11 . Problems and Applications Q8
Structural unemployment is sometimes said to result from a mismatch between the job skills that employers want and the job skills that workers have.
To explore this idea, consider an economy with two industries: auto manu
11 . Hulliple Choice Q6
The idea that economic downturns result from an inadequate aggregate demand Forgoods and servioa is derived From the work of which economist?
0 Adam Smith
. David Hume
0 David Ricardo
J . John Maynard Keynes
13 . Problems and Applicaons Q4
In 1939, with the U.S. economyr not yet fullyr recovered from the Great Deprasion, President Roosevelt proclaimetRhat Thanksgiving would fall a week
earlier than usual so that the shopping period before Christmas would be l
3. The meaning of saving and investment
Ckssy each affhe faowing based on the mmomk: denitions afsavfng and invesbnenf.
Ginny purchasa stock in Pherk, a pharmaceutical company. O O
Cho purchase; new ovens For her cupcakebaking busi
7. The money creann pm
Suppcae First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zere exoeai raerva. The required raerve ratio is 10%. The
Federal Reserve buys a govemment bond worth $250,000 'orn Andrew, a client of First Mai
2. '[he leory oi liquidilv preference and lire downward-shyingaggregahe demand curve
The following graph shows the money market ln a hypothetical economy. The central bank in this economy is called the Fed. Assume that the Fed xes
the quantity of money su
3. Changes in le money supply
The following graph represents the money market in a hypothetical economy. As in the United States, this economy has a central bank called the Fed,
but unlike in the United States, the economy is closed (that is, the economy
13 . Problems and Applicanns Q3
Beleaguered State Bank (553) holds $250 million in deposits and maintains a meme ratio of 10 percent.
Compiete the faifawmg Tamount for 355.
Belemmd State Ballr
Reserves $25 I million Depo
9. Banking requirements I)
Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions.
Ba nk's Balance Sheet
Assets Liabilities and Owners' Equity
Reserves $100 Deposits $300
Loans $400 Debt $150
11 . Problems and Applications Q5
The following graph shows the longrun aggregatesupplyr curve (LRAS), the shortrun aggregatesupplyr curve (AS), and the aggregatedemand curve for
El |"I econ OI'TIY.
Correct Answer Your Answer
9 . Problems and Applications Q1
Use the graph to help you oomolete the task that follows. You will not be gradei:f on your nal placement of the curves oh the graph.
Mo neyup p Iv
m Mo ne,r Su p p Iv
a - - - -
4. Using policy to slabilize le economy
The government has the ability to inuence the level of output in the short run using monetary and scal policy. There is some disagreement as to
whether the government should attempt to stabilize the economy.
5. I1Ie Federal Reserve's organizalinn
There are 12 1 Federal Reserve regional banks.
which ofthe following contributes to making the Federal Reserve an independent policymaking body?
. There are 12 Federal Rmenre banks.
. Its role is written into the U
Attempts: -:|: Keep the Highest: 1! 1
6 . Hulliple Choice QZ
If the government wants to contract aggregate demand, it can government purchase; or taxes.
. increase, increase
J . decrease, increase h
. decrease, decrease
Attempts: -:|:| Keep the Highest: 1! 1
Consider the relative liquidity of the following assets:
. A $10 bill
. The Funds in a money market account h
. A boat you own
. A share in a publicly traded company
Seied'ie assets in orderaft
10 . HIIIIipIe Choice Q3
A change in the expected price level shifts
. the aggregate demand curve.
I . the shortrun aggregatesupplyr curve. h
. the longrun aggregatesupva curve.
. both the shortrun and the longrun aggregate-supply curws.
9 . Hulliple Choice QZ
A sudden crash in the stock market shifts
if . the aggregate demand curve.
. the shortrun aggregatesutlpl":r curve.
. the longrun aggregatesuplpllyr curve.
. both the shortrun and the longrun aggregatesupply:r curws.
12 . Problems and Annlicah'nns 02
Indkzte whethereadl ofthe folkming events will increase, deaease, or have no effecton kmgmn aggregate suppiy.
Effect on Long-Run Aggregate Supply
Event Increase Decrease No Effect
The United State: aperienoe: a wave o
10 . Problems and Applicaons Q3
Between January 2010 and January 2013, total U.S. employment increased by 4.9 million workers, but the numberof unemployed workers declined by
only 2.? million.
Which of the following statements are consistent with this ndi
7. 11|e lilenrur ofeiciencvr wagm
Whv might some rms voluntarilv oav workers a wage above the market equilibrium, even in the omenoe of surplus labor?I Check all? that amfy.
( I Higher wages attract a more competent pool of workers.
1' I Higher wages caus
attempts: -:I: Keep the Highest: 1! 1
9 . Hulliple Choice ()6
According to the theoryr ofeFcieno; waga,
I . rms mayr nd it protable to pay aboveequilibrium wages.
. an exams supplyr of labor puts downward prasure on raga.
. sectoral shifts are the main
8 .HulliplechoiceQ3 h
The main policy goal of the unemployment insurance system is to reduce the
. search effort ofthe unemployed.
1" . income uncertainty that workers face.
. role of unions in wage setting.
. amount offn'ctional unemployment.
15 . Problems and Applications (18
For eadl ofthe faibwing events, use the subsequentgiraph to finishate the shaltrun effect on aggregate supply aJI'IdI aggregate demand.
Households decide to save a larger share of their income.
1. Financial insmons in le US. economy
Suppose Tim would like to invat $1,000 of his savings.
One way of invating is to purchase stock or bonds from a private company.
Suppose TouchTech, a handheld computing rm, is selling stocks to raise money Fora new l
4. Why the aggregate supply curve slopes upward in the short run
In the short run, the quantity of output that rms supply can deviate from the natural level of output if the actual price level in the economy deviates
from the expected price level. Several
4. Supply and demand for loanable funds
The following graph shows the market for loanable funds in a closed economy. The upwardsloping orange line represents the supply of loanable funds,
and the downwardsloping blue line represents the demand for loanabl
2. Why the aggregate demand curve slopes downward
The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 140, and the quantity of output
demanded is $300 billion. Moving down along the aggregate
2. Saving and inveslment in le naonal income accounls
The following table contains data for a hypothetical closed economy:r that use; the dollar as its currency.
Suppose GDP in this country J's $1,540 rnhbn. Enter the amount for cansurnpthn.
14 . Problems and Applicaons 06
Complete the statements about the foliowing three leories far the upward slope of the shartmn aggregatesupply wrve.
According to the stichHuage leorv, the economy is in a recession because the price level has declined so th