QUESTION: 1285

Cyclical unemployment is a result of

inaccurate and/or costly information about job opportunities.
an inadequate matching of qualified workers and available jobs.
not enough employees to fill available jobs.
insufficient employment in the building trades.
a downturn in economic activity.

Answer(s): E

Explanation:

Cyclical unemployment occurs due to recessionary business conditions and inadequate aggregate demand for labor.

On a certain date, the banking system had $2 billion in excess reserves. The legally required reserve ratio was 12.5 percent. Potentially, the banking system as a whole could increase its loans a maximum of

more than $25 billion.
$2 billion.
$12.5 billion.
$16 billion.

Answer(s): D

Explanation:

The deposit expansion multiplier in this economy is 8 (found by taking the inverse of 12.5%=1/(.125)). Since banks hold an excess $2 billion in reserves they could extend loans in this amount and increase the money supply by 8 x $2 billion = $16 billion.

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QUESTION: 1287

Structural unemployment is a result of

not enough employees to fill available jobs.
inaccurate and/or costly information about job opportunities.
insufficient employment in the building trades.
an inadequate matching of qualified workers and available jobs.

Answer(s): D

Explanation:

Structural unemployment occurs because there are structural characteristics of the economy that make it difficult for job seekers to find employment and employers to hire workers. Basic structural characteristics of the economy make it difficult for employees and employers to "match up." Unemployment due to this structure of the economy, means that unemployed workers do not possess the skills necessary to fill available jobs.

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QUESTION: 1288

Which of the following is a false statement?

CPI is calculated using a market basket of consumer goods.
CPI is a broad measure of prices throughout the economy.
The GDP deflator is used to calculate real GDP from nominal GDP.
Both CPI and the GDP deflator suffer from substitution bias.
The CPI and the GDP deflator tend to move in the same direction.

Answer(s): B

Explanation:

CPI is designed to measure the changes in the price level of consumer goods only. Since GDP includes productions in all sectors, not just the consumer sector, consumer price inflation is inadequate to calculate real GDP from nominal GDP.

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QUESTION: 1285

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QUESTION: 1286

Explanation:

QUESTION: 1287

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QUESTION: 1288

Explanation: