Macroeconomics

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When the Fed buys securities from a​ bank, ______.

A the bank's reserves invrease but its deposits do not change

The unemployment that arises from normal labor turnover—from people entering and leaving the labor force— and from the ongoing creation and destruction of jobs is ​______ unemployment.

A. Frictional

Once a​ month, the Bureau of​ ______ Statistics calculates the Consumer Price​ Index, which is a measure of the​ ______ consumers for a fixed basket of consumer goods and services.

A. Labor; average of the prices paid by urban

Choose the statement that is incorrect.

A. Liquid asset have a higher interest rate than securities.

The main sources of bias in the CPI are​ ______.

A. New good bias, quality change bias, commodity substitution bias, and outlet substitution bias.

​______ sees the economy as a perpetual motion machine.

A. New growth theory

How can the change in U.S. wealth differ from U.S.​ saving?

A. The change in wealth includes changes in the prices of assests

How can the change in U.S. wealth differ from U.S.​ saving?

A. The change in wealth includes changes in the prices of assets owned and saving excludes these items.

The fundamental precondition for labor productivity growth is​ _______.

A. The incentive system created by firms, property rights, and money

Choose the statement that is incorrect.

A. The nominal interest rate is the real interest rate adjusted to the remove the effects of inflation on the buying power of money.

Choose the statement about the Fed that is incorrect.

A. The policy decisions of the Federal Open Market Committee are implemented each month by a different Federal Reserve Bank.

Choose the statement about the Fed that is incorrect.

A. The policy decisions of the federal open market commite are implemented each month by a different federal reserve bank

Choose the statement about an increase in the population that is incorrect.

A. The production function shifts upward.

Suppose that Sara withdraws​ $1,000 from her savings account at the Lucky​ S&L, keeps​ $50 in​ cash, and deposits the balance in her checking account at the Bank of Illinois. The immediate change is​ ______ in M1 of​ $1,000 and​ ______ in M2.

A. an increase; no change

An increase in the population​ ______ the real wage rate and​ ______ the equilibrium quantity of labor.

A. decreases; increases

In the short​ run, the quantity of real money and real GDP are given and the​ ______ adjusts to achieve equilibrium. In the long​ run, supply and demand in the loanable funds market determines the​ ______. In the long​ run, the price level adjusts to make the quantity of real money supplied equal the quantity demanded.

A. interest rate; real interest rate Blue answer is bottom statement ( price level)

The natural unemployment rate​ _______.

A. is the unemployment rate at full employment

Suppose the Fed increases the quantity of money. In the long​ run, supply and demand in the​ ______ market determines the real interest rate. The​ ______ adjusts to make the quantity of real money supplied equal to the quantity demanded.

A. loanable funds; price level

If we count marginally attached workers as unemployed​ ______.

A. no change occurs in the employment to population ratio

An increase in the population​ ______.

A. shifts the supply of labor curve rightward and creates a movement along the production function

An open market operation is​ ______.

A. the purchase or sale of securities by the Federal Reserve System in the loanable funds market.

An increase in labor productivity​ ______.

B shifts the demand for labor curve rightward and the production function upward

An increase in labor productivity results in all of the following except ​______.

B A decrease in potential GDP per hour of labor because of diminishing returns.

The money multiplier is the ratio of the change in the quantity of​ ______ to the change in the quantity of​ ______.

D. ​money; monetary base

Suppose that in 2014​ China's real GDP is growing at 1010 percent a year and its population is growing at 3.03.0 percent a year. If these growth rates​ continue, then​ China's real GDP per person in​ ______ will be twice what it is in 2014.

D. 2024

Choose the statement about money that is incorrect.

D. A work of art is an example of money because it can act as a store of value.

In the United​ States, the CPI basket consists of items that​ ______ . ​______ has the greatest weight in the CPI basket.

D. An average urban household buys; Housing

n the United​ States, the CPI basket consists of items that​ ______ . ​______ has the greatest weight in the CPI basket.

D. An average urban household buys; Housing

The reference base period for the CPI is​ 1982-1984. In AprilApril ​2014, the CPI was 237.1237.1. This number tells us that the​ ______ of the prices paid by urban consumers for a fixed basket of consumer goods and services was​ ______ .

