Question 1

When explaining expansions and recessions,the classical model is

Accepted Answer

A)  reliable 
B)  seriously flawed 
C)  the favorite explanatory tool of economists 
D)  overly focused on the labor market 
E)  sometimes accurate and sometimes not 
A)  reliable 
B)  seriously flawed 
C)  the favorite explanatory tool of economists 
D)  overly focused on the labor market 
E)  sometimes accurate and sometimes not

Question 2

Which of the following is a common reaction to a decrease in the interest rate?

Accepted Answer

A)  An increase in oil prices. 
B)  A decrease in stock market prices. 
C)  An increase in spending on new homes. 
D)  An increase in military spending. 
E)  An increase in federal highway spending. 
A)  An increase in oil prices. 
B)  A decrease in stock market prices. 
C)  An increase in spending on new homes. 
D)  An increase in military spending. 
E)  An increase in federal highway spending.

Question 3

A logical explanation for recessions might be that households have suddenly altered their willingness to work.A problem with this explanation is

Accepted Answer

A)  it is inconsistent with patterns of job searches during recessions 
B)  the demand for labor rarely shifts 
C)  the large number of women who entered the labor force in the last four decades 
D)  it is inconsistent with the classical model 
E)  the work ethic that is responsible for the decline in American vacations. 
A)  it is inconsistent with patterns of job searches during recessions 
B)  the demand for labor rarely shifts 
C)  the large number of women who entered the labor force in the last four decades 
D)  it is inconsistent with the classical model 
E)  the work ethic that is responsible for the decline in American vacations.

Question 4

Which statement best describes economic fluctuations?

Accepted Answer

A)  Expansions and contractions typically have about the same lengths. 
B)  Expansions typically last 7 years,while recessions typically last 3 years. 
C)  Expansions tend to be shorter than contractions. 
D)  The percent change in output is larger during recessions than during expansions. 
E)  Expansions and contractions vary in duration and magnitude,with expansions tending to last longer than contractions. 
A)  Expansions and contractions typically have about the same lengths. 
B)  Expansions typically last 7 years,while recessions typically last 3 years. 
C)  Expansions tend to be shorter than contractions. 
D)  The percent change in output is larger during recessions than during expansions. 
E)  Expansions and contractions vary in duration and magnitude,with expansions tending to last longer than contractions.

Question 5

What do all expansions and recessions since 1950 have in common?

Accepted Answer

A)  Changes in oil prices. 
B)  Changes in interest rates. 
C)  Changes in spending. 
D)  Changes in productivity. 
E)  None of the above. 
A)  Changes in oil prices. 
B)  Changes in interest rates. 
C)  Changes in spending. 
D)  Changes in productivity. 
E)  None of the above.

Question 6

The most recent economic expansion started in

Accepted Answer

A)  2005 
B)  2003 
C)  2007 
D)  1998 
A)  2005 
B)  2003 
C)  2007 
D)  1998

Question 7

Why is it unlikely that expansions could be explained by a decrease in labor demand in the classical model?

Accepted Answer

A)  It would be hard to say why productivity decreases. 
B)  Productivity increases are too fast and variable to explain expansions. 
C)  Productivity tends to improve at a constant and steady rate. 
D)  Only unexplained spending changes can lead to changes in output and employment,not the other way around. 
E)  Productivity improvements are rather slow. 
A)  It would be hard to say why productivity decreases. 
B)  Productivity increases are too fast and variable to explain expansions. 
C)  Productivity tends to improve at a constant and steady rate. 
D)  Only unexplained spending changes can lead to changes in output and employment,not the other way around. 
E)  Productivity improvements are rather slow.

Question 8

The assumption that labor markets clear makes it very easy for the classical model to explain expansions.

Accepted Answer

A) True 
 B)False

Question 9

A weakness in the classical economic claim that a recession is caused by a decrease in labor demand curve is

Accepted Answer

A)  that labor demand never changes 
B)  that labor demand increases during a recession 
C)  that labor supply decreases during a recession 
D)  the confusion between a shift of the labor demand curve and a movement along that curve 
E)  the impossibility in the classical model of total spending ever being deficient 
A)  that labor demand never changes 
B)  that labor demand increases during a recession 
C)  that labor supply decreases during a recession 
D)  the confusion between a shift of the labor demand curve and a movement along that curve 
E)  the impossibility in the classical model of total spending ever being deficient

Question 10

Which of the following occurs during a recession?

