Econ hw 6 review 2
At an 8% interest rate, the quantity of savings is $250 billion. What would the quantity of savings be if the interest rate falls to 5%?
$190 billion
Compare a fund that charges a 0.25% annual fee with a fund that charges a 1.25% annual fee. If an investment of $5,000 earns an average return of 8% over the course of 5 years, approximately how much more will fees over those 5 years be for the higher-fee fund?
$330
(Table: Employment, Unemployment, and Labor Force Participation) Refer to the table. What is the unemployment rate of the country in 2009?
3.9%
(Table: Employment, Unemployment, and Labor Force Participation) Refer to the table. What is the unemployment rate of the country in 2010?
5%
Collateral is:
Something of value that secures a loan to protect the lender
In a nonrecession year, the majority of U.S. unemployment is:
frictional.
High volatility in the inflation rate can result in:
improper allocation of resources
Fluctuations in income cause most people to:
save
Cyclical unemployment is:
unemployment correlated with the business cycle
(Figure: Labor Market) Refer to the figure. What is the unemployment rate in this market as a result of the implementation of a $10 minimum wage?
50%
A saver buys a $10,000 zero-coupon government bond for $9,375. When it matures a year from now, what will be the approximate implied interest rate?
6.67%
Debt monetization means that a government pays off its debt by:
increasing the money supply
In the long run, the quantity theory of money says that the growth rate of the money supply will be approximately equal to the:
inflation rate.
A bank lends money for a year at an interest rate of 7%, and the inflation rate for that year turns out to be 5%. What is the bank's real rate of return for that year?
2%
According to the rule of 70, a stock portfolio growing at a rate of 3.5% will double approximately every ______ years.
20
Deflation is:
a decrease in the average level of prices
A higher leverage ratio means that
the firm is at a greater risk for becoming insolvent.
A stock that has a high covariance with market conditions is considered risky because:
when the market is declining that stock will decline too.
high fees
are not likely to generate higher returns in the long run because of the efficient markets hypothesis.
(Table: CPI) According to the table, in which of the following years did this country experience disinflation?
both 2001 and 2002