Question

ition to make a b. technological knowledge. c. physical capital. d. human capital. [15]When we add up currency, demand deposits, other checkable deposits, and travelers checks, we get a. the money supply, as univernsally defined by economists b. the totality of common stores of value in the United States c. M1. [16] The Bureau of Labor Statistics defines the unemployment rate as the percentage of a. those unemployed relative to those employed. b. the labor force that is unemployed. c. the adult population that is unemployed d. the adult population that is unemployed or not in the labor force [17] Suppose banks desire to hold no excess reserves. If the reserve requirement is 15 percent and if a bank receives a new deposit of $10, then this bank a. must increase its required reserves by $10 b. will initially see its total reserves increase by $15. c. will be able to make new loans up to a maximum of $8.50 d. All of the above are correct. [18] If the public decides to hold more currency and fewer deposits in banks, bank reserveS a. decrease and the money supply eventually decreases. b. decrease but the money supply does not change. c. increase and the money supply eventually increases. d. increase but the money supply does not change. [19] The price level rises if either a. money demand shifts rightward or money supply shifts leftward; this rise in the price level is associated with a rise in the value of money b. money demand shits rightward or money supply shifts leftward; this rise in the price level is associated with a fall in the value of money c. money demand shifts leftward or money supply shits rightward; this rise in the price level is associated with a rise in the value of money d. money demand shifts leftward or money supply shifts rightward; this rise in the price level is associated with a fall in the value of money [20] If the price of a DVD player is three times the price of a CD player, then a DVD player contributes a. more than three times as much to GDP as does a CD player b. less than three times as much to GDP as does a CD player

Answer 1

15] option a

16] Unemployment is defined as the people who are willing to work i.e. they are in labour force but do nor get work. So, they are part of labour force. Therefore option c is most accurate.

17] Reserve requirement is defined as the minimum amount of money as a percentage of deposits banks must have.

deposit= $10 RR= 15%= 0.15 so, 0.15*10= $1.5 is the reserve requirement. Therefore reserve available to bank to make new loans would be $10-$1.5=$8.5 . So, option c

18] option b . As people have more currency and less deposits. so bank's reserves fall. But Money supply is considered to be deposits and liquid cash. So, money supply remain same.

19] Photo attached. option a

9] option c

10] option a . this is according to ISLM model of Keynes

11] real interest rate = nominal interest rate - inflation rate

= 5%- 2% = 3% . so, option b

12] option c

13] option b