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1)Cyclical unemployment refers to the portion of unemployment created by job search

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1)Cyclical unemployment refers to

1. 1. the portion of unemployment created by job search.
   2. short-run fluctuations around the natural rate of unemployment.
   3. changes in unemployment due to changes in the natural rate of unemployment.
   4. the portion of unemployment created by wages set above the equilibrium level.
2. Jamarcus works part-time as a pizza delivery person in a college town. The Bureau of Labor Statistics counts Jamarcus as
   1. unemployed and in the labor force.
   2. unemployed and not in the labor force.
   3. employed and in the labor force.
   4. employed and not in the labor force.
3. In June 2009 the Bureau of Labor Statistics 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
   1. 93.3/234.9.
   2. 12.4/234.9.
   3. 93.3/154.
   4. 12.4/154.
4. People who are unemployed because they are in search of a job that suits their skills are included within

1. structural unemployment.
2. frictional unemployment.
3. cyclical unemployment.
4. marginal unemployment.

5. 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 does not appear to be falling, there seems to be more people applying than jobs available.
   1. John and Curtis are both frictionally unemployed.
   2. John and Curtis are both structurally unemployed.
   3. John is frictionally unemployed, and Curtis is structurally unemployed.
   4. John is structurally unemployed, and Curtis is frictionally unemployed.
6. When a union raises the wage above the equilibrium level, it
   1. reduces both the quantity of labor supplied and the quantity of labor demanded.
   2. reduces the quantity of labor supplied and raises the quantity of labor demanded.
   3. raises the quantity of labor supplied and reduces the quantity of labor demanded.
   4. raises both the quantity of labor supplied and the quantity of labor demanded.
7. The ease with which an asset can be
   1. traded for another asset determines whether or not that asset is a unit of account.
   2. transported from one place to another determines whether or not that asset could serve as fiat money.
   3. converted into a store of value determines the liquidity of that asset.
   4. converted into the economy’s medium of exchange determines the liquidity of that asset.

 

8. A double coincidence of wants
   1. is required when there is no item in an economy that is widely accepted in exchange for goods and services.
   2. is required in an economy that relies on barter.
   3. is a hindrance to the allocation of resources when it is required for trade.
   4. All of the above are correct.
9. Demand deposits are included in
   1. M1 but not M2.
   2. M2 but not M1.
   3. M1 and M2.
   4. neither M1 nor M2.
10. When conducting an open-market sale, the Fed
    1. buys government bonds, and in so doing increases the money supply.
    2. buys government bonds, and in so doing decreases the money supply.
    3. sells government bonds, and in so doing increases the money supply.
    4. sells government bonds, and in so doing decreases the money supply.
11. A bank’s reserve ratio is 10 percent and the bank has $5,000 in deposits. Its reserves amount to
    1. $50.
    2. $500.

c. $4,500.

d. $4,950.

12. A bank has a 5 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement.
    1. It has $25 in reserves and $4,975 in loans.
    2. It has $250 in reserves and $4,750 in loans.
    3. It has $1,000 in reserves and $4,000 in loans.
    4. None of the above is correct.
13. The discount rate is
    1. the interest rate the Fed charges banks.
    2. one divided by the difference between one and the reserve ratio.
    3. the interest rate banks receive on reserve deposits with the Fed.
    4. the interest rate that banks charge on overnight loans to other banks.
14. When the price level falls, the number of dollars needed to buy a representative basket of goods
    1. increases, so the value of money rises.
    2. increases, so the value of money falls.
    3. decreases, so the value of money rises.
    4. decreases, so the value of money falls.
15. When the money market is drawn with the value of money on the vertical axis, an increase in the money supply causes the equilibrium value of money
    1. and equilibrium quantity of money to increase.
    2. and equilibrium quantity of money to decrease.
    3. to increase, while the equilibrium quantity of money decreases.
    4. to decrease, while the equilibrium quantity of money increases.
16. Last year, Jane spent all of her income to purchase 200 units of corn at $5 per unit. This year, she spent all of her income to purchase 180 units of corn at $6 per unit.
    1. Jane’s nominal income and real income decreased this year.
    2. Jane’s nominal income decreased this year, but her real income increased.
    3. Jane’s nominal income and real income increased this year.
    4. Jane’s nominal income increased this year, but her real income decreased.
17. If M = 3,000, P = 2, and Y = 6,000, what is velocity?
    1. 1. 1/4
       2. 2
       3. 4
       4. 1
18. According to the assumptions of the quantity theory of money, if the money supply increases by 5 percent, then
    1. nominal and real GDP would rise by 5 percent.
    2. nominal GDP would rise by 5 percent; real GDP would be unchanged.
    3. nominal GDP would be unchanged; real GDP would rise by 5 percent.
    4. neither nominal GDP nor real GDP would change.
19. You observe people going to the bank more frequently. Other things the same this could result from
    1. an increase in inflation which increases money demand.
    2. an increase in inflation which reduces money demand.
    3. a decrease in inflation which increases money demand.
    4. a decrease in inflation which reduces money demand.
20. Egypt has exports of $500 million and imports of $750 million. Egypt
    1. sells more overseas then it buys from overseas; it has a trade deficit.
    2. sells more overseas then it buys from overseas; it has a trade surplus.
    3. buys more from overseas then it sells overseas; it has a trade deficit.
    4. buys more from overseas then it sells overseas; it has a trade surplus.
21. If U.S. residents purchase $600 billion worth of foreign assets and foreigners purchase $300 billion worth of U.S. assets,
    1. U.S. net capital outflow is $300 billion; capital is flowing into the U.S.
    2. U.S. net capital outflow is $300 billion; capital is flowing out of the U.S.
    3. U.S. net capital outflow is -$300 billion; capital is flowing into the U.S.
    4. U.S. net capital outflow is -$300 billion; capital is flowing out of the U.S.
22. Which of the following equations is always correct in an open economy?
    1. I = Y - C
    2. I = S
    3. I = S - NCO
    4. I = S + NX
23. If a country has a trade surplus
    1. it has positive net exports and positive net capital outflow.
    2. it has positive net exports and negative net capital outflow.
    3. it has negative net exports and positive net capital outflow.
    4. it has negative net exports and negative net capital outflow.
24. If you are vacationing in France and the dollar depreciates relative to the euro, then
    1. the dollar buys more euros. It will take fewer dollars to buy a good that costs 50 euros.
    2. the dollar buys more euros. It will take more dollars to buy a good that costs 50 euros.
    3. the dollar buys fewer euros. It will take fewer dollars to buy a good that costs 50 euros.
    4. the dollar buys fewer euros. It will take more dollars to buy a good that costs 50 euros.
25. The real exchange rate is the nominal exchange rate, defined as foreign currency per dollar, times
    1. U.S. prices minus foreign prices.
    2. U.S. prices divided by foreign prices.
    3. foreign prices divided by U.S. prices.
    4. None of the above is correct.
26. According to purchasing-power parity, if the same basket of goods costs $100 in the U.S. and 50 pounds in Britain, then what is the nominal exchange rate?
    1. 2 pounds per dollar
    2. 1 pound per dollar
    3. 1/2 pound per dollar
    4. None of the above is correct

