vacaflores exam 2

most spells of unemployment are

short, but most unemployment observed at any given time is long term.

there will be structural unemployment if?

some wages are kept above the equilibrium level

M1 equals currency + demand deposits +?

travelers check+other check-able deposits

the shoe-leather costs refer to

resources (time) used to maintain lower money holdings when inflation is high.

3. refer to the table above. what is the male adult labor force in meditor

160 million

what is the current unemployment rate in the U.S.?

4.9%

4. what is the male adult labor-force participation in meditor?

66.67%

if the nominal exchange rate e is foreign currency per dollar, the domestic price is P and the foreign price is P*, then purchasing power parity implies that

D. E. (P/P*)=1

according the assumptions of quantity theory, if they money supply increases by 5%, then?

Nominal GDP would rise by 5%, Real GDP would be unchanged

the agency responsible for regulating the money supply in the u.s. is?

The Federal Reserve Bank

you are staying berlin over the summer and you have a number of dollars with you. if the dollar depreciated relative to the Euro then other things the same,

The dollar would buy fewer euros. the depreciation would discourage you from buying as many german goods and services

the fisher effect says that

a nominal interest rate adjusts one for one with the inflation rate

an item that people can use to transfer purchasing power from the present to the future is called

a store of value

which of the following is correct. a. the amount of money in the economy depends in part on the behavior of banks b. the fed can control the money supply precisely. c. the amount of money in the economy does not depend on the behavior of depositors. d. none of the above are correct.

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

the natural rate of unemployment is the?

amount of unemployment that the economy normally experiences

The quantity equation, M x V = P x Y, where M is the quantity of money, V is the velocity of money, P is the price of output, and Y is the amount of output. If we assume that the velocity of money and output are relatively stable (unchanged) in the long run, then we can expect that an increase in the money supply (M) by the federal reserve bank will result in?

an increase in the price level in the long-run

if the inflation rate is higher than a borrower expects it to be during the duration of a loan, which of the following is true? a. the borrower will pay a higher real interest rate on the loan than expected. b. the borrower will pay a lower real interest rate on the loan than expected c. the borrower will pay the expected real interest rate on the loan d. the real interest rate and nominal interest rate on the loan will be the same. e. inflation does not affect the real interest rate paid on a loan.

b. the borrower will pay a lower real interest rate on the loan than expected

suppose you buy a big mac in el paso this morning for $4.00 and that same big mac across the border in Juarez mexico cost 40 pesos. what is the relative cost of a big mac between the countries if the nominal exchange rate is e=10 pesos/dollars

big mac costs the same in mexico as they do in the u.s.

the fed's primary tool to change the money supply is

c. conduction open market operatins

which of the following would be associated with the type of unemployment created by minimum wages? a. greg quits his job as a grocery cashier because he prefers to work at the library. b. In hopes of earning higher income, bruce goes back to trade school to get further training c. mia searches for a low-wage job, but finds that there seem to be more people looking than positions open. d. liz pays the workers for her plumbing and heating company for than the equilibrium wage because she believes it will make them work harder.

c. mia searches for a low-wage job, but finds that there seem to be more people looking than positions open.

net capital outflow measures?

c. the imbalance between the amount of foreign assets bought by domestic residents and the amount of domestic financial assets bought by foreigners.

assuming everyone below is in the adult population, which of the following statements is not correct? a. Elmo works part time as a baby sitter. the BLS counts him as employed and in the labor force. b. liz is seeking work, but has not found it. The BLS counts her as unemployed and in the labor force. c. jim is working for his father, and as compensation he gets to drive their Porsche. The BLS counts him as unemployed and part of the labor force. d. Anna is a full-time student not looking for a job. the BLS counts her as unemployed in the labor force.

d. Anna is a full-time student not looking for a job. the BLS counts her as unemployed in the labor force.

which of the following is correct? a. if the fed sells bonds in the open market then the money supply curves shifts right. A change in the price level does not shift the money supply curve. b. if the fed purchases bonds, then the money supply curve shifts right. An increase in the price level shifts the money supply curve right. c. If the fed sells the bonds, then the money supply curve shifts right. A decrease in the level shifts the money supply curve right. d. if the fed purchases bonds in the open market, then the money supply curve shifts right. A change in the price level does not shift the money supply curve.

d. if the fed purchases bonds in the open market, then the money supply curve shifts right. A change in the price level does not shift the money supply curve.

most the the current u.s. currency is

fiat money with no intrinsic value

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

net export of a country are the value of

goods exported minus the value goods imported

France offers its citizens unemployment compensation that is more generous and lasts longer than what the united states offers to its citizens. Considering only this information, it is likely that unemployment rate is?

greater in france than in the united states

when the money market is drawn with the value of money on the vertical axis, the value of money increases if?

if money demand shifts right or money supply shifts left

if the reserve ratio is 10 percent, banks do not hold excess reserves, and people do not hold currency, then when the fed purchases $20 million of government bonds, bank reserves

increase by $20 million and the money supply eventually increases by $200 million

10. refer to the figure above. if there were no minimum wage and then the government instituted a minimum wage of $5.5 in this market, unemployment would approximately?

increase by 20

argentina buys commercial airplanes from boeing, an american company that builds planes in seattle, and pays for them with pesos (Argentinian currency) By itself, this transcation

increases both U.s. net exports and u.s. net capital outflow

paper money

is valuable because it is generally accepted in trade

the banking system currently has $10 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10%. If the fed raises the reserve requirement ratio to 20% and at the same time buys $1 billion dollars of bonds, then by how much money does the money supply change?

it falls by $45 billion

suppose a bank has a 10 percent reserve requirements, $5000 in deposits, and has loaned out all it an given the reserve requirement.

it has $500 in reserves, And $4500 in loans

the supply curve of money is vertical because the quantity of money supplied increases....

only if the central bank increases the money supply