D. Average. 137.1 percent higher in April 2014 than the average of 1982-1984

Growth rates are calculated in a similar manner for all variables. Real GDP growth rate​ = [(Real GDP in​ ______ yearminus−Real GDP in​ ______ ​year) divided by ÷Real GDP in​ ______ year ​] times ×100.

D. Current; previous; previous

The supply of loanable funds is influenced by all of the following except ​______.

D. Expected profit

The liabilities of the Fed are​ ______, and these liabilities along with​ ______ make up the monetary base.

D. Federal Reserve notes held by households and businesses and reserves of depostiary institutions; coins issued by the Treasury.

Choose the statement that is incorrect.

D. If a finacial institutions net worth is positive, the institution must be solvent and liquid.

Choose the statement that is incorrect.

D. If a financial institution's net worth is positive, the institution must be solvent and liquid.

The bias in the CPI is a problem because​ ______ .

D. It distorts wage agreements linked to the CPI

Choose the statement that is incorrect.

D. Labor hours are all equally productive

Choose the statement that is incorrect.

D. Most economists believe that the Ricardo effect holds in the loanable funds market.

Choose the statement about the Consumer Price Index that is incorrect. A. The CPI is calculated monthly. B. The CPI is a measure of the average of the prices paid by urban consumers for a fixed basket of consumer goods and services. C. The CPI is measured by the Bureau of Labor Statistics. D. The CPI is defined to equal 1.00 for a period called the reference base period.

D. The CpI is defined to equal 1.00 for a period called the reference base period.

The price level is​ ______ A. the average level of prices paid by urban consumers for all goods excluding food and energy B. equal to the inflation rate C. the average level of prices paid by urban consumers D. the average level of​ prices, and the value of money

D. The average level of prices, and the value of money

All of the following statements are included in new growth theory except​ ______.

D. The forces of competition destroy incentives to make new discoveries

The CPI tells us​ ______.

D. The price level in a given period expressed as a percentage of the price level in the base period, which is by definition equal to 100.

Choose the correct statement. A. The CPI inflation rate is always greater than the core inflation rate. B. The inflation rate is the annual percentage change in the price level. .C. By​ definition, the inflation rate is always positive. D. The core inflation rate is always greater than the CPI inflation rate.

B. The inflation rate is the annual percentage change in the price level

Choose the statement that is incorrect.

B. A government budget surplus competes with investments for funds.

A mortgage is​ _______.

B. A legal contract that gives ownership of a home to the lender in the event that the borrower fails to meet the agreed loan payments (repayments and interest)

Choose the statement that is incorrect. . An unexpected inflation or deflation redistributes income and wealth. B. An unexpected inflation or deflation has no effect on the economy. This is the correct answer.C. An unexpected inflation or deflation diverts resources from production. D. An unexpected inflation or deflation brings lower real GDP and employment

B. An unexpected inflation or deflation has no effect on the economy.

Choose the statement that is incorrect.

B. Classical growth theory tells us that technological change induces a level of saving and investment that makes capital per hour of labor grow indefinitely.

Choose the statement that is incorrect.

B. Coins, which are issued by the Treasury are an asset of the Fed and a component of the monetary base.

Choose the statement that is incorrect.

B. Deposits are not money because you cannot settle a debt with a deposit.

Choose the statement that is incorrect.

B. In the united states in 2009, 22 million fewer people had jobs than in 1989.

Suppose the Fed increases the quantity of money. In the long​ run, supply and demand in the​ ______ market determines the real interest rate. The​ ______ adjusts to make the quantity of real money supplied equal to the quantity demanded.

B. Loanable funds; price level

Unemployment arises for all of the following reasons except​ ______. A. people leave their jobs and spend time searching for another job that better suits their abilities B. people leave the labor force C. firms​ close, people lose their jobs and search for new jobs D. students enter the labor force to search for a job

B. People leave the labor force

On average in the United​ States, the inflation rate and the money growth rate minus the real GDP growth rate​ ______.

