EC 302 CH 11 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
The efficiency wage is:
A.
the equilibrium wage rate determined in competitive labor markets.
B.
an amount that maximizes effort or efficiency per dollar of money wages.
C.
an amount that maximizes effort or efficiency per dollar of real wages.
D.
an amount equal to or just above the minimum wage. - Answers C.
an amount that maximizes effort or efficiency per dollar of real wages.
An assumption about worker behavior behind the efficiency wage theory is that effort is ___ related
to the worker compensation.
- directly
- inversely
- not - Answers directly
How is full-employment output determined in the Keynesian model with efficiency wages?
A.
the amount of output produced by firms with employment determined by the labor demand curve at
the point where the marginal product of labor equals the efficiency wage
B.
the amount of output produced by firms with employment determined by the labor demand curve at
the point where the unemployment rate is zero
C.
the amount of output produced by firms with employment determined by the labor supply curve at
the point where workers do not shirk
D.
the amount of output produced by firms with employment determined where the labor demand
curve intersects the labor supply curve - Answers A.
the amount of output produced by firms with employment determined by the labor demand curve at
the point where the marginal product of labor equals the efficiency wage
In this model, how is full-employment output affected by changes in productivity (supply shocks)?
A.
A productivity shock does not affect the marginal product of labor, so employment does not change
B.
A productivity shock changes the efficiency wage, since it affects work effort, so employment changes
C.
A productivity shock affects the marginal product of labor, so employment changes
D.
A productivity shock does not lead to a change in the efficiency wage, so employment does not
change - Answers C.
A productivity shock affects the marginal product of labor, so employment changes
How is full-employment output affected by changes in labor supply?
A.
Labor supply changes affect the efficiency wage and employment; so they change full-employment
output.
B.
Labor supply changes have no effect on the efficiency wage but they change employment; so they
affect full-employment output.
C.
Labor supply changes have no effect on the efficiency wage or employment; so they have no impact
on full-employment output.
D.
Labor supply changes have no effect on employment, despite changing the efficiency wage; so they
have no impact on full-employment output. - Answers C.
, Labor supply changes have no effect on the efficiency wage or employment; so they have no impact
on full-employment output.
The existence of labor unions could contribute to realminuswage rigidity, except that in the United
States
A.
unions are interested in benefits, not wages.
B.
labor unions are outlawed.
C.
most workers aren't in unions.
D.
unions try to increase employment rather than negotiating over wages. - Answers C.
most workers aren't in unions.
The effort curve is
A.
horizontal, because work effort is independent of the real wage.
B.
negatively sloped, because of diminishing marginal returns to labor.
C.
positively sloped, because of the law of increasing cost.
D.
s-shaped, because a small increase in the real wage will increase work effort more at an intermediate
wage than at a low wage or at a high wage. - Answers D.
s-shaped, because a small increase in the real wage will increase work effort more at an intermediate
wage than at a low wage or at a high wage.
In the efficiency wage model with the efficiency wage above the market-clearing wage, when
employment is at its full-employment level
A.
there could be either an excess demand for, or an excess supply of, labor.
B.
there is an excess demand for labor.
C.
there is an excess supply of labor.
D.
labor supply equals labor demand. - Answers C.
there is an excess supply of labor.
In the efficiency wage model, an increase in productivity will cause
A.
a decrease in the real wage.
B.
an increase in both the real wage and the level of employment.
C.
an increase in the real wage.
D.
no change in the real wage. - Answers D.
no change in the real wage.
In the Keynesian model, the real wage is mildly procyclical because
A.
firms take advantage of recessions to pay slightly lower wages, since there's excess labor supply.
B.
workers' effort may depend on the unemployment rate and the real wage.
C.
demand for labor fluctuates with the demand for final goods.
D.
the supply of labor fluctuates with the business cycle - Answers B.
workers' effort may depend on the unemployment rate and the real wage
In the Keynesian model, the full-employment level of output is the amount of output produced when
The efficiency wage is:
A.
the equilibrium wage rate determined in competitive labor markets.
