MACRO EXAM 3
Suppose banks decide to hold more excess reserves relative to deposits. Other things the same, this action will cause the money supply to
fall. To reduce the impact of this the Fed could buy Treasury bonds.
Cash, fine art, and silver are all
stores of value.
If a U.S. dollar purchases 4 Argentinean pesos, and a gallon of milk costs $3 in the U.S. and 6 pesos in Argentina what is the real exchange rate?
2 gallons of Argentinean milk/1 gallon of U.S. milk
Suppose that the adult population in the country of Atlantis is 140 million. If 90 million people are employed and 10 million are unemployed, then
40 million are not in the labor force.
Which of the following is an example of U.S. foreign direct investment?
A U.S. based restaurant chain opens new restaurants in India.
Which of the following statements regarding the Federal Open Market Committee is correct?
All regional Fed presidents attend the meetings, but only five get to vote.
Which of the following is an example of an efficiency wage?
An above-equilibrium wage offered by a firm to attract a more talented pool of job applicants
A Chinese company exchanges yuan (Chinese currency) for dollars. It uses these dollars to purchase scrap metal from a U.S. company. As a result of these transactions, Chinese net exports
ITS NOT: decrease, and US net capital outflow increases
Suppose that garbage collectors and landscaping workers have no unions. Now suppose that garbage collectors form unions. What does this do to the labor supply and wages of landscaping workers?
Labor supply increases, and wages decrease.
Which of the following is included in M2?
Money market mutual funds
Which of the following increases when the Fed makes open-market sales?
Neither currency nor reserves
Octavia is a stay-at-home parent who has not searched for work in recent years. Michael does not currently have a job, but has applied for several jobs in the previous week. Who does the Bureau of Labor Statistics count as "not in the labor force"?
Octavia but not Michael
Which of the following is not a function of money?
Protection against inflation
When Bill, a Mexican citizen, sellsdresses he desingstoSpain, the sale is
Spain's import and Mexico's export
Which of the following groups meets to discuss changes in th
The Federal Open Market Committee
Which of the following groups meets to discuss changes in the economy and determine monetary policy?
The Federal Open Market Committee
Visitors to a country hosting a world soccer tournament purchase food, souvenirs, and accommodations while attending the tournament. Which of the following should these expenditures raise?
The host country's net exports and its net capital outflow.
According to purchasing-power parity, which of the following necessarily equals the ratio of the foreign price level divided by the domestic price level?
The nominal exchange rate, but not the real exchange rate.
Which of the following is not correct?
The unemployment rate occasionally falls to zero.
Which of the following is correct?
Union membership in the United States peaked in the 1940s and 1950s.
An open economy's GDP can be expressed by
Y = C + I + G + NX.
The "law of one price" states that
a good must sell at the same price at all locations.
Domestic saving must equal domestic investment in
closed, but not open economies.
An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions
decrease U.S. net capital outflow because Germans obtain U.S. assets.
If the public decides to hold more currency and fewer deposits in banks, bank reserves
decrease and the money supply eventually decreases
If a country sells fewer goods and services abroad than it buys from other countries, it is said to have a trade
deficit and negative net exports.
Other things the same, if the exchange rate changes from 35 Thai bhat per dollar to 21 Thai bhat per dollar, then the dollar has
depreciated and so buys fewer Thai goods.
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.
Right-to-work laws
give workers in a unionized firm the right to choose whether to join the union.
Over the past several decades, the difference between the labor-force participation rates of men and women in the U.S. has
gradually decreased.
In the early 1900s, Henry Ford introduced a
high-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory.
Teenagers have more frequent unemployment spells and spend more time searching for jobs. Other thing the same, this means that teenagers have a
higher unemployment rate. If a larger portion of the adult population were teenagers, the natural rate of unemployment would be higher.
If the Fed raised the reserve requirement, the demand for reserves would
increase, so the federal funds rate would rise.
A company in Panama pays a U.S. architect to design a factory building. By itself this transaction
increases Panama's imports and so decreases the Panama's trade balance.
An increase in the minimum wage above the equilibrium wage
increases structural unemployment.
The federal funds rate is the
interest rate at which banks lend reserves to each other overnight.
A country's trade balance
is greater than zero only if exports are greater than imports.
A depreciation of the U.S. real exchange rate induces U.S. consumers to buy
more domestic goods and fewer foreign goods.
