Question

Henry has had an interview with a new employer in town, and the human resource representative likes Henry, but has declined to hire him because Henry lacks some of the skills that are required to perform any of the jobs that are open. Henry would most likely be classified as

Select one:

a. structurally unemployed.

b. permanently unemployed.

c. cyclically unemployed.

d. frictionally unemployed.

In the Austrian View of the Business Cycle, one of the factors that contributes to the unsustainability of economic growth generated by an increase in the money supply by the central bank is that

Select one:

a. Households will respond to a decline in the interest rate by lowering their saving.

b. Business will lower their investment in response to the lower interest rate.

c. The government does not support the boom by increasing its spending.

d. Households lower their consumption expenditures, resulting in businesses becoming less optimistic.

In the Keynesian View, if consumers suddenly decide to lower their spending on consumption goods,

Select one:

a. It will lead to a decline in production, because in the Keynesian View spending drives the overall production.

b. It must have been caused by a decline in production, because in the Keynesian View production drives the overall spending.

c. It will leave the overall production unchanged because the production of investment goods will rise and compensate for the consumption goods shortfall.

d. It will lead to an increase in the overall production in the short-run, because there will be more resources left available for production.

Under 100% reserve deposit banking

Select one:

a. The bank is the only owner of the currency deposited while it is in the bank.

b. Deposits are loaned out by the bank and the borrower is the only owner of the currency after it is borrowed and until it is spent.

c. The depositor and the bank both have an ownership claim to the currency while deposited in the bank.

d. The depositor is considered the only owner of the deposited currency at all times.

Assuming the money multiplier is equal to 20 and the central bank manages to take $10,000 of cash out of the circulation (the monetary base thus declines by $10,000), the overall money supply

Select one:

a. Declines by $200,000.

b. Increases by $500.

c. Declines by $500.

d. Increases by $200,000.

Answer 1

1) Option a) because he does not have the required skills due to a structural transformation in the job.

2) Option a) When savings are reduced, funds are not available for investment which hampers the growth

3) Option d) . This is because when consumption falls, aggregate spending is less than output and there is unplanned inventory accumulation.

4) Option d) All the reserves are kept out for liquidity purposes and banks cannot have any right over the reserved money.

5) Option a) Decline in money supply = multiplier x decline in monetary base = 20 x 10000 = 200,000.

answered by: anonymous