Given the balance sheet below and assuming a required reserve ratio of 20 percent, how
much (in dollar terms) is this bank holding in excess reserves?
a. $3.5 million
b. $8 million
c. $15 million
d. $19 million
e. $35 million
In cases of extreme annual inflation, such as in thousands of percent or higher, people
are no longer willing to hold currency or accept it from others.
The frequency of banking panics was greatly reduced when
a. the Federal Reserve was created
b. the federal government started insuring banking deposits
c. the Federal Reserve increased the required reserve ratio
d. the Federal Reserve started using open market operations
e. the Federal Reserve decided to take a less active role in controlling the money supply
In the classical model there is complete crowding out when government spending
increases, but in the short-run macro model there is only partial crowding out.
Butter and margarine are examples of
How many members are there on the Board of Governors of the Federal Reserve?
a. 12
b. 50
c. 7
d. 4
e. 14
A market in which a small number of strategically interdependent firms produce the
dominant share of output is called
Figure 8-3 shows the total revenue and total cost for a firm at selected output levels.
Which is the profit-maximizing level of output for this firm?
Which of the following annual real GDP growth rates would be needed to prevent the
U.S. unemployment rate from rising?
a. 3.3 percent
b. 2.5 percent
c. 10.0 percent
d. 5.0 percent
e. 1.0 percent
Figure 12-2 depicts labor demand and supply in a nonunionized labor market. The
original equilibrium is at point A. If a labor union subsequently establishes a union shop
and negotiates an hourly wage of $20, then
In the short-run macro model, cyclical unemployment is caused by insufficient
spending.
The aggregate supply curve
a. indicates the markup at which firms are willing to supply a given level of output
b. is derived from equilibrium conditions in the money market
c. has a positive slope because an increase in real GDP causes an increase in the cost of
resources
d. is found by summing up the supply curves of all the firms in an economy
e. illustrates how a change in the price level affects total output
Which of the following would prevent a labor market from being classified as perfectly
competitive?
If the president of Chile commented that “the crime rate in Chile is currently too high,”
this would be an example of a normative statement.
A spending shock is a change in spending that ultimately affects the entire economy.
Sally’s Salon sells haircuts in a perfectly competitive market. As the salon hires
additional workers, the marginal revenue product of labor