QUESTION 12

1. Assuming no excess reserves, if the public converts $50 million of currency into demand deposits, this will, in the end:
2. A.increase bank excess reserves.
3. B.increase bank reserves.
4. C.leave the assets of the bank unchanged.
5. D.require banks to reduce their outstanding loans.

QUESTION 13

1. Required reserve ratios are the same for all forms of deposits at all types of financial institutions.
2. True
3. False

QUESTION 14

1. Even a small bank can loan out several dollars for each dollar deposited with them.
2. True
3. False

QUESTION 15

1. If the reserve requirement were 100%, then the money multiplier would equal 1.
2. True
3. False

QUESTION 16

1. If the reserve requirement were 100%, then the money multiplier would equal 1, indicating that the banking system could "create money."
2. True
3. False

QUESTION 17

1. A person who left her job to look for another job would be classified as:
2. A.cyclically unemployed.
3. B.no longer in the labor force.
4. C.structurally unemployed.
5. D.a discouraged worker.
6. E.frictionally unemployed.

QUESTION 18

1. A program that helped match the skills of unemployed workers to the needs of potential employers might lower structural unemployment.
2. True
3. False

QUESTION 19

1. An individual that has not looked for work in the past 2 weeks is considered out of the labor force.
2. True
3. False

QUESTION 20

1. Okun's Law suggests that every increase of 4 percent in GDP above potential GDP can be expected to be associated with:
2. A.a 2 percent reduction in unemployment.
3. B.a 1 percent increase in inflation.
4. C.an increase in unemployment of 1 percentage point.
5. D.a reduction in inflation of 1 percentage point.
6. E.none of the above.

QUESTION 21

1. Lower oil prices lowers production costs and thereby lowers aggregate supply.
2. True
3. False

QUESTION 22

1. Aggregate supply describes the behavior of the production side of the economy.
2. True
3. False

QUESTION 23

1. One difference between the short-run and long-run aggregate supply curves is that:
2. A.the short-run aggregate supply curve is vertical, and the long-run aggregate supply curve is flat.
3. B.the long-run aggregate supply curve assumes that prices are inflexible.
4. C.the short-run aggregate supply curve is more likely to be at potential GDP.
5. D.the short-run aggregate supply curve slopes upward because prices are less flexible in the short-run.
6. E.none of the above.

QUESTION 24

1. Which of the following should be expected to shift the aggregate demand curve to the right?
2. A.C) a reduction in labor force participation.
3. B.A) an increase in government spending.
4. C.D) an increase in taxes.
5. D.E) a decrease in the money-supply.
6. E.B) a reduction in net exports.

QUESTION 25

1. Structural unemployment is defined as:
2. A.incessant movement of people between regions and jobs or thorough different stages of the life cycle.
3. B.a mismatch between the supply of and the demand for workers.
4. C.when the overall demand for labor is low.
5. D.when people are not looking for work.
6. E.none of the above.

QUESTION 26

1. The intersection of the supply and the demand schedules for money determines:
2. A.the equilibrium interest rate.
3. B.the equilibrium supply of money (M1).
4. C.the level of nominal GDP.
5. D.answers A and B.
6. E.all of the above.

QUESTION 27

1. A decrease in the reserve requirement would cause banks to make fewer loans and the money supply to decline.
2. True
3. False

QUESTION 28

1. Which of the following can have an impact on aggregate supply?
2. A.inputs.
3. B.technology.
4. C.wages.
5. D.import prices.
6. E.all of the above.

QUESTION 29

1. If the central bank wants to increase money supply, then it can ------- reserve ratio.
2. A.increase
3. B.decrease
4. C.not change
5. D.none of the above

QUESTION 30

1. An increase in interest rate could -------- checking account deposits
2. A.increase
3. B.decrease
4. C.not affect
5. D.none of the above