Question 1

Which of the following groups would be considered suppliers in the labor market?

Accepted Answer

A)  Government agencies 
B)  Firms 
C)  Households 
D)  Stockholders 
E)  Landlords 
A)  Government agencies 
B)  Firms 
C)  Households 
D)  Stockholders 
E)  Landlords

Question 2

Say's Law

Accepted Answer

A)  cannot be satisfied if there is excess supply or demand in individual markets in the long run 
B)  ensures that every firm will sell all of its output 
C)  can be satisfied even if there is a general overproduction or underproduction of goods in the economy 
D)  is satisfied only if every market clears in the short run 
E)  shows that the total value of spending in the economy will equal the total value of the output produced 
A)  cannot be satisfied if there is excess supply or demand in individual markets in the long run 
B)  ensures that every firm will sell all of its output 
C)  can be satisfied even if there is a general overproduction or underproduction of goods in the economy 
D)  is satisfied only if every market clears in the short run 
E)  shows that the total value of spending in the economy will equal the total value of the output produced

Question 3

Investment spending is inversely related to the interest rate.

Accepted Answer

A) True 
 B)False

Question 4

According to the classical model,an increase in government purchases will

Accepted Answer

A)  lead to a change in the interest rate that encourages consumers to spend more 
B)  lead to a change in the interest rate that encourages private businesses to invest more 
C)  discourage private spending by increasing the price level 
D)  be partially offset by a decline in consumption and investment spending 
E)  leave total spending and output unchanged 
A)  lead to a change in the interest rate that encourages consumers to spend more 
B)  lead to a change in the interest rate that encourages private businesses to invest more 
C)  discourage private spending by increasing the price level 
D)  be partially offset by a decline in consumption and investment spending 
E)  leave total spending and output unchanged

Question 5

In the classical model,when an open economy has balanced trade,Say's law holds.

Accepted Answer

A) True 
 B)False

Question 6

Assuming the economy was in equilibrium,use the following information to determine the amount of funds supplied to the loanable funds market.
$$\begin{array} { | l | l | } 
\hline \text { Consumption Spending } & \$ 3.5 \text { tillian } \
\hline \text { Net Taxes } & \$ 2.7 \text { tillian } \
\hline \text { Hausehold Seving } & \$ 2.5 \text { tillian } \
\hline \text { Gvestment Spenfing } & \$ 2.2 \text { tillian } \
\hline \text { Gavernment purchases } & \$ 3.0 \text { trillian } \
\hline
\end{array}$$

Accepted Answer

A)  $2.2 trillion 
B)  $2.5 trillion 
C)  $2.7 trillion 
D)  $3.0 trillion 
E)  $5.2 trillion 
A)  $2.2 trillion 
B)  $2.5 trillion 
C)  $2.7 trillion 
D)  $3.0 trillion 
E)  $5.2 trillion

Question 7

Fiscal policy is a change in either government purchases or the money supply designed to change total spending in the economy,thereby influencing the levels of employment and output.

Accepted Answer

A) True 
 B)False

Question 8

What major historical event led to the most significant challenge to classical economic thinking?

Accepted Answer

A)  The war on poverty 
B)  The American Revolution 
C)  World War II 
D)  The Great Depression 
E)  The oil shocks of the 1970s 
A)  The war on poverty 
B)  The American Revolution 
C)  World War II 
D)  The Great Depression 
E)  The oil shocks of the 1970s

Question 9

Transfer payments,such as unemployment insurance and welfare,are included in the circular flow as part of

Accepted Answer

A)  government purchases 
B)  household saving 
C)  net taxes 
D)  planned investment spending 
E)  household consumption 
A)  government purchases 
B)  household saving 
C)  net taxes 
D)  planned investment spending 
E)  household consumption

Question 10

When a country runs a trade deficit,

Accepted Answer

A)  it must be running a budget surplus. 
B)  its imports will become injections instead of leakages. 
C)  its exports will become leakages instead of injections. 
D)  foreigners will demand loanable funds from the country. 
E)  foreigners will supply loanable funds to the country equal to its trade deficit 
A)  it must be running a budget surplus. 
B)  its imports will become injections instead of leakages. 
C)  its exports will become leakages instead of injections. 
D)  foreigners will demand loanable funds from the country. 
E)  foreigners will supply loanable funds to the country equal to its trade deficit

Question 11

Which of the following is more of a short-run than a long-run goal?

Accepted Answer

A)  Increasing the capital stock 
B)  Encouraging investment in human capital 
C)  Moderating economic fluctuations 
D)  Stimulating economic growth 
E)  Increasing private investment 
A)  Increasing the capital stock 
B)  Encouraging investment in human capital 
C)  Moderating economic fluctuations 
D)  Stimulating economic growth 
E)  Increasing private investment

Question 12

The economy's level of output depends upon (1)the

Accepted Answer

A)  amount of land and capital available for labor to use and (2)the state of technology and types of inputs available 
B)  cost of land and capital and (2)the cost of labor 
C)  availability of land and (2)the availability of capital 
D)  state of technology and (2)the cost of land 
E)  state of technology and (2)the types of inputs available 
A)  amount of land and capital available for labor to use and (2)the state of technology and types of inputs available 
B)  cost of land and capital and (2)the cost of labor 
C)  availability of land and (2)the availability of capital 
D)  state of technology and (2)the cost of land 
E)  state of technology and (2)the types of inputs available

Question 13

If the government increases its spending or reduces its taxes in order to influence the level of economic activity,it is engaging in

Accepted Answer

A)  regulatory policy 
B)  antitrust policy 
C)  monetary policy 
D)  fiscal policy 
E)  supply-management policy 
A)  regulatory policy 
B)  antitrust policy 
C)  monetary policy 
D)  fiscal policy 
E)  supply-management policy

Question 14

The classical model is based on the assumption that

Accepted Answer

A)  all markets clear 
B)  all demand curves are horizontal 
C)  all supply curves are vertical 
D)  the government's budget is always balanced 
E)  the quantity of loanable funds demanded is independent of the interest rate 
A)  all markets clear 
B)  all demand curves are horizontal 
C)  all supply curves are vertical 
D)  the government's budget is always balanced 
E)  the quantity of loanable funds demanded is independent of the interest rate

Question 15

Fiscal policy is

Accepted Answer

A)  a change in money supply designed to change total spending. 
B)  a change in interest rates designed to change total spending. 
C)  a change in government purchases or net taxes designed to change total spending. 
D)  a change in government regulations designed to change total spending. 
E)  a change in policy stance by the Federal Reserve designed to change total spending. 
A)  a change in money supply designed to change total spending. 
B)  a change in interest rates designed to change total spending. 
C)  a change in government purchases or net taxes designed to change total spending. 
D)  a change in government regulations designed to change total spending. 
E)  a change in policy stance by the Federal Reserve designed to change total spending.

Question 16

-Refer to Figure 8-2.The economy's potential level of output on the graph

Accepted Answer

A)  cannot be determined with this information,only actual output can be found 
B)  is rising 
C)  exceeds $8 trillion 
D)  is less than $8 trillion 
E)  equals $8 trillion 
A)  cannot be determined with this information,only actual output can be found 
B)  is rising 
C)  exceeds $8 trillion 
D)  is less than $8 trillion 
E)  equals $8 trillion

Question 17

Which of the following lists represent leakages from the circular flow?

Accepted Answer

A)  Government purchases,net taxes and household saving. 
B)  Planned investment,net taxes and government purchases. 
C)  Household saving and planned investment. 
D)  Planned investment and net taxes. 
E)  Household saving and net taxes. 
A)  Government purchases,net taxes and household saving. 
B)  Planned investment,net taxes and government purchases. 
C)  Household saving and planned investment. 
D)  Planned investment and net taxes. 
E)  Household saving and net taxes.

Question 18

A critical assumption in the classical model is that markets are always clear.

Accepted Answer

A) True 
 B)False

Question 19

When we talk about injections in the classical model,we refer to

Accepted Answer

A)  taxes 
B)  total government purchases. 
C)  federal government purchases only. 
D)  state government purchases only. 
E)  local government purchases only. 
A)  taxes 
B)  total government purchases. 
C)  federal government purchases only. 
D)  state government purchases only. 
E)  local government purchases only.

Question 20

Assume the economy is currently in equilibrium.Use the following information to calculate the total value of injections
$ \begin{array}{ll}\text { Consumption Spending } & \$ 5 \text { trillion } \ \text { Net Taxes } & \$ 2.9 \text { trillion } \ \text { Household Saving } & \$ 2.8 \text { trillion } \ \text { Investment Spending } & \$ 2.3 \text { trillion } \ \text { Government Purchases } & \$ 3.4 \text { trillion }\end{array} $
Total injections are

Accepted Answer

A)  $10.7 trillion 
B)  $5.1 trillion 
C)  $5.9 trillion 
D)  $5.7 trillion 
E)  $5.3 trillion 
A)  $10.7 trillion 
B)  $5.1 trillion 
C)  $5.9 trillion 
D)  $5.7 trillion 
E)  $5.3 trillion

Which of the following groups would be considered suppliers in the labor market?

Say's Law

Investment spending is inversely related to the interest rate.

According to the classical model,an increase in government purchases will

In the classical model,when an open economy has balanced trade,Say's law holds.

Assuming the economy was in equilibrium,use the following information to determine the amount of funds supplied to the loanable funds market. Consumption Spending \ 3.5 tillian Net Taxes \ 2.7 tillian Hausehold Seving \ 2.5 tillian Gvestment Spenfing \ 2.2 tillian Gavernment purchases \ 3.0 trillian

Fiscal policy is a change in either government purchases or the money supply designed to change total spending in the economy,thereby influencing the levels of employment and output.

What major historical event led to the most significant challenge to classical economic thinking?

Transfer payments,such as unemployment insurance and welfare,are included in the circular flow as part of

When a country runs a trade deficit,

Which of the following is more of a short-run than a long-run goal?

The economy's level of output depends upon (1)the

If the government increases its spending or reduces its taxes in order to influence the level of economic activity,it is engaging in

The classical model is based on the assumption that

Fiscal policy is

-Refer to Figure 8-2.The economy's potential level of output on the graph

Which of the following lists represent leakages from the circular flow?

A critical assumption in the classical model is that markets are always clear.

When we talk about injections in the classical model,we refer to

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

Which of the following groups would be considered suppliers in the labor market?

Say's Law

Investment spending is inversely related to the interest rate.

According to the classical model,an increase in government purchases will

In the classical model,when an open economy has balanced trade,Say's law holds.

Fiscal policy is a change in either government purchases or the money supply designed to change total spending in the economy,thereby influencing the levels of employment and output.

What major historical event led to the most significant challenge to classical economic thinking?

Transfer payments,such as unemployment insurance and welfare,are included in the circular flow as part of

When a country runs a trade deficit,

Which of the following is more of a short-run than a long-run goal?

The economy's level of output depends upon (1)the

If the government increases its spending or reduces its taxes in order to influence the level of economic activity,it is engaging in

The classical model is based on the assumption that

Fiscal policy is

-Refer to Figure 8-2.The economy's potential level of output on the graph

Which of the following lists represent leakages from the circular flow?

A critical assumption in the classical model is that markets are always clear.

When we talk about injections in the classical model,we refer to

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