question
The quantity of money in the United States is essentially controlled by the:
a. President of the United States.
b. Department of the Treasury.
c. Federal Reserve.
d. system of commercial banks.
a. President of the United States.
b. Department of the Treasury.
c. Federal Reserve.
d. system of commercial banks.
answer
C
question
High-powered money is another name for:
A) currency.
B) demand deposits.
C) the monetary base.
D) M2
A) currency.
B) demand deposits.
C) the monetary base.
D) M2
answer
C
question
Liabilities of banks include:
A) reserves.
B) currency in the hands of the public.
C) loans to customers.
D) demand deposits.
A) reserves.
B) currency in the hands of the public.
C) loans to customers.
D) demand deposits.
answer
D
question
Economists use the term money to refer to:
A) income.
B) profits.
C) assets used for transactions.
D) earnings from labor.
A) income.
B) profits.
C) assets used for transactions.
D) earnings from labor.
answer
C
question
The more funds that the Federal Reserve makes available for banks to borrow through the Term Auction Facility, the _____ the monetary base and the _____ the money supply.
A) smaller; smaller
B) smaller; greater
C) greater; greater
D) greater; smaller
A) smaller; smaller
B) smaller; greater
C) greater; greater
D) greater; smaller
answer
C
question
If the ratio of currency to deposits (cr) increases, while the ratio of reserves to deposits (rr) is constant and the monetary base (B) is constant, then:
A) it cannot be determined whether the money supply increases or decreases.
B) the money supply increases.
C) the money supply decreases.
D) the money supply does not change.
A) it cannot be determined whether the money supply increases or decreases.
B) the money supply increases.
C) the money supply decreases.
D) the money supply does not change.
answer
C
question
Compared to typical open-market operations, when pursuing quantitative easing, Federal Reserve purchases tended to be _____ securities.
A) safer and shorter-term
B) tax-favored and foreign
C) smaller-denomination and higher-grade
D) riskier and longer-term
A) safer and shorter-term
B) tax-favored and foreign
C) smaller-denomination and higher-grade
D) riskier and longer-term
answer
D
question
All of the following are considered major functions of money except as a:
A) medium of exchange.
B) way to display wealth.
C) unit of account.
D) store of value.
A) medium of exchange.
B) way to display wealth.
C) unit of account.
D) store of value.
answer
B
question
A country that is on a gold standard primarily uses:
A) commodity money.
B) fiat money.
C) credit money.
D) the barter system.
A) commodity money.
B) fiat money.
C) credit money.
D) the barter system.
answer
A
question
To prevent banks from using excess reserves to make loans that would increase the money supply, the Federal Reserve could conduct open-market ______ and _____ the interest rate paid on bank reserves.
A) purchases; raise
B) purchases; lower
C) sales; raise
D) sales; lower
A) purchases; raise
B) purchases; lower
C) sales; raise
D) sales; lower
answer
C
question
In a country on a gold standard, the quantity of money is determined by the:
A) government.
B) central bank.
C) amount of gold.
D) buying and selling of government securities.
A) government.
B) central bank.
C) amount of gold.
D) buying and selling of government securities.
answer
C
question
Open-market operations change the ______; changes in interest rate paid on reserves change the ______; and changes in the discount rate change the ______.
A) monetary base; monetary base; monetary base
B) money multiplier; money multiplier; money multiplier
C) monetary base; money multiplier; monetary base
D) money multiplier; monetary base; money multiplier
A) monetary base; monetary base; monetary base
B) money multiplier; money multiplier; money multiplier
C) monetary base; money multiplier; monetary base
D) money multiplier; monetary base; money multiplier
answer
C
question
The banking system creates:
A) liquidity.
B) wealth.
C) reserves.
D) currency.
A) liquidity.
B) wealth.
C) reserves.
D) currency.
answer
A
question
A bank balance sheet consists of only the following items:
Deposits $1,000
Reserves $100
Securities $400
Debt $500
Loans $2,000
What is the value of bank capital?
A) -$1,000
B) +$500
C) +$1,000
D) +$1,500
Deposits $1,000
Reserves $100
Securities $400
Debt $500
Loans $2,000
What is the value of bank capital?
A) -$1,000
B) +$500
C) +$1,000
D) +$1,500
answer
C
question
In the United States, the money supply is determined:
A) only by the Fed.
B) only by the behavior of individuals who hold money and of banks in which money is held.
C) jointly by the Fed and by the behavior of individuals who hold money and of banks in which money is held.
D) according to a constant-growth-rate rule.
A) only by the Fed.
B) only by the behavior of individuals who hold money and of banks in which money is held.
C) jointly by the Fed and by the behavior of individuals who hold money and of banks in which money is held.
D) according to a constant-growth-rate rule.
answer
C
question
If many banks fail, this is likely to:
A) increase the ratio of currency to deposits.
B) decrease the ratio of currency to deposits.
C) have no effect on the ratio of currency to deposits.
D) decrease the amount of currency in circulation, if the Fed takes no action.
A) increase the ratio of currency to deposits.
B) decrease the ratio of currency to deposits.
C) have no effect on the ratio of currency to deposits.
D) decrease the amount of currency in circulation, if the Fed takes no action.
answer
A
question
If the monetary base fell and the currency-deposit ratio rose but the reserve-deposit ratio remained the same, then:
A) the money supply would fall, but not by as much as it would have fallen if the reserve-deposit ratio had risen.
B) the money supply would fall, but not by as much as it would have fallen if the reserve-deposit ratio had fallen.
C) the money supply would fall more than it would have fallen if the reserve-deposit ratio had risen.
D) it is impossible to be certain whether the money supply would fall or rise in this case.
A) the money supply would fall, but not by as much as it would have fallen if the reserve-deposit ratio had risen.
B) the money supply would fall, but not by as much as it would have fallen if the reserve-deposit ratio had fallen.
C) the money supply would fall more than it would have fallen if the reserve-deposit ratio had risen.
D) it is impossible to be certain whether the money supply would fall or rise in this case.
answer
A
question
If the ratio of reserves to deposits (rr) increases, while the ratio of currency to deposits (cr) is constant and the monetary base (B) is constant, then:
A) it cannot be determined whether the money supply increases or decreases.
B) the money supply increases.
C) the money supply decreases.
D) the money supply does not change.
A) it cannot be determined whether the money supply increases or decreases.
B) the money supply increases.
C) the money supply decreases.
D) the money supply does not change.
answer
C
question
The money supply will decrease if the:
A) monetary base increases.
B) currency-deposit ratio increases.
C) discount rate decreases.
D) reserve-deposit ratio decreases.
A) monetary base increases.
B) currency-deposit ratio increases.
C) discount rate decreases.
D) reserve-deposit ratio decreases.
answer
B
question
The money supply will increase if the:
A) currency-deposit ratio increases.
B) reserve-deposit ratio increases.
C) monetary base increases.
D) discount rate increases.
A) currency-deposit ratio increases.
B) reserve-deposit ratio increases.
C) monetary base increases.
D) discount rate increases.
answer
C
question
When the Fed makes an open-market sale, it:
A) increases the money multiplier (m).
B) increases the currency-deposit ratio (cr).
C) increases the monetary base (B).
D) decreases the monetary base (B).
A) increases the money multiplier (m).
B) increases the currency-deposit ratio (cr).
C) increases the monetary base (B).
D) decreases the monetary base (B).
answer
D
question
If you hear in the news that the Federal Reserve conducted open-market purchases, then you should expect ______ to increase.
A) reserve requirements
B) the discount rate
C) the money supply
D) the reserve-deposit ratio
A) reserve requirements
B) the discount rate
C) the money supply
D) the reserve-deposit ratio
answer
C
question
When the Fed decreases the interest rate paid on reserves, it:
A) increases the reserve-deposit ratio (rr).
B) decreases the reserve-deposit ratio (rr).
C) increases the monetary base (B).
D) decreases the monetary base (B).
A) increases the reserve-deposit ratio (rr).
