Question 1

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.

Accepted Answer

A) True 
 B)False  True

Question 2

According to classical economists,Say's law applies to a barter economy,but it does not apply to a money economy.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following statements is true?

Accepted Answer

A)  If current Real GDP is greater than Natural Real GDP,the economy is in a recessionary gap. 
B)  If current Real GDP is less than Natural Real GDP,the economy is in long-run equilibrium. 
C)  Wages are flexible if the economy is self-regulating. 
D)  Wages rise but prices remain constant in long-run equilibrium. 
E)  All economists believe the economy is self-regulating. 
A)  If current Real GDP is greater than Natural Real GDP,the economy is in a recessionary gap. 
B)  If current Real GDP is less than Natural Real GDP,the economy is in long-run equilibrium. 
C)  Wages are flexible if the economy is self-regulating. 
D)  Wages rise but prices remain constant in long-run equilibrium. 
E)  All economists believe the economy is self-regulating. C

Question 4

Business-cycle macroeconomics involves increases in Real GDP that result from a rightward-shifting LRAS curve.

Accepted Answer

A) True 
 B)False

Question 5

Suppose the natural unemployment rate is 5 percent.Which of the following observations is consistent with an economy that is self-regulating?

Accepted Answer

A)  The unemployment rate in the economy is always above 5 percent. 
B)  The unemployment rate in the economy is always below 5 percent. 
C)  There is a tendency for the unemployment rate in the economy to move toward 5 percent if it is not already there. 
D)  If the unemployment rate in the economy is greater than 5 percent,wages start to rise. 
E)  If the unemployment rate in the economy is less than 5 percent,wages start to fall. 
A)  The unemployment rate in the economy is always above 5 percent. 
B)  The unemployment rate in the economy is always below 5 percent. 
C)  There is a tendency for the unemployment rate in the economy to move toward 5 percent if it is not already there. 
D)  If the unemployment rate in the economy is greater than 5 percent,wages start to rise. 
E)  If the unemployment rate in the economy is less than 5 percent,wages start to fall.

Question 6

When the current state of the economy is such that Real GDP is less than Natural Real GDP,the economy is in a(n)____________________ gap.In this situation,the (actual)unemployment rate is ___________ than the natural unemployment rate,and there is a ________________ in the labor market.

Accepted Answer

A)  recessionary; greater; shortage 
B)  inflationary; less; shortage 
C)  inflationary; greater; surplus 
D)  recessionary; greater; surplus 
E)  recessionary; less; shortage 
A)  recessionary; greater; shortage 
B)  inflationary; less; shortage 
C)  inflationary; greater; surplus 
D)  recessionary; greater; surplus 
E)  recessionary; less; shortage

Question 7

An economy that is operating on its institutional production possibilities frontier is operating at its natural unemployment rate.

Accepted Answer

A) True 
 B)False

Question 8

When the actual unemployment rate is less than the natural unemployment rate,the economy is in a recessionary gap.

Accepted Answer

A) True 
 B)False

Question 9

The classical economists believed that wages,prices,and interest rates were flexible in both the upward and the downward direction.

Accepted Answer

A) True 
 B)False

Question 10

The economy can operate

Accepted Answer

A)  beyond its institutional PPF but not beyond its physical PPF. 
B)  on both its institutional PPF and its physical PPF,but not at the same time. 
C)  under its physical PPF but not under its institutional PPF. 
D)  a and b 
E)  a,b,and c 
A)  beyond its institutional PPF but not beyond its physical PPF. 
B)  on both its institutional PPF and its physical PPF,but not at the same time. 
C)  under its physical PPF but not under its institutional PPF. 
D)  a and b 
E)  a,b,and c

Question 11

When the current state of the economy is such that Real GDP is equal to Natural Real GDP,the economy is in ____________________ .In this situation,the (actual)unemployment rate is ___________ the natural unemployment rate,and there is ________________ in the labor market.

Accepted Answer

A)  long-run equilibrium; equal to; equilibrium 
B)  inflationary; less than; a shortage 
C)  long-run equilibrium; greater than; equilibrium 
D)  recessionary; greater than; a surplus 
E)  recessionary; less than; equilibrium 
A)  long-run equilibrium; equal to; equilibrium 
B)  inflationary; less than; a shortage 
C)  long-run equilibrium; greater than; equilibrium 
D)  recessionary; greater than; a surplus 
E)  recessionary; less than; equilibrium

Question 12

-Refer to Exhibit 9-3.If the economy is in short-run equilibrium at point A,

Accepted Answer

A)  the (actual)unemployment rate is less than the natural unemployment rate. 
B)  the (actual)unemployment rate is equal to the natural unemployment rate. 
C)  the (actual)unemployment rate is greater than the natural unemployment rate. 
D)  the relationship between the (actual)unemployment rate and the natural unemployment rate cannot be determined from the available information. 
A)  the (actual)unemployment rate is less than the natural unemployment rate. 
B)  the (actual)unemployment rate is equal to the natural unemployment rate. 
C)  the (actual)unemployment rate is greater than the natural unemployment rate. 
D)  the relationship between the (actual)unemployment rate and the natural unemployment rate cannot be determined from the available information.

Question 13

According to classical economists,the relationship between the amount of funds firms invest and the interest rate is

Accepted Answer

A)  direct. 
B)  inverse. 
C)  indirect. 
D)  independent. 
A)  direct. 
B)  inverse. 
C)  indirect. 
D)  independent.

Question 14

-Refer to Exhibit 9-7.Which point is representative of the economy experiencing labor market surpluses?

Accepted Answer

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

Question 15

-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 16

When there is an inflationary gap,(actual)Real GDP is __________ Natural Real GDP,and the (actual)unemployment rate is __________ the natural unemployment rate.

Accepted Answer

A)  greater than; less than 
B)  greater than; greater than 
C)  less than; greater than 
D)  less than; less than 
E)  less than; equal to 
A)  greater than; less than 
B)  greater than; greater than 
C)  less than; greater than 
D)  less than; less than 
E)  less than; equal to

Question 17

If the structural unemployment rate is 3 percent,the frictional unemployment rate is 2 percent,and the current unemployment rate is 6 percent,then the economy is in a recessionary gap.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following equations is correct?

Accepted Answer

A)  Saving = Disposable income + Consumption 
B)  Saving = Disposable income x Consumption 
C)  Disposable income = Consumption - Saving 
D)  Saving = Disposable income - Consumption 
A)  Saving = Disposable income + Consumption 
B)  Saving = Disposable income x Consumption 
C)  Disposable income = Consumption - Saving 
D)  Saving = Disposable income - Consumption

Question 19

The more institutional constraints that exist in a particular society,

Accepted Answer

A)  the closer the institutional PPF will lie to the physical PPF. 
B)  the farther out from the origin the institutional PPF will lie. 
C)  the closer to the origin the institutional PPF will lie. 
D)  the closer to the origin the institutional PPF will lie and the farther out from the origin the physical PPF will lie. 
A)  the closer the institutional PPF will lie to the physical PPF. 
B)  the farther out from the origin the institutional PPF will lie. 
C)  the closer to the origin the institutional PPF will lie. 
D)  the closer to the origin the institutional PPF will lie and the farther out from the origin the physical PPF will lie.

Question 20

According to classical economists,the economy

Accepted Answer

A)  always operates at a point below its institutional production possibilities frontier (PPF). 
B)  always operates close to or on its institutional PPF. 
C)  seldom operates close to or on its institutional PPF. 
D)  never operates close to or on its institutional PPF. 
A)  always operates at a point below its institutional production possibilities frontier (PPF). 
B)  always operates close to or on its institutional PPF. 
C)  seldom operates close to or on its institutional PPF. 
D)  never operates close to or on its institutional PPF.

Exam 9: Perfect Competition

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.

According to classical economists,Say's law applies to a barter economy,but it does not apply to a money economy.

Which of the following statements is true?

Business-cycle macroeconomics involves increases in Real GDP that result from a rightward-shifting LRAS curve.

Suppose the natural unemployment rate is 5 percent.Which of the following observations is consistent with an economy that is self-regulating?

When the current state of the economy is such that Real GDP is less than Natural Real GDP,the economy is in a(n)____________________ gap.In this situation,the (actual)unemployment rate is ___________ than the natural unemployment rate,and there is a ________________ in the labor market.

An economy that is operating on its institutional production possibilities frontier is operating at its natural unemployment rate.

When the actual unemployment rate is less than the natural unemployment rate,the economy is in a recessionary gap.

The classical economists believed that wages,prices,and interest rates were flexible in both the upward and the downward direction.

The economy can operate

When the current state of the economy is such that Real GDP is equal to Natural Real GDP,the economy is in ____________________ .In this situation,the (actual)unemployment rate is ___________ the natural unemployment rate,and there is ________________ in the labor market.

-Refer to Exhibit 9-3.If the economy is in short-run equilibrium at point A,

According to classical economists,the relationship between the amount of funds firms invest and the interest rate is

-Refer to Exhibit 9-7.Which point is representative of the economy experiencing labor market surpluses?

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

When there is an inflationary gap,(actual)Real GDP is __________ Natural Real GDP,and the (actual)unemployment rate is __________ the natural unemployment rate.

If the structural unemployment rate is 3 percent,the frictional unemployment rate is 2 percent,and the current unemployment rate is 6 percent,then the economy is in a recessionary gap.

Which of the following equations is correct?

The more institutional constraints that exist in a particular society,

According to classical economists,the economy

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

When the current state of the economy is such that Real GDP is less than Natural Real GDP,the economy is in a(n)______________ gap.In this situation,the (actual)unemployment rate is _ than the natural unemployment rate,and there is a ____________ in the labor market.

When the current state of the economy is such that Real GDP is equal to Natural Real GDP,the economy is in ______________ .In this situation,the (actual)unemployment rate is _ the natural unemployment rate,and there is ____________ in the labor market.

When there is an inflationary gap,(actual)Real GDP is Natural Real GDP,and the (actual)unemployment rate is the natural unemployment rate.