macro homework 3

If unions were formed in more industries, the supply of labor in other industries would

a. increase, causing employment in other industries to rise.

Which list ranks assets from most to least liquid?

a. money, bonds, cars, houses

Unions

a. raise the wages of unionized workers and raise unemployment.

The value of money falls as the price level

a. rises, because the number of dollars needed to buy a representative basket of goods rises.

The unemployment rate is computed as the number of unemployed

a. divided by the labor force, all times 100.

In June 2009 the BLS reported an adult population of 234.9 million, unemployment of 12.4 million, and employment of 141.6 million. Based on these numbers the labor-force participation rate was

a. 154/234.9.

In 2009, based on concepts similar to those used to estimate U.S. employment figures, the Italian adult non-institutionalized population was 51.070 million, the labor force was 24.710 million, and the number of people employed was 22.765 million. According to the- se numbers, the Italian labor-force participation rate and unemployment rate were about

a. 48.4% and 7.9%.

Which of the following statements is correct?

a. All items that are included in M1 are included also in M2

Which of the following lists is included in what economists call "money"?

a. Cash

Which of the following statements about U.S. inflation is not correct?

a. Low inflation was viewed as a triumph of President Carter's economic policy.

Minimum-wage laws can keep wages

a. above equilibrium and cause a surplus of labor.

Paying efficiency wages means that wages are

a. above equilibrium and profits are higher than otherwise

When conducting an open-market purchase, the Fed

a. buys government bonds, and in so doing increases the money supply.

Which of the following is a store of value?

a. cash and stocks

Efficiency wages create a labor

a. surplus and so increase unemployment

Liquidity refers to

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

Money demand depends on

a. the price level and the interest rate.

The measure of the money stock called M1 includes

a. wealth held by people in their checking accounts.

Suppose the banking system currently has $300 billion in reserves; the reserve requirement is 10 percent; and excess reserves amount to $3 billion. What is the level of deposits?

b. $2,970 billion

A bank has $200,000 in deposits and $190,000 in loans. It has loaned out all it can. It has a reserve ratio of

b. 5 percent.

A bank has a 10 percent reserve requirement, $4,000 in deposits, and has loaned out all it can given the reserve requirement.

b. It has $400 in reserves and $3,600 in loans.

Which of the following helps to explain why the inflation fallacy is a fallacy?

b. Nominal incomes tend to rise at the same time that the price level is rising.

Suppose there is a surplus in the money market.

b. This could have been created by an increase in the money supply. The value of money will fall.

The confidence you have that a retailer will accept dollars in exchange for goods is based primarily on money

b. being a medium of exchange.

The quantity theory of money

b. can explain both moderate inflation and hyperinflation.

Which list ranks assets from most to least liquid?

b. currency, stocks, fine art

The classical dichotomy refers to the idea that the supply of money

b. determines nominal variables, but not real variables.

The theory of efficiency wages explains why

b. it may be in the best interest of firms to offer wages that are above the equilibrium level.

Which of the following items is included in M2?

b. money market mutual funds

The Bureau of Labor Statistics produces data on unemployment

b. monthly.

Economic variables whose values are measured in monetary units are called

b. nominal variables.

The labor force equals the

b. number of people employed plus the number of people unemployed.

Inflation can be measured by the

b. percentage change in the consumer price index.

An increase in the money supply might indicate that the Fed had

b. purchased bonds in an attempt to reduce the federal funds rate.

The Bureau of Labor Statistics defines the unemployment rate as the percentage of

b. the labor force that is unemployed.

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 10 percent receives a deposit of $400 it has a

c. $360 increase in excess reserves and a $40 increase in required reserves.

The labor-force participation rate is computed as

c. (Labor Force Adult Population) 100.

Which of the following does the Federal Reserve not do?

c. It makes loans to any qualified business that requests one.

The term hyperinflation refers to

c. a period of very high inflation.

The classical dichotomy argues that changes in the money supply

c. affect nominal variables, but not real variables.

