Question 1

According to classical economists,

Accepted Answer

A)  full employment means zero unemployment 
B)  as long as markets clear,no government action is needed to ensure full employment 
C)  even if all markets clear,government action is needed to correct labor market imperfections if the economy is to reach full employment 
D)  as long as markets clear and government provides jobs to those who need them,the economy will be at full employment 
E)  even if markets clear,cyclical unemployment will still persist in the long run 
A)  full employment means zero unemployment 
B)  as long as markets clear,no government action is needed to ensure full employment 
C)  even if all markets clear,government action is needed to correct labor market imperfections if the economy is to reach full employment 
D)  as long as markets clear and government provides jobs to those who need them,the economy will be at full employment 
E)  even if markets clear,cyclical unemployment will still persist in the long run

Question 2

What is the full-employment output level?

Accepted Answer

A)  The output level that results when the loanable funds market clears 
B)  The output level that results when the returns to labor are zero 
C)  The output level that results when factories are completely full 
D)  The output level that results when the labor market clears 
E)  The output level that would occur if the output level was positive. 
A)  The output level that results when the loanable funds market clears 
B)  The output level that results when the returns to labor are zero 
C)  The output level that results when factories are completely full 
D)  The output level that results when the labor market clears 
E)  The output level that would occur if the output level was positive.

Question 3

The aggregate production function shows how much output the economy can produce

Accepted Answer

A)  with different quantities of labor,land,capital and states of technology 
B)  with different quantities of labor and capital,for given amounts of land and a given state of technology 
C)  with different quantities of labor,for given amounts of land and capital,and a given state of technology 
D)  with a given amount of money 
E)  with different amounts of money and given amounts of land,labor,capital,and a given state of technology 
A)  with different quantities of labor,land,capital and states of technology 
B)  with different quantities of labor and capital,for given amounts of land and a given state of technology 
C)  with different quantities of labor,for given amounts of land and capital,and a given state of technology 
D)  with a given amount of money 
E)  with different amounts of money and given amounts of land,labor,capital,and a given state of technology

Question 4

Total spending will equal total output

Accepted Answer

A)  after inventory adjustments 
B)  only when total leakages are equal to total injections 
C)  by the end of every year 
D)  only when the sum of saving and investment equals the sum of net taxes and government expenditures 
E)  saving is equal to net taxes 
A)  after inventory adjustments 
B)  only when total leakages are equal to total injections 
C)  by the end of every year 
D)  only when the sum of saving and investment equals the sum of net taxes and government expenditures 
E)  saving is equal to net taxes

Question 5

In the classical model,if the amount households wish to save exceeds the sum of the amount businesses wish to invest plus the government's budget deficit,the loanable funds market

Accepted Answer

A)  will be in disequilibrium,but this does not prevent equilibrium in the total economy 
B)  will be in disequilibrium,and we would expect the supply of funds to decrease 
C)  will be in disequilibrium,and we would expect the interest rate to rise 
D)  will be in disequilibrium,and we would expect the interest rate to fall 
E)  may be in equilibrium,because unplanned inventory changes have not been included 
A)  will be in disequilibrium,but this does not prevent equilibrium in the total economy 
B)  will be in disequilibrium,and we would expect the supply of funds to decrease 
C)  will be in disequilibrium,and we would expect the interest rate to rise 
D)  will be in disequilibrium,and we would expect the interest rate to fall 
E)  may be in equilibrium,because unplanned inventory changes have not been included

Question 6

The classical model

Accepted Answer

A)  is another name for the short-run macro model 
B)  was developed to explain the long period of poor economic performance during the Great Depression 
C)  is an attempt to explain why the economy tends to perform rather well over long periods of time 
D)  is believed by most economists to be a better explanatory model for short-term,rather than long-term,economic performance 
E)  was not really accepted as a legitimate economic theory until the 1950s 
A)  is another name for the short-run macro model 
B)  was developed to explain the long period of poor economic performance during the Great Depression 
C)  is an attempt to explain why the economy tends to perform rather well over long periods of time 
D)  is believed by most economists to be a better explanatory model for short-term,rather than long-term,economic performance 
E)  was not really accepted as a legitimate economic theory until the 1950s

Question 7

An aggregate production function,when shown on a graph,

Accepted Answer

A)  is linear and slopes upward 
B)  is linear and slopes downward 
C)  is horizontal 
D)  is vertical 
E)  slopes upward,and flattens out as more labor is used 
A)  is linear and slopes upward 
B)  is linear and slopes downward 
C)  is horizontal 
D)  is vertical 
E)  slopes upward,and flattens out as more labor is used

Question 8

Because financial markets clear,we know that leakages in the economy will equal injections and,therefore,there will be enough spending in the economy to purchase whatever amount of output level produced.