Accepted Answer

A)  Output rises,employment rises and unemployment falls. 
B)  Output falls,employment falls and unemployment rises. 
C)  Output rises,employment falls and unemployment falls. 
D)  Output rises,employment rises and unemployment rises. 
E)  Output rises,employment rises and tax revenues fall.. 
A)  Output rises,employment rises and unemployment falls. 
B)  Output falls,employment falls and unemployment rises. 
C)  Output rises,employment falls and unemployment falls. 
D)  Output rises,employment rises and unemployment rises. 
E)  Output rises,employment rises and tax revenues fall..

Question 11

The expansion of 2002 and beyond was due,at least in part to

Accepted Answer

A)  interest rate increases. 
B)  increases in housing wealth. 
C)  increases in investment spending. 
D)  large reductions in federal spending. 
E)  increases in taxes. 
A)  interest rate increases. 
B)  increases in housing wealth. 
C)  increases in investment spending. 
D)  large reductions in federal spending. 
E)  increases in taxes.

Question 12

An economic expansion reflects

Accepted Answer

A)  any movement from disequilibrium to a new equilibrium 
B)  the increase in output and decrease in employment level following a recession 
C)  the increase in output and employment levels following a recession 
D)  the rising wage rates that follow economic instability 
E)  instability in government tax revenues. 
A)  any movement from disequilibrium to a new equilibrium 
B)  the increase in output and decrease in employment level following a recession 
C)  the increase in output and employment levels following a recession 
D)  the rising wage rates that follow economic instability 
E)  instability in government tax revenues.

Question 13

The reason a shock to one sector can spread to the whole economy is that

Accepted Answer

A)  a decrease in production in one sector leads to an overall decrease in spending 
B)  firms will need to help bail out other firms that are having troubles 
C)  an increase in production in one sector will lead to an overall decrease in spending 
D)  most shocks are not sector-specific but economy-wide 
E)  workers laid off in the one sector will purchase more goods in another sector 
A)  a decrease in production in one sector leads to an overall decrease in spending 
B)  firms will need to help bail out other firms that are having troubles 
C)  an increase in production in one sector will lead to an overall decrease in spending 
D)  most shocks are not sector-specific but economy-wide 
E)  workers laid off in the one sector will purchase more goods in another sector

Question 14

Which of the following assumptions of the classical model is the best reason we cannot use it to explain short-run economic fluctuations?

Accepted Answer

A)  Markets never clear in the long run. 
B)  The labor market clears. 
C)  Prices remain constant and supply and demand adjust. 
D)  It does not show how an economy recovers from a recession. 
E)  Government intervention is essential to get markets to clear. 
A)  Markets never clear in the long run. 
B)  The labor market clears. 
C)  Prices remain constant and supply and demand adjust. 
D)  It does not show how an economy recovers from a recession. 
E)  Government intervention is essential to get markets to clear.

Question 15

Which of the following could cause a decrease in labor supply?

Accepted Answer

A)  An increased preference for working in the labor market 
B)  An increase in the number of two-family households 
C)  An increased preference for enjoying leisure time 
D)  A trend toward less schooling and toward earlier entrance into the labor market 
E)  An increase in the retirement age 
A)  An increased preference for working in the labor market 
B)  An increase in the number of two-family households 
C)  An increased preference for enjoying leisure time 
D)  A trend toward less schooling and toward earlier entrance into the labor market 
E)  An increase in the retirement age

Question 16

In the classical model,a falling demand for labor will

Accepted Answer

A)  not cause unemployment because the labor market always clears 
B)  cause a recession with lower employment and a lower real wage 
C)  cause a recession with lower employment and an increasing real wage 
D)  cause a recession with lower unemployment and a lower real wage 
E)  cause a recession with higher employment and an increasing real wage. 
A)  not cause unemployment because the labor market always clears 
B)  cause a recession with lower employment and a lower real wage 
C)  cause a recession with lower employment and an increasing real wage 
D)  cause a recession with lower unemployment and a lower real wage 
E)  cause a recession with higher employment and an increasing real wage.

Question 17

Which of the following is true in the classical model?

Accepted Answer

A)  A spontaneous increase in spending can cause an increase in output and employment. 
B)  An increase in output and employment can cause a decrease in spending. 
C)  A spontaneous decrease in spending can cause an increase in output and employment. 
D)  An increase in output and employment can cause an increase in spending. 
E)  A spontaneous decrease in spending can cause a decrease in output and an increase in employment. 
A)  A spontaneous increase in spending can cause an increase in output and employment. 
B)  An increase in output and employment can cause a decrease in spending. 
C)  A spontaneous decrease in spending can cause an increase in output and employment. 
D)  An increase in output and employment can cause an increase in spending. 
E)  A spontaneous decrease in spending can cause a decrease in output and an increase in employment.

Question 18

The economic expansion that began in 1991

Accepted Answer

A)  lasted approximately five years. 
B)  lasted approximately twelve years. 
C)  lasted approximately nine years. 
D)  was the longest expansion in U.S.history. 
E)  was the second longest expansion in U.S.history. 
A)  lasted approximately five years. 
B)  lasted approximately twelve years. 
C)  lasted approximately nine years. 
D)  was the longest expansion in U.S.history. 
E)  was the second longest expansion in U.S.history.

Question 19

The classical model fails to recognize that

Accepted Answer

A)  labor markets always clear 
B)  managers develop paternalistic feelings toward their workers 
C)  labor markets do not always clear 
D)  what was true yesterday might not be true today 
E)  search costs are low during recessions 
A)  labor markets always clear 
B)  managers develop paternalistic feelings toward their workers 
C)  labor markets do not always clear 
D)  what was true yesterday might not be true today 
E)  search costs are low during recessions

Question 20

The process of moving from disequilibrium to equilibrium in labor markets creates special problems because

Accepted Answer

A)  we are all workers threatened by recession 
B)  we cannot spend money we have not earned 
C)  the process is very short 
D)  the process is especially lengthy 
E)  negative shocks create economic expansions 
A)  we are all workers threatened by recession 
B)  we cannot spend money we have not earned 
C)  the process is very short 
D)  the process is especially lengthy 
E)  negative shocks create economic expansions

When explaining expansions and recessions,the classical model is

Which of the following is a common reaction to a decrease in the interest rate?

A logical explanation for recessions might be that households have suddenly altered their willingness to work.A problem with this explanation is

Which statement best describes economic fluctuations?

What do all expansions and recessions since 1950 have in common?

The most recent economic expansion started in

Why is it unlikely that expansions could be explained by a decrease in labor demand in the classical model?

The assumption that labor markets clear makes it very easy for the classical model to explain expansions.

A weakness in the classical economic claim that a recession is caused by a decrease in labor demand curve is

Which of the following occurs during a recession?

The expansion of 2002 and beyond was due,at least in part to

An economic expansion reflects

The reason a shock to one sector can spread to the whole economy is that

Which of the following assumptions of the classical model is the best reason we cannot use it to explain short-run economic fluctuations?

Which of the following could cause a decrease in labor supply?

In the classical model,a falling demand for labor will

Which of the following is true in the classical model?

The economic expansion that began in 1991

The classical model fails to recognize that

The process of moving from disequilibrium to equilibrium in labor markets creates special problems because

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

The Classical Long run Model

Economic Growth and Rising Living Standards

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 10: Economic Fluctuations

When explaining expansions and recessions,the classical model is

Which of the following is a common reaction to a decrease in the interest rate?

A logical explanation for recessions might be that households have suddenly altered their willingness to work.A problem with this explanation is

Which statement best describes economic fluctuations?

What do all expansions and recessions since 1950 have in common?

The most recent economic expansion started in

Why is it unlikely that expansions could be explained by a decrease in labor demand in the classical model?

The assumption that labor markets clear makes it very easy for the classical model to explain expansions.

A weakness in the classical economic claim that a recession is caused by a decrease in labor demand curve is

Which of the following occurs during a recession?

The expansion of 2002 and beyond was due,at least in part to

An economic expansion reflects

The reason a shock to one sector can spread to the whole economy is that

Which of the following assumptions of the classical model is the best reason we cannot use it to explain short-run economic fluctuations?

Which of the following could cause a decrease in labor supply?

In the classical model,a falling demand for labor will

Which of the following is true in the classical model?

The economic expansion that began in 1991

The classical model fails to recognize that

The process of moving from disequilibrium to equilibrium in labor markets creates special problems because

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

The Classical Long run Model

Economic Growth and Rising Living Standards

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