Question 1

If the economy is in long-run equilibrium,

Accepted Answer

A)  prices will rise but wages will remain constant. 
B)  neither prices nor wages will change. 
C)  it is producing Natural Real GDP. 
D)  prices will remain constant but wages may rise. 
E)  b and c 
A)  prices will rise but wages will remain constant. 
B)  neither prices nor wages will change. 
C)  it is producing Natural Real GDP. 
D)  prices will remain constant but wages may rise. 
E)  b and c

Question 2

Exhibit 9-6
  
-Refer to Exhibit 9-6.If the economy is self-regulating and currently at point 1,what is going to happen?

Accepted Answer

A)  Wages rise, the SRAS curve shifts to the right until it passes through point 3; in long-run equilibrium the price level is lower and Real GDP is higher than at point 1. 
B)  Wages fall, the SRAS curve shifts to the left until it passes through point 2; in long-run equilibrium the price level is higher and Real GDP is lower that at point 1. 
C)  Wages fall, the SRAS curve shifts to the right until it passes through point 3; in long-run equilibrium the price level is lower and Real GDP is higher than at point 1. 
D)  Wages rise, the AD curve shifts to the right until it passes through point 4; in long-run equilibrium the price level and Real GDP are higher than at point 1. 
E)  Prices rise, the AD curve shifts to the right until it passes through point 4; in long-run equilibrium the price level and Real GDP are higher than at point 1. 
A)  Wages rise, the SRAS curve shifts to the right until it passes through point 3; in long-run equilibrium the price level is lower and Real GDP is higher than at point 1. 
B)  Wages fall, the SRAS curve shifts to the left until it passes through point 2; in long-run equilibrium the price level is higher and Real GDP is lower that at point 1. 
C)  Wages fall, the SRAS curve shifts to the right until it passes through point 3; in long-run equilibrium the price level is lower and Real GDP is higher than at point 1. 
D)  Wages rise, the AD curve shifts to the right until it passes through point 4; in long-run equilibrium the price level and Real GDP are higher than at point 1. 
E)  Prices rise, the AD curve shifts to the right until it passes through point 4; in long-run equilibrium the price level and Real GDP are higher than at point 1.

Question 3

Exhibit 9-5
  
-Refer to Exhibit 9-5.Picture an AD curve intersecting an SRAS curve at Point L on graph (1). Which point(s)would this correspond to on graph (2)?

Accepted Answer

A)  A or B 
B)  C 
C)  D or E 
D)  F 
E)  G 
A)  A or B 
B)  C 
C)  D or E 
D)  F 
E)  G

Question 4

Which of the following statements is false?

Accepted Answer

A)  If the economy is self-regulating, wages are flexible. 
B)  The frictional unemployment rate equals the natural unemployment rate minus the structural unemployment rate. 
C)  If the economy is producing Natural Real GDP, it is operating at the natural unemployment rate. 
D)  The economy is operating at full employment if it is producing more than Natural Real GDP. 
A)  If the economy is self-regulating, wages are flexible. 
B)  The frictional unemployment rate equals the natural unemployment rate minus the structural unemployment rate. 
C)  If the economy is producing Natural Real GDP, it is operating at the natural unemployment rate. 
D)  The economy is operating at full employment if it is producing more than Natural Real GDP.

Question 5

Exhibit 9-3
  
-Refer to Exhibit 9-3.The economy is in short-run equilibrium and has a recessionary gap at point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E. 
A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E.

Question 6

A necessary condition for the economy to be self-regulating is that

Accepted Answer

A)  wages must be relatively high. 
B)  the labor market must always be in equilibrium. 
C)  the interest rate must be above its equilibrium level. 
D)  wages must be flexible in both an upward and downward direction. 
E)  none of the above 
A)  wages must be relatively high. 
B)  the labor market must always be in equilibrium. 
C)  the interest rate must be above its equilibrium level. 
D)  wages must be flexible in both an upward and downward direction. 
E)  none of the above

Question 7

If the economy is producing Natural Real GDP,then the

Accepted Answer

A)  current unemployment rate is greater than the natural unemployment rate. 
B)  current unemployment rate is less than the natural unemployment rate. 
C)  economy is at full employment. 
D)  economy is operating at the natural unemployment rate. 
E)  c and d 
A)  current unemployment rate is greater than the natural unemployment rate. 
B)  current unemployment rate is less than the natural unemployment rate. 
C)  economy is at full employment. 
D)  economy is operating at the natural unemployment rate. 
E)  c and d

Exam 9: Classical Macroeconomics and the Self Regulating Economy

If the economy is in long-run equilibrium,

Exhibit 9-6 -Refer to Exhibit 9-6.If the economy is self-regulating and currently at point 1,what is going to happen?

Exhibit 9-5 -Refer to Exhibit 9-5.Picture an AD curve intersecting an SRAS curve at Point L on graph (1). Which point(s)would this correspond to on graph (2)?

Which of the following statements is false?

Exhibit 9-3 -Refer to Exhibit 9-3.The economy is in short-run equilibrium and has a recessionary gap at point

A necessary condition for the economy to be self-regulating is that

If the economy is producing Natural Real GDP,then the

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Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

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