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Fight the system... make teachers do their job

Suppose that some people are counted as unemployed when, to maintain unemployment compensation, they search for work only at places where they are unlikely to be hired. If these individuals were counted as out of the labor force instead of as unemployed, then
a. both the unemployment rate and labor-force participation rate would be lower.
b. the unemployment rate would be higher and the participation rate would be lower.
c. both the unemployment rate and labor-force participation rate would be higher.
d. the unemployment rate would be lower and the labor-force participation rate would be higher

both the unemployment rate and labor-force participation rate would be lower

Which of the following is an explanation for the existence of frictional unemployment?
a. minimum-wage laws
b. job search
c. efficiency wages
d. unions

job search

Adults who were not working but who had jobs from which they were temporarily absent are included in the Bureau of Labor Statistics' "employed" category

True

Unions contribute to
a. the natural rate of unemployment but not frictional unemployment.
b. both frictional unemployment and the natural rate of unemployment.
c. neither frictional unemployment nor the natural rate of unemployment.
d. frictional unemployment but not the natural rate of unemployment.

the natural rate of unemployment but not frictional unemployment.

Table 28-1 Labor Data for Aridia

Year 2010 2011 2012
Adult population 2000 3000 3200
Number of employed 1400 1300 1600
Number of unemployed 200 600 200

Refer to Table 28-1. The labor force of Aridia in 2010 was
a. 1400.
b. 2000.
c. 1800.
d. 1600

1600

When a minimum-wage law forces the wage to remain above the level that balances supply and demand, the quantity of labor supplied is higher and the quantity demanded of labor is lower than at the equilibrium wage.

True

John is a stockbroker. He has had several job offers, but he has turned them down because he thinks he can find a firm that better matches his tastes and skills. Curtis has looked for work as an accountant for some time. While the demand for accountants doesn't appear to be falling, there seems to be more people applying than jobs available.
a. John and Curtis are both frictionally unemployed.
b. John is structurally unemployed, and Curtis is frictionally unemployed.
c. John and Curtis are both structurally unemployed.
d. John is frictionally unemployed, and Curtis is structurally unemployed

John is frictionally unemployed, and Curtis is structurally unemployed.

Which of the following is correct?
a. There is consensus among economists that unions are bad for the economy.
b. There is consensus among economists that unions are good for the economy.
c. There is consensus among economists that, on net, unions have almost no impact on macroeconomic variables.
d. There is no consensus among economists about whether unions are good or bad for the economy.

There is no consensus among economists about whether unions are good or bad for the economy.

ecause people move into and out of the labor force so often, statistics on unemployment are difficult to interpret

True

Table 28-2 2009 Labor Data for Baltivia
Number of adults 20,000
Number of adults who are paid employees 8,000
Number of adults who work in their own businesses 1,600
Number of adults who are unpaid workers in a family member's business 1,000
Number of adults who were temporarily absent from their jobs because of an earthquake 400
Number of adults who were waiting to be recalled to a job from which they had been laid off 200
Number of adults who do not have a job, are available for work, and have tried to find a job within the past four weeks 1,400
Number of adults who do not have a job, are available for work, but have not tried to find a job within the past four weeks 780
Number of adults who are full-time students 3,000
Number of adults who are homemakers or retirees 3,620

Refer to Table 28-2. How many people were employed in Baltivia in 2009?
a. 11,200
b. 11,000
c. 10,600

11,000

Every adult who was not employed during the previous 4 weeks is included in the Bureau of Labor Statistics' "unemployed" category.

False

Unions are exempt from U.S. antitrust laws

True

An increase in the reserve requirement ratio increases reserves and decreases the money supply.

False

If the reserve ratio is 12.5 percent, then $5,600 of money can be generated by
a. $700 of new reserves.
b. $448 of new reserves.
c. $800 of new reserves.
d. $64 of new reserves.

$700 of new reserves

Credit cards are a medium of exchange.

