Question 1

If foreign producers can supply an infinite amount of tradable goods at the world price, this would imply that the world supply curve is:

Accepted Answer

A) horizontal. 
B) downward-sloping. 
C) vertical. 
D) upward-sloping. 
A) horizontal. 
B) downward-sloping. 
C) vertical. 
D) upward-sloping.

Question 2

What do almost all the "solutions" to the structural stagnation problem have in common?

Accepted Answer

Almost all the "solutions" to the struct

Question 3

Refer to the graph. Economic output in year 0 is $20 billion. What is potential output in year 2?

Accepted Answer

A) $20 billion 
B) $20.4 billion 
C) $20.8 billion 
D) $21.2 billion 
A) $20 billion 
B) $20.4 billion 
C) $20.8 billion 
D) $21.2 billion

Question 4

In the figure shown, domestic production

Accepted Answer

A) exceeds global constrained potential output. 
B) is less than exports less imports. 
C) exceeds global constrained prices. 
D) equals domestic consumption. 
A) exceeds global constrained potential output. 
B) is less than exports less imports. 
C) exceeds global constrained prices. 
D) equals domestic consumption.

Question 5

In the graph shown, the country has:

Accepted Answer

A) a trade surplus. 
B) a budget deficit. 
C) a trade deficit. 
D) neither a trade deficit nor trade surplus; exports are equal to imports. 
A) a trade surplus. 
B) a budget deficit. 
C) a trade deficit. 
D) neither a trade deficit nor trade surplus; exports are equal to imports.

Question 6

Adding globalization and large trade deficits to the standard AS/AD model creates:

Accepted Answer

A) reduced domestic production and consumption. 
B) increased domestic production and consumption. 
C) increased domestic production and reduced consumption. 
D) decreased domestic production and increased consumption. 
A) reduced domestic production and consumption. 
B) increased domestic production and consumption. 
C) increased domestic production and reduced consumption. 
D) decreased domestic production and increased consumption.

Question 7

Which group most benefited from globalization?

Accepted Answer

A) International traders and those associated with them 
B) Workers in the "commodities" sector 
C) Workers in the nontradable goods sector 
D) No one benefited 
A) International traders and those associated with them 
B) Workers in the "commodities" sector 
C) Workers in the nontradable goods sector 
D) No one benefited

Question 8

As India and China move up the value added chain,how will the effect of globalization likely change on US workers?

Accepted Answer

Even though the process of integrating C

Question 9

Refer to the graph shown. The economy begins at a level of output of $50 billion and experiences a one year recession in which output declines by 3 percent. What is output in year 1?

Accepted Answer

A) $1.50 billion 
B) $15 billion 
C) $48.5 million 
D) $51.5 billion 
A) $1.50 billion 
B) $15 billion 
C) $48.5 million 
D) $51.5 billion

Question 10

Refer to the graph. The economy begins at a level of output of $20 billion and experiences a one year recession in which output declines by 4 percent. By what rate per year must the economy expand, after it has reached its trough, to return to its potential output by year 3?

Accepted Answer

A) About 3 percent 
B) About 5 percent 
C) About 8 percent 
D) About 10 percent 
A) About 3 percent 
B) About 5 percent 
C) About 8 percent 
D) About 10 percent

Question 11

Explain graphically and with words the effect of expansionary fiscal policy in the globalized AS/AD model.

Accepted Answer

In the graph shown,the quantity of aggre

Question 12

Why is it often empirically difficult to differentiate a structural stagnation from a standard recession?

Accepted Answer

Since structural stagnation means that a

Question 13

According to the structural stagnation hypothesis, what is the long-run cause of the recent problems facing the United States?

Accepted Answer

A) Globalization 
B) Too-low investment 
C) Inflation 
D) Unemployment 
A) Globalization 
B) Too-low investment 
C) Inflation 
D) Unemployment

Question 14

Refer to the graph shown. Economic output in year 0 is $50 billion. What is potential output in year 3?

Accepted Answer

A) $47.0 billion 
B) $50 billion 
C) $54.6 billion 
D) $56.3 billion 
A) $47.0 billion 
B) $50 billion 
C) $54.6 billion 
D) $56.3 billion

Question 15

In the graph shown, what would eliminate a trade deficit if there were one?

Accepted Answer

A) The exchange rate appreciates. 
B) Domestic reservation wages rise. 
C) Foreign wages rise relative to domestic wages. 
D) Government runs expansionary policy. 
A) The exchange rate appreciates. 
B) Domestic reservation wages rise. 
C) Foreign wages rise relative to domestic wages. 
D) Government runs expansionary policy.

Question 16

One solution to long-run structural problems could involve:

Accepted Answer

A) shifting the world supply curve down. 
B) shifting the world supply curve up. 
C) moving along the domestic supply curve. 
D) shifting the domestic supply curve up. 
A) shifting the world supply curve down. 
B) shifting the world supply curve up. 
C) moving along the domestic supply curve. 
D) shifting the domestic supply curve up.

Question 17

The market solution to structural unemployment, according to structural stagnationists, should include a:

Accepted Answer

A) higher reservation wage so that workers will earn more income. 
B) rise in inflation to make government begin to run contractionary policy. 
C) lower reservation wage so that workers can be rehired and make firms more competitive. 
D) combination of higher and lower reservation wages, dependent upon the rate of inflation. 
A) higher reservation wage so that workers will earn more income. 
B) rise in inflation to make government begin to run contractionary policy. 
C) lower reservation wage so that workers can be rehired and make firms more competitive. 
D) combination of higher and lower reservation wages, dependent upon the rate of inflation.

Question 18

The wage a person requires before accepting a job is referred to as the ________ wage.

Accepted Answer

A) compensating 
B) minimum 
C) reservation 
D) psychological 
A) compensating 
B) minimum 
C) reservation 
D) psychological

Question 19

Refer to the graph. The economy begins at a level of output of $20 billion and experiences a one year recession in which output declines by 4 percent. By what rate must the economy expand to return to potential output by year 2?

Accepted Answer

A) About 4 percent 
B) About 6 percent 
C) About 8 percent 
D) About 10 percent 
A) About 4 percent 
B) About 6 percent 
C) About 8 percent 
D) About 10 percent

Question 20

In the graph shown, which of the world supply curves is associated with a trade balance?

Accepted Answer

A) WAS0 
B) WAS1 
C) WAS2 
D) None create surpluses. 
A) WAS0 
B) WAS1 
C) WAS2 
D) None create surpluses.

Exam 37: Structural Stagnation and Globalization

If foreign producers can supply an infinite amount of tradable goods at the world price, this would imply that the world supply curve is:

What do almost all the "solutions" to the structural stagnation problem have in common?

Refer to the graph. Economic output in year 0 is $20 billion. What is potential output in year 2?

In the figure shown, domestic production

In the graph shown, the country has:

Adding globalization and large trade deficits to the standard AS/AD model creates:

Which group most benefited from globalization?

As India and China move up the value added chain,how will the effect of globalization likely change on US workers?

Refer to the graph shown. The economy begins at a level of output of $50 billion and experiences a one year recession in which output declines by 3 percent. What is output in year 1?

Refer to the graph. The economy begins at a level of output of $20 billion and experiences a one year recession in which output declines by 4 percent. By what rate per year must the economy expand, after it has reached its trough, to return to its potential output by year 3?

Explain graphically and with words the effect of expansionary fiscal policy in the globalized AS/AD model.

Why is it often empirically difficult to differentiate a structural stagnation from a standard recession?

According to the structural stagnation hypothesis, what is the long-run cause of the recent problems facing the United States?

Refer to the graph shown. Economic output in year 0 is $50 billion. What is potential output in year 3?

In the graph shown, what would eliminate a trade deficit if there were one?

One solution to long-run structural problems could involve:

The market solution to structural unemployment, according to structural stagnationists, should include a:

The wage a person requires before accepting a job is referred to as the ________ wage.

Refer to the graph. The economy begins at a level of output of $20 billion and experiences a one year recession in which output declines by 4 percent. By what rate must the economy expand to return to potential output by year 2?

In the graph shown, which of the world supply curves is associated with a trade balance?

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Macro Policy in Developing Countries

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