Exam 9: Classical Macroeconomics and the Self-Regulating Economy

When the economy is in a recessionary gap,the labor market is experiencing a _____________.In a self-regulating economy,wage rates will then ___________ and the ______________ curve will shift __________________.

If Real GDP is greater than Natural Real GDP,the economy is in a(n)

When the economy is in a recessionary gap,the labor market is experiencing a surplus.

Suppose the economy's short-run equilibrium level is at a point to the left of Natural Real GDP.Which of the following statements is true?

If the economy is currently in a recessionary gap,the SRAS curve intersects the AD curve to the left of Natural Real GDP.

Suppose the economy is self-regulating and the (actual)unemployment rate is less than the natural unemployment rate.This means that the economy is producing a level of output

If the economy is self-regulating,explain the correct sequence of events that occurs once the economy is in a recessionary gap to move the economy to long-run equilibrium.

The unemployment rate is equal to the natural unemployment rate at

If the economy is currently operating below its institutional production possibilities frontier (institutional PPF),it is

A necessary condition for a money economy to be self-regulating is that

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

Explain how it is possible for the economy to produce at a point beyond its institutional production possibilities frontier (PPF),but not beyond its physical PPF.

According to the classical economists,which of the following statements is false?

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.

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

In the long run,changes in aggregate demand will affect the level of Real GDP (but not the price level)in a self-regulating economy.

Exhibit 9-6 -Refer to Exhibit 9-6.If the economy is self-regulating and currently at point 1,it follows that

It is possible for the economy to be producing at a point that lies beyond its institutional production possibilities frontier (PPF),but not its physical PPF.

Exhibit 9-6 -Refer to Exhibit 9-6.If the economy is self-regulating and currently at point 1,the real balance effect is operational and relevant between points

If the structural unemployment rate is 3 percent,the frictional unemployment rate is 3 percent,and the current unemployment rate is 5 percent,then the economy is in a recessionary gap.