B) decreases the reserve-deposit ratio (rr).
C) increases the monetary base (B).
D) decreases the monetary base (B).
answer
B
question
When the Fed increases the discount rate, it:
A) increases the reserve to deposit ratio (rr).
B) decreases the reserve to deposit ratio (rr).
C) is likely to increase the monetary base (B)
D) is likely to decrease the monetary base (B).
A) increases the reserve to deposit ratio (rr).
B) decreases the reserve to deposit ratio (rr).
C) is likely to increase the monetary base (B)
D) is likely to decrease the monetary base (B).
answer
D
question
When the Fed increases the interest rate paid on reserves, it:
A) increases the reserve-deposit ratio (rr).
B) decreases the reserve-deposit ratio (rr).
C) increases the monetary base (B).
D) decreases the monetary base (B).
A) increases the reserve-deposit ratio (rr).
B) decreases the reserve-deposit ratio (rr).
C) increases the monetary base (B).
D) decreases the monetary base (B).
answer
A
question
If the Federal Reserve wishes to increase the money supply, it should:
A) decrease the discount rate.
B) increase interest paid on reserves.
C) sell government bonds.
D) decrease the monetary base.
A) decrease the discount rate.
B) increase interest paid on reserves.
C) sell government bonds.
D) decrease the monetary base.
answer
A
question
If the Federal Reserve increases the interest rate paid on reserves, banks will tend to hold _____ excess reserves, which will _____ the money multiplier.
A) more; increase
B) more; decrease
C) fewer; increase
D) fewer; decrease
A) more; increase
B) more; decrease
C) fewer; increase
D) fewer; decrease
answer
B
question
Using average rates of money growth and inflation in the United States over many decades, Friedman and Schwartz found that decades of high money growth tended to have ______ rates of inflation and decades of low money growth tended to have ______ rates of inflation.
A) high; high
B) high; low
C) low; low
D) low; high
A) high; high
B) high; low
C) low; low
D) low; high
answer
B
question
All of the following are costs of fully expected inflation except that expected inflation:
A) causes lower real wages.
B) leads to shoeleather costs.
C) increases menu costs.
D) leads to taxing of nominal capital gains that are not real.
A) causes lower real wages.
B) leads to shoeleather costs.
C) increases menu costs.
D) leads to taxing of nominal capital gains that are not real.
answer
A
question
A variable rate of inflation is undesirable because:
A) debtors and creditors cannot protect themselves by indexing contracts.
B) shoeleather costs are greater under variable inflation than under constant inflation.
C) menu costs are greater under variable inflation than under constant inflation.
D) variable inflation leads to greater uncertainty and risk than under constant inflation.
A) debtors and creditors cannot protect themselves by indexing contracts.
B) shoeleather costs are greater under variable inflation than under constant inflation.
C) menu costs are greater under variable inflation than under constant inflation.
D) variable inflation leads to greater uncertainty and risk than under constant inflation.
answer
D
question
The definition of the transactions velocity of money is:
A) money multiplied by prices divided by transactions.
B) transactions divided by prices multiplied by money.
C) money divided by prices multiplied by transactions.
D) prices multiplied by transactions divided by money.
A) money multiplied by prices divided by transactions.
B) transactions divided by prices multiplied by money.
C) money divided by prices multiplied by transactions.
D) prices multiplied by transactions divided by money.
answer
D
question
Using decade-long data across countries from 2000-2010, countries with high money growth tend to have _____ inflation.
A) high
B) low
C) constant
D) decreasing
A) high
B) low
C) constant
D) decreasing
answer
A
question
If the real return on government bonds is 3 percent and the expected rate of inflation is 4 percent, then the cost of holding money is ______ percent.
A) 1
B) 3
C) 4
D) 7
A) 1
B) 3
C) 4
D) 7
answer
D
question
The costs of unexpected inflation, but not of expected inflation, are:
A) menu costs.
B) the arbitrary redistribution of wealth between debtors and creditors.
C) unintended distortions of individual tax liabilities
D) the costs of relative price variability.
A) menu costs.
