Financial Sector Test--Part II

Financial Test Part II -

Two-Minute Drill

Do you take attendance at the beginning of the class period? Do you give make up work during this time? When are your most frequent interruptions?

If you want something to keep your students actively engaged while you are attending to routine tasks, try the Two-Minute Drill. You can project the image on a whiteboard or print off a copy for each student.

Here are my answers.

Test

Income, Poverty, and Health Insurance Coverage in the United States: 2008 -

Question

Question 1 Reffonomics -

Real interest rate equals nominal interest rate minus the expected rate of inflation. An increasing real interest rate means that my investment will enable me to buy more real goods in the future. I would only invest in new technology if I felt the investment would allow me to consume more in the future then I could now. An increase in the price level would erode my investment if the nominal interest rate did not impute these expectations.

I believe the answer to this question is "A". Expectations of future growth such as new technology increase the demand for loanable funds. This would shift the demand to the right and increase the real interest rate from r to r2 in the graph. B is incorrect because higher inflationary expectations decreases the real interest rate. C is incorrect because it's not illustrated on this graph. I believe a decrease in consumption would lower the price level and the expected inflation and increase the real rate. However, this is not what the question asks. D is incorrect because a decrease in budget deficits will increase the supply of loanable funds, shift the supply to the right and the real rate would be lower. E is incorrect because an increase in savings would shift the supply curve to the right and decrease the real interest rate.


The full test can be found at www.reffonomics.com. Scroll down to Monetary and Fiscal Policy and make sure you sign the guest book. This site is highly recommended

Women in the Labor Force--TIME

The State of the American Woman is a provocative Special Report in TIME. TIME reports that in 1970 3% of women were lawyers and 8% of women were doctors. In 2008, those figures are 32% and 28% respectively. Women are increasing in proportion in professional occupations.

In addition, there are now 3.3 million married couples in which the wife is the sole earner. This is up from 2.4 million in 1970.

Women prefer occupations like law and medicine whereas men prefer construction and trades. As the economy has shifted from a manufacturing base to a service base, women have filled those professional positions.

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TIME Quick Facts -- Women in Labor Force

These facts are from the October 26, 2009, issue of Time. The special report is, The State of the American Woman.

[1] In 1971,the town of Red Oak, Iowa, opened a child-care center. It closed a few months later for lack of customers. Today, there are five child care centers for a population of 5,683.

Item 1 is evidence that women are working more. I think that all individuals weight the opportunity cost of staying home versus working. With innovations in appliances such as microwave ovens, vacuums, dish washers, and dryers, the value of staying home is less. In other words, the cost of not working is greater. A Prisoner's Dilemma will result if a mother stays home to raise their children and all other mothers go to work. A mother will have to go to work.

[2] There were 7 Female TV-news correspondents at ABC, CBS, and NBC out of 153 in 1972. In 2009 there are 95 out of 252 or 38%.

Item 2 is evidence that sector shifts in consumption have created new opportunities for women. As society changes from print media to digital, women are preferred to men for news delivery.

[3] On average, women consume 344 more calories per day than they did in 1974. Today, 61% are overweight, compared with 41% in the 1970s.

Item 3 shows that more fuel is needed to meet a demanding day. Also, food is relatively cheaper now than in the 70s especially carbohydrates. When stress levels are high, many eat. So women must be in more stressful occupations.