B. Rise and fall together

Choose the statements concerning neoclassical growth theory that are true. 1. Neoclassical growth theory implies that growth rates and income levels per person around the globe will diverge.Neoclassical growth theory implies that growth rates and income levels per person around the globe will diverge. nothing 2. Technological change results from the choices people make in the pursuit of profit.Technological change results from the choices people make in the pursuit of profit. nothing 3. Technological change results from chance.Technological change results from chance. nothing 4. Economic growth will stop if technology stops advancing.Economic growth will stop if technology stops advancing. nothing

B. Statements 3 and 4 are correct.

A central bank is​ ______. The central bank in the United States is the​ ______.

B. a bank's bank and a public authority that regulates a nation's depositary institutions and conducts monetary policy; federal reserve system.

During the 100 years from 1914 to​ 2014, real GDP per person in the United States grew at​ ______.

B. an average of 2 percent a year

The deposits of the following three types of depository institutions make up the​ nation's money:​ ______.

B. commercial banks; thrift instituitons, and money market mutual funds

An electrician who is laid off because the economy is in a recessionAn electrician who is laid off because the economy is in a recession experiences ​______.

B. cyclical unemployment

The gap between real GDP per person in the United States and Hong Kong has​ ______ since 1960. During this​ period, the growth rate of real GDP per person in the United States has been​ ______ than in Hong Kong.

B. decreased; slower

An increaseAn increase in expected future income​ ______

B. decreasesthe supply of loanable funds today because households with larger expected future income will save less today

The ratio of reserves to deposits that a bank plans to hold is its​ ______. If a bank has​ $10 million in actual reserves and​ $8 million in desired​ reserves, then it has​ ______.

B. desired reserve​ ratio; excess reserves

Potential GDP is​ ______.

B. determined by the full-employment quantity of labor.

The Bank of​ America's total assets​ ______ and its total liabilities​ ___

B. do not change; do not change

A depository institution takes deposits from​ ______ and earns most of its income by​ _______.

B. households and firms; making loans and buying securities that earn a higher interest rate than that paid to depostiors

Potential GDP​ ______ and potential GDP per hour of labor​ ______.

B. increases; decreases

An increase in real GDP​ ______ the demand for money and financial innovation​ ______.

B. increases; might increase the demand for some types of deposits and decrease demand for others

The three main types of markets for financial capital are​ _______.

B. loan​ markets, bond​ markets, and stock markets

The money multiplier is the ratio of the change in the quantity of​ ______ to the change in the quantity of​ ______.

B. money; monetary base

Rapid inflation in Brazil in the early 1990s caused the cruzerio to lose its ability to function as money. Which of the following commodities do you think would most likely have taken the place of the cruzeiro in the Brazilian​ economy?

B. packs of cigarettes because they are a good medium of exchange

Between 1914 and​ 2014, the average growth rate of real GDP per person in the United States was 2 percent a year. During this​ period, ______ grew at a faster rate than​ ______.

B. real GDP; the population

An increase in the population​ ______.

B. shifts the supply of labor curve rightward and creates a movement along the production function

Choose the statement that is incorrect.

B. the presence of a banking system in Britain in the middle 1700s started the Industrial revolution.

Choose the statement about an increase in the population that is incorrect.

B. the production function shifts upward.

For a given increase in the monetary​ base, ______.

B. the resulting increase in M2 is greater than the resulting increase in M1.

All of the following statements are correct except​ _______.

B. the return to full employment in an expansion phase of the business cycle is economic growth.

An economy is at full employment when-----

B. there is no cyclical unemployment

When the Fed buys securities from a​ bank, ______.

B. the​ bank's reserves increase but its deposits do not change

he CPI basket consists of items that fill in (answer: urban) households buy. The CPI places more weight on​ _______ than on​ _______.