Accepted Answer

A) True 
 B)False

Question 9

Say's law assures us that in the classical model,total spending is always enough to purchase the economy's total output.

Accepted Answer

A) True 
 B)False

Question 10

In the classical model with an open economy,an increase in government purchases always causes complete crowding out.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a definition of economic fluctuations?

Accepted Answer

A)  Movements in prices around their long-run trend 
B)  Shifts in the long-run trend of output 
C)  Movements of the real wage over the long run 
D)  Shifts in the long-run trend of prices 
E)  Movements in output around its long-run trend 
A)  Movements in prices around their long-run trend 
B)  Shifts in the long-run trend of output 
C)  Movements of the real wage over the long run 
D)  Shifts in the long-run trend of prices 
E)  Movements in output around its long-run trend

Question 12

The aggregate production function shows

Accepted Answer

A)  the total output the economy can produce with different quantities of labor and technology,holding land and capital constant 
B)  the total output the economy can produce with different quantities of land and labor,holding capital and technology constant 
C)  the total output the economy can produce with different quantities of labor,holding land,capital and technology constant 
D)  the total output the economy can produce with different quantities of labor and capital,holding land and technology constant 
E)  the total output the economy can produce with different quantities of technology,holding land,labor and capital constant 
A)  the total output the economy can produce with different quantities of labor and technology,holding land and capital constant 
B)  the total output the economy can produce with different quantities of land and labor,holding capital and technology constant 
C)  the total output the economy can produce with different quantities of labor,holding land,capital and technology constant 
D)  the total output the economy can produce with different quantities of labor and capital,holding land and technology constant 
E)  the total output the economy can produce with different quantities of technology,holding land,labor and capital constant

Question 13

According to the classical model,if there are too many elementary school teachers in the labor market,

Accepted Answer

A)  the government should institute a retraining program to give the unemployed teachers new job skills 
B)  the wages for elementary teachers will fall,eventually causing the number of excess teachers to shrink 
C)  the wage for elementary teachers will increase for those who are employed,but unemployment of teachers will remain high 
D)  this situation provides an example of cyclical unemployment,which often occurs in the long run 
E)  people will quit training to become elementary school teachers and soon there will be a shortage in this labor market 
A)  the government should institute a retraining program to give the unemployed teachers new job skills 
B)  the wages for elementary teachers will fall,eventually causing the number of excess teachers to shrink 
C)  the wage for elementary teachers will increase for those who are employed,but unemployment of teachers will remain high 
D)  this situation provides an example of cyclical unemployment,which often occurs in the long run 
E)  people will quit training to become elementary school teachers and soon there will be a shortage in this labor market

Question 14

Classical economists believed that the economy would always return to full employment.

Accepted Answer

A) True 
 B)False

Question 15

Markets clear

Accepted Answer

A)  in the short run 
B)  when a depression occurs 
C)  when a recession occurs 
D)  roughly every ninety days 
E)  eventually 
A)  in the short run 
B)  when a depression occurs 
C)  when a recession occurs 
D)  roughly every ninety days 
E)  eventually

According to classical economists,

What is the full-employment output level?

The aggregate production function shows how much output the economy can produce

Total spending will equal total output

In the classical model,if the amount households wish to save exceeds the sum of the amount businesses wish to invest plus the government's budget deficit,the loanable funds market

The classical model

An aggregate production function,when shown on a graph,

Because financial markets clear,we know that leakages in the economy will equal injections and,therefore,there will be enough spending in the economy to purchase whatever amount of output level produced.

Say's law assures us that in the classical model,total spending is always enough to purchase the economy's total output.

In the classical model with an open economy,an increase in government purchases always causes complete crowding out.

Which of the following is a definition of economic fluctuations?

The aggregate production function shows

According to the classical model,if there are too many elementary school teachers in the labor market,

Classical economists believed that the economy would always return to full employment.

Markets clear

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

Exam 8:The Classical Long run Model

According to classical economists,

What is the full-employment output level?

The aggregate production function shows how much output the economy can produce

Total spending will equal total output

In the classical model,if the amount households wish to save exceeds the sum of the amount businesses wish to invest plus the government's budget deficit,the loanable funds market

The classical model

An aggregate production function,when shown on a graph,

Because financial markets clear,we know that leakages in the economy will equal injections and,therefore,there will be enough spending in the economy to purchase whatever amount of output level produced.

Say's law assures us that in the classical model,total spending is always enough to purchase the economy's total output.

In the classical model with an open economy,an increase in government purchases always causes complete crowding out.

Which of the following is a definition of economic fluctuations?

The aggregate production function shows

According to the classical model,if there are too many elementary school teachers in the labor market,

Classical economists believed that the economy would always return to full employment.

Markets clear

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters