Question 1

If the natural unemployment rate is 5.5 percent,then the economy is at full employment when the actual unemployment rate is

Accepted Answer

A)  more than 5.5 percent. 
B)  between 0 and 5.5 percent. 
C)  0 percent. 
D)  5.5 percent. 
E)  none of the above 
A)  more than 5.5 percent. 
B)  between 0 and 5.5 percent. 
C)  0 percent. 
D)  5.5 percent. 
E)  none of the above

Question 2

Exhibit 9-5  
-Refer to Exhibit 9-5.Picture 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 3

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

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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 6

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

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 7

If the current unemployment rate is equal to the natural unemployment rate,then current Real GDP is

Accepted Answer

A)  greater than Natural Real GDP. 
B)  equal to Natural Real GDP. 
C)  equal to the Real GDP produced at full employment. 
D)  less than Natural Real GDP. 
E)  b and c 
A)  greater than Natural Real GDP. 
B)  equal to Natural Real GDP. 
C)  equal to the Real GDP produced at full employment. 
D)  less than Natural Real GDP. 
E)  b and c

Question 8

Exhibit 9-3  
-Refer to Exhibit 9-3.The economy is in short-run equilibrium and has an inflationary 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 9

Suppose the economy is self-regulating,the price level is 120,the quantity demanded of Real GDP and the quantity supplied of Real GDP in the short run both equal $5.7 trillion,and the quantity supplied of Real GDP in the long run is $5.2 trillion.Given all of this information,we can conclude that the economy ____________ in short run equilibrium,and that the price level in long run equilibrium will be _____________ than 120.

Accepted Answer

A)  is not;less 
B)  is;more 
C)  is;less 
D)  is not;more 
A)  is not;less 
B)  is;more 
C)  is;less 
D)  is not;more

Question 10

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)  at Natural Real GDP. 
C)  in an inflationary gap. 
D)  at full-employment Real GDP. 
A)  in a recessionary gap. 
B)  at Natural Real GDP. 
C)  in an inflationary gap. 
D)  at full-employment Real GDP.

Question 11

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 12

A recessionary gap exists if (actual)Real GDP is __________ Natural Real GDP.

Accepted Answer

A)  less than 
B)  greater than 
C)  equal to 
D)  b and c 
E)  none of the above 
A)  less than 
B)  greater than 
C)  equal to 
D)  b and c 
E)  none of the above

Question 13

Exhibit 9-2  
-Refer to Exhibit 9-2.The economy is currently producing Q1.At this level of Real GDP,the economy is in a(n)

Accepted Answer

A)  inflationary gap. 
B)  recessionary gap. 
C)  unemployment gap. 
D)  high Real GDP gap. 
E)  none of the above 
A)  inflationary gap. 
B)  recessionary gap. 
C)  unemployment gap. 
D)  high Real GDP gap. 
E)  none of the above

Question 14

If the current Real GDP is less than Natural Real GDP,then the economy is

Accepted Answer

A)  in long-run equilibrium. 
B)  in a recessionary gap. 
C)  in an inflationary gap. 
D)  possibly in short-run equilibrium. 
E)  b and d 
A)  in long-run equilibrium. 
B)  in a recessionary gap. 
C)  in an inflationary gap. 
D)  possibly in short-run equilibrium. 
E)  b and d

Question 15

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

Accepted Answer

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

Question 16

Exhibit 9-7  
-Refer to Exhibit 9-7.Which point is representative of the economy on its LRAS curve?

Accepted Answer

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

Question 17

Exhibit 9-1  
-Refer to Exhibit 9-1.The unemployment rate is lower at

Accepted Answer

A)  Q1 than QN. 
B)  QN than Q1. 
C)  point A than point B. 
D)  point B than point A. 
A)  Q1 than QN. 
B)  QN than Q1. 
C)  point A than point B. 
D)  point B than point A.

Question 18

The structural unemployment rate is 1.3 percent,the frictional unemployment rate is 2.1 percent,and the current unemployment rate is 4.9 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 19

The structural unemployment rate is 3.1 percent,the frictional unemployment rate is 2.1 percent,and the current unemployment rate is 6.0 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 20

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.

Accepted Answer

The physical PPF represents the maximum

Exam 9: Classical Macroeconomics and the Self-Regulating Economy

If the natural unemployment rate is 5.5 percent,then the economy is at full employment when the actual unemployment rate is

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

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.

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

The more institutional constraints that exist in a particular society,

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

If the current unemployment rate is equal to the natural unemployment rate,then current Real GDP is

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

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

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.

A recessionary gap exists if (actual)Real GDP is __________ Natural Real GDP.

Exhibit 9-2 -Refer to Exhibit 9-2.The economy is currently producing Q1.At this level of Real GDP,the economy is in a(n)

If the current Real GDP is less than Natural Real GDP,then the economy is

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

Exhibit 9-7 -Refer to Exhibit 9-7.Which point is representative of the economy on its LRAS curve?

Exhibit 9-1 -Refer to Exhibit 9-1.The unemployment rate is lower at

The structural unemployment rate is 1.3 percent,the frictional unemployment rate is 2.1 percent,and the current unemployment rate is 4.9 percent.The economy is in

The structural unemployment rate is 3.1 percent,the frictional unemployment rate is 2.1 percent,and the current unemployment rate is 6.0 percent.The economy is in

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.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, controlled, and Relative

Supply,demand,and Price: Applications

Macroeconomic Measurements, Prices and Unemployment

Macroeconomic Measurements, 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

Agriculture: Problems, policies, and Unintended Effects

Filters

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

Exhibit 9-2 -Refer to Exhibit 9-2.The economy is currently producing Q₁.At this level of Real GDP,the economy is in a(n)