Question 1

According to the structural stagnation hypothesis, expansionary macro policy tends to lead to:

Accepted Answer

A) goods inflation. 
B) goods deflation. 
C) asset price inflation. 
D) low exchange rates. 
A) goods inflation. 
B) goods deflation. 
C) asset price inflation. 
D) low exchange rates.

Question 2

The higher the reservation wage, the more likely one is to be unemployed.

Accepted Answer

A) True 
 B)False

Question 3

In the graph shown, which of the world supply curves create a trade surplus?

Accepted Answer

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

Question 4

Which of the following will shift the domestic SAS curve up?

Accepted Answer

A) Lowering wages 
B) Increasing unemployment insurance 
C) Increasing productivity by retraining 
D) Reducing unemployment insurance 
A) Lowering wages 
B) Increasing unemployment insurance 
C) Increasing productivity by retraining 
D) Reducing unemployment insurance

Question 5

How does the existence of a nontradable sector change the implications of the globalized AS/AD model?

Accepted Answer

Nontradable sectors are not directly aff

Question 6

In the graph shown, a downward shift in the SAS curve:

Accepted Answer

A) raises domestic consumption, because domestic producers produce more. 
B) raises the trade deficit, because domestic producers are more competitive. 
C) raises domestic production, because input prices have fallen. 
D) lowers globalized potential output, because domestic producers are more competitive. 
A) raises domestic consumption, because domestic producers produce more. 
B) raises the trade deficit, because domestic producers are more competitive. 
C) raises domestic production, because input prices have fallen. 
D) lowers globalized potential output, because domestic producers are more competitive.

Question 7

Why are deficits of less concern when used to fight a standard recession than when they are used to fight structural stagnation?

Accepted Answer

Deficits are less of a concern when used

Question 8

Which of the following statements best describes the figure shown?

Accepted Answer

A) The world price level equals the domestic price level. 
B) The economy is operating below potential because of globalization. 
C) Domestic aggregate supply is less than domestic aggregate demand. 
D) Potential output is constrained by globalization. 
A) The world price level equals the domestic price level. 
B) The economy is operating below potential because of globalization. 
C) Domestic aggregate supply is less than domestic aggregate demand. 
D) Potential output is constrained by globalization.

Question 9

Looking at the globalized AS/AD model, the economy can exceed potential output, without generating accelerating goods inflation, because:

Accepted Answer

A) the world price level puts a cap on the domestic price level. 
B) the domestic price level always exceeds the world price level. 
C) the world price level always exceeds the domestic price level. 
D) the LRAS curve is no longer vertical. 
A) the world price level puts a cap on the domestic price level. 
B) the domestic price level always exceeds the world price level. 
C) the world price level always exceeds the domestic price level. 
D) the LRAS curve is no longer vertical.

Question 10

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. By what rate must the economy expand to return to potential output by year 2?

Accepted Answer

A) About 3 percent 
B) About 4 percent 
C) About 6 percent 
D) About 9 percent 
A) About 3 percent 
B) About 4 percent 
C) About 6 percent 
D) About 9 percent

Question 11

Structural stagnation focuses on ________ in terms of understanding why the economy experiences slow growth.

Accepted Answer

A) low investment 
B) low consumption 
C) low government spending 
D) globalization 
A) low investment 
B) low consumption 
C) low government spending 
D) globalization

Question 12

In order for the economy to return to its growth rate, the rate at which the economy expands must be:

Accepted Answer

A) equal to the trend rate. 
B) less than the trend rate. 
C) greater than the trend rate. 
D) equal to the rate of inflation. 
A) equal to the trend rate. 
B) less than the trend rate. 
C) greater than the trend rate. 
D) equal to the rate of inflation.

Question 13

If the structural stagnation hypothesis is correct, demand-side government policy has been far too expansionary since the mid:

Accepted Answer

A) 2000s. 
B) 1980s. 
C) 1990s. 
D) 1970s. 
A) 2000s. 
B) 1980s. 
C) 1990s. 
D) 1970s.

