Economics 2 HW Week 6

Minimum-wage laws are most likely to affect the wages paid to a. people who are self-employed b. teenagers c. union members d. people with advanced technical training

b. teenagers

Which of the following types of unemployment will exist even if the wage is at the competitive equilibrium? a. unemployment due to minimum-wage laws b. unemployment due to efficiency wages c. frictional unemployment d. unemployment due to unions

c. frictional unemployment

Some frictional unemployment is inevitable because a. efficiency wages may hold the wage above the equilibrium wage b. of minimum-wage laws c. there are changes in the demand for labor among different firms d. of unions e. of all of the above

c. there are changes in the demand for labor among different firms

Sheila is on a temporary layoff from her automobile factory job but has not looked for work in the last four weeks. The Bureau of Labor Statistics counts Sheila as a. employed and not in the labor force b. unemployed and not in the labor force c. unemployed and in the labor force d. employed and in the labor force

c. unemployed and in the labor force

Over the past several decades, the difference between the labor-force participation rates of men and women in the U.S. has a. remained constant b. gradually increased c. been eliminated d. gradually decreased

d. gradually decreased

Which of the following will help to prevent bank runs? a. Lack of government insurance of deposits b. 100% reserve banking c. A 0% reserve requirement d. Fractional reserve banking

b. 100% reserve banking

Suppose people in the adult population in a small country are classified based on their age. In the proper order, which age group has the highest unemployment rate and which has the highest labor-force participation rate? a. Under 55, under 55 b. 55 and older, under 55 c. 55 and older, 55 and older d. Under 55, 55 and older

b. 55 and older, under 55

In 2018 the Bureau of Labor Statistics reported that there were 57.4 million people over age 25 whose highest level of education was some college or an associate degree. Of these, 36.3 million were employed and 1.2 million were unemployed. What were the labor-force participation rate and the unemployment rate for this group? a. 65.3% and 2.1% b. 65.3% and 3.2% c. 63.2% and 3.2% d. 63.2% and 2.1%

b. 65.3% and 3.2%

Use the following table to answer question. Numbers are in millions. The labor force is a. 92.3 million. b. 98.0 million. c. 134.0 million. d. 139.7 million. e. none of the above.

b. 98.0 million.

Which of the following policies can the Fed follow to increase the money supply? a. Increase reserve requirements for banks b. Reduce the interest rate on reserves c.​ Sell government bonds d. Reduce the quantity of funds available through the Term Auction Facility

b. Reduce the interest rate on reserves

Which of the following groups meets to discuss changes in the economy and determine monetary policy? a. The President of the United States b. The Federal Open Market Committee c. Congress d. The Board of Directors from each of the 12 regional Federal Reserve Banks

b. The Federal Open Market Committee

Which of the following statements is true? a. The primary tool of monetary policy is the reserve requirement. b. When the Fed sells government bonds, the money supply decreases. c. The FOMC meets once per year to discuss monetary policy. d. The Federal Reserve was created in 1871 in response to the Civil War.

b. When the Fed sells government bonds, the money supply decreases.

Unions tend to increase the disparity in pay between insiders and outsiders by a. decreasing the demand for workers in the unionized sector. b. increasing the wage in the unionized sector, which may create an increase in the supply of workers in the nonunionized sector. c. increasing the wage in the unionized sector, which may create a decrease in the supply of workers in the nonunionized sector. d. increasing the demand for workers in the unionized sector.

b. increasing the wage in the unionized sector, which may create an increase in the supply of workers in the nonunionized sector.

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

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

Public policy a. can reduce frictional unemployment, but it cannot reduce the natural rate of unemployment b. cannot reduce either frictional unemployment or the natural rate of unemployment c. can reduce both frictional unemployment and the natural rate of unemployment d. cannot reduce frictional unemployment, but it can reduce the natural rate of unemployment

c. can reduce both frictional unemployment and the natural rate of unemployment

If the federal funds rate were below the level the Federal Reserve had targeted, the Fed could move the rate back towards its target by a. buying bonds. This buying would reduce reserves. b. selling bonds. This selling would increase reserves. c. selling bonds. This selling would reduce reserves. d. buying bonds. This buying would increase reserves.

c. selling bonds. This selling would reduce reserves.

The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the Tazian dollar. Aggregate banking statistics show that collectively the banks of Tazi hold $300 million of required reserves, $75 million of excess reserves, have issued $7,500 million of deposits, and hold $225 million of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank. Suppose the Bank of Tazi loaned the banks of Tazi $10 million. Suppose also that both the reserve requirement and the percentage of deposits held as excess reserves stay the same. By how much would the money supply change? a. $10 million b. $250 million c. $125 million d. $200 million

d. $200 million

Octavia does not currently have a job, but she has applied for several jobs in the previous week. Eve is an unpaid stay-at-home mom who has not searched for work in recent years. Who does the Bureau of Labor Statistics count as "not in the labor force"? a. Octavia but not Eve b. Neither Octavia nor Eve c. Both Octavia and Eve d. Eve but not Octavia

d. Eve but not Octavia

David and Asher buy the same pair of sneakers, but each in the wrong size. David proposes a size swap with Asher. This is an example of a. ​barter, since the sneakers in the correct size represent a medium of exchange b. money, since the sneakers in the correct size represent a medium of exchange c. ​money, since the sneakers in the correct size do not have any intrinsic value d. ​barter, since the sneakers in the correct size have intrinsic value to both David and Asher

d. ​barter, since the sneakers in the correct size have intrinsic value to both David and Asher

