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Mary worked part-time for her mother's business without pay. Larry was absent from work because he had the flu. Who is counted as employed by the BLS?

Both Mary and Larry

The labor-force participation rate measures the percentage of the

total adult population that is in the labor force.

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


What is the labor force participation rate?

The labor force participation rate is the ratio between the labor force and the overall size of the population

Marginally attached workers are people who

are not working and are not looking for work, but would work if asked.

In one year, you meet 52 people who are each unemployed for one week and eight people who are each unemployed for the whole year. What percentage of the unemployment spells you encountered was short-term, and what percentage of the total number of unemployment weeks reported over the year was long-term?

86.7 percent and 88.9 percent

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called

Frictional Unemploment

Which of the following is not an explanation for the existence of structural unemployment?

Job Search

Every month, the Bureau of Labor Statistics surveys 160,000 business establishments to help determine

the number of jobs the economy has gained or lost.

Unions contribute to

both structural unemployment and the natural rate of unemployment.

Efficiency wages

increase structural unemployment by keeping wages above equilibrium.

Economists use the term "money" to refer to

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

Most financial assets other than money function as

a store of value, but not a unit of account nor a medium of exchange

Which list ranks assets from most to least liquid?

money, bonds, cars, houses

When in France you notice that prices are posted in euros, this best illustrates money's function as

a unit of account

Currently, U.S. currency is

fiat money with no intrinsic value

M1 includes

currency, demand deposits, traveler's checks

Which group within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

the FOMC

At any meeting of the Federal Open Market Committee, that committee's voting members consist of

5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors.

When conducting an open-market sale, the Fed

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

When conducting an open-market purchase, the Fed

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

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


Under a fractional-reserve banking system, banks

generally lend out a majority of the funds deposited.

The money multiplier (in a simplified banking system where money supply is demand deposits) equals

1/R, where R represents the reserve ratio for all banks in the economy.

Which tool of monetary policy does the Federal Reserve use most often?

Open-market operations

The interest rate the Fed charges on loans it makes to banks is called

the discount rate.

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