Nazarbayev University

ECON 328

ECON 328: LABOR ECONOMICS MIDTERM Time allowed: 1 hour IMPORTANT: Explain your answers carefully. You get no credit for unsupported assertions or guesses. Write as if you are trying to convince an intelligent person who does not already know the answers. If your answers would not convince such a person, it will be assumed that you do not really understand the material Multiple Choice (3 point each, 30 points in total): 1. When forming theories, economists must be careful to a. include all known facts and details. b. omit crucial factors. c. mirror the real world as realistically but as simply as possible. d. consider historical behavior and policies. e. limit the analysis to two variables. 2. When plotting log wages (y-axis) against years of schooling (x-axis), the slope of the regression line indicates a. the average wage. b. the average logged wage. c. the average years of schooling. d. the economic return to each additional year of schooling measured in dollars. e. the economic return to each additional year of schooling measured in percentage terms. 3. An outward shift in the labor demand curve implies that a. employers are now looking to hire more workers at any given wage. b. employers are now looking to hire more workers if the wage increases. c. employers are now looking to hire fewer workers regardless of the wage. d. demand for the firm's output likely fell. e. a greater number of workers are now more willing to work at any given wage. 4. Of the 500,000 people (age 16+) in a particular country, 300,000 people are in the labor force. Of these, 240,000 are employed and 60,000 are unemployed. Of the 200,000 workers not in the labor force, 20,000 want jobs but have given up looking for one. What is the unemployment rate if discouraged workers are counted as being unemployed? a. 10% b. 20% c. 25% d. 48% e. 60% 5. Fertility in the U.S. declined in the last 100 years primarily because a. real income has increased and children are inferior goods.