Question 1

-In the above figure, if the relevant aggregate demand curve is AD2, what type of gap exists and how large is it?

Accepted Answer

A)  inflationary gap of $500 billion 
B)  inflationary gap of $1 trillion 
C)  recessionary gap of $1 trillion 
D)  recessionary gap of $500 billion 
A)  inflationary gap of $500 billion 
B)  inflationary gap of $1 trillion 
C)  recessionary gap of $1 trillion 
D)  recessionary gap of $500 billion

Question 2

Classical economists suggest that unemployment is a short-lived phenomenon because

Accepted Answer

A)  wages adjust quickly to equilibrate quantity of labor demanded with quantity of labor supplied. 
B)  wages remain unchanged when the quantity of labor demanded exceeds the quantity of labor supplied. 
C)  wages remain unchanged when the quantity of labor supplied exceeds the quantity of labor demanded. 
D)  wages tend to rise slowly when the quantity of labor demanded equals the quantity of labor supplied. 
A)  wages adjust quickly to equilibrate quantity of labor demanded with quantity of labor supplied. 
B)  wages remain unchanged when the quantity of labor demanded exceeds the quantity of labor supplied. 
C)  wages remain unchanged when the quantity of labor supplied exceeds the quantity of labor demanded. 
D)  wages tend to rise slowly when the quantity of labor demanded equals the quantity of labor supplied.

Question 3

The idea that supply creates its own demand is known as

Accepted Answer

A)  the law of supply. 
B)  the law of demand. 
C)  Keynes' law. 
D)  Say's law. 
A)  the law of supply. 
B)  the law of demand. 
C)  Keynes' law. 
D)  Say's law.

Question 4

Both the long-run and short-run aggregate supply curves will shift when

Accepted Answer

A)  the government increases defense spending. 
B)  an event occurs which is expected to last only a short period of time. 
C)  they are both upward sloping. 
D)  the endowments of the factors of production change. 
A)  the government increases defense spending. 
B)  an event occurs which is expected to last only a short period of time. 
C)  they are both upward sloping. 
D)  the endowments of the factors of production change.

Question 5

Cost-push inflation is

Accepted Answer

A)  inflation caused by increases in aggregate demand that generate an even larger increase in aggregate supply. 
B)  inflation caused by increases in aggregate demand that are not matched by increases in aggregate supply. 
C)  inflation caused by decreases in aggregate supply that generate an even larger decrease in aggregate demand. 
D)  inflation caused by decreases in aggregate supply that are not matched by decreases in aggregate demand. 
A)  inflation caused by increases in aggregate demand that generate an even larger increase in aggregate supply. 
B)  inflation caused by increases in aggregate demand that are not matched by increases in aggregate supply. 
C)  inflation caused by decreases in aggregate supply that generate an even larger decrease in aggregate demand. 
D)  inflation caused by decreases in aggregate supply that are not matched by decreases in aggregate demand.

-In the above figure, if the relevant aggregate demand curve is AD₂, what type of gap exists and how large is it?

Classical economists suggest that unemployment is a short-lived phenomenon because

The idea that supply creates its own demand is known as

Both the long-run and short-run aggregate supply curves will shift when

Cost-push inflation is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 11: Classical and Keynesian Macro Analyses

-In the above figure, if the relevant aggregate demand curve is AD2, what type of gap exists and how large is it?

Classical economists suggest that unemployment is a short-lived phenomenon because

The idea that supply creates its own demand is known as

Both the long-run and short-run aggregate supply curves will shift when

Cost-push inflation is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

-In the above figure, if the relevant aggregate demand curve is AD₂, what type of gap exists and how large is it?