Microeconomics

In an open economy, gross domestic product equals $3,500 billion, consumption expenditure equals $2100 billion, government expenditure equals $400 billion, investment equals $800 billion, and net exports equals $200 billion. What is national savings?

$1,000 billion

Table 29-1. The information in the table pertains to an imaginary economy. Asset Amount Small time deposits $750 billion Demand deposits $480 billion Other checkable deposits $350 billion Savings deposits $4,700 billion Traveler's checks $15 billion Money market mutual funds $910 billion Currency $1,070 billion Minor categories of M2 $40 billion Table 29-1. What is the value of M1 in billions of dollars?

$1,915 billion

(Statement 16-1) Which of the following will be a new reserve, when a depositor withdraws $10 million?

$12 million

Statement 16-1 SWOSU Bank holds $250 million in deposits and maintains a reserve ratio of 5 percent. (Statement 16-1) Which of the following will be reserves?

$12.5 million

(Statement 16-1) Which of the following will be money supply (M1)?

$487.5 million

If the exchange rate is .60 British pounds = $1, a bottle of ale that costs 3 pounds costs

$5

Table 29-1. What is the value of M2 in billions of dollars?

$8,315 billion

Refer to Table 28-1. How many in the sample are in the labor force?

10

Refer to Figure 30-2. Suppose the relevant money-demand curve is the one labeled MD1; also suppose the velocity of money is 4. If the money market is in equilibrium, then the economy's real GDP amounts to:

10,000

Table 28-1 Sample Population Person Status Allen Unpaid stay at home dad. Has not looked for a job in several years. Ben College president. Allison Part-time welder. Actively looking for full time work. Brittany Self-employed full-time wedding singer. Cathy Fulltime physician's assistant. Calvin Retired finance professor. Last applied for work 10 weeks ago. Diane Laid-off fork-lift operator expecting to be recalled. David Works for a bicycle store. Age 70. Evelyn Manager of health food store. Eli Museum guard. Was not at work last week due to illness. Flora Has never been employed. Looked for a job last week. Frank Fired from job as an investment banker. Last looked for work three weeks ago. Refer to Table 28-1. How many in the sample are unemployed?

3

Refer to Table 28-1 Who is included in the category of "not in the labor force"?

Allen

When other things are the same, real wages _____ when inflation rises.

Decrease

Breann takes $100 of currency from her wallet and deposits it into her checking account. The money supply (M1) ________.

Does not change

Which of the following is an example of U.S. foreign portfolio investment?

Erica, a U.S. resident, buys bonds issued by the Swiss government.

Which of the following occurs when more workers post their resumes at LinkedIn.com and more employers use LinedIn.com to find suitable workers to hire?

Frictional unemployment falls

Which of the following occurs in the money supply and demand market, when changes in bank regulations decrease the availability of credit cards so that people need to hold more cash?

Money demand curve shifts to the right

In a system of fractional-reserve banking, even without any action by the central bank, the money supply declines if households choose to hold ______ relative to deposits:

More currency

Which of the following equations is correct?

NX = NCO Y = C + I + G + NCO NCO = S - I, where S = national saving All of the choices are correct.

A country has net capital outflow of $40 billion. Which of the following is consistent with this net capital outflow?

Purchases of foreign assets by domestic residents exceed purchases of domestic assets by foreign residents by $40 billion.

Which of the following occurs when the government eliminates the minimum wage or a new law bans labor unions?

Structural unemployment falls

Consider the following traders who meet. Bill has an eggplant wants a head of cabbage Tim has a head of lettuce wants a cucumber Mike has a tomato wants an eggplant Amy has a cucumber wants a head of lettuce Which, if any, pairs of traders has a double coincidence of wants?

Tim with Amy

If U.S. residents purchase $600 billion worth of foreign assets and foreigners purchase $300 billion worth of U.S. assets,

U.S. net capital outflow is $300 billion; capital is flowing out of the U.S.

Which of the following occurs when a discouraged worker becomes an active job searcher?

Unemployment rate and the labor force participation rate would rise

Which of following occurs when Sam, the sole earner in his family of 5, just lost his $80,000 as a research scientist. Immediately he takes a part-time job at McDonald's until he can find another job in his field?

Unemployment rate does not change

What happens to the unemployment rate when Sue lost her job and beings looking for a new one?

Unemployment rate rises

Employment is the total number of people who are______.

Working either full or part time

Refer to Figure 30-2. Which of the following events could explain a shift of the money-demand curve from MD1 to MD2?

a decrease in the availability of credit card leads to increased cash holdings

A rise in nominal wages represents:

an increase in production costs

If the dollar buys less cotton in Egypt than in the United States, then traders could make a profit by

buying cotton in the United States and selling it in Egypt, which would tend to raise the price of cotton in the United States.

Figure 30-2 On the graph, MS represents the money supply and MD represents money demand. The quantity of money is on the horizontal axis and the value of money (=) is on the vertical axis. Refer to Figure 30-2. If the relevant money-demand curve is the one labeled MD1, then:

choices a and b are true b-when the money market is in equilibrium, one unit of goods and services sells for 2 dollars. a-when the money market is in equilibrium, one dollar purchases one-half of a basket of goods and services.

Bob, a Greek citizen, opens a restaurant in Chicago. His expenditures:

decrease U.S. net capital outflow, but increase Greek net capital outflow.

Hyperinflation is:

extremely high rates of inflation

Greg, a U.S. citizen, opens an ice cream store in Bermuda. His expenditures are U.S.

foreign direct investment that increase U.S. net capital outflow.

The real interest rate is the:

interest rate in terms of changes in purchasing power

Which list ranks assets from most to least liquid (hint: liquidity refers to how easily assets can be converted into cash)?

money, cars. houses

A depreciation of the U.S. real exchange rate induces U.S. consumers to buy

more domestic goods and fewer foreign goods.

According to Fisher effect, the real interest rate is the:

nominal interest rate minus the rate of inflation

The nominal interest rate is the:

stated interest rate without a correction for inflation.

The discount rate is the interest rate that:

the Fed charges banks for loans.

Cyclical unemployment refers to ________.

year-to-year fluctuations of unemployment around its natural rate.