In the 1990s Ireland made unemployment benefits less generous. This change would likely have reduced a. both frictional unemployment and the natural rate of unemployment b. frictional unemployment but not the natural rate of unemployment c. structural unemployment but not the natural rate of unemployment d. both structural unemployment and the natural rate of unemployment

a. both frictional unemployment and the natural rate of unemployment

Suppose the bank faces a reserve requirement of 10 percent. Starting from the situation as depicted by the T-account, a customer deposits an additional $60,000 into his account at the bank. If the bank takes no other action it will a. have $64,000 in excess reserves b. be in a position to make new loans equal to a maximum of $6,000 c. be unable to make any new loans d. have $4,000 in excess reserves

a. have $64,000 in excess reserves

In the early 1900s, Henry Ford introduced a a. high-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory. b. low-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory. c. low-wage policy, and this policy produced none of the effects predicted by efficiency-wage theory. d. high-wage policy, and this policy produced none of the effects predicted by efficiency-wage theory.

a. high-wage policy, and this policy produced many of the effects predicted by efficiency-wage theory.

Suppose the Fed requires banks to hold 9 percent of their deposits as reserves. A bank has $18,000 of excess reserves and then sells the Fed a Treasury bill for $9,000. How much does this bank now have available to lend out if it decides to hold only required reserves? a. $27,000 b. $9,000 c. $27,190 d. $26,190

a. $27,000

Who of the following is not included in the Bureau of Labor Statistics' "employed" category? a. Those waiting to be recalled to a job from which they had been laid off b. Those who were temporarily absent from work because of vacation c. Those who worked in their own business d. Those who worked as unpaid workers in a family member's business

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

If the bank faces a reserve requirement of 6 percent, then the bank a. is in a position to make new loans equal to a maximum of $18,000 b. is in a position to make new loans equal to a maximum of $12,000 c. has excess reserves of $30,000 d. has excess reserves of $12,000

a. is in a position to make new loans equal to a maximum of $18,000

If banks increase their holdings of excess reserves a. the money multiplier and the money supply decrease. b. the money multiplier decreases and the money supply increases. c. the money multiplier and the money supply increase. d. the money multiplier increases and the money supply decreases.

a. the money multiplier and the money supply decrease.

Matilda just graduated from college. In order to devote all her efforts to college, she didn't hold a job. She is going to tour around the country on her motorcycle for a month before she starts looking for work. Other things the same, the unemployment rate a. and the labor-force participation rate both increase b. and the labor-force participation rate are both unaffected c. increases, and the labor-force participation rate is unaffected d. increases, and the labor-force participation rate decreases

b. and the labor-force participation rate are both unaffected

The natural rate of unemployment includes a. structural but not frictional unemployment. b. both frictional and structural unemployment. c. neither frictional nor structural unemployment. d. frictional but not structural unemployment.

b. both frictional and structural unemployment.

When a firm pays an efficiency wage, it may a. have to monitor its workers more closely b. find that its workers quit less frequently c. have trouble attracting enough workers d. experience declines in worker quality

b. find that its workers quit less frequently

The existence of money leads to a. greater specialization in production, but not to a higher standard of living b. greater specialization and to a higher standard of living c. neither greater specialization nor to a higher standard of living d. a higher standard of living, but not to greater specialization

b. greater specialization and to a higher standard of living

The banking system currently has $10 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10 percent. If the Fed raises the reserve requirement to 12.5 percent and at the same time buys $1 billion worth of bonds, then by how much does the money supply change? a. It falls by $19 billion b. It falls by $21 billion c. It falls by $12 billion d. It rises by $19 billion

c. It falls by $12 billion

A bank has an 8 percent reserve requirement, $10,000 in deposits, and has loaned out all it can, given the reserve requirement. a. It has $8,000 in reserves and $2,000 in loans. b. It has $1,250 in reserves and $8,750 in loans. c. It has $800 in reserves and $9,200 in loans. d. It has $80 in reserves and $9,920 in loans.

c. It has $800 in reserves and $9,200 in loans.

In a system of 100-percent-reserve banking, a. banks do not accept deposits. b. banks can increase the money supply. c. banks do not influence the supply of money. d. loans are the only asset item for banks.

c. banks do not influence the supply of money.

Consider two people who are currently out of work. Tim is not looking for work because there have been many job cuts where he lives, and he doesn't think it likely that he will find work. Bev is not currently looking for work, but she would like a job, and she has looked for work in the past. The Bureau of Labor Statistics considers a. only Tim to be a marginally attached worker b. only Bev to be a marginally attached worker c. both Tim and Bev to be marginally attached workers d. neither Tim nor Bev to be marginally attached workers

c. both Tim and Bev to be marginally attached workers

Which of the following is included in both M1 and M2? a. Currency and money market mutual funds b. Traveler's checks, demand deposits, and savings deposits c. Currency, demand deposits, and savings deposits d. Currency, demand deposits, and other checkable deposits

d. Currency, demand deposits, and other checkable deposits

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits? a. $5,062.5 billion b. $4,937.5 billion c. $5,000 billion d. $4,995 billion

b. $4,937.5 billion

If the local government imposed a minimum wage of $4 in Productionville, how many people would be unemployed? a. 2,000 b. 10,000 c. 0 d. 3,000

c. 0

Which list ranks assets from most to least liquid? a. Currency, fine art, stocks b. Fine art, currency, stocks c. Currency, stocks, fine art d. Fine art, stocks, currency

c. Currency, stocks, fine art

If the Fed raises the interest rate it pays on reserves, it will ________ the money supply by increasing ________. a. increase, the money multiplier b. increase, excess reserves c. decrease, excess reserves d. decrease, the money multiplier

c. decrease, excess reserves

A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150. If customers deposit $50 into the bank, what is the value of the money supply? a. $100 b. $50 c. $200 d. $150

d. $150