Macro Test 3
Suppose Joe changes his $1,000 demand deposit from Bank A to Bank B. If the reserve requirement is 10 percent, what is the potential change in demand deposits as a result of Joe's action?
$0
Suppose the Fed purchases a $1,000 government bond from you. If you deposit the entire $1,000 in your bank, what is the total potential change in the money supply as a result of the Fed's action if reserve requirements are 20 percent?
$5,000
If the reserve ratio is 25 percent, the value of the money multiplier is
4
The unemployment rate is
5.8 percent
The labor-force participation rate is
70.2 percent
The labor force is
98.0 million
Which of the following is an example of a reason why firms might pay efficiency wages?
All of the above are true
Which of the following statements about efficiency wage theory is true?
Paying above the competitive equilibrium wage may improve worker health, lower worker turnover, improve worker quality, and increase worker effort
Which of the following statements is true?
Prime-age men and women tend to have similar unemployment rates.
Which of the following statements is true?
When the Fed sells government bonds, the money supply decreases
Which of the following statements about a bank's balance sheet is true?
assets minus liabilities equals owner's equity or capital
Which of the following policy combinations would consistently work to increase the money supply?
buy government bonds, decrease reserve requirements, decrease the discount rate
A minimum-wage law tends to
create more unemployment in low-skill job markets than in high-skill job markets
The M1 money supply is composed of
currency, demand deposits, traveler's checks, and other checkable accounts
Required reserves of banks are a fixed percentage of their
deposits
Sectoral shifts tend to raise which type of unemployment?
frictional unemployment
Which of the following types of unemployment will exist even if the wage is at the competitive equilibrium?
frictional unemployment
Which of the following is not a characteristic of minimum-wage workers? They tend to be
full time
Commodity money
has intrinsic value
Unions tend to increase the disparity in pay between insiders and outsiders by
increasing the wage in the unionized sector, which may create an increase in the supply of workers in the nonunionized sector
According to the Bureau of Labor Statistics, a husband who chooses to stay home and take care of the household is
not in the labor force
An accountant with a CPA designation who has been unable to find work for so long that she has stopped looking for work is considered to be
not in the labor force
Unions might increase efficiency in the case where they
offset the market power of a large firm in a "company town"
The Fed's tools of monetary control are
open-market operations, lending to banks, reserve requirements, and paying interest on reserves
An example of fiat money is
paper dollars
Which of the following is not a function of money?
protection against inflation
Which of the following government policies would fail to lower the unemployment rate?
raise the minimum wage
Which of the following policy actions by the Fed is likely to increase the money supply?
reducing reserve requirements
The Board of Governors of the Federal Reserve System consists of
seven members appointed by the president
Which one of the following types of unemployment results from the wage being held above the competitive equilibrium wage?
structural unemployment
To insulate the Federal Reserve from political pressure,
the Board of Governors are appointed to fourteen-year terms
The discount rate is
the interest rate the Fed charges on loans to banks
If banks increase their holdings of excess reserves,
the money multiplier and the money supply decrease
A decrease in the reserve requirement causes
the money multiplier to rise
Suppose all banks maintain a 100 percent reserve ratio. If an individual deposits $1,000 of currency in a bank,
the money supply is unaffected
The amount of unemployment that the economy normally experiences is known as
the natural rate of unemployment
If unemployment insurance were so generous that it paid laid-off workers 95 percent of their regular salary,
the official unemployment rate would probably overstate true unemployment
If, for any reason, the wage is held above the competitive equilibrium wage,
the quantity of labor supplied will exceed the quantity of labor demanded, and there will be unemployment
Some frictional unemployment is inevitable because
there are changes in the demand for labor among different firms
If the Fed engages in an open-market purchase, and at the same time, it raises reserve requirements,
we cannot be certain what will happen to the money supply
