Week 6: End of Week Quiz

Question 1

12 / 12 pts

All answers are integers.

If the money base is $500, the reserve ratio is .20 and the public holds no currency, then M2 is $  .

If instead, $100 of currency is held by people outside the banks, M2 is $  .

Again assuming that people hold $100 of currency, if half of deposits are checking and half are saving then M1 is $  .

Now return to assuming that no currency is held by the public.  If the central bank wants to increase the M2 by $100, they should  treasuries worth $  .  This will probably cause short-term (but not necessarily long-term) interest rates to  . (increase/decrease)

Answer 1:

Correct!2500

Answer 2:

Correct!2100

Answer 3:

Correct!1100

Answer 4:

Correct!buy

Answer 5:

Correct!20

Answer 6:

Correct!decrease

 

Question 2

8 / 8 pts

A certain country has a working-age population of 20,000 people.  Of these, 12,000 are employed and 1,000 are unemployed.

Note that these answers are percentages.

a. The labor force participation rate is  %

b. The unemployment rate is  %. (Round to one decimal place.)

c. If the natural rate of unemployment is 5%, then cyclical unemployment must be  %. (Round to one decimal place.)

d. Now imagine that 200 of the unemployed workers become "discouraged."  What does the unemployment rate become?  %. (Round to two decimal places.)

Answer 1:

Correct!60

Answer 2:

Correct!7.7

Answer 3:

Correct!2.7

Answer 4:

Correct!6.25

Quiz Score: 20 out of 20