Interest rates adjusted for the effects of inflation

c. are real variables; inflation is a nominal variable.

Suppose there are a large number of men who used to work or seek work who now no longer do either. Other things the same, this makes

c. both the number of people unemployed and the labor force fall.

The idea that nominal variables are heavily influenced by the quantity of money and that money is largely irrelevant for understanding the determinants of real variables is called the

c. classical dichotomy.

As the reserve ratio increases, the money multiplier

c. decreases.

Money demand refers to

c. how much wealth people want to hold in liquid form.

Efficiency wages

c. increase structural unemployment by keeping wages above equilibrium.

An increase in the minimum wage

c. increases structural unemployment.

The inflation tax

c. is a tax on everyone who holds money.

The Bureau of Labor Statistics produces data on

c. length of the average workweek.

A decrease in the money supply might indicate that the Fed had

c. sold bonds in an attempt to increase the federal funds rate.

The supply of money increases when

c. the Fed makes open-market purchases.

The supply of money is determined by

c. the Federal Reserve System.

The shoeleather cost of inflation refers to.

c. the waste of resources used to maintain lower money holdings.

Who of the following is not included in the Bureau of Labor Statistics' "employed" category?

c. those waiting to be recalled to a job from which they had been laid off

M1 equally currency plus demand deposits plus

c. traveler's checks plus other checkable deposits.

Which of the following is not one of the categories into which the Bureau of Labor Statistics places each adult of each surveyed household?

c. underemployed

In June 2009 the BLS reported an adult population of 234.9 million, a labor force of 154 million and employment of 141.6 million. Based on these numbers the unemployment rate was

d. 12.4/154

In 2009, based on concepts similar to those used to estimate U.S. employment figures, the Japanese adult non-institutionalized population was 110.272 million, the labor force was 65.362 million, and the number of people employed was 62.242 million. According to the- se numbers, the Japanese labor-force participation rate and unemployment rate were about

d. 59.3% and 4.8%.

If P denotes the price of goods and services measured in terms of money, then

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

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

d. All of the above are correct. (a. certain unpaid workers b. part-time workers c. workers on vacation)

The classical theory of inflation

d. All of the above are correct. (a. is also known as the quantity theory of money. b. was developed by some of the earliest economic thinkers. c. is used by most modern economists to explain the long-run determinants of the inflation rate.)

A double coincidence of wants

d. All of the above are correct. (a. is required when there is no item in an economy that is widely accepted in exchange for goods and services. b. is required in an economy that relies on barter. c. is a hindrance to the allocation of resources when it is required for trade.)

To decrease the money supply, the Fed could

d. All of the above are correct. (a. sell government bonds. b. increase the discount rate. c. increase the reserve requirement.)

In June 2009 the BLS reported a U.S. foreign-born population of 35.3 million. Of these 22.7 million were employed and 1.4 million were unemployed. Based on these numbers what were the unemployment rate and the labor-force participation rate of the foreign-born U.S. population?

d. None of the above are correct. (a. 1.4/35.3 and 22.7/35.3 b. 1.4/35.3 and 24.1/35.3 c. 1.4/24.1 and 22.7/24.1)

Deflation

d. decreases incomes and reduces the ability of debtors to pay off their debts.

An increase in the minimum wage

d. decreases the quantity of labor demanded but increases the quantity of labor supplied.

A decrease in the money supply creates an excess

d. demand for money that is eliminated by falling prices.

The federal funds rate is the

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

The price level is a

d. nominal variable.

Economic variables whose values are measured in goods are called

d. real variables.

When conducting an open-market sale, the Fed

d. sells government bonds, and in so doing decreases the money supply.

Unions contribute to

d. structural unemployment.

The velocity of money is

d. the average number of times per year a dollar is spent.

Which of the following groups is largely responsible for carrying out the Fed's tasks of regulating banks and ensuring the health of the financial system?

d. the regional Federal Reserve Banks

Economists use the term money" to refer to

d. those types of wealth that are regularly accepted by sellers in exchange for goods and services