Question 1

When actual output is below potential output

Accepted Answer

A)  the economic costs of unemployment are zero. 
B)  everyone actively seeking a job can easily find one. 
C)  extreme inflationary pressure prevails. 
D)  less than 95 percent of the labor force is employed. 
E)  the economy is producing on its production possibilities curve. 
A)  the economic costs of unemployment are zero. 
B)  everyone actively seeking a job can easily find one. 
C)  extreme inflationary pressure prevails. 
D)  less than 95 percent of the labor force is employed. 
E)  the economy is producing on its production possibilities curve.

Question 2

The following question are based on the following diagram:
  
-An equilibrium level of output and an equilibrium price level occur

Accepted Answer

A)  only when the aggregate supply curve is horizontal. 
B)  when the price level equals the level of national output. 
C)  as long as the aggregate demand curve slopes upward. 
D)  where the aggregate supply and demand curves intersect. 
E)  in the short run only with specific government intervention. 
A)  only when the aggregate supply curve is horizontal. 
B)  when the price level equals the level of national output. 
C)  as long as the aggregate demand curve slopes upward. 
D)  where the aggregate supply and demand curves intersect. 
E)  in the short run only with specific government intervention.

Question 3

If the money supply is fixed,increases in the price level

Accepted Answer

A)  raise the purchasing power of the money supply and increase the amount people spend. 
B)  reduce the average money cost of each transaction, thus lowering total spending. 
C)  reduce interest rates; thus, the cost of borrowing money falls, leading to more consumption and investment. 
D)  raise the incentive for people to spend on big-ticket items such as appliances, automobiles, and houses. 
E)  increase the size of the money balances people want in order to maintain the real value of their purchases, thus causing interest rates to rise. 
A)  raise the purchasing power of the money supply and increase the amount people spend. 
B)  reduce the average money cost of each transaction, thus lowering total spending. 
C)  reduce interest rates; thus, the cost of borrowing money falls, leading to more consumption and investment. 
D)  raise the incentive for people to spend on big-ticket items such as appliances, automobiles, and houses. 
E)  increase the size of the money balances people want in order to maintain the real value of their purchases, thus causing interest rates to rise.

Question 4

The aggregate supply curve becomes vertical

Accepted Answer

A)  when there is significant excess capacity. 
B)  as the prices of raw materials and labor fall. 
C)  at full employment. 
D)  because demand falls as prices rise. 
E)  for reasons that are a mystery to most economists. 
A)  when there is significant excess capacity. 
B)  as the prices of raw materials and labor fall. 
C)  at full employment. 
D)  because demand falls as prices rise. 
E)  for reasons that are a mystery to most economists.

Question 5

The level of real national output demanded at each price level

Accepted Answer

A)  declines as aggregate supply increases. 
B)  is horizontal according to the classical economists. 
C)  is unaffected by changes in interest rates. 
D)  can be calculated only when the economy is at full employment. 
E)  is inversely related to the price level. 
A)  declines as aggregate supply increases. 
B)  is horizontal according to the classical economists. 
C)  is unaffected by changes in interest rates. 
D)  can be calculated only when the economy is at full employment. 
E)  is inversely related to the price level.

Question 6

As the price level rises

Accepted Answer

A)  the average price of all goods and services falls. 
B)  total output demanded rises proportionately. 
C)  interest rates rise if the money supply is held constant. 
D)  the aggregate supply curve shifts back and forth. 
E)  the demand for money falls. 
A)  the average price of all goods and services falls. 
B)  total output demanded rises proportionately. 
C)  interest rates rise if the money supply is held constant. 
D)  the aggregate supply curve shifts back and forth. 
E)  the demand for money falls.

