Question

1. For each of the following statements, state if it is True or False and carefully...

1. For each of the following statements, state if it is True or False and carefully explain your response. (1 point for correctly stating T or F, 2 points for explanation) (15 pts)

a) According to classical theory, in the long run, a decrease in the growth rate of the money supply leads to an increase in the real interest rate, but no change in the nominal interest rate.

b) An increase in workers’ unions will likely increase frictional unemployment.

c) An increase in discouraged workers increases the unemployment rate

d) A country with negative net exports has a trade surplus.

e) If the Fed buys bonds under open market operations, the money supply increases.

Homework Answers

Answer #1

A) false. Decrease in the growth rate of money supply will increase the nominal rate of interest in the long run so that the real interest rate remains unchanged

B) false. It will result in structural unemployment because those with less skills will be unemployed

C) true. number of discouraged workers will increase the number of unemployed and the labour force. This will increase the rate of unemployment

D) false. Negative net exports means trade deficit

E) true. this is because it increases the reserves in the banking system which increases its lending capacity

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
ECO - 252 - Macroeconomics 7. True/False statements. Simply state if the statement is true or...
ECO - 252 - Macroeconomics 7. True/False statements. Simply state if the statement is true or false. No explanation required. a. When the economy is at its natural rate of unemployment, the unemployment rate is equal to the natural rate of unemployment. b. Discouraged workers are workers who work part-time. c. Unemployment due to job search is best classified as cyclical unemployment. d. A minimum wage above equilibrium creates a shortage in the labor market. e. Collective bargaining is the...
Evaluate carefully each of the following statements; decide if they are True or False and provide...
Evaluate carefully each of the following statements; decide if they are True or False and provide a precise justification for your answer. Your mark will depend on the quality of your response. 1. An increase in the marginal tax rate increases the investment multiplier, while an increase in the marginal propensity to consume lowers it. 2. If consumers become thrifty, in the sense that they reduce their autonomous consumption, for example, this will end up lowering their saving. 3. The...
ECO - 252 Macroeconomics 9. True/False statements. Simply state if the statement is true or false....
ECO - 252 Macroeconomics 9. True/False statements. Simply state if the statement is true or false. No explanation required. a. U.S. dollars are an example of commodity money. b. In the long run, money neutrality implies that an increase in the money supply will increase real variables. c. Ceteris Paribus, if banks decide to hold a smaller part of their deposits as excess reserves, the money supply will fall. d. Open market operations include changing reserve requirements, changing the discount...
True or false questions with justification. Evaluate carefully each of the following statements; decide if they...
True or false questions with justification. Evaluate carefully each of the following statements; decide if they are True or False and provide a precise justification for your answer. Your mark will depend on the quality of your response. 1. An increase in the marginal tax rate increases the investment multiplier, while an increase in the marginal propensity to consume lowers it. 2. If consumers become thrifty, in the sense that they reduce their autonomous consumption, for example, this will end...
ECO - 252 -- Macroeconomics 7. True/False statements. Simply state if the statement is true or...
ECO - 252 -- Macroeconomics 7. True/False statements. Simply state if the statement is true or false. No explanation required. a. In the AD-AS Model, the wealth effect refers to a decrease in the interest rate that in turn increases consumption and investment. b. Ceteris Paribus, a decrease in the price level causes the interest rate to decrease, which leads to a depreciation of the dollar in the foreign-currency exchange. c. The aggregate demand curve slopes downward because it is...
ECO - 252 - Macroeconomics. 7. True/False statements. Simply state if the statement is true or...
ECO - 252 - Macroeconomics. 7. True/False statements. Simply state if the statement is true or false. No explanation required. a. An increase in U.S. net exports decreases the supply of dollars. b. If net exports are negative, foreign assets bought by Americans are greater than American assets bought by foreigners. c. A decrease in a country's real interest rate reduces net capital outflow. d. If a U.S. resident buys a foreign bond, this action is included in the U.S....
During the recessions of 2001 and 2008-09, Select one: a. only the broader measures of the...
During the recessions of 2001 and 2008-09, Select one: a. only the broader measures of the unemployment rate increased. b. only the narrower measures of the unemployment rate increased. c. the labor force participation rate for women increased. d. all measures of the unemployment rate (U-1 through U-6) increased. e. the labor force participation rate for men increased. --- Full employment is the level of unemployment that occurs Select one: a. None of the above answers is correct. b. when...
QUESTION 1 Total output in the economy is equivalent to: A. total (real) income in the...
QUESTION 1 Total output in the economy is equivalent to: A. total (real) income in the economy. B. total consumption expenditure in the economy. C. total investment expenditure in the economy. D. none of the above. 10 points    QUESTION 2 In the classical model, because of full employment, real interest rate is A. a fixed number. B. determined in the labor market equilibrium. C. determined in the goods market equilibrium. D. none of the above. 10 points    QUESTION...
True or False 1. The loanable fund market demand is the demand for consumption. (           )...
True or False 1. The loanable fund market demand is the demand for consumption. (           ) 2. An increase in the bond price increases the bond yield. (           ) 3. An increase in the stock price increases the stock rate of return. (           ) 4. Monopoly increases unemployment, but monopsony does not. (           ) 5. The open market operation is the changes in interest rate in open market. (           ) 6. The high reserve requirement has the direct relationship with...
QUESTION 2 In the classical model, because of full employment, real interest rate is A. a...
QUESTION 2 In the classical model, because of full employment, real interest rate is A. a fixed number. B. determined in the labor market equilibrium. C. determined in the goods market equilibrium. D. none of the above. 10 points    QUESTION 3 Which of the following is NOT considered to be a major function of money? A. a way to display wealth. B. medium of exchange. C. storage of value or transfer purchasing power into the future. D. none of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT