

Answer 10

Individuals who have left the labor force because they believe that there is little hope of finding a job.