Question 14

When the financial crisis occurred, policy makers were more concerned about the deficit than they were about addressing the financial crisis.

Accepted Answer

A) True 
 B)False

Question 15

What would tariffs do to unemployment caused by globalization? Why do most economists not favor using tariffs?

Accepted Answer

While tariffs would also shift the world

Question 16

Structural stagnation cannot be treated as a normal business cycle because it:

Accepted Answer

A) only happens once every 30 years. 
B) only occurs as result of hyperinflation. 
C) is far less responsive to typical demand-side policies. 
D) is far less responsive to supply-side policies. 
A) only happens once every 30 years. 
B) only occurs as result of hyperinflation. 
C) is far less responsive to typical demand-side policies. 
D) is far less responsive to supply-side policies.

Question 17

Which of the following would shift the domestic SAS curve down?

Accepted Answer

A) Increasing wages 
B) Increasing unemployment insurance 
C) Finding a new, low-cost energy source tied to the country 
D) Reducing foreign wages 
A) Increasing wages 
B) Increasing unemployment insurance 
C) Finding a new, low-cost energy source tied to the country 
D) Reducing foreign wages

Question 18

How is the globalized AS/AD model different from the standard AS/AD model?

Accepted Answer

A) It has an added world demand curve. 
B) The AD curve is upward sloping. 
C) It has an added world supply curve. 
D) The AS curve is downward sloping. 
A) It has an added world demand curve. 
B) The AD curve is upward sloping. 
C) It has an added world supply curve. 
D) The AS curve is downward sloping.

Question 19

The globalized AS/AD curve is the standard AS/AD model with an added:

Accepted Answer

A) world demand curve. 
B) domestic supply curve. 
C) world supply curve. 
D) long-run aggregate supply curve. 
A) world demand curve. 
B) domestic supply curve. 
C) world supply curve. 
D) long-run aggregate supply curve.

Question 20

According to the structural stagnation model, an increasing trade deficit translates into ________ unemployment and ________ globally-constrained potential output.

Accepted Answer

A) lower; higher 
B) lower; lower 
C) higher; higher 
D) higher; lower 
A) lower; higher 
B) lower; lower 
C) higher; higher 
D) higher; lower

Exam 37: Structural Stagnation and Globalization

According to the structural stagnation hypothesis, expansionary macro policy tends to lead to:

The higher the reservation wage, the more likely one is to be unemployed.

In the graph shown, which of the world supply curves create a trade surplus?

Which of the following will shift the domestic SAS curve up?

How does the existence of a nontradable sector change the implications of the globalized AS/AD model?

In the graph shown, a downward shift in the SAS curve:

Why are deficits of less concern when used to fight a standard recession than when they are used to fight structural stagnation?

Which of the following statements best describes the figure shown?

Looking at the globalized AS/AD model, the economy can exceed potential output, without generating accelerating goods inflation, because:

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. By what rate must the economy expand to return to potential output by year 2?

Structural stagnation focuses on ________ in terms of understanding why the economy experiences slow growth.

In order for the economy to return to its growth rate, the rate at which the economy expands must be:

If the structural stagnation hypothesis is correct, demand-side government policy has been far too expansionary since the mid:

When the financial crisis occurred, policy makers were more concerned about the deficit than they were about addressing the financial crisis.

What would tariffs do to unemployment caused by globalization? Why do most economists not favor using tariffs?

Structural stagnation cannot be treated as a normal business cycle because it:

Which of the following would shift the domestic SAS curve down?

How is the globalized AS/AD model different from the standard AS/AD model?

The globalized AS/AD curve is the standard AS/AD model with an added:

According to the structural stagnation model, an increasing trade deficit translates into ________ unemployment and ________ globally-constrained potential output.

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

Filters

According to the structural stagnation model, an increasing trade deficit translates into unemployment and globally-constrained potential output.