ECON 222 exam 3

*refer to figure 28-1* If the government imposes a minimum wage of $4, then how many workers will be unemployed? a. 0 b. 3000 c. 7000 d. 4000

a. 0

According to the numbers in *scenario 1*, the Japanese unemployment rate was about a. 4.8% b. 2.9% c. 6.0% d. 5.5%

a. 4.8%

Which of the following is correct? a. adults have higher labor-force participation rates and lower rates of unemployment compared to teenagers b. adults have lower labor-force participation rates and higher rates of unemployment compared to teenagers c. adults have lower labor-force participation rates and lower rates of unemployment compared to teenagers d. adults have higher labor-force participation rates and higher rates of unemployment compared to teenagers

a. adults have higher labor-force participation rates and lower rates of unemployment compared to teenagers

During the Great Depression in the early 1930s, a. bank runs closed many banks b. the money supply rose sharply c. the Fed decreased reserve requirements d. there was a high confidence in the banking system because of the FDIC

a. bank runs closed many banks

Which of the following is *not* a reason that paying efficiency wages may increase a firms profit? a. efficiency wages attract workers with low reservation wages and therefore increase worker productivity b. efficiency wages decrease worker turnover and therefore decrease hiring and training costs c. efficiency wages increase worker health and therefore increase worker productivity d. efficiency wages increase worker effort and therefore increase worker productivity

a. efficiency wages attract workers with low reservation wages and therefore increase worker productivity

Currently, US currency is a. fiat money with no intrinsic value b. fiat money with intrinsic value c. commodity money with no intrinsic value d. commodity money with intrinsic value

a. fiat money with no intrinsic value

Which of the following is not correct? a. if the wage is kept below the equilibrium level for any reason, the result is unemployed b. it is only among the least skilled and least experienced members of the labor force that minimum wage laws cause unemployment c. the equilibrium wages of the least skilled and least experienced members of the labor force tend to be low, and therefore are more likely to fall below the legal minimum wage d. minimum wage laws, unions, and efficiency wages are all reasons wages may be kept above the equilibrium level

a. if the wage is kept below the equilibrium level for any reason, the result is unemployed

Cyclical unemployment is closely associated with a. short-run ups and downs of the economy b. the natural rate of unemployment c. long-term economic growth d. changes in the minimum wage

a. short-run ups and downs of the economy

If the wage is kept above the equilibrium wage for any reason, the result is a. structural unemployment b. frictional unemployment c. seasonal unemployment d. cyclical unemployment

a. structural unemployment

Liquidity refers to a. the ease with which an asset is converted to the medium of exchange b. how many times a dollar circulates in a given year c. the suitability of an asset to serve as a store of value d. a measure of the intrinsic value of commodity money

a. the ease with which an asset is converted to the medium of exchange

Which of the following best illustrates the unit of account function of money? a. you list prices for candy sold on your web site, www.sweettooth.com, in dollars b. you keep 6 ounces of gold in your safe-deposit box at the bank for emergencies c. you pay for your theater tickets with dollars d. none of the above is correct

a. you list prices for candy sold on your web site, www.sweettooth.com, in dollars

If the price of a can of soda is $2 and the price of a bag of chips is $1, then the relative price of chips is a. $0.50 b. $2 c. $1 d. $3

b. $2

*refer to table 29-2* If all banks in the economy have the same reserve ratio as this bank, then the value of the economy's money multiplier is a. 1.33 b. 13.33 c. 10.81 d. 10.00

b. 13.33

The Bureau of Labor Statistics produces data on unemployment and other aspects of the labor market from a regular survey of about 60,000 households called the a. Labor Survey b. Current Population Survey c. Survey of Economic Indicators d. Census

b. Current Population Survey

*question 26* Which of the following pairs of individuals has a double coincidence of wants? a. Clark and Nathan b. Polly and Paul c. Mary and Clark d. Nathan and Polly

b. Polly and Paul

The Fed's primary tool to change the money supply is a. redeeming Federal Reserve notes b. conducting open market operations c. changing the discount rate d. changing the reserve requirement

b. conducting open market operations

Yves is an unpaid worker in his family's bakery. The bureau of labor statistics counts Yves as a. unemployed and not in the labor force b. employed and in the labor force c. employed and not in the labor force d. unemployed and in the labor force

b. employed and in the labor force

Suppose that because of the popularity of the low-carb diet, bakeries need fewer workers and steak houses need more workers. This is an example of a. structural unemployment created by efficiency wages b. frictional unemployment created by sectoral shifts c. structural unemployment created by sectoral shifts d. frictional unemployment created by efficiency wages

b. frictional unemployment created by sectoral shifts

*refer to table 29-4* If the bank faces a reserve requirement of 10 percent, then the bank a. is in a position to make a new loan of $15,000 b. has excess reserves of $10,000 c. has fewer reserves than are required d. none of the above are correct

b. has excess reserves of $10,000

Over the past several decades in the United States, the labor force participation rate of women has a. decreased and the labor-force participation rate of men has decreased b. increased and the labor-force participation rate of men has decreased c. decreased and the labor-force participation rate of men has increased d. increased and the labor-force participation rate of men has increased