B. transportation ; medical care

CPI​ = ______. A. ​[(Cost of CPI basket at​ base-period pricesminus−Cost of CPI basket at​ current-period ​prices) divided by ÷Cost of CPI basket at​ current-period ​prices] times ×100 B. ​(Cost of CPI basket at​ current-period prices divided by ÷Cost of CPI basket at​ base-period ​prices) times ×100 C. ​[(Cost of CPI basket at​ current-period pricesminus−Cost of CPI basket at​ base-period ​prices) divided by ÷Cost of CPI basket at​ current-period ​prices] times ×100 D. ​(Cost of CPI basket at​ base-period prices divided by ÷Cost of CPI basket at​ current-period ​prices) times ×100

B.Cost of CPI basket at​ current-period prices divided by ÷Cost of CPI basket at​ base-period ​prices) times ×100

Money serves as a​ ______.

B.medium of​ exchange, which means that it is generally accepted in exchange for goods and services Your answer is correct.C.

Some unemployment is unavoidable because​ ______. A. often people become discouraged workers B. people are making transitions through the stages of life and businesses are making transitions .C. many​ part-time workers would like to have​ full-time work D. many people in the​ working-age population attend school and are unemployed

B.people are making transitions through the stages of life and businesses are making transitions

A government budget surplus​ occurs, which increases the supply of loanable funds. The real interest rate​ ______, household saving​ ______,

Blue answer: ( Supply of) D. Falls; decreases and investment increases

A government budget surplus​ occurs, which increases the ___________ loanable funds. The real interest rate​ ______, household saving​ ______,

Blue answer: (supply of) C. falls; decreases and investment increases

Upper A decreaseA decrease in current income taxes​ ______ the supply of loanable funds today because it​ ______.

C increases; increases. disposable​ income, which encourages greater saving

Choose the correct statement.

C. Commercial banks are financial institutions that accept deposits, provide payment services, and make loans to firms and households.

Choose the correct statement.

C. Commercial banks are financial institutions that accept​ deposits, provide payment​ services, and make loans to firms and households.

In January 2017January 2017​, the U.S. unemployment rate LOADING... was 4.84.8 percent. In January 2018January 2018​, the unemployment rate was 4.14.1 percent. Assuming that the labor force remained constant between January 2017January 2017 and January 2018January 2018​, then unemployment​ _______.

C. Decreased

Choose the correct statement

C. Deposits are​ money, checks are not​ money, and credit cards are not money

I​ = ______.

C. S+ (T-G)+(M-X)

Choose the correct statements. 1. The fluctuating unemployment over the business cycle is cyclical unemployment.The fluctuating unemployment over the business cycle is cyclical unemployment. nothing 2. The unemployment that arises from normal labor turnover is frictional unemployment.The unemployment that arises from normal labor turnover is frictional unemployment. nothing 3. The unemployment that arises when changes in technology or international competition change the skillsThe unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs is cyclical unemployment.needed to perform jobs or change the locations of jobs is cyclical unemployment. 4. The unemployment that arises from normal labor turnover is structural unemployment.The unemployment that arises from normal labor turnover is structural unemployment. nothing

C. Statements 1 and 2 are correct

Choose the statement that is incorrect. A. Close to a third of federal government outlays are linked directly toClose to a third of federal government outlays are linked directly to the CPIthe CPI. B. Upper A wage contract linked to the CPI gives the workers more real income than the firmA wage contract linked to the CPI gives the workers more real income than the firm intendedintended. C. The bias in the CPI decreases government outlaysThe bias in the CPI decreases government outlays. .D. The bias in the CPI distorts privateThe bias in the CPI distorts private contractscontracts.

C. The bias in the CPI decreases government outlays.

One of the​ Fed's main policy tools is​ ______.

C. The last resort loan, which means that if a bank is short of reserves it can borrow from the Fed

A mortgage is​ _______.

C. a legal contract that gives ownership of a home to the lender in the event that the borrower fails to meet the agreed loan payments​ (repayments and​ interest)

Labor supply growth is influenced by all of the following except​_______.

C. changes in labor productiviy

As a result of financial​ innovation, ______ have become​ ______.

C. checking deposits at thrift institutions; an increasing percentage of M1.

Depository institutions provide four​ benefits, which are​ ______.

C. creating liquidity, lowering the cost of borrowing, lowering the cost of monitoring borrows, and pooling risk

Choose the statement that is incorrect.

C. each addition hour of labor increases real GDP by successively larger amounts.

According to new growth​ theory, ______.

