The identity stating that the total amount spent on final output equals the amount received for final output is known as the
A. equation of exchange.
B. circular flow identity.
C. identity equation.
D. fundamental law of economics.
Answer: A
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If current unemployment is close to the natural rate of unemployment, the level of the ________ GDP is likely to be close to the level of potential output
A) real B) structural C) nominal D) estimated
If the required reserve ratio is 0.25 and the First National Bank holds $10 million in demand deposits and $2.5 million in reserves, how much more money is the bank capable of creating?
a. $0 b. $0.625 million c. $1.875 million d. $2.5 million e. $10 million
Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that
a. foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding. b. foreign competition may cause unemployment in import-competing industries, but the increase in consumer surplus due to free trade is more valuable than the lost jobs. c. the critics are correct, so countries must protect their industries with tariffs or quotas. d. foreign competition may cause unemployment in import-competing industries, but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.
Annie had a job as a human resource manager of a restaurant chain that went out of business due to a downturn in the economy. She looked for work for six months and gave up because she was convinced that she could not find a suitable job to fit her skill set. In this instance she would be counted as a
A. reentrant. B. discouraged worker. C. labor force participant. D. job leaver.