Question 1

Suppose there are no firms,only the government and households.What would the total demand for funds curve look like in such a world?

Accepted Answer

A)  Downward sloping 
B)  Perfectly horizontal 
C)  Upward sloping 
D)  There would be no such curve 
E)  Perfectly vertical 
A)  Downward sloping 
B)  Perfectly horizontal 
C)  Upward sloping 
D)  There would be no such curve 
E)  Perfectly vertical

Question 2

-Refer to Figure 8-3.This figure is known as

Accepted Answer

A)  the classical aggregate production function 
B)  the Keynesian aggregate production function 
C)  the full-employment model 
D)  the circular flow diagram 
E)  Say's diagram 
A)  the classical aggregate production function 
B)  the Keynesian aggregate production function 
C)  the full-employment model 
D)  the circular flow diagram 
E)  Say's diagram

Question 3

According to Say's Law,

Accepted Answer

A)  demand creates its own supply 
B)  interest rates never change 
C)  there is never too much or too little spending 
D)  prices never change 
E)  the market for loanable funds is always in equilibrium 
A)  demand creates its own supply 
B)  interest rates never change 
C)  there is never too much or too little spending 
D)  prices never change 
E)  the market for loanable funds is always in equilibrium

Question 4

Which of the following types of unemployment can the classical model not explain?

Accepted Answer

A)  Structural unemployment 
B)  Cyclical unemployment 
C)  Seasonal unemployment 
D)  Frictional unemployment 
E)  Temporary unemployment 
A)  Structural unemployment 
B)  Cyclical unemployment 
C)  Seasonal unemployment 
D)  Frictional unemployment 
E)  Temporary unemployment

Question 5

If political influences,independent of any economic forces,lead to a larger government budget deficit,what will be the effect on the loanable funds market?

Accepted Answer

A)  The interest rate will rise and the amount of saving will increase. 
B)  The interest rate will fall and the amount of saving will increase. 
C)  The interest rate will rise and the amount of saving will decrease. 
D)  The interest rate will fall and the amount of saving will decrease. 
E)  The interest rate will rise but the change in saving will be ambiguous. 
A)  The interest rate will rise and the amount of saving will increase. 
B)  The interest rate will fall and the amount of saving will increase. 
C)  The interest rate will rise and the amount of saving will decrease. 
D)  The interest rate will fall and the amount of saving will decrease. 
E)  The interest rate will rise but the change in saving will be ambiguous.

Question 6

Which of the following are examples of leakages?

Accepted Answer

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

Question 7

Diminishing returns to labor occur for two primary reasons: 1)as we keep adding new workers,it becomes increasingly difficult to obtain productivity gains through additional specialization;and 2)each additional worker we add has less land and capital to work with.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is an injection into the circular flow?

Accepted Answer

A)  household saving and government spending 
B)  business investment and household saving 
C)  net taxes and household saving 
D)  government spending and business investment 
E)  net taxes and government spending 
A)  household saving and government spending 
B)  business investment and household saving 
C)  net taxes and household saving 
D)  government spending and business investment 
E)  net taxes and government spending

Question 9

Which economic phenomenon is the short-run macro model most useful in explaining?

Accepted Answer

A)  The sources of employment in the long run 
B)  The trend of output in the long run 
C)  The sources of cyclical unemployment 
D)  The reasons why some workers become discouraged 
E)  The sources of long-run economic growth 
A)  The sources of employment in the long run 
B)  The trend of output in the long run 
C)  The sources of cyclical unemployment 
D)  The reasons why some workers become discouraged 
E)  The sources of long-run economic growth

Question 10

Market clearing in the loanable funds market

Accepted Answer

A)  violates Say's Law 
B)  guarantees that total spending will be just sufficient to purchase whatever output is produced 
C)  means that the interest rate never changes 
D)  guarantees that total spending will equal the quantity of loanable funds demanded 
E)  requires that the government run a budget deficit 
A)  violates Say's Law 
B)  guarantees that total spending will be just sufficient to purchase whatever output is produced 
C)  means that the interest rate never changes 
D)  guarantees that total spending will equal the quantity of loanable funds demanded 
E)  requires that the government run a budget deficit

Question 11

In the classical model,when an open economy has balanced trade,Say's law does not hold.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Which of the following is true for a market that clears?

Accepted Answer

A)  An excess supply of anything traded will lead to a fall in its price. 
B)  An excess demand of anything traded will lead to a fall in its price. 
C)  An excess supply of anything traded will lead to a rise in its price. 
D)  An excess demand of anything traded will not lead to a price change. 
E)  A high price will lead to a high demand. 
A)  An excess supply of anything traded will lead to a fall in its price. 
B)  An excess demand of anything traded will lead to a fall in its price. 
C)  An excess supply of anything traded will lead to a rise in its price. 
D)  An excess demand of anything traded will not lead to a price change. 
E)  A high price will lead to a high demand.

Question 14

Assuming the economy was in equilibrium,use the following information to calculate the total value of injections.
$$\begin{array} { | l | l | } 
\hline \text { Consumption Spending } & \$ 3.5 \text { tillian } \
\hline \text { Net Taxes } & \$ 2.7 \text { tillian } \
\hline \text { Hausehold Seving } & \$ 2.5 \text { tillian } \
\hline \text { Avestment Spenfing } & \$ 2.2 \text { tillian } \
\hline \text { Gavernment purchases } & \$ 3.0 \text { trillian } \
\hline
\end{array}$$
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 15

In the loanable funds market,if the government is running a deficit

Accepted Answer

A)  it is a supplier of funds as it is taking in more than it is spending 
B)  it is a demander of funds as it is taking in more than it is spending 
C)  it is a supplier of funds as it is spending more than it is taking in 
D)  it is neither be a supplier or demander 
E)  it is a demander of funds as it is spending more than it is taking in. 
A)  it is a supplier of funds as it is taking in more than it is spending 
B)  it is a demander of funds as it is taking in more than it is spending 
C)  it is a supplier of funds as it is spending more than it is taking in 
D)  it is neither be a supplier or demander 
E)  it is a demander of funds as it is spending more than it is taking in.

