question archive 4) Suppose job search has decreased over the last several years
4) Suppose job search has decreased over the last several years
Subject:EconomicsPrice: Bought3
4) Suppose job search has decreased over the last several years. This decrease could be a result of
i) a change in unemployment benefits.
ii) a positive structural change.
iii) a higher inflation rate.
A) ii only
B) i only
C) i and ii
D) ii and iii
E) i and iii
5) The figure above shows the U.S. production function. How would an increase in income taxes be shown in the figure?
A) a movement from point C to point B
B) a movement from point A to point B
C) an upward shift or rotation of the production function
D) a downward shift or rotation of the production function
E) None of the above because the effects of an increase in taxes cannot be shown in the figure.
6) At one time, the country of Freedonia had no banks, but had currency of $40 million. Then a banking system was established with a reserve requirement of one-third. The people of Freedonia now keep half their money in the form of currency and half in the form of bank deposits. If banks do not hold excess reserves, the money supply after the first round of deposit is closest to:
a. $13.33 million
b. $20 million
c. $33.34 million
d. $36.36 million
7) Suppose the reserve ratio is 25 percent and the public holds $10 million in cash. Then the public decides to withdraw $5 million from the banks. How does the money supply eventually change?
a. falls by $5 million
b. falls by $10 million
c. falls by $20 million
d. falls by $35 million
8) Suppose the reserve ratio is 20 percent and banks do not hold excess reserves. Suppose the Bank of Canada sells $10 million of bonds to the public. Which statement best describes the effects of this open-market operation?
a. Bank reserves increase by $1 million, and the money supply eventually increases by $10 million.
b. Bank reserves increase by $10 million, and the money supply eventually increases by $50 million.
c. Bank reserves decrease by $1 million, and the money supply eventually increases by $10 million.
d. Bank reserves decrease by $10 million, and the money supply eventually decreases by $50 million.
9)In the nineteenth century, when there were often bank runs caused by crop failures, banks would make relatively fewer loans and hold relatively more excess reserves. By itself, which action should the banks have taken?
a)They should have increased both the money multiplier and the money supply.
b) They should have decreased the money multiplier and increased the money supply.
c) They should have increased the money multiplier and decreased the money supply.
d) They should have decreased both the money multiplier and the money supply.