False

In a fractional-reserve banking system with no excess reserves and no currency holdings, if the central bank buys $100 million worth of bonds,
a. both reserves and the money supply increase by more than $100 million.
b. reserves and the money supply increase by less than $100 million.
c. reserves increase by $100 million and the money supply increases by $100 million.
d. reserves increase by $100 million and the money supply increases by more than $100 million.

reserves increase by $100 million and the money supply increases by more than $100 million

Liquidity refers to
a. how many time a dollar circulates in a given year.
b. the measurement of the durability of a good.
c. the ease with which an asset is converted to the medium of exchange.
d. the measurement of the intrinsic value of commodity money

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

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

currency, stocks, fine art

If the reserve ratio is 10 percent, banks do not hold excess reserves, people hold only deposits and no currency, then when the Fed sells $10 million worth of bonds to the public, bank reserves
a. increase by $10 million and the money supply eventually increases by $100 million.
b. decrease by $1 million and the money supply eventually increases by $10 million.
c. decrease by $10 million and the money supply eventually decreases by $100 million.
d. increase by $1 million and the money supply eventually increases by $10 million

decrease by $10 million and the money supply eventually decreases by $100 million.

Which of the following is correct?
a. The amount of money in the economy depends in part on the behavior of banks.
b. The amount of money in the economy does not depend on the behavior of depositors.
c. The Fed can control the money supply precisely.
d. None of the above is correct.

The amount of money in the economy depends in part on the behavior of banks

If the reserve ratio is 20 percent, the money multiplier is
a. 4.
b. 5.
c. 2.
d. 8

5

Credit card limits are included in
a. neither M1 nor M2.
b. M1 but not M2.
c. M1 and M2.
d. M2 but not M1.

neither M1 nor M2.

Because of the multiple tools at its disposal, the Fed can control the money supply very precisely.
a. true
b. false

false

The confidence you have that a retailer will accept dollars in exchange for goods is based primarily on money
a. being a medium of exchange.
b. being a unit of account.
c. serving as a store of value.
d. having intrinsic value

being a medium of exchange.

The inflation tax
a. is an alternative to income taxes and government borrowing.
b. taxes most those who hold the most money.
c. is the revenue created when the government prints money.
d. All of the above are correct

All of the above are correct

The costs of changing price tags and price listings are known as
a. shoeleather costs.
b. inflation-induced tax distortions.
c. menu costs.
d. relative-price variability costs.

Menu Cost

If the price level increased from 120 to 150, then what was the inflation rate?
a. 20 percent
b. 30 percent
c. 25 percent
d. None of the above is correct.

25%

In the 1990s, U.S. prices rose at about the same rate as in the 1970s.

False

According to the classical dichotomy, which of the following increases when the money supply increases?
a. the real wage
b. real GDP
c. the real interest rate
d. None of the above increases.

None of the above increases

Based on the quantity equation, if M = 150, V = 4, and Y = 200, then P =
a. 1/2.
b. 2.
c. 3.
d. 1/3

3

Higher inflation makes relative prices
a. more variable, making it less likely that resources will be allocated to their best use.
b. less variable, making it more likely that resources will be allocated to their best use.
c. more variable, making it more likely that resources will be allocated to their best use.
d. less variable, making it less likely that resources will be allocated to their best use.

more variable, making it less likely that resources will be allocated to their best use.

Shawn puts money into an account. One year later he sees that he has 5 percent more dollars and that his money will buy 6 percent more goods.
a. The nominal interest rate was 6 percent and the inflation rate was 5 percent.
b. The nominal interest rate was 11 percent and the inflation rate was 5 percent.
c. The nominal interest rate was 5 percent and the inflation rate was -1 percent.
d. None of the above is correct.

The nominal interest rate was 5 percent and the inflation rate was -1 percent.

If M = 10,000, P = 2, and Y = 20,000, then velocity =
a. 4. Velocity will rise if money changes hands more frequently.
b. 8. Velocity will rise if money changes hands less frequently.
c. 8. Velocity will rise if money changes hands more frequently.
d. 4. Velocity will rise if money changes hands less frequently

4. Velocity will rise if money changes hands more frequently

On a given morning, Franco sold 40 pairs of shoes for a total of $80 at his shoe store.
a. The $80 is a real variable. The quantity of shoes is a nominal variable.
b. Both the $80 and the quantity of shoes are real variables.
c. Both the $80 and the quantity of shoes are nominal variables.
d. The $80 is a nominal variable. The quantity of shoes is a real variable

The $80 is a nominal variable. The quantity of shoes is a real variable.

Market economies rely on which of the following to allocate scarce resources?
a. relative prices
b. consumers
c. real interest rates
d. government

Relative Prices

According to the classical dichotomy, which of the following is influenced by monetary factors?
a. nominal interest rates
b. real GDP
c. unemployment
d. All of the above are correct.

Nominal Interest Rates

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