Question 16

In the classical model,

Accepted Answer

A)  markets do not automatically clear. 
B)  business demand for loanable fund exceeds business planned investment spending. 
C)  business demand for loanable fund is equal to business planned investment spending. 
D)  businesses engage in interest-free borrowing. 
E)  the government's demand for funds is downward sloping. 
A)  markets do not automatically clear. 
B)  business demand for loanable fund exceeds business planned investment spending. 
C)  business demand for loanable fund is equal to business planned investment spending. 
D)  businesses engage in interest-free borrowing. 
E)  the government's demand for funds is downward sloping.

Question 17

The demand for funds in the financial market comes from one source: the business sector's investment spending.

Accepted Answer

A) True 
 B)False

Question 18

According to classical economics,

Accepted Answer

A)  the economy moves to full employment in the long run 
B)  the economy is always at full employment in the short run 
C)  the economy is rarely at full employment 
D)  business cycles explain long-run fluctuations in the economy 
E)  the economy is at full employment in the short run,but in the long run,business cycle movements lead the economy away from full employment 
A)  the economy moves to full employment in the long run 
B)  the economy is always at full employment in the short run 
C)  the economy is rarely at full employment 
D)  business cycles explain long-run fluctuations in the economy 
E)  the economy is at full employment in the short run,but in the long run,business cycle movements lead the economy away from full employment

Question 19

The supply of loanable funds curve

Accepted Answer

A)  is upward sloping 
B)  is downward sloping 
C)  is horizontal 
D)  begins sloping upward,then levels off 
E)  may slope either upward or downward,depending upon the interest rate 
A)  is upward sloping 
B)  is downward sloping 
C)  is horizontal 
D)  begins sloping upward,then levels off 
E)  may slope either upward or downward,depending upon the interest rate

Question 20

Assume that markets clear.If in the labor market there is

Accepted Answer

A)  an excess supply of labor,wages will rise 
B)  an excess demand for labor,wages will fall 
C)  an excess demand for labor,wages will rise 
D)  an excess supply of labor,wages stay constant 
E)  a decline in labor demand,wages will rise 
A)  an excess supply of labor,wages will rise 
B)  an excess demand for labor,wages will fall 
C)  an excess demand for labor,wages will rise 
D)  an excess supply of labor,wages stay constant 
E)  a decline in labor demand,wages will rise

Suppose there are no firms,only the government and households.What would the total demand for funds curve look like in such a world?

-Refer to Figure 8-3.This figure is known as

According to Say's Law,

Which of the following types of unemployment can the classical model not explain?

If political influences,independent of any economic forces,lead to a larger government budget deficit,what will be the effect on the loanable funds market?

Which of the following are examples of leakages?

Diminishing returns to labor occur for two primary reasons: 1)as we keep adding new workers,it becomes increasingly difficult to obtain productivity gains through additional specialization;and 2)each additional worker we add has less land and capital to work with.

Which of the following is an injection into the circular flow?

Which economic phenomenon is the short-run macro model most useful in explaining?

Market clearing in the loanable funds market

In the classical model,when an open economy has balanced trade,Say's law does not hold.

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

Which of the following is true for a market that clears?

Assuming the economy was in equilibrium,use the following information to calculate the total value of injections. Consumption Spending \ 3.5 tillian Net Taxes \ 2.7 tillian Hausehold Seving \ 2.5 tillian Avestment Spenfing \ 2.2 tillian Gavernment purchases \ 3.0 trillian Total leakages are

In the loanable funds market,if the government is running a deficit

In the classical model,

The demand for funds in the financial market comes from one source: the business sector's investment spending.

According to classical economics,

The supply of loanable funds curve

Assume that markets clear.If in the labor market there is

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

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

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

Exam 8:The Classical Long run Model

Suppose there are no firms,only the government and households.What would the total demand for funds curve look like in such a world?

-Refer to Figure 8-3.This figure is known as

According to Say's Law,

Which of the following types of unemployment can the classical model not explain?

If political influences,independent of any economic forces,lead to a larger government budget deficit,what will be the effect on the loanable funds market?

Which of the following are examples of leakages?

Diminishing returns to labor occur for two primary reasons: 1)as we keep adding new workers,it becomes increasingly difficult to obtain productivity gains through additional specialization;and 2)each additional worker we add has less land and capital to work with.

Which of the following is an injection into the circular flow?

Which economic phenomenon is the short-run macro model most useful in explaining?

Market clearing in the loanable funds market

In the classical model,when an open economy has balanced trade,Say's law does not hold.

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

Which of the following is true for a market that clears?

Assuming the economy was in equilibrium,use the following information to calculate the total value of injections. Consumption Spending \ 3.5 tillian Net Taxes \ 2.7 tillian Hausehold Seving \ 2.5 tillian Avestment Spenfing \ 2.2 tillian Gavernment purchases \ 3.0 trillian Total leakages are

In the loanable funds market,if the government is running a deficit

In the classical model,

The demand for funds in the financial market comes from one source: the business sector's investment spending.

According to classical economics,

The supply of loanable funds curve

Assume that markets clear.If in the labor market there is

What is Economics?

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

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

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters