macro

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? a. $27,000 b. $27,190 c. $26,190 d. $9,000

a. $27,000

If the reserve ratio is 8 percent, then the money multiplier is a. 12.5. b. 11.5. c. 13.5. d. 8.

a. 12.5.

At any meeting of the Federal Open Market Committee, that committee's voting members consist of a. 5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors. b. 5 Federal Reserve Regional Bank Presidents and 5 members of the Board of Governors. c. 12 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors. d. 12 Federal Reserve Regional Bank Presidents and 5 members of the Board of Governors.

a. 5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors.

Which of the following is not a commonly-cited explanation for the decreasing labor-force participation rates for men from 1950 to the present? a. availability of reliable birth control b. men acquiring additional years of schooling before entering the labor force c. a preference for men to retire when younger d. changing social attitudes about stay-at-home fathers

a. availability of reliable birth control

The federal funds rate is the interest rate that a. banks charge one another for loans. b. banks charge the Fed for loans. c. the Fed charges banks for loans. d. the Fed charges Congress for loans.

a. banks charge one another for loans.

For the Bureau of Labor Statistics to place someone in the "unemployed" category, that person must a. be available for work. b. have tried to find employment during the previous week. c. have previously been employed. d. All of the above are correct.

a. be available for work.

When a union bargains successfully with employers, in that industry, a. both wages and unemployment increase. b. wages increase and unemployment decreases. c. wages decrease and unemployment increases. d. both wages and unemployment decrease.

a. both wages and unemployment increase.

If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could a. buy $300,000 worth of bonds. b. buy $225,000 worth of bonds. c. sell $300,000 worth of bonds. d. sell $225,000 worth of bonds

a. buy $300,000 worth of bonds.

Frictional unemployment a. can be created both by workers quitting to find more suitable jobs and changes in a country's comparative advantages. b. can be created by workers quitting to find more suitable jobs but not by changes in a country's comparative advantages. c. can be created by changes in a country's comparative advantages, but not by workers quitting to find new jobs. d. is not created by workers quitting to find more suitable jobs nor by changes in a county's comparative advantages.

a. can be created both by workers quitting to find more suitable jobs and changes in a country's comparative advantages.

9. Public policy a. can reduce both frictional unemployment and the natural rate of unemployment. b. can reduce frictional unemployment, but it cannot reduce the natural rate of unemployment. c. cannot reduce frictional unemployment, but it can reduce the natural rate of unemployment. d. cannot reduce either frictional unemployment or the natural rate of unemployment.

a. can reduce both frictional unemployment and the natural rate of unemployment.

If the Fed increases the reserve ratio from 5 percent to 12.5 percent, then the money multiplier a. decreases from 20 to 8. b. decreases from 12.5 to 5. c. increases from 8 to 20. d. increases from 5 to 12.5.

a. decreases from 20 to 8.

The money supply decreases if a. households decide to hold relatively more currency and relatively fewer deposits and banks decide to hold relatively more excess reserves and make fewer loans. b. households decide to hold relatively more currency and relatively fewer deposits and banks decide to hold relatively fewer excess reserves and make more loans. c. households decide to hold relatively less currency and relatively more deposits and banks decide to hold relatively more excess reserves and make fewer loans. d. households decide to hold relatively less currency and relatively more deposits and banks decide to hold relatively less excess reserves and make more loans.

a. households decide to hold relatively more currency and relatively fewer deposits and banks decide to hold relatively more excess reserves and make fewer loans.

You pay for cheese and bread from the deli with currency. Which function of money does this best illustrate? a. medium of exchange b. unit of account c. store of value d. liquidity

a. medium of exchange

17. 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? a. pay all workers more than the equilibrium wage rate b. pay all workers below the equilibrium wage rate to make up for the loss from shirking c. make sure that workers are getting paid exactly the equilibrium wage rate d. fire the workers with the most seniority

a. pay all workers more than the equilibrium wage rate

Unemployment insurance a. reduces search effort which raises unemployment. b. reduces search effort which lowers unemployment. c. increases search effort which raises unemployment. d. increases search effort which decreases unemployment.

a. reduces search effort which raises unemployment.

When colonists in Virginia used tobacco as money, their money a. was commodity money. b. had no intrinsic value. c. was fiat money. d. had no store of value.

a. was commodity money.

12. If traveler's checks were $1000 higher and saving deposits were $500 higher, M1 would be a. $500 higher and M2 would be $1,500 higher. b. $1,000 higher and M2 would be $1,500 higher. c. M2 and M1 would be $1,500 higher. d. $1,000 high and M2 would be $500 higher.

b. $1,000 higher and M2 would be $1,500 higher.

If the reserve ratio is 12.5 percent, then $1,000 of additional reserves can create up to a. $7,000 of new money. b. $8,000 of new money. c. $11,500 of new money. d. $12,500 of new money.

b. $8,000 of new money.

If R represents the reserve ratio for all banks in the economy, then the money multiplier is a. 1/(1-R). b. 1/R. c. 1/(1+R). d. (1+R)/R.

b. 1/R.

n 2016 the Bureau of Labor Statistics reported that there were 57.1 million people over age 25 whose highest level of education was some college or an associate degree. Of these, 36.4 million were employed and 1.5 million were unemployed. What were the labor-force participation rate and the unemployment rate for this group? a. 66.4% and 2.6% b. 66.4% and 4.0% c. 63.7% and 2.6% d. 63.7% and 4.0%

b. 66.4% and 4.0%

Consider five individuals with different occupations. Allen prepares taxes wants ribs Betty does dry cleaning wants computer fixed Calvin fixes computers wants bread Diedre bakes bread wants taxes prepared Eric barbecues ribs wants dry cleaning If this economy has money a. Allen will buy from Betty b. Betty will buy from Calvin c. Eric will buy from Allen d. None of the above are correct.

b. Betty will buy from Calvin

Which of the following might explain why the United States has so much currency per person? a. U.S. citizens are holding a lot of foreign currency. b. Currency may be a preferable store of wealth for criminals. c. People use credit and debit cards more frequently. d. All of the above help explain the abundance of currency.

b. Currency may be a preferable store of wealth for criminals.

Which of the following is correct? a. Nearly all economists believe that unions are bad for the economy as a whole. b. Unionized firms pay wages above the competitive equilibrium level. c. Unions increase the level of employment in unionized firms. d. Unions decrease the level of employment in firms without unions.

b. Unionized firms pay wages above the competitive equilibrium level.

8. The "yardstick" people use to post prices and record debts is called a. a medium of exchange. b. a unit of account. c. a store of value. d. liquidity.

b. a unit of account.

16. Which of the following is an example of an efficiency wage? a. a high wage paid to compensate for dangerous work such as coal mining b. an above-equilibrium wage offered by a firm to attract a more talented pool of job applicants c. a wage below the minimum wage but supplemented by customer tips d. a high wage paid to a college graduate for a high-skill job such as electrical engineering

b. an above-equilibrium wage offered by a firm to attract a more talented pool of job applicants

Paper dollars a. are commodity money and gold coins are fiat money. b. are fiat money and gold coins are commodity money. c. and gold coins are both commodity monies. d. and gold coins are both fiat monies.

b. are fiat money and gold coins are commodity money.

in a system of 100-percent-reserve banking, a. banks do not accept deposits. b. banks do not influence the supply of money. c. loans are the only asset item for banks. d. All of the above are correct.

b. banks do not influence the supply of money.

On a bank's T-account, which are part of the banks liabilities? a. both deposits made by its customers and reserves b. deposits made by its customers but not reserves c. reserves but not deposits made by its customers d. neither deposits made by its customers nor reserves

b. deposits made by its customers but not reserves

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 a. frictional unemployment created by efficiency wages. b. frictional unemployment created by sectoral shifts. c. structural unemployment created by efficiency wages. d. structural unemployment created by sectoral shifts.

b. frictional unemployment created by sectoral shifts.