B) the arbitrary redistribution of wealth between debtors and creditors.
C) unintended distortions of individual tax liabilities
D) the costs of relative price variability.
answer
B
question
Which of the following would most likely be called a hyperinflation?
A) Price increases averaged 300 percent per year.
B) The inflation rate was 10 percent per year.
C) Real GDP grew at a rate of 12 percent over a year.
D) A stock market index rose by 1,000 points over a year.
A) Price increases averaged 300 percent per year.
B) The inflation rate was 10 percent per year.
C) Real GDP grew at a rate of 12 percent over a year.
D) A stock market index rose by 1,000 points over a year.
answer
A
question
The one-to-one relation between the inflation rate and the nominal interest rate, the Fisher effect, assumes that the:
A) money supply is constant.
B) velocity is constant.
C) inflation rate is constant.
D) real interest rate is constant.
A) money supply is constant.
B) velocity is constant.
C) inflation rate is constant.
D) real interest rate is constant.
answer
D
question
According to the classical theory of money, inflation does not make workers poorer because wages increase:
A) faster than the overall price level.
B) more slowly than the overall price level.
C) in proportion to the increase in the overall price level.
D) in real terms during periods of inflation.
A) faster than the overall price level.
B) more slowly than the overall price level.
C) in proportion to the increase in the overall price level.
D) in real terms during periods of inflation.
answer
C
question
Inflation ______ the variability of relative prices and ______ allocative efficiency.
A) increases; increases
B) increases; decreases
C) decreases; decreases
D) decreases; increases
A) increases; increases
B) increases; decreases
C) decreases; decreases
D) decreases; increases
answer
B
question
If the real interest rate and real national income are constant, according to the quantity theory and the Fisher effect, a 1 percent increase in money growth will lead to rises in:
A) inflation of 1 percent and the nominal interest rate of less than 1 percent.
B) inflation of 1 percent and the nominal interest rate of 1 percent.
C) inflation of 1 percent and the nominal interest rate of more than 1 percent.
D) both inflation and the nominal interest rate of less than 1 percent.
A) inflation of 1 percent and the nominal interest rate of less than 1 percent.
B) inflation of 1 percent and the nominal interest rate of 1 percent.
C) inflation of 1 percent and the nominal interest rate of more than 1 percent.
D) both inflation and the nominal interest rate of less than 1 percent.
answer
B
question
According to the Fisher effect, the nominal interest rate moves one-for-one with changes in the:
A) inflation rate.
B) expected inflation rate.
C) ex ante real interest rate.
D) ex post real interest rate.
A) inflation rate.
B) expected inflation rate.
C) ex ante real interest rate.
D) ex post real interest rate.
answer
B
question
The rate of inflation is the:
A) median level of prices.
B) average level of prices.
C) percentage change in the level of prices.
D) measure of the overall level of prices.
A) median level of prices.
B) average level of prices.
C) percentage change in the level of prices.
D) measure of the overall level of prices.
answer
C
question
The income velocity of money:
A) is defined in the identity MV = PY.
B) is defined in the identity MV = PT.
C) is the same thing as the transactions velocity of money.
D) is the same as the number of times a dollar bill changes hands.
A) is defined in the identity MV = PY.
B) is defined in the identity MV = PT.
C) is the same thing as the transactions velocity of money.
D) is the same as the number of times a dollar bill changes hands.
answer
A
question
If the quantity of real money balances is kY, where k is a constant, then velocity is:
A) k.
B) 1/k.
C) kP.
D) P/k.
A) k.
B) 1/k.
C) kP.
D) P/k.
answer
B
question
The inconvenience associated with reducing money holdings to avoid the inflation tax is called:
A) menu costs.
B) shoeleather costs.
C) variable yardstick costs.
D) fixed costs.
A) menu costs.
B) shoeleather costs.
C) variable yardstick costs.
D) fixed costs.
answer
B
question
The real interest rate is equal to the:
A) amount of interest that a lender actually receives when making a loan.
B) nominal interest rate plus the inflation rate.
C) nominal interest rate minus the inflation rate.
D) nominal interest rate.
A) amount of interest that a lender actually receives when making a loan.
B) nominal interest rate plus the inflation rate.
C) nominal interest rate minus the inflation rate.
D) nominal interest rate.
answer
C
question
Econoland finances government expenditures with an inflation tax. Explain who pays the tax and how it is paid.
answer
people holding the money
question
Econoland finances government expenditures with an inflation tax. What are costs of the tax, assuming the tax rate is expected?
answer
the inflation rate
question
In classical macroeconomic theory, the concept of monetary neutrality means that changes in the money supply do not influence real variables. Explain why changes in money growth affect the nominal interest rate, but not the real interest rate
answer
The real interest rate will adjust to S&I without a reference to inflation or money growth rate
question
If the demand for money depends positively on real income and depends inversely on the nominal interest rate, what will happen to the price level today, if the central bank announces (and people believe) that it will decrease the money growth rate in the future, but it does not change the money supply today?
answer
Money supply increases in future so price goes up now.
question
Suppose that Congress passes legislation making it more difficult for firms to fire workers. (An example is a law requiring severance pay for fired workers.) If this legislation reduces the rate of job separation without affecting the rate of job finding, how would the natural rate of unemployment change? Do you think that it is plausible that the legislation would not affect the rate of job finding? Why or why not?
answer
No, because if separation rate is low, then job finding rate is low.
question
Suppose that a country experiences a reduction in productivity - that is, an adverse shock to the production function.
a. What happens to the labor demand curve?
a. What happens to the labor demand curve?
answer
Shifts Down, due to supply reducing
question
Suppose that a country experiences a reduction in productivity - that is, an adverse shock to the production function.
b. How would this change in productivity affect the labor market - that is, employment, unemployment, and real wages - if the labor market were always in equilibrium?
b. How would this change in productivity affect the labor market - that is, employment, unemployment, and real wages - if the labor market were always in equilibrium?
answer
L,U = No change
question
Suppose that a country experiences a reduction in productivity - that is, an adverse shock to the production function.
c. How would this change in productivity affect the labor market if unions prevented real wages from falling?
c. How would this change in productivity affect the labor market if unions prevented real wages from falling?
answer
No change in wages, due to Unions
question
1. During the past 50 years the natural rate of unemployment in the United States ______ during the 1970s and 1980s, compared to the 1950s and 1960s, and then ______ during the 1990s, compared to the previous two decades.
A) increased; increased
B) increased; decreased
C) decreased; decreased
D) decreased; increased
A) increased; increased
B) increased; decreased
C) decreased; decreased
D) decreased; increased
answer
B
question
A spell of unemployment begins when a person leaves their job or:
A) withdraws from the labor force.
B) enters the labor force.
C) takes a vacation.
D) has been without a job for at least four weeks.
A) withdraws from the labor force.
B) enters the labor force.
C) takes a vacation.
D) has been without a job for at least four weeks.
answer
B
question
If the rate of separation is 0.02 and the rate of job finding is 0.08 but the current unemployment rate is 0.10, then the current unemployment rate is ______ the equilibrium rate, and in the next period it will move ______ the equilibrium rate.
A) above; toward
B) above; away from
C) below; toward
D) below; away from
A) above; toward
B) above; away from
C) below; toward
D) below; away from
answer
C
question
The macroeconomic problem that affects individuals most directly and severely is:
A) inflation.
B) unemployment.
C) low savings.
D) low investment.
A) inflation.
B) unemployment.
C) low savings.
D) low investment.
answer
B
question
Frictional unemployment is unemployment caused by:
A) wage rigidity.
B) minimum-wage legislation.
C) the time it takes workers to search for a job.
D) clashes between the motives of insiders and outsiders.
A) wage rigidity.
B) minimum-wage legislation.
C) the time it takes workers to search for a job.
D) clashes between the motives of insiders and outsiders.
answer
C
question
The recent reduced demand for unskilled workers relative to skilled workers has led to ______ for unskilled workers in Europe compared to ______ for unskilled workers in the United States.
A) unemployment; lower wages
B) lower wages; unemployment
C) more unionization; efficiency wages
D) efficiency wages; more unionization
A) unemployment; lower wages
B) lower wages; unemployment
C) more unionization; efficiency wages
D) efficiency wages; more unionization
answer
A
question
Sectoral shifts:
A) lead to wage rigidity.
B) explain the payment of efficiency wages.
C) depend on the level of the minimum wage.
D) make frictional employment inevitable.
A) lead to wage rigidity.
B) explain the payment of efficiency wages.
C) depend on the level of the minimum wage.
D) make frictional employment inevitable.
answer
D
question
Unions contribute to structural unemployment when collective bargaining results in wages:
A) above the equilibrium level.
B) below the minimum wage.
C) below the equilibrium level.
D) above the level of unemployment compensation.
A) above the equilibrium level.
B) below the minimum wage.
C) below the equilibrium level.
D) above the level of unemployment compensation.
answer
A
question
Centralized union wage bargaining with government intervention in Sweden gives relatively more influence to ______, while firm-level union wage bargaining in the United States gives relatively more influence to ______.
A) efficiency wages; sectoral shifts
B) sectoral shifts; efficiency wages
C) insiders; outsiders
D) outsiders; insiders
A) efficiency wages; sectoral shifts
B) sectoral shifts; efficiency wages
C) insiders; outsiders
D) outsiders; insiders
answer
B
question
Which of the following is an example of frictional unemployment?
A) Dave searches for a new job after voluntarily moving to San Diego.
B) Elaine is willing to work for less than the minimum wage, but employers cannot hire her.
C) Bill is qualified and would like to be an airline pilot, but airlines do not find it profitable to hire him at the wage established by the airline pilot's union.
D) Joan is willing to work at the going wage, but there are no jobs available.
A) Dave searches for a new job after voluntarily moving to San Diego.
B) Elaine is willing to work for less than the minimum wage, but employers cannot hire her.
C) Bill is qualified and would like to be an airline pilot, but airlines do not find it profitable to hire him at the wage established by the airline pilot's union.
D) Joan is willing to work at the going wage, but there are no jobs available.
answer
A
question
The earned income tax credit:
A) increases the government's tax revenue.
B) reduces the incomes of poor working families.
C) does not raise labor costs.
D) is not an alternative to raising the minimum wage.
A) increases the government's tax revenue.
B) reduces the incomes of poor working families.
C) does not raise labor costs.
D) is not an alternative to raising the minimum wage.
answer
C
question
When the real wage is above the level that equilibrates supply and demand:
A) the quantity of labor supplied exceeds the quantity demanded.
B) the quantity of labor demanded exceeds the quantity supplied.
C) there is no unemployment.
D) the labor market clears.
A) the quantity of labor supplied exceeds the quantity demanded.
B) the quantity of labor demanded exceeds the quantity supplied.
C) there is no unemployment.
D) the labor market clears.
answer
A
question
When there is structural unemployment, the real wage is:
A) rigid at a level below the market-clearing level.
B) rigid at the market-clearing level.
C) rigid at a level above the market-clearing level.
D) flexible.
A) rigid at a level below the market-clearing level.
B) rigid at the market-clearing level.
C) rigid at a level above the market-clearing level.
D) flexible.
answer
C
question
Unemployment caused by the time it takes workers to search for a job is called ______ unemployment.
A) frictional
B) structural
C) efficiency
D) insider
A) frictional
B) structural
C) efficiency
D) insider
answer
A
question
In 1974 in the United States, most spells of unemployment lasted:
A) less than one month, yet most of the weeks of unemployment occurred in spells lasting two or more months.
B) more than one month, and most weeks of unemployment occurred in spells of two or more months.
C) less than one month, and most weeks of unemployment occurred in spells of one month or less.
D) more than one month, but most weeks of unemployment occurred in spells of one month or less.
A) less than one month, yet most of the weeks of unemployment occurred in spells lasting two or more months.
B) more than one month, and most weeks of unemployment occurred in spells of two or more months.
