Question 1

Exhibit 9-1  
-Refer to Exhibit 9-1.The economy is currently producing Q1.At this level of Real GDP,the economy is in

Accepted Answer

A) an inflationary gap. 
B) a recessionary gap. 
C) long-run equilibrium. 
D) none of the above 
A) an inflationary gap. 
B) a recessionary gap. 
C) long-run equilibrium. 
D) none of the above B

Question 2

Exhibit 9-2  
-Refer to Exhibit 9-2.The economy is currently producing Q1.At this level of Real GDP,the economy is experiencing

Accepted Answer

A) a shortage in the labor market. 
B) a surplus in the labor market. 
C) neither a shortage nor a surplus in the labor market. 
D) all of the above are equally likely 
A) a shortage in the labor market. 
B) a surplus in the labor market. 
C) neither a shortage nor a surplus in the labor market. 
D) all of the above are equally likely A

Question 3

Classical macroeconomists assert that "saving" is the same as "not spending at all".

Accepted Answer

A) True 
 B)False  False

Question 4

If the economy is operating at a point beyond its institutional production possibilities frontier (institutional PPF),then the economy is

Accepted Answer

A) producing Natural Real GDP and operating at the natural unemployment rate. 
B) producing less than Natural Real GDP and operating below the natural unemployment rate. 
C) producing more than Natural Real GDP and operating above the natural unemployment rate. 
D) producing more than Natural Real GDP and operating below the natural unemployment rate. 
E) none of the above 
A) producing Natural Real GDP and operating at the natural unemployment rate. 
B) producing less than Natural Real GDP and operating below the natural unemployment rate. 
C) producing more than Natural Real GDP and operating above the natural unemployment rate. 
D) producing more than Natural Real GDP and operating below the natural unemployment rate. 
E) none of the above

Question 5

The classical economists argued that saving is matched by an equal amount of investment because of

Accepted Answer

A) wage flexibility. 
B) price flexibility. 
C) money flexibility. 
D) interest rate flexibility. 
E) b and c 
A) wage flexibility. 
B) price flexibility. 
C) money flexibility. 
D) interest rate flexibility. 
E) b and c

Question 6

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 7

Exhibit 9-7  
-Refer to Exhibit 9-7.Which point is representative of the economy with an unemployment rate that is greater than the natural unemployment rate?

Accepted Answer

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

Question 8

Exhibit 9-7  
-Refer to Exhibit 9-7.Which point is representative of the economy in an inflationary gap?

Accepted Answer

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

Question 9

If the economy is self-regulating and in an inflationary gap,

Accepted Answer

A) wages and prices will fall. 
B) wages will rise,but prices will fall. 
C) wages and prices will rise. 
D) wages will fall,but prices will rise. 
E) neither wages nor prices will change. 
A) wages and prices will fall. 
B) wages will rise,but prices will fall. 
C) wages and prices will rise. 
D) wages will fall,but prices will rise. 
E) neither wages nor prices will change.

Question 10

Exhibit 9-5  
-Refer to Exhibit 9-5.Imagine an AD curve and an SRAS curve intersecting at Point I 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 11

According to the classical theorists,it is impossible to have a

Accepted Answer

A) surplus of a particular product. 
B) shortage of a particular product. 
C) decrease in the demand for a product. 
D) decrease in the supply of a product. 
E) general overproduction of products. 
A) surplus of a particular product. 
B) shortage of a particular product. 
C) decrease in the demand for a product. 
D) decrease in the supply of a product. 
E) general overproduction of products.

Question 12

The economy is currently operating at a point on its physical production possibilities frontier (physical PPF).It is

Accepted Answer

A) producing Natural Real GDP and operating below the natural unemployment rate. 
B) producing more than Natural Real GDP and operating above the natural unemployment rate. 
C) producing more than Natural Real GDP and operating below the natural unemployment rate. 
D) in long-run equilibrium. 
A) producing Natural Real GDP and operating below the natural unemployment rate. 
B) producing more than Natural Real GDP and operating above the natural unemployment rate. 
C) producing more than Natural Real GDP and operating below the natural unemployment rate. 
D) in long-run equilibrium.

Question 13

If the SRAS curve intersects the AD curve to the right of Natural Real GDP,the economy is

Accepted Answer

A) in a recessionary gap. 
B) in either a recessionary gap or an inflationary gap,but we need more information to determine which one. 
C) in an inflationary gap. 
D) at full-employment Real GDP. 
A) in a recessionary gap. 
B) in either a recessionary gap or an inflationary gap,but we need more information to determine which one. 
C) in an inflationary gap. 
D) at full-employment Real GDP.

Question 14

A natural disaster,such as the 2011 Japanese earthquake and tsunami,shifts the ___________ curve _____________________.According to economists who believe that the economy is self-regulating,the result will be that the economy _____________be able to find its way back to Natural Real GDP without government intervention.