If all workers and all jobs were the same such that all workers were equally well suited for all jobs, then there would be no a. cyclical unemployment. b. frictional unemployment. c. natural rate of unemployment. d. structural unemployment.

b. frictional unemployment.

Workers searching for jobs that best suit them is most closely associated with a. cyclical unemployment. b. frictional unemployment. c. seasonal unemployment. d. structural unemployment.

b. frictional unemployment.

Efficiency wages a. increase productivity and reduce unemployment. b. increase productivity but increase unemployment. c. decrease productivity but reduce unemployment. d. decrease productivity and increase unemployment.

b. increase productivity but increase unemployment.

1. An open-market purchase a. increases the number of dollars and the number of bonds in the hands of the public. b. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public. c. decreases the number of dollars and the number of bonds in the hands of the public. d. decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public.

b. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.

The theory of efficiency wages explains why a. setting wages at the equilibrium level may increase unemployment. b. it may be in the best interest of firms to offer wages that are above the equilibrium level. c. the most efficient way to pay workers is to pay them according to their skills. d. it is efficient for firms to set wages at the equilibrium level.

b. it may be in the best interest of firms to offer wages that are above the equilibrium level.

16. Which of the following does the U.S. president appoint and the U.S. Senate confirm? a. members of the Board of Governors and regional Federal Reserve Bank Presidents. b. members of the Board of Governors but not the regional Federal Reserve Bank Presidents. c. the regional Federal Reserve Bank Presidents, but not members of the Board of Governors. d. neither members of the Board of Governors nor regional Federal Reserve Bank Presidents.

b. members of the Board of Governors but not the regional Federal Reserve Bank Presidents.

The tool most often used by the Fed to control the money supply is a. changing reserve requirements. b. open market operations. c. buying and selling of equities. d. altering the discount rate.

b. open market operations.

More generous unemployment insurance would a. raise structural unemployment. b. raise frictional unemployment. c. lower structural unemployment. d. lower frictional unemployment.

b. raise frictional unemployment.

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy? a. the Board of Governors b. the FOMC c. the regional Federal Reserve Bank presidents d. the Central Bank Policy Commission

b. the FOMC

Economists use the word "money" to refer to a. income generated by the production of goods and services. b. those assets regularly used to buy goods and services. c. financial assets such as stocks and bonds. d. any type of wealth.

b. those assets regularly used to buy goods and services.

All else equal, which of the following would increase the unemployment rate? (i) an increase in the number of women who return to work after being stay-at-home mothers (ii) a preference among older men to retire early (iii) an increase in the maximum number of weeks for which someone can receive government unemployment benefits (iv) an increase in the number of previously unemployed women who stop looking for work and become discouraged workers a. (i) and (ii) only b. (iii) only c. (ii) and (iii) only d. (ii), (iii), and (iv) only

c. (ii) and (iii) only

Which of the following is correct? a. The Fed can control the money supply precisely. b. The amount of money in the economy does not depend on the behavior of depositors. c. The amount of money in the economy depends in part on the behavior of banks. d. None of the above is correct.

c. The amount of money in the economy depends in part on the behavior of banks.

Which of the following is not a contention of advocates of unions? a. Unions are a necessary antidote to the market power of the firms that hire workers. b. In the case of a "company town," a union may balance the firm's market power and protect the workers from being at the mercy of the firm's owners. c. The introduction of a union benefits all workers in a firm. d. Unions are important for helping firms respond efficiently to workers' concerns.

c. The introduction of a union benefits all workers in a firm.

Which of the following is correct? a. Labor force = number of employed. b. Labor force = population - number of unemployed. c. Unemployment Rate = number of unemployed / (number of employed + number of unemployed) x 100. d. Unemployment Rate = number of unemployed / adult population x 100.

c. Unemployment Rate = number of unemployed / (number of employed + number of unemployed) x 100.

