Macro Exam 4

7 October 2022
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question
Which of the following is true of the capital requirement? Check all that apply. -Its intended goal is to protect the interests of those who hold equity in the bank. -Its intended goal is to protect the interests of the depositors. -It specifies a minimum leverage ratio for all banks.
answer
Its intended goal is to protect the interests of the depositors.
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why, in the real world, the Fed cannot precisely control the money supply?
answer
The Fed cannot control the amount of money that households choose to hold as currency. The Fed cannot control whether and to what extent banks hold excess reserves.
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Eric has $20000 in a money market account
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M2
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Jim has $1200 in a checking account
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M1 and M2
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Ron has $7000 in a two-year CD
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M2
question
Paolo can easily determine that the whole sandwich, while twice as long as the half, is priced at less than twice as much.
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Unit of Account
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Paolo accumulates money in his savings account for future purchases.
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Store of Value
question
Which of the following contributes to making the Federal Reserve an independent policymaking body? -Its role is written into the U.S. Constitution. -There are 12 Federal Reserve banks. -Members of the Board of Governors are appointed for 14-year terms.
answer
Members of the Board of Governors are appointed for 14-year terms.
question
The Federal Reserve's primary tool for changing the money supply is
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Open Market Operations
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In order to decrease the number of dollars in the U.S. economy (the money supply), the Federal Reserve will
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Sell government bonds
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U-4
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100x Unemployed+Discouraged/ Labor Force + Discouraged
question
A recent recession has reduced the number of visitors to a local theme park. The park has had to lay off many of its employees, including Neha.
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Cyclical
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Gilberto recently lost his job as a dishwasher. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work.
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Structural
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Juanita is a physician who has decided to relocate to California to be closer to her family. She is currently interviewing with several prestigious hospitals in the San Francisco Bay Area.
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Frictional
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Efficiency wages create a labor
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Surplus and so increase unemployment