Question

10. The goal of this measure is to reduce the risk in the banking sector.

a. Monetary policy.

b. Reserve Requirement.

c. The money multiplier

d. None of the above.

12. Two men have given up looking for a job. One of them gave up looking 20 days ago. The other gave up 45 days ago when he became hopeless. A third man is a part-time worker, but would like a full-time job. Which of the following statements is true?

a. Under U3 unemployment, the two men without jobs are considered unemployed, while the part time worker is not considered unemployed.

b. Under U4 unemployment, discouraged workers are considered unemployed, so the man who hasn't looked in 45 days is considered unemployed.

c. Under U5 unemployment, marginally attached workers are considered unemployed, so the man who hasn't looked in 45 days is considered unemployed.

c. Under U6 unemployment, all three men are considered unemployed.

d. The part-time worker is never considered unemployed.

Answer 1

10) Reserve Requirement.

Reserve Requirement is a Central Bank policy that all commercial banks that are working within the country should keep a certain percentage of their deposit along with the central bank compulsorily.

If all commercial banks should keep a certain percentage of their deposit along with central Bank so that the central bank and give assurance to commercial banks as well as its customers.

By this policy  central Bank must have a certain percentage of the total deposit of the country along with them. So that the central bank can easily give assurance to the customers of commercial banks as well as to the commercial banks if there arises failures of any kinds.

If the central bank gives such assurance to the commercial banks as well as to its customers the risk in the banking sector will be automatically get reduced. So reserve requirements is specifically intended to reduce risk in the banking sector.

Monetary policy is the policy of the central bank in order to control the money supply of the country . It has so many tools like bank rate, cash reserve ratio etc. It is more broad and not specifically intended to reduce risk in the banking sector

Money multiplier is the ratio of commercial bank money to Central Bank money. This is the amount of money that can be created in commercial bank with the use of some amount of Central Bank money.

So both monetary policy and money multiplier can do relatively less in avoiding risk in banking sector.

12) c.

under u6 unemployment all 3 men are considered as unemployed.

Because u6 unemployment measures those who are unemployed, underemployed and discouraged worker. Hence we can consider all three men of our case are unemployed.