Any item that people can use to transfer purchasing power from the present to the future is called a. a medium of exchange. b. a unit of account. c. a store of value. d. None of the above is correct.

c. a store of value.

When a minimum-wage law forces the wage to remain above the equilibrium level, the result is a. both a shortage of labor and a shortage of jobs. b. a shortage of labor and a surplus of jobs. c. a surplus of labor and a shortage of jobs. d. both surplus of labor and a surplus of jobs.

c. a surplus of labor and a shortage of jobs.

Which of the following is not a commonly-cited explanation for the dramatically increasing labor-force participation rates for women from 1950 to the present? a. availability of reliable birth control b. invention of household labor-saving devices such as dishwashers and microwave ovens c. an increasing number of women who work to support their parents d. changing social attitudes about working mothers

c. an increasing number of women who work to support their parents

Wages in excess of their equilibrium level help explain a. structural unemployment but not the natural rate of unemployment. b. the natural rate of unemployment but not structural unemployment. c. both structural unemployment and the natural rate of unemployment. d. neither structural unemployment nor the natural rate of unemployment.

c. both structural unemployment and the natural rate of unemployment.

Suppose there are a large number of men who used to work or seek work who now no longer do either. Other things the same, this makes a. the number of people unemployed rise but does not change the labor force. b. the number of people unemployed rise but makes the labor force fall. c. both the number of people unemployed and the labor force fall. d. the number of people unemployed fall but does not change the labor force.

c. both the number of people unemployed and the labor force fall.

The existence of money leads to a. greater specialization in production, but not to a higher standard of living. b. a higher standard of living, but not to greater specialization. c. greater specialization and to a higher standard of living. d. neither greater specialization nor to a higher standard of living.

c. greater specialization and to a higher standard of living.

Frictional unemployment is a. not inevitable; rather, it can be reduced to zero by well-designed public policies. b. not inevitable; rather, it could be reduced to zero if by the elimination of unemployment insurance. c. inevitable, because at any given time, jobs are being created in some firms and destroyed in other firms. d. inevitable, because in some industries, wages are always set above the level that brings supply and demand into equilibrium.

c. inevitable, because at any given time, jobs are being created in some firms and destroyed in other firms.

14. The discount rate is the interest rate that a. banks charge one another for loans. b. banks charge the Fed for loans. c. the Fed charges banks for loans. d. the Fed charges Congress for loans.

c. the Fed charges banks for loans.

Which of the following is not one of the categories into which the Bureau of Labor Statistics places each adult of each surveyed household? a. employed b. unemployed c. underemployed d. not in the labor force

c. underemployed

​FOMC voting rights a. are given to all twelve regional bank presidents. b. ​rotate among the twelve regional bank presidents. c. ​rotate among the twelve regional bank presidents, except the president of the New York Fed, who always gets a vote. d. ​are all given to the president of the New York Fed, since all of the Fed's bond sales and purchases are conducted at the New York Fed trading desk.

c. ​rotate among the twelve regional bank presidents, except the president of the New York Fed, who always gets a vote.

A bank's reserve ratio is 5 percent and the bank has $2,280 in reserve. Its deposits amount to a. $114. b. $2,166. c. $2,400. d. $45,600.

d. $45,600.

In 2016 the Bureau of Labor Statistics reported that there were 71.9 million people over age 25 who had at least a bachelor's degree. Of these 52.1 million were employed and 1.3 million were unemployed. What were the labor-force participation rate and the unemployment rate for this group? a. 72.5% and 1.8% b. 72.5% and 2.4% c. 74.3% and 1.8% d. 74.3% and 2.4%

d. 74.3% and 2.4%

A double coincidence of wants a. is required when there is no item in an economy that is widely accepted in exchange for goods and services. b. is required in an economy that relies on barter. c. is a hindrance to the allocation o f resources when it is required for trade. d. All of the above are correct.

d. All of the above are correct.