B.
an amount that maximizes effort or efficiency per dollar of money wages.
C.
an amount that maximizes effort or efficiency per dollar of real wages.
D.
an amount equal to or just above the minimum wage. - Answers C.
an amount that maximizes effort or efficiency per dollar of real wages.
An assumption about worker behavior behind the efficiency wage theory is that effort is ___ related
to the worker compensation.
- directly
- inversely
- not - Answers directly
How is full-employment output determined in the Keynesian model with efficiency wages?
A.
the amount of output produced by firms with employment determined by the labor demand curve at
the point where the marginal product of labor equals the efficiency wage
B.
the amount of output produced by firms with employment determined by the labor demand curve at
the point where the unemployment rate is zero
C.
the amount of output produced by firms with employment determined by the labor supply curve at
the point where workers do not shirk
D.
the amount of output produced by firms with employment determined where the labor demand
curve intersects the labor supply curve - Answers A.
the amount of output produced by firms with employment determined by the labor demand curve at
the point where the marginal product of labor equals the efficiency wage
In this model, how is full-employment output affected by changes in productivity (supply shocks)?
A.
A productivity shock does not affect the marginal product of labor, so employment does not change
B.
A productivity shock changes the efficiency wage, since it affects work effort, so employment changes
C.
A productivity shock affects the marginal product of labor, so employment changes
D.
A productivity shock does not lead to a change in the efficiency wage, so employment does not
change - Answers C.
A productivity shock affects the marginal product of labor, so employment changes
How is full-employment output affected by changes in labor supply?
A.
Labor supply changes affect the efficiency wage and employment; so they change full-employment
output.
B.
Labor supply changes have no effect on the efficiency wage but they change employment; so they
affect full-employment output.
C.
Labor supply changes have no effect on the efficiency wage or employment; so they have no impact
on full-employment output.
D.
Labor supply changes have no effect on employment, despite changing the efficiency wage; so they
have no impact on full-employment output. - Answers C.
, Labor supply changes have no effect on the efficiency wage or employment; so they have no impact
on full-employment output.
The existence of labor unions could contribute to realminuswage rigidity, except that in the United
States
A.
unions are interested in benefits, not wages.
B.
labor unions are outlawed.
C.
most workers aren't in unions.
D.
unions try to increase employment rather than negotiating over wages. - Answers C.
most workers aren't in unions.
The effort curve is
A.
horizontal, because work effort is independent of the real wage.
B.
negatively sloped, because of diminishing marginal returns to labor.
C.
positively sloped, because of the law of increasing cost.
D.
s-shaped, because a small increase in the real wage will increase work effort more at an intermediate
wage than at a low wage or at a high wage. - Answers D.
s-shaped, because a small increase in the real wage will increase work effort more at an intermediate
wage than at a low wage or at a high wage.
In the efficiency wage model with the efficiency wage above the market-clearing wage, when
employment is at its full-employment level
A.
there could be either an excess demand for, or an excess supply of, labor.
B.
there is an excess demand for labor.
C.
there is an excess supply of labor.
D.
labor supply equals labor demand. - Answers C.
there is an excess supply of labor.
In the efficiency wage model, an increase in productivity will cause
A.
a decrease in the real wage.
B.
an increase in both the real wage and the level of employment.
C.
an increase in the real wage.
D.
no change in the real wage. - Answers D.
no change in the real wage.
In the Keynesian model, the real wage is mildly procyclical because
A.
firms take advantage of recessions to pay slightly lower wages, since there's excess labor supply.
B.
workers' effort may depend on the unemployment rate and the real wage.
C.
demand for labor fluctuates with the demand for final goods.
D.
the supply of labor fluctuates with the business cycle - Answers B.
workers' effort may depend on the unemployment rate and the real wage
In the Keynesian model, the full-employment level of output is the amount of output produced when