C) less than one month, and most weeks of unemployment occurred in spells of one month or less.
D) more than one month, but most weeks of unemployment occurred in spells of one month or less.
answer
A
question
. The unemployment insurance system may be desirable because unemployment insurance:
A) raises the natural rate of unemployment.
B) reduces the rate of job finding.
C) increases workers' uncertainty about their incomes.
D) induces workers to reject unattractive job offers.
A) raises the natural rate of unemployment.
B) reduces the rate of job finding.
C) increases workers' uncertainty about their incomes.
D) induces workers to reject unattractive job offers.
answer
B
question
Wage rigidity:
A) forces labor demand to equal labor supply.
B) is caused by sectoral shifts.
C) prevents labor demand and labor supply from reaching the equilibrium level.
D) increases the rate of job finding.
A) forces labor demand to equal labor supply.
B) is caused by sectoral shifts.
C) prevents labor demand and labor supply from reaching the equilibrium level.
D) increases the rate of job finding.
answer
C
question
When insiders have a much greater impact on the wage bargaining process than do outsiders, the negotiated wage is likely to be ______ the equilibrium wage.
A) much greater than
B) much less than
C) almost equal to
D) about one-half of
A) much greater than
B) much less than
C) almost equal to
D) about one-half of
answer
A
question
Firms currently have incentives to temporarily lay off workers because firms typically are charged for ______ of workers' unemployment benefits.
A) all
B) only a part
C) none
D) twice the cost
A) all
B) only a part
C) none
D) twice the cost
answer
B
question
According to studies of individual unemployed workers, these workers are most likely to find a job:
A) about three months before their unemployment insurance runs out.
B) within a few weeks of their unemployment insurance running out.
C) about three months after their unemployment insurance runs out.
D) at a time not influenced by the remaining number of weeks of unemployment insurance.
A) about three months before their unemployment insurance runs out.
B) within a few weeks of their unemployment insurance running out.
C) about three months after their unemployment insurance runs out.
D) at a time not influenced by the remaining number of weeks of unemployment insurance.
answer
B
question
In a steady state:
A) no hiring or firings are occurring.
B) the number of people finding jobs equals the number of people losing jobs.
C) the number of people finding jobs exceeds the number of people losing jobs.
D) the number of people losing jobs exceeds the number of people finding jobs.
A) no hiring or firings are occurring.
B) the number of people finding jobs equals the number of people losing jobs.
C) the number of people finding jobs exceeds the number of people losing jobs.
D) the number of people losing jobs exceeds the number of people finding jobs.
answer
B
question
If wage rigidity holds the real wage above the equilibrium level, an increase in the supply of labor will ______ the number unemployed.
answer
increase
question
The unemployment resulting from wage rigidity and job rationing is called ________ unemployment.
answer
structural unemployment.
question
When an aggregate demand curve is drawn with real GDP (Y) along the horizontal axis and the price level (P) along the vertical axis, if the money supply is decreased, then the aggregate demand curve will shift:
answer
downward and to the left.
question
In the short run, a favorable supply shock causes:
answer
Prices to fall and output to rise.
question
The quantitative easing policy conducted by the Federal Reserve between 2007 and 2011 resulted in a large increase in the monetary base that was partially offset by:
answer
a significant increase in the reserve-deposit ratio.
question
To increase the money multiplier, the Fed can:
answer
Lower the interest rate paid on reserves.
question
Sectoral Shifts:
answer
Make frictional employment inevitable.
question
According to the quantity theory of money, if money is growing at a 10 percent rate and real output is growing at a 3 percent rate, but velocity is growing at increasingly faster rates over time as a result of financial innovation, the rate of inflation must be:
answer
increasing
question
If the fraction of employed workers who lose their jobs each month(the rate of job separations) is 0.01 and the fraction of the unemployed who find a job each month is 0.09 (the rate of job findings), then the natural rate of unemployment is:
answer
10 percent
question
In the classical model, according to the quantity theory and the Fisher equation, an increase in money growth increases:
answer
the nominal interest rate.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
