____ 3. The classical model fails to recognize that a. labor markets always clea

Question

____ 3. The classical model fails to recognize that
a. labor markets always clear
b. managers develop paternalistic feelings toward their workers
c. labor markets do not always clear
d. what was true yesterday might not be true today
e. search costs are low during recessions.


____ 5. If real income increases,
a. there will be a rightward movement along a stationary money demand curve
b. there will be a leftward movement along a stationary money demand curve
c. the demand for money curve will shift rightward
d. the demand for money curve will shift leftward
e. there will be no movement of the demand curve for money and no movement along it.


a. What is TABOR? Why is TABOR a revenue limit and not a spending limit? What is the difference between the General Fund and Cash Funds?










b. What is Referendum C? How does Referendum C impact TABOR and why was it passed?












c. What are the causes of the most recent recession? Explain which sectors in Colorado’s economy have been most impacted by the recent recession?
















2. The Banking System and Money Supply
a. For each of the following situations, determine whether the money supply will increase, decrease or stay the same.

i. Depositors become concerned about the safety of depository institutions


ii. The Fed lowers the required reserve ratio



iii. The economy enters a recession and banks have a hard time finding creditworthy borrowers.



iv. The Fed sells $100 million of bonds to First National Bank of Ames, Iowa.



b. Describe the structure of the Fed. What is the Board of Governor’s? Describe the Federal Open Market Committee (FOMC)? How many Federal Reserve districts are there? What is the purpose of the districts?













c. Describe the functions of the Federal Reserve. How does the Fed change the money supply?

Explanation / Answer

Indicate how each of the following would shift the (1) marginal-cost curve, (2) average-variable-cost curve, (3) average-fixed-cost curve, and (4) average-total-cost curve of a manufacturing firm. In each case specify the direction of the shift. a. A reduction in business property taxes. b. An increase in the nominal wages of production workers. c. a decrease in the price of electricity. d. An increase in insurance rates on plant and equipment. e. An increase in transportation costs.

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