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Economics Test 2 (Aplia And Book) – Q’s And A’s
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Economics Test 2 (Aplia And Book) – Q’s And A’sThe FEDs role as "lender of last resort" applies to which financially
troubles institution? Correct Ans - US banks that cannot borrow
elsewhere
How many federal reserve regional banks are there? Correct Ans -
12
What is the FEDs primary tool for changing the money supply? Correct
Ans - open market operation (changing inflation rate and required
reserves)
In order to increase or decrease dollars in the US economy, what will the
FED do? Correct Ans - increase- buy government bonds/ notes
decrease- sell government bonds/ notes
Frictional unemployment- Correct Ans - often results from changes
in the demand for labor among firms
If the government wants to reduce frictional unemployment, what policies
would help achieve this goal? Correct Ans - offering recipients of
unemployment a benefit of cash bonus if they find a new job (incentive).
type of unemployment- Same recently lost his job as a taxi driver.
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.
Correct Ans - Structural unemployment
type of unemployment- Beth is a real estate agent. House sales in her area
have declined because the region has been going through a recession. She
has no clients and is currently looking for a new full-time job. Correct
Ans - Cyclical unemployment (the ups and downs of the economy)
type of unemployment- Teresa 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. Correct
Ans - Frictional unemployment
, Suppose the world price of steel fall substantially. The demand for labor
among tell-producing firms in Pennsylvania will _________. The demand for
labor among automobile-producing firms in Michigan, for which steel is an
input, will _______. the temporary unemployment resulting from such
sectoral shifts in the economy is best described as _______ unemployment.
Correct Ans - decrease; increase; frictional
What are the functions of money in the economy? Correct Ans -
medium of exchange, unit of account, store of value, standard of deffered
payment
medium of exchange, unit of account, store of value- Larry has $1,537 in his
checking account. Correct Ans - store of value (providing means of
transferring purchasing power from the present to the future)
medium of exchange, unit of account, store of value- Larry writes a check
for $3,000. Correct Ans - medium of exchange (providing an
accepted method of payment for goods and services)
medium of exchange, unit of account, store of value- Larry can easily
determine that the price of the computer is more than the price of the
vacation. Correct Ans - unit of account (providing buyers and
sellers a common reference point for valuing goods and services)
list most liquid to least liquid- a share in a publicly traded company, the
funds in a money market account, a $5 bill, your house. Correct Ans -
$5 bill, funds in a money market account, share of stock, house
commodity money- Correct Ans - money taking the form of a
commodity with intrinsic value; value outside of its use as money
fiat money- Correct Ans - money whose value derives from
government decree
What contributes to making the FED an independent policymaking body?
Correct Ans - Members of the Board of Governors are appointed for 14-
year terms
How many members of the FED of governors? Correct Ans - 7
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