1) Many firms transformed their offices during the pandemic and they can hire now workers located in places far from the office. As a result, places that had consistently had large unemployment rates , see large reductions in unemployment. This is because employees can offer their skills in business in different geographies where they are needed. This is an example of a reduction in:

(a)frictional unemployment.

(b)cyclical unemployment.

(c)structural unemployment.

(d)underemployment.

2) Financial markets main functions include:

(a) Increasing risk for investors, by providing a set of risky financial instruments.

(b) Liquidity transformation, helping banks fund liquid loans with illiquid deposits.

(c) Reducing the costs related to funding a new investment opportunity.

(d) Answers (a), (b), and (c) are all correct.

3) For an investor living in the UK, investing 200000 in a house is a more liquid investment compared to investing the same amount in the New York Stock Exchange. TRUE or FALSE?

4) You have just been awarded a cost-of-living increase tied to the CPI. The CPI has gone from 105 to 114. If your salary is 50,000 per year before the increase. Your salary, after the CPI increase is factored in, will be :_________ , and in real terms the change is equal to ________ .