Question

21. Entry into and exit from the labor force are important to the determination of the unemployment rate because:

a. more than one-half of the unemployed have only recently entered the labor force.

b. most of the unemployed are young workers still looking for their first job.

c. discouraged workers are counted as part of the labor force.

d. almost one-half of all spells of unemployment end in the unemployed person's withdrawal from the labor market.

10. The characteristic of the classical model that the money supply does not affect real variables is called:

a. the monetary basis.

b. monetary policy.

c. the quantity theory of money.

d. monetary neutrality

6. If the Fed announces that it will raise the money supply in the future but does not change the money supply today,

a. both the nominal interest rate and the current price level will decrease.

b. the nominal interest rate will increase and the current price level will decrease.

c. the nominal interest rate will decrease and the current price level will increase.

d. both the nominal interest rate and the current price level will increase.

3. To prevent banks from using excess reserves to make loans that would increase the money supply, the Federal Reserve could conduct open-market ______ and _____ the interest rate paid on bank reserves.

a. purchases; raise

b. purchases; lower

c. sales; raise

d. sales; lower

Answer 1

21. Unemployment rate is the percentage of unemployed labor force; labor force includes the employed and unemployed people who are searching for job.

The correct option is d.

10. Money neutrality states that a change in supply of money affects on prices and wages only rather than overall economic productivity.

The correct option is d.

6. Nominal interest rates is the interest rates which is taking before inflation. When Fed increase money supply in future both nominal and current price level leads to increase.

The correct option is d.

3. Fed use open market operations which is purchase and sales of government bonds. Reserves above the requirement reserve are known as excess reserves.

The correct option is c