Question 7

It is argued that short-run aggregate supply curves slope upward to the right because

Accepted Answer

A)  short-run price levels are inversely related to individual product prices. 
B)  falling profits force firms to increase prices. 
C)  in the short run, wages and raw material prices tend to rise less rapidly than product prices. 
D)  as price rises, demand falls. 
E)  increases in aggregate supply cause prices to rise. 
A)  short-run price levels are inversely related to individual product prices. 
B)  falling profits force firms to increase prices. 
C)  in the short run, wages and raw material prices tend to rise less rapidly than product prices. 
D)  as price rises, demand falls. 
E)  increases in aggregate supply cause prices to rise.

Question 8

Say's law suggests that

Accepted Answer

A)  supply creates its own supply. 
B)  demand creates its own supply. 
C)  demand creates its own demand. 
D)  supply creates its own demand. 
E)  supply creates; demand destroys. 
A)  supply creates its own supply. 
B)  demand creates its own supply. 
C)  demand creates its own demand. 
D)  supply creates its own demand. 
E)  supply creates; demand destroys.

Question 9

The level of real national output purchased at each price level is called a(n)

Accepted Answer

A)  market basket. 
B)  market demand curve. 
C)  aggregate demand curve. 
D)  derived demand curve. 
E)  consumption possibilities curve. 
A)  market basket. 
B)  market demand curve. 
C)  aggregate demand curve. 
D)  derived demand curve. 
E)  consumption possibilities curve.

Question 10

Most economists today hold a certain respect for Marx's economic perspectives because

Accepted Answer

A)  most of Marx's predictions have come true, pretty much in the way he said they would. 
B)  most economists today are strong labor sympathizers. 
C)  Marx was the first to recognize the inherent dangers of government intervention. 
D)  Marx demonstrated that in the final analysis, there is always a market for goods and the labor that produces them. 
E)  Marx was the first to conceptualize a business cycle in which good times eventually produced bad times and vice versa. 
A)  most of Marx's predictions have come true, pretty much in the way he said they would. 
B)  most economists today are strong labor sympathizers. 
C)  Marx was the first to recognize the inherent dangers of government intervention. 
D)  Marx demonstrated that in the final analysis, there is always a market for goods and the labor that produces them. 
E)  Marx was the first to conceptualize a business cycle in which good times eventually produced bad times and vice versa.

Question 11

Structural unemployment exists when those looking for jobs

Accepted Answer

A)  are voluntarily unemployed. 
B)  lack employable skills. 
C)  can easily find work. 
D)  currently hold part-time positions at prevailing wages. 
E)  are not eligible for unemployment. 
A)  are voluntarily unemployed. 
B)  lack employable skills. 
C)  can easily find work. 
D)  currently hold part-time positions at prevailing wages. 
E)  are not eligible for unemployment.

Question 12

The following question are based on the following diagram:
  
-The peak of the cycle is best characterized by letter

Accepted Answer

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

When actual output is below potential output

The following question are based on the following diagram: -An equilibrium level of output and an equilibrium price level occur

If the money supply is fixed,increases in the price level

The aggregate supply curve becomes vertical

The level of real national output demanded at each price level

As the price level rises

It is argued that short-run aggregate supply curves slope upward to the right because

Say's law suggests that

The level of real national output purchased at each price level is called a(n)

Most economists today hold a certain respect for Marx's economic perspectives because

Structural unemployment exists when those looking for jobs

The following question are based on the following diagram: -The peak of the cycle is best characterized by letter

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 16: Business Fluctuations and Unemployment

When actual output is below potential output

The following question are based on the following diagram: -An equilibrium level of output and an equilibrium price level occur

If the money supply is fixed,increases in the price level

The aggregate supply curve becomes vertical

The level of real national output demanded at each price level

As the price level rises

It is argued that short-run aggregate supply curves slope upward to the right because

Say's law suggests that

The level of real national output purchased at each price level is called a(n)

Most economists today hold a certain respect for Marx's economic perspectives because

Structural unemployment exists when those looking for jobs

The following question are based on the following diagram: -The peak of the cycle is best characterized by letter

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

Filters