Accepted Answer

A) SRAS;rightward;will 
B) SRAS;leftward;will not 
C) AD;leftward;will not 
D) SRAS;leftward;will 
E) AD;leftward;will 
A) SRAS;rightward;will 
B) SRAS;leftward;will not 
C) AD;leftward;will not 
D) SRAS;leftward;will 
E) AD;leftward;will

Question 15

Exhibit 9-5  
-The structural unemployment rate is 2.3 percent,the frictional unemployment rate is 2.4 percent,and the economy's current unemployment rate is 4.1 percent.The economy is in

Accepted Answer

A) a recessionary gap producing less than Natural Real GDP. 
B) an inflationary gap producing more than Natural Real GDP. 
C) long-run equilibrium. 
D) an inflationary gap producing Natural Real GDP. 
E) a recessionary gap producing more than Natural Real GDP. 
A) a recessionary gap producing less than Natural Real GDP. 
B) an inflationary gap producing more than Natural Real GDP. 
C) long-run equilibrium. 
D) an inflationary gap producing Natural Real GDP. 
E) a recessionary gap producing more than Natural Real GDP.

Question 16

Exhibit 9-4  
-Refer to Exhibit 9-4.Assume the economy is currently in long-run equilibrium with the price level equal to P3.If foreigners begin to buy more U.S.goods,the economy will,in the short run,move to which of the following equilibrium combinations of price level and Real GDP?

Accepted Answer

A) P2,Q4. 
B) P3,Q3. 
C) P4,Q2. 
D) P4,Q4. 
E) P5,Q3. 
A) P2,Q4. 
B) P3,Q3. 
C) P4,Q2. 
D) P4,Q4. 
E) P5,Q3.

Question 17

If the economy is self-regulating and current Real GDP is greater than Natural Real GDP,the economy is operating __________ the natural unemployment rate and wages will soon __________.

Accepted Answer

A) below;fall. 
B) above;fall 
C) below;rise 
D) above;rise 
E) none of the above 
A) below;fall. 
B) above;fall 
C) below;rise 
D) above;rise 
E) none of the above

Question 18

According to Say's law,in a money economy a reduction in consumption spending causes a __________ shift of the saving curve and therefore a __________ in the interest rate.

Accepted Answer

A) leftward;rise 
B) leftward;fall 
C) rightward;rise 
D) rightward;fall 
A) leftward;rise 
B) leftward;fall 
C) rightward;rise 
D) rightward;fall

Question 19

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

Accepted Answer

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

Question 20

According to Say's law,

Accepted Answer

A) the demand curve is negatively sloped. 
B) the supply curve is positively sloped. 
C) supply creates its own demand. 
D) economic units should produce those goods for which they are low-opportunity-cost producers. 
A) the demand curve is negatively sloped. 
B) the supply curve is positively sloped. 
C) supply creates its own demand. 
D) economic units should produce those goods for which they are low-opportunity-cost producers.

Exam 9: Classical Macroeconomics and the Self-Regulating Economy

Exhibit 9-1 -Refer to Exhibit 9-1.The economy is currently producing Q1.At this level of Real GDP,the economy is in

Exhibit 9-2 -Refer to Exhibit 9-2.The economy is currently producing Q1.At this level of Real GDP,the economy is experiencing

Classical macroeconomists assert that "saving" is the same as "not spending at all".

If the economy is operating at a point beyond its institutional production possibilities frontier (institutional PPF),then the economy is

The classical economists argued that saving is matched by an equal amount of investment because of

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.

Exhibit 9-7 -Refer to Exhibit 9-7.Which point is representative of the economy with an unemployment rate that is greater than the natural unemployment rate?

Exhibit 9-7 -Refer to Exhibit 9-7.Which point is representative of the economy in an inflationary gap?

If the economy is self-regulating and in an inflationary gap,

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

According to the classical theorists,it is impossible to have a

The economy is currently operating at a point on its physical production possibilities frontier (physical PPF).It is

If the SRAS curve intersects the AD curve to the right of Natural Real GDP,the economy is

Exhibit 9-5 -The structural unemployment rate is 2.3 percent,the frictional unemployment rate is 2.4 percent,and the economy's current unemployment rate is 4.1 percent.The economy is in

Exhibit 9-4 -Refer to Exhibit 9-4.Assume the economy is currently in long-run equilibrium with the price level equal to P3.If foreigners begin to buy more U.S.goods,the economy will,in the short run,move to which of the following equilibrium combinations of price level and Real GDP?

If the economy is self-regulating and current Real GDP is greater than Natural Real GDP,the economy is operating __________ the natural unemployment rate and wages will soon __________.

According to Say's law,in a money economy a reduction in consumption spending causes a __________ shift of the saving curve and therefore a __________ in the interest rate.

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

According to Say's law,

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, part I: Prices and Unemployment

Macroeconomic Measurements, part II: GDP and Real GDP

Aggregate Demand and Aggregate Supply

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

Fiscal Policy and the Federal Budget

Money,banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, technology, ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

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

Globalization and International Impacts on the Economy

The Economic Case for and Against Government: Five Topics Considered

Stocks, bonds, futures, and Options

Filters

Exhibit 9-1 -Refer to Exhibit 9-1.The economy is currently producing Q₁.At this level of Real GDP,the economy is in

Exhibit 9-2 -Refer to Exhibit 9-2.The economy is currently producing Q₁.At this level of Real GDP,the economy is experiencing

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.

Exhibit 9-4 -Refer to Exhibit 9-4.Assume the economy is currently in long-run equilibrium with the price level equal to P₃.If foreigners begin to buy more U.S.goods,the economy will,in the short run,move to which of the following equilibrium combinations of price level and Real GDP?

If the economy is self-regulating and current Real GDP is greater than Natural Real GDP,the economy is operating the natural unemployment rate and wages will soon .

According to Say's law,in a money economy a reduction in consumption spending causes a shift of the saving curve and therefore a in the interest rate.