ECON TEST 3

if the reserve ratio is 10 percent, $1400 of additonal reserves can create up to

$14000 of new money

The manager of the bank where you work tells you that the bank has $400 million in deposits and $340 million dollars in loans. If the FED raises the reserve requirement from 5 to 10 percent, how much is the bank holding in excess reserves?

$20 mil

Suppose the Fed requires banks to hold 9 percent of their deposits as reserves. A bank has $18,000 of excess reserves and then sells the Fed a Treasury bill for $9,000. How much does this bank now have to lend out if it decides to hold only required reserves?

$27,000

a banks reserve ration is 5 percent and the bank has $2,280 in reserve. its deposits amount to

$45,600

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600, it has a

$510 increase in excess reserves and a $90 increase in required reserves

labor force participation rate is computed as

(labor force/adult population) x 100

table 28-7 if the local govt imposed a minimum wage of $4 in productionville, how many people would be unemplyed

0

figure 28-3 if the govt imposes a minimum wage of $4, then the unemployment will increase by

0 workers

the money multiplier equals

1/R, where R represents the reserve ratio for all banks in the economy.

table 28-3 how many people were employed in baltivia in 2009?

11,000

table 28-2 unemployment rate of aridia in 2012 was

11,1%

in Ugoland, the money supply is $8 mil and reserves are $1 mil. assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

12.5 percent

table 28-4 what is male pop in meditor

135 mil

table 28-4 what is the adult pop in meditor

230 mil

the BLS produces data on unemployment and other aspects of the labor market from a regular survey of about

60,000 households

table 28-4 what is the adult female labor force pop rate in meditor

66.7%

table 28-4; what is the adult female labor force in meditor

70 mil

which of the following is a function of money

All of the above are correct

Who would be included in the labor force?

Lisa, who is unhappy with her current job.

which of the following is correct

The Federal Reserve has 12 regional banks. The Board of Governors has 7 members who serve 14-year terms.

which of the following is the correct formula for calculating the labor force participation rate

[labor force/ adult pop] x100

which of the following is the correct formula for calculating unemployment rate

[number employed/labor force] x100

Economists call an institution designed to oversee the banking system and regulate the quantity of money in the economy

a central bank

according to 2012 data on the US population, which of the following was correct

adults of prime working age had higher labor force participation rates and lower rater of unemployment compared to teenagers

at any given time, the voting members of the federal open market committee include

all of the above

which of the following is correct -typically more than 1/3 -most spells of -most unemployment observed at any time is

all of the above

job search

all of the above are correct

the new york federal reserve bank

all of the above are correct

which of the following is concerning for FOMC

all of the above are correct

Access to which of the following explains the lower growth rate for the American economy in the 21st century compared to the previous 250 years?

all the above

the natural rate of unemployment is the

amount of unemployment that the economy normally experiences

which of the following includes everyone in the adult population that the BLS counts as unemployed

anyone who is not employed, available for work, has looked for work in the past four weeks, and anyone who is waiting to be recalled from a job from which they have been laid off

the members of the federal reserve board of governers

are appointed by the president of the US and confirmed by US senate

the leverage ratio is calculated as

assets divided by bank capital

during the great depression in the early 1930s

bank runs closed many banks

the federal funds rate is the interest rate

banks charge each other for short term loans of reserves

When the Fed decreases the discount rate, banks will

borrow more from the fed and lend more to the public. the money supply increases

treasury bonds

both liquid and store of value

suppose there are a large number of men who used to work or seek work who now do not do wither. other things the same, this makes

both the number of people unemployed and the labor force fall

When a union raises the wage above the equilibrium level,

both the quantity of labor supplied and unemployment rise

When conducting an open-market purchase, the Fed

buys government bonds, and in so doing increases the money supply.

an important function of the us fed reserve is to

control the supply of money

a person who is not employed and claims to be trying hard to find a job but really is not trying hard to find a job is

counted as unemployed but should be counted as out of the labor force

in the US average adult holds about $4,490 in

currency

in the 19th century , when crop failures often led to bank runs, banks would make relatively fewer loans and hold relatively more excess reserves. By itself, these actions by the banks should have

decreased both the money multiplier and the money supply

some individuals would like to have a job, but they have given up looking for a job after an unsuccessful search. these individuals are called

discouraged workers, not classified by BLS as unemployed

the unemployment rate is computed as the number of unemploed

divided by the labor force, all times 100

Bank regulators impose capital requirements in order to

ensure banks can pay off depositors

the FOMC meets approx

every 6 weeks

currently, us currency is

fiat money with no intrinsic value

If changing consumer preferences increase the demand for satellite radios and decrease the demand for video cassette recorders, the economy will likely exhibit