C. growth can persist indefinitely

The aggregate production function is the relationship that tells us​ ______, when all other influences on production remain the same.

C. how real GDP changes as the quantity of labor changes.

The fundamental source of labor productivity growth is​ ______.

C. human capital

Money serves as a​ ______.

C. medium of exchange; which means that it is generally accepted in exchange for goods and services

Assume that the preconditions for labor productivity growth are in place. The pace of labor productivity growth is influenced by all of the following except​ ______.

C. population growth

By measuring​ ______, we can see that the economy of Singapore has caught up to and surpassed the economy of the United​ States, but that the economies of Central and South America have not.

C. real GDP per person

Choose the statement about growth in labor productivity that is incorrect.

C. the demand for labor increases, the production function does not change, but a movement occurs along the production function.

Choose the statement that is incorrec

C. the demand for labor is the relationship between the quanity of labor demanded and the money wage rate.

Economic growth is​ _______.

C. the expansion of production possibilities.

When the price of an asset​ rises, ______.

C. the interest rate falls

An open market operation is​ ______

C. the purchase or sale of securities by the Federal Reserve System in the loanable funds market

Choose the statement that is incorrect.

C. the return to full employment in an expansion phase of the business cycle is economic growth.

The two broad sources of potential GDP growth are growth of​ ______ and growth of​ ______.

C. the supply of labor; labor productivity

Cindy takes a summer job painting houses. During the​ summer, she earns an​ after-tax income of ​$3 comma 5003,500 and she spends ​$1 comma 5001,500 on living expenses. What was​ Cindy's saving during the​ summer?

Cindy's saving during the summer was ​$2,000.

Choose the statement that is incorrect. A. In 1933 comma 25 percent of the labor force was unemployedIn 1933, 25 percent of the labor force was unemployed. .B. The 1930 s were and remain the longest and worst period of high unemployment in historyThe 1930s were and remain the longest and worst period of high unemployment in history. C. The Great Depression began in October 1929The Great Depression began in October 1929. D. The United States and Great Britain were the only countries who suffered in the Great Depression.

D.

The quantity of labor demanded is the number of labor hours ____________________________ during a given period. The quantity of labor supplied is the number of labor hours ___________________________________ during a given period. The _______ wage rate adjusts to bring the labor market to equilibrium.

first : hired by all the firms in the economy second: That all the households in the economy plan to work third: real

What are the three sources of global investment​ funds? (Separate with a​ comma, no plurals or​ abbreviations.)

household saving, government budget surplus, borrowing from rest of world

The demand for money is the relationship between the quantity of real money demanded and the nominal interest rate when all other influences on the amount of money that people wish to hold remain the same. When the nominal interest rate​ rises, the opportunity cost of holding money​ ______ and the quantity of real money demanded​ ______.

nominal interest rate = blue answer a. rises, decreases

The Rule of 70 states that the number of years it takes for the level of any variable to​ ______ is approximately​ ______.

​ A. double; 70 divided by the annual percentage growth rate of the variable

Choose the statement that is incorrect.

D. The unemployment rate includes all underutilized labor.

Choose the statement that is incorrect.

D. a bias in the CPI gives workers with wage contracts linked to the CPI less real income than the firm intended.

A central bank is​ ______. The central bank in the United States is the​ ______.

D. a​ bank's bank and a public authority that regulates a​ nation's depository institutions and conducts monetary​ policy; Federal Reserve System

Suppose the Fed sells​ $50 million of government securities to the Bank of America. The​ Fed's total assets​ ______ and its total liabilities​ ______.

D. decrease by $50 million; decrease by $50 million

When the unemployment rate is less than the natural unemployment​ rate, real GDP is​ ______ than potential GDP and the output gap is​ ______.

D. greater; positive

In neoclassical growth​ theory, ______.

D. growth will stop if technology stops advancing.

When the unemployment rate​ ______ the natural unemployment​ rate, real GDP​ ______ potential GDP.

D. is less than; is greater than

According to new growth​ theory, ______ experience diminishing returns.

D. knowledge is capital that does not

Choose the statement that is incorrect.

D. money market mutual funds represent 13 percent of M1.

Between 1960 and​ 2010, the gap between real GDP per person in the United States and real GDP per person in Japan​ ______.

D. narrowed

Convergence between real GDP per person in the United States and Japan was relatively​ ______ during the​ 1960s; convergence has recently been​ ______.

D. rapid; decreasing

Real GDP per person grows when​ ______.

D. real GDP grows at a faster rate than the population grows.

The demand for labor is the relationship between the quantity of labor demanded and the​ ______. The supply of labor is the relationship between the quantity of labor supplied and the​ ______.

D. real wage rate; real wage rate

A​ ______ is a depository institution that accepts savings deposits and makes mostly​ home-purchase loans. A​ ______ is a depository institution owned by a social or economic group such as a​ firm's employees that accepts savings deposits and makes mostly personal loans.

D. savings bank; credit union

An increase in labor productivity​ ______.

D. shifts the demand for labor curve rightward and the production function upward.

When cyclical unemployment increases and other things remain the​ same, ______.

D. the natural unemployment rate does not change

International evidence shows us that​ ______.

D. there is a general tendency for money growth and inflation to be correlated but the quantity theory does not predict inflation precisely.

Suppose that potential GDP and the velocity of circulation are constant. What is the change in the price level in the long run if the quantity of money increases by 1 percent a​ year?

If the quantity of money increases by 1 percent a​ year, in the long run the change in the price level is 1 percent a year.

A typical family on Sandy Island consumes only juice and cloth. Last​ year, which was the base​ year, the family spent ​$21 on juice and ​$6 on cloth. In the base​ year, juice was ​$3 a bottle and cloth was ​$3 a length. This​ year, juice is ​$9 a bottle and cloth is ​$6 a length. What is the CPI​ basket? What is the CPI and the inflation rate in the current​ year?

The CPI basket is 7 bottles of juice and 2 lengths of cloth. The CPI in the current year is 277.8 ​>>> Answer to 1 decimal place. The inflation rate in the current year is 177.8 percent. ​>>> Answer to 1 decimal place.

The bank plans to hold ​$3 for every​ $100 in deposits. The bank holds actual reserves actual reserves of ​ 19,000 and desired reserves desired reserves of ​$15,000. What is the​ bank's desired reserve ratio and its excess reservesexcess reserves​? ​>>> Answer to 2 decimal places.

The​ bank's desired reserve ratio is 3 percent. The banks excess excess reserve sare ​$4000

The Bureau of Labor Statistics reported the following data for January 2018January 2018. Labor force LOADING... 161 comma 115161,115 Employed LOADING... 154 comma 430154,430 Working-age population LOADING... 256 comma 780256,780 Use the above data to calculate for January 2018January 2018​:

Unemployment rate 4.14.1 percent Labor force participation rate 62.762.7 percent Employment to population ratio 60.160.1 percent

In the short​ run, the quantity of real money and real GDP are given and the​ ______ adjusts to achieve equilibrium. In the long​ run, supply and demand in the loanable funds market determines the​ ______. In the long​ run, the price level adjusts to make the quantity of real money supplied equal the quantity demanded.

blue answer : ( price level) ( 2nd answer) multiple choice: C. interest​ rate; real interest rate

The fundamental precondition for labor productivity growth is the incentive system created by all of the following except​ ______.

C. Population growth

Choose the statement that is incorrect

C. President Roosevelt's New Deal minimized the role of government in economic life.

Suppose the Fed buys​ $50 million of government securities from the Bank of America. The​ Fed's total assets​ ______ and its total liabilities​ ______. The Bank of​ America's total assets​ ______ and its total liabilities​ ______.

1: D. increase by $50 million; increase by $50 million 2: D. do not change; do not change

One of the​ Fed's main policy tools is​ ______.

A. the last resort​ loan, which means that if a bank is short of​ reserves, it can borrow from the Fed

Physical capital is​ ______. Financial capital is​ ______.

A. the​ tools, instruments,​ machines, buildings, and other items that have been produced in the past and that are used today to produce goods and​ services;

If real GDP per person doubles in 20​ years, then the annual growth rate of real GDP per person is​ ______ percent a year.

A. 3.5

Choose the statement that is incorrect.

A. Deposits are not money because you cannot settle a debt with a deposit.

Choose the correct statement.

A. Depostis are money, checks are not money, and credit cards are not money.

The ratio of reserves to deposits that a bank plans to hold is its​ ______. If a bank has​ $10 million in actual reserves and​ $8 million in desired​ reserves, then it has​ ______.

A. Desired reserve ratio; excess reserves

Examples of physical capital are​ ______. Examples of financial capital are​ ______.

B. ovens used by Pizza Hut and lawn mowers used by​ Larry's Mowing; bonds issued by​ Wal-Mart and stocks issued by Boeing

​G-20 Leaders Look to Shake off Lingering Economic Troubles The​ G-20 aims to take stock of the economic recovery. One achievement in Pittsburgh could be a deal to require that financial institutions hold more capital. ​Source: USA Today​, September​ 24, 2009 The​ "capital" referred to in the news clip is​ ______. The financial institutions that the​ G-20 might require to hold more capital are​ ______. The requirement to hold more capital can make financial institutions safer because by using more of its own funds and less borrowed​ funds, a financial institution​ ______.

B. the​ institutions' own​ funds; banks and insurance companies Answer 2: C. Decreases its risk of insolvency

The money multiplier can be calculated as​ ______, where C is​ currency, D is​ deposits, and R is​ banks' reserves.

B. (1+C/D)+(R/D+C/D)

The personal consumption expenditure deflator is calculated as​ _______.

B. (Nominal C +Real C) x100

Over the past 100​ years, the average growth rate of U.S. real GDP per person is 2 percent. Over the past 100​ years, growth was most rapid during the​ ______ and slowest during the​ ______.

B. 1960s; Great Depression

A government budget deficit​ occurs, which​ ______. The real interest rate​ ______ Private saving increases and investment decreases .

C. Increases the demand for loanable​ funds; rises blue answer: Increases; decreases

Choose the statement that is incorrect.

C. Labor hours are all equally productive.

Choose the statement that is incorrect.

C. Liquid assets have a higher interest rate than securities.

If the CPI rises from 120 to​ 126, then​ ______.

C. On average, the price paid by urban consumers for a fixed basket of consumer goods, and services rises by 5 percent.

Choose the statement that is incorrect.

C. Real GDP per person grows whenever reall GDP grows.

Out of a Job and Out of Luck at 54 Too young to​ retire, too old to get a new job.​ That's how many older workers feel after getting the pink slip and spending time on the unemployment line. Many lack the skills to craft resumes and search​ online, experts say. Older workers took an average of 21.1 weeks to land a new job in​ 2007, about 5 weeks longer than younger people.​ "Older workers will be more adversely affected because of the time it takes to transition into another​ job," said Deborah​ Russell, AARP's director of workforce issues. Older workers are more prone to experience​ ______ unemployment. During a​ recession, the unemployment rate of older workers​ ______. (Labeling this as part 1 in answer catagory) Choose the statement that is incorrect. Older unemployed workers might become marginally attached workers or discouraged workers during a recession because​ _______. (Labeling as part 2)

Part 1 answer: D. Structural; increases Part 2 answer: C. given their long employment​ history, they are eligible for longer periods of unemployment benefits

Governor Plans to Boost Economy with Ecofriendly Jobs ​Oregon's 5.6 percent unemployment rate hovers close to the national average of 5.5 percent. A few years​ ago, Oregon had one of the highest unemployment rates in the nation. To avoid rising​ unemployment, Oregon Governor Kulongoski introduced a plan that provides public schools and universities with enough state funds to meet growing demand for skilled workers. Also Kulongoski wants to use state and federal money for​ bridges, roads, and buildings to stimulate more construction jobs. ​Source: The Oregonian​, July​ 8, 2008 The main type of unemployment that Governor Kulongoski is using policies to avoid is​ ______. If these policies are​ successful, we would expect to see​ Oregon's natural unemployment rate​ ______.

Part 1: (the main type...) A. Frictional and structural Part 2: Fall

Jobless Rate Soars to​ 6.1% September​ 5, 2008 The unemployment rate soared to a nearly​ five-year high in August as employers trimmed jobs for the eighth straight​ month, the government reported Friday. The unemployment rate rose to​ 6.1%, the highest level since September 2003.​ That's up from​ 5.7% in July and​ 4.7% a year ago. In​ addition, the economy suffered a net loss of​ 84,000 jobs in​ August, according to the U.S. Department of​ Labor, compared to a revised reading of a​ 60,000 job loss in July. The U.S. economy has lost​ 605,000 jobs so far this year. The jobs report immediately drew comment from the presidential candidates as well as the Bush administration. The White House pointed to other economic​ readings, including last​ week's gross domestic product report. It showed second quarter growth jumping to a​ 3.3% annual​ rate, helped by economic stimulus checks and strong exports. ​"While these​ (jobs) numbers are​ disappointing, what is most important is the overall direction the economy is​ headed," said the White House statement. But the campaign of Democratic presidential candidate Barack Obama said the report points out the failure of Republican policies. ... The unemployment rate​ doesn't tell the whole picture about how difficult the job market has become. It only counts those who looked for work during the​ month; it excludes the unemployed who want jobs but have stopped looking for work. And it also​ doesn't count those who want​ full-time jobs but can only find​ part-time positions. The​ so-called underemployment​ rate, which includes those two other​ groups, rose to ​10.7%long dash—the highest reading since 1994. ​© 2006 The Los Angeles Times via Tribune Media Services. All Rights Reserved. Reprinted with permission. The slow job growth and rise in unemployment after​ mid-2007 is most likely: A. cyclical B. frictional C. Structural Choose the statement that is incorrect.

Part 1: A. cyclical Part 2: B. The U.S. government cannot create jobs. Jobs are created by the private sector.

The U.S. economy has lost​ 605,000 jobs so far this year. The jobs report immediately drew comment from the presidential candidates as well as the Bush administration. The White House pointed to other economic​ readings, including last​ week's gross domestic product report. It showed second quarter growth jumping to a​ 3.3% annual​ rate, helped by economic stimulus checks and strong exports. ​"While these​ (jobs) numbers are​ disappointing, what is most important is the overall direction the economy is​ headed," said the White House statement. But the campaign of Democratic presidential candidate Barack Obama said the report points out the failure of Republican policies. ... The unemployment rate​ doesn't tell the whole picture about how difficult the job market has become. It only counts those who looked for work during the​ month; it excludes the unemployed who want jobs but have stopped looking for work. And it also​ doesn't count those who want​ full-time jobs but can only find​ part-time positions. The​ so-called underemployment​ rate, which includes those two other​ groups, rose to ​10.7%long dash—the highest reading since 1994. ​© 2006 The Los Angeles Times via Tribune Media Services. All Rights Reserved. Reprinted with permission. The unemployment rate peaked​ ______ after the 2001 recession. During the​ 2002-2008 recession, the unemployment rate reached its lowest point at the beginning of​ ______. The expansion of​ 2002-2008 created jobs at​ ______ rate. The first two years of the expansion created few jobs because​ ______.

Part 1: C. 18 months; 2007 Part 2: D an unusually​ slow; the expansion was very​ weak, so employment growth was weak

A​ Half-Year of Job Losses Employers trimmed jobs in June for the sixth straight​ month, with the total for the first six months at​ 438,000 jobs lost by the U.S. economy. The job losses in June were concentrated in manufacturing and​ construction, two sectors that have been badly battered in the recession. ​Source: CNN, July​ 3, 2008

Read the news​ clip, then answer the following question. According to the news​ clip, the main source of increased unemployment might be​ ______, and the main type of increased unemployment is​ ______. (Answer is D. Losses in manufacturing and construction jobs; cyclical)

According to classical growth​ theory, when real GDP per person​ ______, the population grows.

a. rises above the subsistence level

Upper A decreaseA decrease in current income taxes​ ______ the supply of loanable funds today because it​ ______. Upper A decreaseA decrease in expected future income​ ______.

answer A: A. increases; increases disposable income, which encourages greater saving Answer B: C. increases the supply of loanable funds today because households with smaller expected future income will save more today.


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