EC 311 Old Exam 2 MC

will decrease

A policy that increases the job-finding rate _____ the natural rate of unemployment

the price level

According to the classical dichotomy, when the money supply decreases, _____ will decrease

5; 5

According to the quantity theory a 5 percent increase in money growth increases inflation by ___ percent. According to the Fisher equation a 5 percent increase in the rate of inflation increases the nominal interest rate by _____

unemployment insurance

All of the following are causes of structural unemployment except

as the price level rises, the real value of money held by the public decreases

inflation tax means that

$600 billion

If currency held by the public equals $100 billion, reserves held by banks equal $50 billion, and bank deposits equal $500 billion, then the money supply equals:

2.5

If the currency-deposit ratio equals 0.5 and the reserve-deposit ratio equals 0.1, then the money multiplier equals

10 percent

If the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.01 and the fraction of the unemployed who find a job each month is 0.09 (the rate of job findings), then the natural rate of unemployment is:

decrease; increase

If the money supply is held constant, then an increase in the nominal interest rate will ______ the demand for money and ______ the price level.

9

If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals ______ percent (rounded to the nearest percent).

achieving increased political independence from the government

If the price level depends on both the current money supply and future expected money supplies, in order to stop a hyperinflation, a central bank may try to establish credibility by:

.08

If the steady-state rate of unemployment equals 0.125 and the fraction of unemployed workers who find jobs each month (the rate of job findings) is 0.56, then the fraction of employed workers who lose their jobs each month (the rate of job separations) must be

increase

If wage rigidity holds the real wage above the equilibrium level, an increase in the demand for labor will ______ the number unemployed

the more a firm pays its workers, the greater their incentive to stay with the firm

One efficiency-wage theory implies that firms pay high wages because:

monetary base, money multiplier, monetary base

Open-market operations change the ______; changes in interest rate paid on reserves change the ______; and changes in the discount rate change the ______.

M minus percentage change in Y plus percentage change in velocity

Percentage change in P is approximately equal to the percentage change in

Money neutrality

The characteristic of the classical model that the money supply does not affect real variables is called

actual rate of inflation is greater than expected rate of inflation

The ex post real interest rate will be greater than the ex ante real interest rate when the

lower the interest rate paid on reserves

To increase the money multiplier, the Fed can:

decreases the monetary base

When the fed makes an open market sale it

the quantity of labor supplied exceeds the quantity demanded

When the real wage is above the level that equilibrates supply and demand

the time it takes workers to search for a job

Frictional unemployment is unemployment caused by:

declines when the money growth rate rises

If consumption depends positively on the level of real balances and real balances depend negatively on the nominal interest rate in a neoclassical model, then the nominal interest rate

Federal Reserve purchases and sales of government bonds

open market operations ar