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Unformatted text preview: Name: __________________________ Date: _____________ 1. When the central bank sells $1,000,000 worth of government bonds to the public, the money supply: A) decreases by more than $1,000,000. B) decreases by $1,000,000. C) decreases by less than $1,000,000. D) does not change. E) increases by $1,000,000. 2. Two countries, Alpha and Beta, are otherwise identical except that the money stock is smaller in Alpha than in Beta. Velocity in Alpha must be _____ velocity in Beta. A) the same as B) greater than C) less than D) less than twice the E) more than half the 3. In Macroland, currency held by the public is 2000 econs, bank reserves are 600 econs, and the desired reserve/deposit ratio is 15%. If the Central Bank sells government bonds to the public in exchange for 300 econs that are then destroyed, the money supply in Macroland will decrease from ____ econs to _____ econs assuming that the public does not wish to change the amount of currency it holds. A) 2,000; 1,700 B) 2,600; 2,300 C) 2,990; 2,645 D) 6,000; 4,000 E) 7,000; 6,000 4. Long-term chronic unemployment that results even when the economy is producing at a normal rate is called _____ unemployment. A) cyclical B) structural C) global D) aggregate E) frictional 5. Which of the following is a stock? A) saving B) income C) consumption D) wealth E) investment Page 1 6. As a result of a war in the country of Omega refugees flee to the country of Alpha to seek employment. Holding other factors constant, the influx of refugees will _____ the real wage in Alpha and ____ employment in Alpha. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase E) decrease; not change 7. When the actual reserve/deposit ratio is less than the desired reserve/deposit ratio banks: A) do nothing because this is a profitable situation....
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- Spring '07