b. increased and the labor-force participation rate of men has decreased

The main reason why frictional unemployment is inevitable because a. some people do not want to be employed b. sectoral shifts are always happening c. unions are very popular in the US d. there is a federal minimum-wage law in the US

b. sectoral shifts are always happening

Dollar bills, rare paintings and emerald necklaces are all a. media of exchange b. stores of value c. units of account d. all of the above are correct

b. stores of value

*refer to figure 28-1* If unemployment is 2000 workers, then the minimum wage must be a. $8 b. $4 c. $7 d. $5

c. $7

According to the numbers in *scenario 1*, the Japanese labor-force participation rate was about a. 48% b. 55% c. 60% d. 80% e. 37%

c. 60%

Who is included in the labor force by the Bureau of Labor Statistics? a. Neeltje, an unpaid homemaker who works as a volunteer at the local Red Cross and is currently not looking for a paid job b. Kwamie, a full-time student not looking for work c. Geroy, a 30-year old who does not have a job, but has looked for work in the past 4 weeks d. Izumi, who is 14 and doesn't have a job, but would like work e. Michael, who just graduated with his Ph.D. in Economics but in not interested in accepting any jobs now

c. Geroy, a 30-year old who does not have a job, but has looked for work in the past 4 weeks

When the money market is drawn with the value of money on a regular vertical axis and the price level on the inverted vertical axis like was done in class, the money demand curve slopes a. downward, because there is a direct relationship between the quantity of money demanded and the value of money b. upward, because there is a direct relationship between the quantity of money demanded and the price level c. downward, because there is a direct relationship between the quantity of money demanded and the price level d. upward, because there is an inverse relationship between the quantity of money demanded and the value of money

c. downward, because there is a direct relationship between the quantity of money demanded and the price level

When unions raise wages in some sectors of the economy, the supply of labor in other sectors of the economy a. increases, raising wages in industries that are not unionized b. decreases, reducing wages in industries that are not unionized c. increases, reducing wages in industries that are not unionized d. decreases, raising wages in industries that are not unionized

c. increases, reducing wages in industries that are not unionized

The main reason for differences in unemployment rates amongst different races in the US is observed in data is because a. some races are smarter than others b. of discrimination c. of differences in the average quantity and quality of education amongst different races d. none of the above; there are no differences in unemployment rates amongst different races

c. of differences in the average quantity and quality of education amongst different races

When the money market is drawn with the value of money on a regular vertical axis and the price level on the inverted vertical axis like was done in class, if the Federal Reserve buys bonds, then the money supply curve a. shifts leftward, causing the price level to fall b. shifts leftward, causing the price level to rise c. shifts rightward, causing the price level to rise d. shifts rightward, causing the price level to fall

c. shifts rightward, causing the price level to rise

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

c. the Federal Reserve has 12 regional banks. the Board of Governors has 7 members who serve 14 year terms.

According to the classical dichotomy, which of the following is influenced by monetary factors? a. the real wage b. the real interest rate c. the nominal wage d. relative prices e. all of the above are influenced by monetary factors

c. the nominal wage

If M = 3,000, P= 2 and Y = 12,000 what is velocity? a. 1/2 b. 2 c. 4 d. 8

d. 8

If P denotes the price of goods and services measured in terms of money, then a. an increase in the value of money is associated with a decrease in P b. 1/P represents the value of money measured in terms of goods and services c. P can be regarded as the "overall price level" d. All of the above are correct

d. All of the above are correct

Discouraged workers a. are correctly counted as out of the labor force b. are counted as unemployed but should be counted as out of the labor force c. are correctly counted as unemployed d. are counted as out of the labor force but should be counted as unemployed

d. are counted as out of the labor force but should be counted as unemployed

Which of the following does the Federal Reserve not do? a. serve as a bank regulator b. act as a lender of last resort c. conduct monetary policy d. convert Federal Reserve Notes into gold

d. convert Federal Reserve Notes into gold

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

d. credit cards

In a fractional-reserve banking system, an increase in reserve requirements a. increases both the money multiplier and the money supply b. increases the money multiplier, but decreases the money supply c. decreases the money multiplier but increases the money supply d. decreases both the money multiplier and the money supply

d. decreases both the money multiplier and the money supply

The federal funds rate is the a. interest rate at which the Federal Reserve makes short-term loans to banks b. percentage of face value that the Federal Reserve is willing to pay for Treasury Securities c. percentage of deposits that banks must hold as reserves d. interest rate at which banks lend reserves to each other overnight

d. interest rate at which banks lend reserves to each other overnight

If the Fed wanted to increase the money supply, it would make open market a. purchases or raise the discount rate b. sales or raise the discount rate c. sales or lower the discount rate d. purchases or lower the discount rate

d. purchases or lower the discount rate

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

d. reduces search effort and raises unemployment

Debt as a percentage of GDP in the United States a. has never been 0% b. always falls during wars c. has always been less than 100% e. fell during the late 1990s

e. fell during the late 1990s