Frictional unemployment can be the consequence of a. workers leaving existing jobs to find ones they like better. b. one industry declining while another is growing. c. changes in the working conditions offered by competing firms. d. All of the above are correct.

d. All of the above are correct.

The Bureau of Labor Statistics places people in the "employed" category if they a. are temporarily absent from their jobs. b. are self-employed. c. work without pay in a family member's business. d. All of the above are correct.

d. All of the above are correct.

Which famous company executive introduced an innovative pay system that is consistent with the theory of efficiency wages? a. Lee Iococca b. Steve Jobs c. Mark Zuckerberg d. Henry Ford

d. Henry Ford

Consider five individuals with different occupations. Allen prepares taxes wants ribs Betty does dry cleaning wants computer fixed Calvin fixes computers wants bread Diedre bakes bread wants taxes prepared Eric barbecues ribs wants dry cleaning In a barter system which of the following pairs has a double coincidence of wants? a. Allen and Eric b. Diedre and Calvin c. Both A and B are correct. d. None of the above are correct.

d. None of the above are correct.

Discouraged workers are included in a. the number of unemployed. b. frictional unemployment. c. the labor force. d. None of the above is correct.

d. None of the above is correct.

Which of the following is correct? a. The Federal Reserve has 14 regional banks. The Board of Governors has 12 members who serve 7-year terms. b. The Federal Reserve has 14 regional banks. The Board of Governors has 7 members who serve 14-year terms. c. The Federal Reserve has 12 regional banks. The Board of Governors has 12 members who serve 7-year terms. d. The Federal Reserve has 12 regional banks. The Board of Governors has 7 members who serve 14-year terms.

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

Bank runs a. will affect neither the money supply nor the money multiplier. b. increase the money supply. c. can be neither prevented nor mitigated by the Federal Reserve. d. are a problem because banks only hold a fraction of deposits as reserves.

d. are a problem because banks only hold a fraction of deposits as reserves.

Which of the following is not included in M1? a. currency b. demand deposits c. traveler's checks d. credit cards

d. credit cards

Credit card limits are included in a. M1 but not M2. b. M2 but not M1. c. M1 and M2. d. neither M1 nor M2.

d. neither M1 nor M2.

Josh is a full-time college student who is not working or looking for a job. The Bureau of Labor Statistics counts Josh as a. unemployed and in the labor force. b. unemployed but not in the labor force. c. in the labor force but not unemployed. d. neither in the labor force nor unemployed.

d. neither in the labor force nor unemployed.

Workers waiting for jobs to open up is most closely associated with a. cyclical unemployment. b. frictional unemployment. c. seasonal unemployment. d. structural unemployment.

d. structural unemployment.

2. ​Which of the following is NOT an example of monetary policy? a. ​The Federal Open Market Committee decides to sell bonds. b. ​​The Federal Open Market Committee decides to buy bonds. c. ​The Federal Reserve reduces the reserve requirements. d. ​The Federal Reserve facilitates bad. ​The Federal Reserve facilitates bank transactions by clearing checks

d. ​The Federal Reserve facilitates bank transactions by clearing checks.

Which government body is primarily responsible for regulating banks and ensuring the health of the banking system? a. ​ The U.S. Treasury b. Federal Deposit Insurance Corporation c. The Federal Reserve Board d. ​The regional Federal Reserve Banks

d. ​The regional Federal Reserve Banks

16. Suppose banks decide to hold fewer excess reserves relative to deposits. Other things the same, this action will cause the a. money supply to fall. To reduce the impact of this the Fed could sell Treasury bonds. b. money supply to fall. To reduce the impact of this the Fed could buy Treasury bonds. c. money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds. d. money supply to rise. To reduce the impact of this the Fed could buy Treasury bonds.

money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds.