A reserve requirement of 5 percent implies a potential money deposit multiplier of ________.
Answer(s): A
The potential money deposit multiplier is the reciprocal (inverse) of the required reserve ratio. Thus, a reserve requirement of .5 implies a potential money deposit multiplier of 1/.5 = 20.
Inflation is problematic for which of the following reasons
Answer(s): D
Inflation generally implies that all prices, including the price of labor, increase at the same rate.Therefore inflation does not cause a real decline in income. Although nominal interest rates would rise with increased inflation, this does not cause a fundamental economic problem. However, because inflation tends to create long-term uncertainty, many long-term agreements are foregone that would otherwise be beneficial.
The unemployment rate of teen-agers is substantially higher than the unemployment rate of prime-age workers primarily because teen-agers
Youthful workers experience more unemployment because they change jobs and move in and out of the labor force often.
Frictional unemployment means
Frictional unemployment refers to unemployment due to constant changes in the economy that prevent qualified unemployed workers from being immediately matched up with existing job openings. It results from the scarcity of information and the search activities of both employers and employees for information that will help them make better employment choices.
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