Homework answers / question archive / Week 6: End of Week Quiz Question 1 12 / 12 pts If the money base is $500, the reserve ratio is

Week 6: End of Week Quiz Question 1 12 / 12 pts If the money base is $500, the reserve ratio is

Economics

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Week 6: End of Week Quiz

Question 1

12 / 12 pts

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)

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.)