You are planning a graduation trip to Mexico. Other things the same, if the dollar appreciates relative to the peso, then the dollar buys
more pesos. Your hotel room in Mexico will require fewer dollars.
If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold
more reserves, so the reserve ratio will rise.
Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries. This increase would make foreigners
more willing to purchase U.S. bonds, so U.S. net capital outflow would fall.
Marginally attached workers are people who are
not working and are not looking for work, but would work if asked.
An economist claims that changes in information technology and unemployment insurance have reduced unemployment. Which of these changes affect frictional unemployment?
oth the changes in information technology and unemployment insurance
Most spells of unemployment are
short, but most unemployment observed at any given time is long term.
The nominal exchange rate is the
rate at which a person can trade the currency of one country for another.
If purchasing-power parity holds, then the value of the
real exchange rate is equal to one.
The dollar is said to appreciate against the euro if the exchange rate
rises. Other things the same, it will cost more euros to buy U.S. goods.
A country's trade balance will fall if either
saving falls or investment rises.
If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by
selling bonds. This selling would reduce the money supply.
The money supply decreases when the Fed
sells Treasury bonds. The smaller the reserve requirement, the larger the decrease will be.
Minimum wages create unemployment in markets where they create a
surplus of labor. Unemployment of this type is called structural.
The discount rate is
the interest rate the Fed charges banks.
Money is
the most liquid asset but an imperfect store of value.
Unions contribute to
the natural rate of unemployment but not frictional unemployment.
Collective bargaining refers to
the process by which unions and firms agree on the terms of employment.
Bank capital is
the resources that owners have put into the bank.
Which of the following includes everyone in the adult population that the Bureau of Labor Statistics counts as "unemployed"?
Anyone who is not employed, is 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
Which of the following functions as both a store of value and a medium of exchange?
Cash but not stocks
Which of the following does the Federal Reserve not do?
Conduct fiscal policy
Which of the following does the Federal Reserve not do?
Conduct fiscal policyConduct fiscal policy
Which of the following is included in both M1 and M2?
Currency, demand deposits, and other checkable deposits
Which list ranks assets from most to least liquid?
Currency, stocks, houses
Which of the following is an example of U.S. foreign portfolio investment?
Erica, a U.S. resident, buys bonds issued by the Swiss government.
If an unemployed person quits looking for work, then, eventually the unemployment rate
and the labor-force participation rate both decrease.
The leverage ratio is calculated as
assets divided by bank capital.
In a system of 100-percent-reserve banking,
banks do not influence the supply of money.
Hassan and Kevin buy the same pair of sneakers, but each in the wrong size. Hassan proposes a size swap with Kevin. This is an example of
barter, since the sneakers in the correct size have intrinsic value to both Hassan and Kevin.
Gabrielle, an Italian citizen, uses some previously obtained dollars to purchase a bond issued by a U.S. company. This transaction
does not change U.S. net capital outflow.
You are planning a graduation trip to Mexico. Other things the same, if the dollar appreciates relative to the peso, then the dollar buys
dont know, but know its not: fewer pesos. Your hotel room in Mexico will require more dollars.; I think it may me more pesos. Your hotel room in Mexico will require more dollars.
oshua is working from home for a start-up company developing mobile apps. The Bureau of Labor Statistics counts Joshua as
employed
Esmeraldais taking a three month leave from work to travel across Europe. The Bureau of Labor Statistics counts Esmeralda as
employed and in the labor force.
If the exchange rate is expressed as euros/dollar, the dollar is said to depreciate against the euro if the exchange rate
falls. Other things the same, it will cost fewer euros to buy U.S. goods.
Providing training for unemployed individuals is primarily intended to reduce Correct!
frictional unemployment
Providing training for unemployed individuals is primarily intended to reduce
frictional unemployment.
Providing training for unemployed individuals is primarily intended to reduce Correct!
frictional unemployment.
Evidence from research studies by economists
shows that increased unemployment benefits decrease the job search efforts of the unemployed.
Sasha is on temporary layoff. The Bureau of Labor Statistics counts Sasha as
unemployed and in the labor force.
The natural rate of unemployment
varies little over time but substantially across countries.
The Federal Reserve
was created in 1913.
The measure of the money stock called M1 includes
wealth held by people in currency.
Which of the following policies can the Fed follow to increase the money supply?
Reduce the interest rate on reserves
