You have a bond that you can redeem for $10,000 one year from now. The interest rate
is 10 percent (0.10) per year. How much is the bond worth today?
Suppose that the equilibrium interest rate is 8 percent, but the actual interest rate is 5
percent. Very quickly,
a. bond prices fall
b. bond prices will rise
c. the interest rate will begin to fluctuate until bondholders reduce their demand for
money
d. the primary bond market will start its adjustment process
e. the supply and demand for money will both increase
The higher wage rate received by garbage collectors to compensate for the lower
desirability of their job
Why is it unlikely that expansions could be explained by a decrease in labor demand in
the classical model?
a. It would be hard to say why productivity decreases.
b. Productivity increases are too fast and variable to explain expansions.
c. Productivity tends to improve at a constant and steady rate.
d. Only unexplained spending changes can lead to changes in output and employment,
not the other way around.
e. Productivity improvements are rather slow.
Which of the following people would be considered structurally unemployed?
a. A computer operator who loses his job due to obsolete job skills
b. A landscaper who loses her job in the winter
c. A construction worker who cannot work due to rainy weather
d. A college graduate entering the labor force for the first time
e. An auto worker who is laid off due to a drop in the demand for a certain type of car
An important function of the Federal Reserve is
a. clearing checks
b. printing currency
c. overturning reserve requirements
d. controlling the demand for money
e. making a large profit
When we add the up value of all capital goods, we determine
a. private investment
b. the capital stock
c. a flow phenomenon
d. GDP
e. inventory
A larger controversy of the financial crisis among both members of Congress and the
general public had to do with the Fed’s expanded role in the economy.
Over the last 50 years or so, the rate of growth of average working hours has been
mostly negative.
The demand for curve for money
a. shows the amount of money people actually hold
b. shows the amount of money people would like to hold, given the constraints they
face
c. shifts if the interest rate changes
d. is independent of the price level
e. changes whenever the Fed changes the money supply.