Exam 9: Classical Macroeconomics and the Self Regulating Economy

Due to their belief in interest rate flexibility,the classical economists argued that saving is matched by an equal amount of investment.

Business-cycle macroeconomics involves changes in Real GDP around a ____________ LRAS curve,while economic-growth macroeconomics deals with increases in Real GDP resulting from a ______________ LRAS curve.

Which of the following is not consistent with a self-regulating economy?

The classical economists argued that saving is matched by an equal amount of investment because of

Exhibit 9-7 -Refer to Exhibit 9-7. Which point is representative of the economy with an unemployment rate that is less than the natural unemployment rate?

According to the classical theorists,it is impossible to have a

An economy is producing its Natural Real GDP when the rate of unemployment is equal to the __________ unemployment rate.

Which of the following statements is false?

If an economy is operating __________ its institutional production possibilities frontier,it is producing __________ output than it would be at full employment.

Exhibit 9-4 -Refer to Exhibit 9-4.Assuming the economy is in an inflationary gap at a short-run equilibrium point with the price level at P₂,the movement toward long-run equilibrium will be

If the economy is currently operating below its institutional production possibilities frontier (institutional PPF),it is

Exhibit 9-1 -Refer to Exhibit 9-1.If the economy is self-regulating,the price level is

If the natural unemployment rate is 5 percent and the current unemployment rate is 6 percent,then the economy is

Which of the following statements is true?

The structural unemployment rate is 3.1 percent,the frictional unemployment rate is 2.1 percent,and the current unemployment rate is 6.0 percent.The economy is in

Exhibit 9-8 Suppose that at a given price level the following values exist in a hypothetical economy: Consumption = $7,000 billion Investment = $1,900 billion Government Purchases = $1,700 billion Exports = $300 billion Imports = $300 billion Assume that the level of total expenditures is equal to the value of goods and services that suppliers want to sell. -Refer to Exhibit 9-8. The level of total expenditures (TE)in this economy is currently ______________ billion.

Natural disasters (such as the 2011 earthquake and tsunami in Japan)are examples of an adverse supply shock,which result in the SRAS curve shifting leftward.

If the economy is self-regulating and current Real GDP is greater than Natural Real GDP,the economy is operating __________ the natural unemployment rate and wages will soon __________.

According to Say's law,there can be

Suppose AD and SRAS intersect to the left of LRAS.Which of the following is true?