Question 1

One reason why economists often appear to disagree when asked about the impact of some bad economic news is that

Accepted Answer

A)  they do not understand the economy very well 
B)  economics is a very difficult science,and so there are many incorrect economic projections being made 
C)  economists rarely disagree;people just think they are disagreeing because they do not understand the language of economics 
D)  economists often appear to be disagreeing when one is talking about long-run impact while the other is referring to short-run impacts 
E)  economists are by nature competitive individuals and they often disagree 
A)  they do not understand the economy very well 
B)  economics is a very difficult science,and so there are many incorrect economic projections being made 
C)  economists rarely disagree;people just think they are disagreeing because they do not understand the language of economics 
D)  economists often appear to be disagreeing when one is talking about long-run impact while the other is referring to short-run impacts 
E)  economists are by nature competitive individuals and they often disagree

Question 2

Assuming the economy was in equilibrium,use the following information to calculate the total value of injections.   Total leakages are

Accepted Answer

A)  $2.5 trillion 
B)  $2.7 trillion 
C)  $3.0 trillion 
D)  $5.2 trillion 
E)  $5.7 trillion 
A)  $2.5 trillion 
B)  $2.7 trillion 
C)  $3.0 trillion 
D)  $5.2 trillion 
E)  $5.7 trillion

Question 3

Which of the following best describes the aggregate production function if output is measured on the vertical axis and the number of workers employed is measured on the horizontal axis? The curve is

Accepted Answer

A)  downward sloping and becomes flatter as the number of workers employed increases 
B)  downward sloping and becomes steeper as the number of workers employed increases 
C)  downward sloping with the same slope throughout 
D)  upward sloping and becomes steeper as the number of workers employed increases 
E)  upward sloping and becomes flatter as the number of workers employed increases 
A)  downward sloping and becomes flatter as the number of workers employed increases 
B)  downward sloping and becomes steeper as the number of workers employed increases 
C)  downward sloping with the same slope throughout 
D)  upward sloping and becomes steeper as the number of workers employed increases 
E)  upward sloping and becomes flatter as the number of workers employed increases

Question 4

Saving and taxes are considered leakages from the spending stream.

Accepted Answer

A) True 
 B)False

Question 5

Which concept springs to mind when thinking of the classical model?.

Accepted Answer

A)  Inflation. 
B)  Population growth. 
C)  Markets clear. 
D)  The microeconomy. 
E)  Money supply. 
A)  Inflation. 
B)  Population growth. 
C)  Markets clear. 
D)  The microeconomy. 
E)  Money supply.

Question 6

The economist that gave us the proposition that "supply creates its own demand" was

Accepted Answer

A)  Adam Smith 
B)  Jean Baptiste Say 
C)  Marc Lieberman 
D)  John Maynard Keynes 
E)  Robert Hall 
A)  Adam Smith 
B)  Jean Baptiste Say 
C)  Marc Lieberman 
D)  John Maynard Keynes 
E)  Robert Hall

Question 7

What is the price of funds in the loanable funds market?

Accepted Answer

A)  The real wage rate 
B)  The Consumer Price Index 
C)  The interest rate 
D)  The profit rate 
E)  The GDP price index 
A)  The real wage rate 
B)  The Consumer Price Index 
C)  The interest rate 
D)  The profit rate 
E)  The GDP price index

Question 8

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 9

-Refer to Figure 8-1.If the labor market is in equilibrium,there is no

Accepted Answer

A)  unemployment 
B)  frictional unemployment 
C)  structural unemployment 
D)  seasonal unemployment 
E)  cyclical unemployment 
A)  unemployment 
B)  frictional unemployment 
C)  structural unemployment 
D)  seasonal unemployment 
E)  cyclical unemployment

Question 10

Which of the following statements about modern macroeconomic theory is most accurate?

Accepted Answer

A)  Keynes' ideas help us understand movements in output around its long-run trend,while the Classical model is more useful in explaining the long-run trend itself. 
B)  The classical model helps us understand movements in output around its long-run trend,while the short-run macro model is more useful in explaining the long-run trend itself. 
C)  Both classical and short-run macro models help us understand movements in output around its long-run trend,but neither model is effective at explaining the long-run trend itself. 
D)  Neither the classical nor the short-run macro model helps us understand movements in output around its long-run trend,but both are useful in explaining the long-run trend itself. 
E)  Only the short-run macro model is useful in understanding movements in output around its long-run trend,and in explaining the long-run trend itself. 
A)  Keynes' ideas help us understand movements in output around its long-run trend,while the Classical model is more useful in explaining the long-run trend itself. 
B)  The classical model helps us understand movements in output around its long-run trend,while the short-run macro model is more useful in explaining the long-run trend itself. 
C)  Both classical and short-run macro models help us understand movements in output around its long-run trend,but neither model is effective at explaining the long-run trend itself. 
D)  Neither the classical nor the short-run macro model helps us understand movements in output around its long-run trend,but both are useful in explaining the long-run trend itself. 
E)  Only the short-run macro model is useful in understanding movements in output around its long-run trend,and in explaining the long-run trend itself.

Question 11

Say's Law states that by purchasing goods and services,buyers stimulate firms to produce goods and services equal to what has been purchased: Demand creates its own supply.

Accepted Answer

A) True 
 B)False

Question 12

The aggregate production function shows us that increasing the number of workers employed will increase output at a constant rate.

Accepted Answer

A) True 
 B)False

Question 13

-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 14

According to the classical model,there is no need for government intervention in the economy.if the economy is left alone,full employment output will eventually occur.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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 17

A critical assumption in the classical model is that

Accepted Answer

A)  markets are perfectly competitive in the short run 
B)  markets clear in the long run 
C)  markets clear in the short run 
D)  markets are perfectly competitive in the long run 
E)  all variables are expressed in nominal terms 
A)  markets are perfectly competitive in the short run 
B)  markets clear in the long run 
C)  markets clear in the short run 
D)  markets are perfectly competitive in the long run 
E)  all variables are expressed in nominal terms

Question 18

Which of the following are examples of injections?

Accepted Answer

A)  government purchases,net taxes and exports 
B)  government purchases,investment spending and exports 
C)  net taxes,imports and household saving 
D)  household saving,imports and government purchases 
E)  exports,imports and household saving 
A)  government purchases,net taxes and exports 
B)  government purchases,investment spending and exports 
C)  net taxes,imports and household saving 
D)  household saving,imports and government purchases 
E)  exports,imports and household saving

Question 19

Which of the following is the formula for the government's budget deficit?

Accepted Answer

A)  S - G 
B)  G -T 
C)  C + I + G 
D)  S + I 
E)  I + G 
A)  S - G 
B)  G -T 
C)  C + I + G 
D)  S + I 
E)  I + G

Question 20

In the classical model,which of the following is treated as independent of the interest rate?

Accepted Answer

A)  the quantity of loanable funds demanded by government 
B)  the quantity of loanable funds demanded by businesses 
C)  the total quantity of loanable funds demanded 
D)  household saving 
E)  the total quantity of loanable funds supplied 
A)  the quantity of loanable funds demanded by government 
B)  the quantity of loanable funds demanded by businesses 
C)  the total quantity of loanable funds demanded 
D)  household saving 
E)  the total quantity of loanable funds supplied

Exam 20: The Classical Long-Run Model

One reason why economists often appear to disagree when asked about the impact of some bad economic news is that

Assuming the economy was in equilibrium,use the following information to calculate the total value of injections. Total leakages are

Which of the following best describes the aggregate production function if output is measured on the vertical axis and the number of workers employed is measured on the horizontal axis? The curve is

Saving and taxes are considered leakages from the spending stream.

Which concept springs to mind when thinking of the classical model?.

The economist that gave us the proposition that "supply creates its own demand" was

What is the price of funds in the loanable funds market?

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

-Refer to Figure 8-1.If the labor market is in equilibrium,there is no

Which of the following statements about modern macroeconomic theory is most accurate?

Say's Law states that by purchasing goods and services,buyers stimulate firms to produce goods and services equal to what has been purchased: Demand creates its own supply.

The aggregate production function shows us that increasing the number of workers employed will increase output at a constant rate.

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

According to the classical model,there is no need for government intervention in the economy.if the economy is left alone,full employment output will eventually occur.

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

The classical model is based on the assumption that

A critical assumption in the classical model is that

Which of the following are examples of injections?

Which of the following is the formula for the government's budget deficit?

In the classical model,which of the following is treated as independent of the interest rate?

What Is Economics

Scarcity,choice,and Economic Systems

Scarcity, choice, and Economic Systems: Part A

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

Perfect Competition: Part A

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

labor Markets: Part A

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

What Macroeconomics Tries to Explain

Production, income, and Employment

The Price Level and Inflation

Part A: The Classical Model in an Open Economy

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

Feedback Effects From GDP to the Money Market

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Appendix-finding Equilibrium GDP Algebraically

Appendix: Capital and Leverage

Filters