econ ch 15, 16, 17 & 21 review

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Who of the following are included in the Bureau of Labor Statistics' "employed" category?

all of the above are correct

which of the following is an example of crowding out

an increase in govt spending increases interest rates causing investment to fall

most economists beige that a cut in tax rates

has a relatively small effect on the aggregate supply curve

fiat money

has no intrinsic value

An associate professor of physics gets a $200 a month raise. She figures that with her new monthly salary she can buy more goods and services than she could buy last year.

her real and nominal salary have risen

Vertical equity in taxation refers to the idea that people

in unequal conditions should be treated differently

which of the following policies would be advocated by someone who wants the govt to follow an active stabilization policy when the economy is expierincing severe unemployment

increase govt expenditures

Suppose that roofers are not unionized. If roofers unionize, then the supply of labor in other sectors of the economy will

increase, reducing wages in industries that are not unionized

If the CPI rises, the number of dollars needed to buy a representative basket of goods

increases, so the value of the money falls

the largest source of income for the fed govt is

individual income taxes

compounding refers directly to

interest being earned on previously-earned interest

demand deposits are included in

m1 and m2

Which tool of monetary policy does the Federal Reserve use most often?

open market operations

the federal deposit insurance corp

protects depositors in the event of bank failures

unemployment insurance

reduces search effort which raises unemployment

People hold money primarily because it

serves as a medium of exchange

By holding insurance a person

shares risk and so reduces the burden of risk.

tax increases

shift aggregate demand left while increases in government expenditures shift aggregate demand right.

People go to the bank more frequently to reduce currency holdings when inflation is high. The sacrifice of time and convenience that is involved in doing that is referred to as

shoe leather cost

Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?

store of value

unemployment that results because of the skills required to qualify for a job have changed in some labor markets is called

structural unemployment

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

the FOMC

Risk-averse people will choose different asset portfolios than people who are not risk averse. Over a long period of time, we would expect that

the average risk-averse person will earn a lower rate of return than the average non-risk averse person

monetary policy is determined by

the fed reserve and involves changing the money supply

Buddy is the owner of a firm that bottles beer in St. Louis, Missouri. There are many other such firms in the area. Buddy decides that if he pays his workers a wage higher than the going market wage, his profits will increase. Which of the following is a likely explanation for his decision?

the higher the wage, the less often his workers will choose to leave his firm

Suppose the monetary neutrality and the Fisher effect both hold. An increase in the money supply growth rate increases

the inflation rate, but not the real interest rates

when the fed buys govt bonds,

the money supply increases and the federal funds rate decreases

banks advertise

the nominal interest rate, which is how fast the dollar value of savings grows.

collective bargaining refers to

the process by which unions and firms agree on the terms of employment

to maintain their standard of living, most people rely on

their labor earnings

if the central bank in some country raised the reserve requirement, then the money multiplier for that country

would decrease

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600, it has a

$510 increases in excess reserves and a $90 increase in required reserves

if the reserve ratio is 12.5 percent, then $1000 of additional reserves can create up to

$8000 of new money

Refer to Scenario 29-2. Suppose the Bank of Tazi purchased 50 million tazes of Tazian Treasury Bonds from the banks. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much does the money supply change?

1,000 million tazes

table 29-6Assume the Fed's reserve requirement is 5 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 5 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?

$10,000`

which of the following has the highest future value

$130 saved for 2 years at a 7 percent interest rate

two years Ago darryl put $3000 into an account paying 3 percent interest. how much does he have in the account today

$3,182.70

table 29-4, if someone deposits $500 into the first bank of Fairfield and if the bank makes new loans so as to keep its reserve ratio unchanged, then the amount of new loans that makes will be

$437.50

about what percent of jobs are destroyed ever year, and about what percentage of workers leave their jobs in a typical month

10% and 3%

if the reserve ratio is 10% and $1400 of additional reserves can create up to

14000 of new money

table 29-6 assume threes a reserve requirement and the bank of pleasantville is exactly in compliance with that requirement. assume the same is true for all other banks. lastly, assume people hold only deposits and no currency. what is the money multiplier

16.7

Walter puts money in a savings account at his bank earning 3.5 percent. One year later he takes his money out and notes that while his money was earning interest, prices rose 1.5 percent. Walter earned a nominal interest rate of

3.5 percent and a real interest rate of 2 percent

table 28-2, the unemployment rate of aridida in 2011 was

31.6%

ellen deposited $500 into an account and two years later she had the $561.80 I the account. what interest rate was paid on Ellens deposit?

6%

if m=12000, p=3 and y=32000 then velocity=

8. velocity will rise if money changes hands more frequently

figure 34-7 the aggregate demand curve could shift from AD1 to AD2 as a result of

a decrease in net exports

the federal funds rate is the interest rate that

banks charge one another for loans.

minimum,-wage laws

create unemployment

if expected inflation is constant and the nominal interest rate decreases by 2 percentage points, then the real interest rate

decreases by 2 percentage points

if there us excess money supply, people will

deposit more into interest-bearing accounts and the interest rate will fall


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