Question 1

1. Which of the following contribute to structural unemployment?
2. A. Minimum wage laws
3. B. Unions
4. C. Efficiency wages
5. D. All of the above

2 points

Question 2

1. Which of the following contribute to frictional unemployment?
2. Unemployment insurance
3. Collective bargaining
4. Minimum wage laws
5. All of the above

2 points

Question 3

1. Which of the following is true?
2. A. Economic fluctuations are regular and predictable.
3. B. Most macroeconomic quantities do not fluctuate together.
4. C. As output falls, unemployment rises.
5. D. All of the above

2 points

Question 4

1. Match the following terms associated with money and the financial system with their definitions.

Medium of exchange

Unit of account

Store of value

Fiat money

Financial market

1. Financial intermediary
2. A. Where people's savings are indirectly matched with those doing investing.
3. B. Legal tender via government decree.
4. C. Where people's savings are matched directly with those doing investing.
5. D. It holds purchasing from the present into the future.
6. E. What buyers give to sellers in order to purchase goods and services.
7. F. The yardstick used to post prices and record debts.

12 points

Question 5

1. If the reserve ratio is 25%, how much money would $1 million in deposits create?
2. A. $250,000
3. B. $1,000,000
4. C. $4,000,000
5. D. $25,000,000

2 points

Question 6

1. A Big Mac sells for 8.03 reals in Brazil. In the US, it sells for $3.57. According to the theory of purchasing-power parity, how many reals should $1 buy?
2. A. 2 reals
3. B. 2.15 reals
4. C. 2.25 reals
5. D. 2.29 reals

2 points

Question 7

1. International trade has increased greatly since the 1950s because:
2. A. Merchant ships can now carry 10x more tonnage than they did in 1950.
3. B. The long distance jet and wide body jet have made air transport cheaper.
4. C. Better communication technology has made trade easier.
5. D. All of the above

2 points

Question 8

1. Match the following terms with an example of the term.

Commodity money

Fiat money

Financial market

1. Financial intermediary
2. A. Gold coins
3. B. US Dollars
4. C. Mutual fund
5. D. NASDAQ

8 points

Question 9

1. If the government collects more in tax revenue than it spends, and households consume more than they get in after-tax income, then...
2. A. both private and public saving are positive.
3. B. both private and public saving are negative.
4. C. private saving is positive, but public saving is negative.
5. D. private saving is negative, but public saving is positive.

2 points

Question 10

1. Determine whether the following transactions would either increase or decrease the net exports or increase or decrease the net capital outflow.

A fancy New York restaurant purchases French wine.

A person in North Carolina buys a German car.

China buys US government bonds.

A fishing company in Maine sells several fish to a British food company.

An American mutual fund manager purchases Japanese stock.

An anime fan purchases several movies from a company in Japan.

A Russian bank purchases stock in Microsoft.

A Parisian diner purchases some Californian wines.

A. Increases net exports

B. Decreases net exports

C. Increases net capital outflow

D. Decreases net capital outflow