frictional unemployment

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called

frictional unemployment

people who are unemployed because they are in search of a job that suits their skills are included within

frictional unemployment

Sandy has graduated from college and is devoting her time to searching for a job. She has seen plenty of openings but has not yet been offered one that best suits her tastes and skills. Sandy is

frictionally unemployed, frictional unemployment exists even in the long run

Under a fractional-reserve banking system, banks

generally lend out a majority of the funds deposited

the labor force participation rate tells us the fraction of the population that

has chosen to participate in the labor market

unemployment insurance tends to

increase frictional employment

suppose that in a country people gain more confidence in the banking system and so hold relativly less currency and more deposits. as a result, bank reserves will

increase money supply and will eventually increase

in 1991 the federal reserve lowered the reserve requirement from 12 percent to 10 percent. other things the same this should have

increased both the money multiplier and the money supply

When a bank loans out $1,000, the money supply

increases

An open-market purchase

increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the pubic

Over one time horizon or another, Fed policy decisions influence

inflation and employment

the federal reserve

is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks.

if the reserve requirement is 12% and banks desire to hold no excess reserves, when a bank receives a new deposit of $1,000

it will be able to make new loans up to a max of $880

the BLS is part of the US dept of

labor

What does the Fed auction at the Term-Auction Facility?

loans of a quantity it sets

Meredith is looking for work as a computer programmer. Although her prospects are good, she has not yet taken a job. Julie is looking for work in a steel mill. Every time she shows up for an interview, there are more people looking for work than there are openings. Someone waiting in line with her tells her it has been that way for a long time.

meredith is frictionally unemployed, julia is structually unemployed

When the Fed purchases $1000 worth of government bonds from the public, the U.S. money supply eventually increases by

more than $1000

the labor force equals the

number of people employed plus the number of people unemployed

Which tool of monetary policy does the Federal Reserve use most often?

open-market operations

currency includes

paper bills and coisn

Rafael is the newly-appointed plant manager for a company that manufactures head phones. Rafael's senior supervisors told him that the output the firm produces, given the number of workers employed, indicates that some workers may be shirking. According to efficiency wage theory, what should he do?

pay all workers more than the equilibrium wage rate

wagner act of 1935

prevents employers from interfering when workers try to organize a union

the most common method employed by the fed to increase the money supply is the

purchase of US govt bonds

figure 28-5 if the minimum wage is set at $125 then

quantity of labor supplied will equal 35

unions

raise the wages of unionized workers and raise unemployment

When a minimum-wage law forces the wage to remain above the equilibrium level, it

raises the quantity of labor supplied and reduces the quantity of labor demanded compared to the equilibrium level

which of the following groups is largely responsible for carrying out the feds task of regulating banks and ensuring the heath of the financial system

regional federal reserve of banks

Regional Federal Reserve Banks

regulate banks in their regions

cyclical unemployment refers to

short-run fluctuations around the natural rate of unemployment

You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money's function as a _______. The laptop's price is posted as $500. The $500 price illustrates money's function as a _____. You use the $500 to purchase the laptop. This transaction illustrates money's function as a ______.

store value, unit of account, medium of exchange

If the wage is kept above the equilibrium wage for any reason, the result is

structural unemployment

efficiency wages create a

surplus of labor and so raise unemployment

minimum wage create unemployment in markets where they create a

surplus of labor. unemployment of this type is called structural

Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work during the last two months. Who does the Bureau of Labor Statistics count as "unemployed"?

tatiana but not ican

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

the FOMC

The president of each regional Federal Reserve Bank is appointed by

the board of directors of that regional federal reserve bank

which of the following is not an explanation for the existence of unemployment in the long run

the business cycle

which of the following individuals serve a four year term

the chair of board of goveners

the rate at which the fed lends money to banks is

the discount rate

Liquidity refers to

the ease with which an asset is converted to the medium of exchange

The BLS defines the unemployment rate as the percentage of

the labor force that is unemployed

collective bargaining refers to

the process by which unions and firms agree on the terms of employment

When the wage is above the equilibrium level,

the quantity of labor supplied exceeds the quantity of labor demanded.

bank capital is

the resources that owners have put into the bank

to maintan their standard of livin, most people rely on

their labor earning

when the federal reserve sells assets from its portfolio to the public with the intent of changing the money supply,

those assets are govt bonds and the fed reason for selling them is to decrease the money supply

unemployment data is collected

through a monthly survey of about 60,000 households

today, bank runs are

uncommon because of FDIC deposit insurance

Cyclical employment refers to

year to year fluctuations of unemployment around its natural rate