Excess reserves are
a. checking deposits that are included in the M1 money supply but not the M2.
b. savings deposits that are included in the M2 money supply but not the M1.
c. actual reserves held by banks that exceed the legal requirement.
d. the portion of deposits that banks are required by the Fed to hold as reserves against their deposits.
C
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If the labor force grows faster than the number employed, the
A. unemployment rate will fall. B. unemployment rate will rise. C. labor force rate will rise. D. employment rate will rise.
The law of increasing costs holds that the opportunity cost:
a. of a good decreases as the quantity of the good produced increases. b. of a good is proportional to the resources used in its production. c. of a good increases as more of the good is produced. d. of a good does not change with the resources used its production. e. changes as more of the good is produced.
If the government accelerates money supply growth and enlarges the budget deficit to stimulate aggregate demand, the rational expectations hypothesis indicates that decision makers will:
a. ignore the policy until it exerts an observable impact on prices, output, and employment. b. quickly take steps to adjust their decision making in light of the more expansionary policies. c. be fooled at the outset but eventually adjust their decision making in accordance with the change in policy. d. be unaware that this policy change has been implemented until a higher rate of inflation is observed.
Negative returns set in with the _____ worker.
