macro midterm

If the reserve ratio is 5%, then $600 of additional reserves can create up to

$12,000 of new money

Suppose that the adult population in the town of Springfield is 225 million. If 40 million are unemployed and 100 million are employed, then the unemployment rate is approximately

29%

If M=3,000, P=2, and Y=6,000, what is velocity?

4

The Bureau of Labor Statistics produces data on unemployment and other aspects of the labor market from a regular survey of about

60,000 households

Amy is working part time. Tavaris is on temporary lay-off. Who is included in the Bureau of Labor Statistics "employed" category?

Only Amy

Who can vote on Federal Open Market Committee decisions?

all of the members of the Board of Governors and some of the Federal Reserve Bank presidents

Sirius has just finished high school and started looking for his first job, but has not yet found one. Other things the same, the unemployment rate

and the labor-force participation rate both increase

The leverage ratio is calculated as

assets divided by bank capital

The federal funds rate is the interest rate

banks charge each other for short-term loans of reserves

The primary difference between commodity money and fiat money is that

commodity money has an intrinsic value but fiat money does not

Which list ranks assets from most to least liquid?

currency, stocks, fine art

When the money market is drawn with the value of money on the vertical axis, as the price level decreases the quantity of money

demanded decreases

Suppose the money market, drawn with the value of money on the vertical axis, is in equilibrium. If the money supply increases, then at the old value of money there is an

excess supply of money that will result in an increase in spending

Suppose that because of the popularity of the low-carb diet, bakeries need fewer workers and steak houses need more workers. The unemployment created by this change is

frictional unemployment created by sectoral shifts

In a fractional-reserve banking system, a decrease in reserve requirements

increases both the money multiplier and the money supply

Which of the following is not a tool of monetary policy

increases the government budget deficit

If when the money supply changes, real output and velocity do not change, then a 2 percent increase in the money supply

increases the price level by 2 percent

When the price level rises, the number of dollars needed to buy a representative basket of goods

increases, and so the value of money falls

When the Fed conducts open-market purchases,

it buys Treasury securities, which increases the money supply

A bank has an 8 percent reserve requirement, $10,000 is deposits, and has loaned out all it can given the reserve requirement

it has $800 in reserves and $9,200 in loans

Which of the following is not a reason economics experience structural unemployment?

job search

Which of the following is the correct formula for calculation the labor force participation rate?

labor force/adult population x 100

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate?

medium of exchange

When inflation rises, firms make

more frequent price changes. This raises their menu costs.

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

more reserves, so the money multiplier will fall

The amount of unemployment that an economy normally experiences is called the

natural rate of unemployment

Lucy quit her job because she was unhappy at work. Genevieve was fired because she frequently surfed the internet rather than working on her assigned tasks. Who is eligible for unemployment insurance benefits?

neither Lucy nor Genevieve

The introduction of a union into an industry

raises wages and lowers employment in that industry

Cyclical unemployment is closely associated with

short-term ups and downs of the economy

A decrease in the money supply might indicate that the Fed had

sold bolds in an attempt to increase the federal funds rate

Efficiency wages create a labor

surplus and so increase unemployment

Under the assumptions of the Fisher effect and monetary neutrality, if the money supply growth rate rises, then

the nominal interest rate rises, but the real interest rate does not

The inflation tax refers to

the revenue a government creates by printing money

Wealth is redistributed from debtors to creditors when inflation is

unexpectedly low