more random econ practice questions

Suppose some country had an adult population of about 25 million, a labor force participation rate of 60 percent and an unemployment rate of 6 percent. How many people were employed?

14.1 million

If the reserve ratio is 20 percent, the money multiplier is

5

Suppose that the adult population is 4 million, the number of unemployed is 0.25 million and the labor force participation rate is 75%. What is the unemployment rate?

8.3%

The federal funds rate is the interest rate

Banks charge each other

To increase the money supply, the Fed can

But government bonds or decrease the discount rate

According to the loan able funds model, what event results in a higher interest rate and greater saving

Congress passed a reform of the tax laws that encourages greater investment

Suppose a country repealed its investment tax credit. The effects of this are represented by shifting

Demand to the left

The interest rate the Fed charges on loans it makes to banks is called the

Discount rate

The board of governors

Has 7 members

savings deposits are included in

M2 but not M1

If the discount rate is lowered, banks borrow

More from the Fed so reserves increase

If Japan goes from a small budget deficit to a large budget deficit it will reduce

Public saving and so shift the supply of loan able funds left

More generous unemployment insurance would

Raise frictional unemployment

If congress institutes an investment tax credit, the interest rate would

Rise and saving would increase

Other things the same, a higher interest rate induces people to

Save more so the supply of loan able funds slopes upwards

If the government instituted an investment tax credit, then what would result in a higher equilibrium

Saving and the interest rate

If the budget deficit increases, then

Saving falls and the interest rate rises

In the loan able funds model, an increase in an investment tax credit would create a

Shortage at the former equilibrium rate which leads to a rise in the interest rate

In the first part of the decade the US government went from a surplus to a deficit. Other things the same, this means the

Supply of loan able funds shifted to the left

The supply of loanable funds would shift to the right of either

Tax reforms encouraged greater saving or the budget deficit becomes smaller

When a union raises the wage above equilibrium,

The quantity of labor supplied and unemployment both rise

Which of the following equations represents GDP for a closed economy?

Y=C + I + G

crowding out occurs when investment declines because

a budget deficit makes interest rates rise

Which of the following both increase the money supply?

a decrease in the discount rate and a decrease in the interest rate on reserves

the federal funds rate is the interest rate

banks charge each other for short term loans of reserves

to increase money supply, the Fed can

buy government bonds or decrease the discount rate

Bolivia had a smaller budget deficit in 2003 than in 2002. Other things the same, we would expect this reduction in the budget deficit to have

decreased the interest rates and increased investment

suppose the government changed tax laws, with the result that people were encouraged to consume more and save less. Using the loanable funds model, a consequence would be

higher interest rates and lower investment

Which of the following is a determinant of productivity

human capital, physical capital, and natural resources per worker

If there are diminishing returns to capital, then

increases in the capital stock increases output by even smaller amounts

What does the Fed not do?

it does not make loans to any qualified business

Which of the following does not create unemployment by keeping wages above the equilibrium level?

job search

Efficiency wages, minimum wage laws, and unions all

keep wages above the equilibrium level causing a surplus of labor

Unions

lower the wages of workers in industries without unions

A firm may pay efficiency wages in an attempt to

reduce incentives to shirk, reduce turnover, attract a well-qualified pool of applicants

a larger budget surplus

reduces the interest rate and raises investment

an increase in the budget deficit would cause

shortage of loanable funds at the original interest rate, which would leas to rising interest rates

Wages in excess of their equilibrium level help explain

structural bot not frictional unemployment

When a minimum wage law forces the wage to remain above the level that balances supply and demand, the result is

surplus of labor and a shortage of jobs

suppose that Congress were to repeal an investment tax credit. What would happen in the market for loanable funds

the demand for loanable funds would shift left

suppose the US offered a tax credit for firms that built new factories in the US. Then

the demand for loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate

the interest rate the Fed charges on loans it makes to banks is called

the discount rate

which of the following events could explain a decrease in interest rates together with an increase in investment

the government reduced the tax rate on savings

M1 equals currency plus demand deposits plus

traveler's checks plus other checkable deposits