 

27. Aggregate demand includes
    1. the quantity of goods and services the government, households, firms, and customers abroad want to buy.
    2. neither the quantity of goods and services the government, households, nor firms want to buy nor the quantity of goods and services customers abroad want to buy.
    3. the quantity of goods and service the government wants to buy, but not the quantity of goods and services households, firms, or customers abroad want to buy.
    4. the quantity of goods and services households and firms want to buy, but not the quantity of goods and services the government wants to buy.
28. The wealth effect, interest-rate effect, and exchange-rate effect are all explanations for
    1. the slope of short-run aggregate supply.
    2. the slope of long-run aggregate supply.
    3. the slope of the aggregate-demand curve.
    4. everything that makes the aggregate-demand curve shift.
29. Other things the same, if the price level rises, then domestic interest rates
    1. rise, so domestic residents will want to hold more foreign bonds.
    2. rise, so domestic residents will want to hold fewer foreign bonds.
    3. fall, so domestic residents will want to hold more foreign bonds.
    4. fall, so domestic residents will want to hold fewer foreign bonds.

 

30. The long-run aggregate supply curve shifts right if
    1. immigration from abroad increases.
    2. the capital stock increases.
    3. technology advances.
    4. All of the above are correct.
31. The aggregate supply curve is upward sloping in
    1. the short and long run.
    2. neither the short nor long run.
    3. the long run, but not the short run.
    4. the short run, but not the long run.
32. The sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,
    1. production is more profitable and employment rises.
    2. production is more profitable and employment falls.
    3. production is less profitable and employment rises.
    4. production is less profitable and employment falls.
33. Assuming that a is positive, theories of short-run aggregate supply are expressed mathematically as
    1. quantity of output supplied = natural rate of output + a(actual price level - expected price level).
    2. quantity of output supplied = natural rate of output + a(expected price level - actual price level).
    3. quantity of output supplied = a(actual price level -expected price level) - natural rate of output.
    4. quantity of output supplied = a(expected price level - actual price level) - natural rate of output.
34. People are likely to want to hold more money if the interest rate
    1. increases, making the opportunity cost of holding money rise.
    2. increases, making the opportunity cost of holding money fall.
    3. decreases, making the opportunity cost of holding money rise.
    4. decreases, making the opportunity cost of holding money fall.
35. When there is an excess supply of money,
    1. people will try to get rid of money causing interest rates to rise. Investment increases.
    2. people will try to get rid of money causing interest rates to fall. Investment decreases.
    3. people will try to get rid of money causing interest rates to fall. Investment increases.
    4. people will try to get rid of money causing interest rates to rise. Investment decreases.
36. If the Fed conducts open-market purchases, the money supply
    1. increases and aggregate demand shifts right.
    2. increases and aggregate demand shifts left.
    3. decreases and aggregate demand shifts right.
    4. decreases and aggregate demand shifts left.
37. If the multiplier is 3, then the MPC is

1. 1/3.
2. 3/4.
3. 4/3.
4. 2/3.

38. The government builds a new water-treatment plant. The owner of the company that builds the plant pays her workers. The workers increase their spending. Firms from which the workers buy goods increase their output. This type of effect on spending illustrates
    1. the multiplier effect.
    2. the crowding-out effect.
    3. the Fisher effect.
    4. the wealth effect.

 

39. The change in aggregate demand that results from fiscal expansion changing the interest rate is called the
    1. multiplier effect.
    2. crowding-out effect.
    3. Exchange rate effect.
    4. None of the above.