Question

29. The sustained decline in U.S. inflation rates over the past quarter century likely reflects all of the following, except: (a) a combination of digitalization and technological advances that reduce production costs; (b) a weak U.S. dollar in foreign exchange markets; (c) more exact production processes; (d) globalization.

30. Which of the following statements is most true? (a) money supply increases cause bank reserves to decrease; (b) the Federal Reserve creates bank reserves through open market operations; (c) the Federal Reserve expands the money supply of the U.S. mainly by printing new currency (like $100 bills); (d) bank reserves are liabilities of the banks that cannot and do not earn any interest from any source.

31. A participant in the labor market who cannot find a job due to a mismatch between that worker’s skills and available jobs is said to be: (a) frictionally unemployed; (b) marginally attached to the labor force; (c) seasonally unemployed; (d) structurally unemployed.

32. The U-3 unemployment rate measures the share of the labor force that is: (a) out of work and seeking employment actively; (b) employed part-time though seeking full-time employment; (c) out of work and either younger than age 16 or older than age 55; (d) no longer seeking employment and is counted as a “discouraged worker.”

33. Monthly labor market reports issued by the Bureau of Labor Statistics primarily are based upon: (a) initial claims for unemployment insurance reported by the 50 states; (b) the National Income and Product Accounts; (c) an Establishment Survey and a Household Survey; (d) data collected by each of the 12 Federal Reserve Banks.

34. In recent years, the labor force participation rate in the United States is closest to: (a) 45%; (b) 65%; (c) 85%; (d) 90%.

35. The top chemist for an industrial company loses her job because the company goes out of business. This chemist is now teaching high school chemistry. We might say that she is: (a) under-employed; (b) a discouraged worker; (c) only marginally-attached to the labor force; (d) structurally unemployed.

36. Which of the following puts a virtual floor under the unemployment rate (a level below which it is unlikely to fall)? (a) there will always be cyclical unemployment; (b) there always will be unemployment among children; (c) there always will be discouraged workers; (d) there always will be “structural” unemployment (frictional plus structural unemployment).

37. Rising income inequality exacerbates rising wealth inequality partly because individuals with relatively higher incomes: (a) almost always pay less in taxes than individuals with relatively lower incomes; (b) tend to save more than their lower-income neighbors and can earn more non-wage and salary income; (c) tend to live predominantly in low-cost areas of the country; (d) tend to have more children than their lower-income counterparts who can contribute the their family’s well-being.

38. Which of the following is the BEST way to define “Say’s Law?” (a) supply creates its own demand; (b) continue to add capital until the marginal product of capital is zero; (c) equilibrium takes place at the intersection of a supply curve and a demand curve; (d) the act of producing output in a closed economy generates enough income to buy back all of the output produced.

39. Which of the following is NOT generally considered a determinant of the U.S. labor force participation rate? (a) the level of “discouragement” among unemployed persons; (b) cultural factors, such as the willingness and ability of caregivers to work; (c) frictional unemployment; (d) demographics.

Answer 1

1 - Option B

Weak US dollar in foreign exchange market

This is not true because the dollar has been strong and not going weak. Hence this option will be odd among all options

2 - Option A

Money supply increases cause bank reserves to fall

The other options are not true.

3 - Option D

Structurally unemployed

There exists a gap between the demanded skills and the skill the worker has due to which he is not able to find the job.

4 - Option A

Out of work and seeking employment actively

The other options are not part of U3 rate.