Econ Final Test Preactice

Refer to the table below: What is the U-2 measure of labor underutilization?

• 1.5%

• 3.1%

• 4.7%

• 6.2%

Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills is called

• the natural rate of unemployment.

• cyclical unemployment.

• structural unemployment.

• frictional unemployment.

Sandy has graduated from college and is devoting her time to searching for a job. She has seen plenty of openings but has not yet been offered one that best suits her tastes and skills. Sandy is

• structurally unemployed. Structural unemployment exists even in the long run.

• structurally unemployed. There is no structural unemployment in the long run.

• frictionally unemployed. Frictional unemployment can exist even in the long run.

• frictionally unemployed. There is no frictional unemployment in the long run.

The theory of efficiency wages explains why

• setting wages at the equilibrium level may increase unemployment.

• it may be in the best interest of firms to offer wages that are above the equilibrium level.

• the most efficient way to pay workers is to pay them according to their skills.

• it is efficient for firms to set wages at the equilibrium level.

In one year, you meet 52 people who are each unemployed for one week and eight people who are each unemployed for the whole year. What percentage of the unemployment spells you encountered ended within one week and therefore was short term, and what percentage of the unemployment you encountered in a given week was long term?

• 52% was short term; 13.3% was long term

• 52% was short term; 88.9% was long term

• 86.7% was short term; 13.3% was long term

• 86.7% was short term; 88.9% was long term

If the public decides to hold more currency and fewer deposits in banks, bank reserves

• decrease and the money supply eventually decreases.

• decrease but the money supply does not change.

• increase and the money supply eventually increases.

• increase but the money supply does not change.

If the reserve ratio is 4 percent, then the money multiplier is

• 2.5

• 25

• 0.04

• 10

If the reserve requirement is 10 percent, which of the following pairs of changes would both allow a bank to lend out an additional $10,000?

• The Fed buys a $10,000 bond from the bank or someone deposits $10,000 in the bank.

• The Fed buys a $10,000 bond from the bank or the Fed lends the bank $10,000.

• The Fed sells a $10,000 bond to the bank or someone deposits $10,000 in the bank.

• The Fed sells a $10,000 bond to the bank or the Fed lends the bank $10,000.

You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money's function as a _______. The laptop's price is posted as $500. The $500 price illustrates money's function as a ______. You use the $500 to purchase the laptop. This transaction illustrates money's function as a ______.

• store of value, medium of exchange, unit of account

• store of value, unit of account, medium of exchange

• medium of exchange, unit of account, store of value

• medium of exchange, store of value, unit of account

A bank has an 8 percent reserve requirement, $10,000 in deposits, and has loaned out all it can, given the reserve requirement.

• It has $80 in reserves and $9,920 in loans.

• It has $800 in reserves and $9,200 in loans.

• It has $1,250 in reserves and $8,750 in loans.

• It has $8,000 in reserves and $2,000 in loans.