Question 1

According to Say's law,

Accepted Answer

A)  the demand curve is negatively sloped. 
B)  the supply curve is positively sloped. 
C)  supply creates its own demand. 
D)  economic units should produce those goods for which they are low-opportunity-cost producers. 
A)  the demand curve is negatively sloped. 
B)  the supply curve is positively sloped. 
C)  supply creates its own demand. 
D)  economic units should produce those goods for which they are low-opportunity-cost producers.

Question 2

-Refer to Exhibit 9-3.If the economy is in equilibrium at point B,

Accepted Answer

A)  the (actual)unemployment rate is less than the natural unemployment rate. 
B)  the (actual)unemployment rate is equal to the natural unemployment rate. 
C)  the (actual)unemployment rate is greater than the natural unemployment rate. 
D)  the relationship between the (actual)unemployment rate and the natural unemployment rate cannot be determined from the available information. 
A)  the (actual)unemployment rate is less than the natural unemployment rate. 
B)  the (actual)unemployment rate is equal to the natural unemployment rate. 
C)  the (actual)unemployment rate is greater than the natural unemployment rate. 
D)  the relationship between the (actual)unemployment rate and the natural unemployment rate cannot be determined from the available information.

Question 3

If the economy is self-regulating and in a recessionary gap,what happens?

Accepted Answer

A)  Wages rise,the SRAS curve shifts leftward,and both Real GDP and the price level rise. 
B)  Wages fall,the SRAS curve shifts leftward,the price level rises,and Real GDP falls. 
C)  Wages fall,the SRAS curve shifts rightward,and both the price level and Real GDP fall. 
D)  Wages fall,the SRAS curve shifts rightward,the price level falls,and Real GDP rises. 
E)  none of the above 
A)  Wages rise,the SRAS curve shifts leftward,and both Real GDP and the price level rise. 
B)  Wages fall,the SRAS curve shifts leftward,the price level rises,and Real GDP falls. 
C)  Wages fall,the SRAS curve shifts rightward,and both the price level and Real GDP fall. 
D)  Wages fall,the SRAS curve shifts rightward,the price level falls,and Real GDP rises. 
E)  none of the above

Question 4

Due to their belief in interest rate flexibility,the classical economists argued that saving is matched by an equal amount of investment.

Accepted Answer

A) True 
 B)False

Question 5

An inflationary gap exists when AD and SRAS

Accepted Answer

A)  fail to intersect. 
B)  intersect to the right of Natural Real GDP. 
C)  intersect to the left of Natural Real GDP. 
D)  both have a positive slope. 
A)  fail to intersect. 
B)  intersect to the right of Natural Real GDP. 
C)  intersect to the left of Natural Real GDP. 
D)  both have a positive slope.

Question 6

Classical macroeconomists assert that "saving" is the same as "not spending at all".

Accepted Answer

A) True 
 B)False

Question 7

-Refer to Exhibit 9-7.Which point is representative of the economy with an unemployment rate that is greater than the natural unemployment rate?

Accepted Answer

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

Question 8

Suppose the economy is self-regulating,the price level is 150,the quantity demanded of Real GDP and the quantity supplied of Real GDP in the short run both equal $4.3 trillion,and the quantity supplied of Real GDP in the long run is $4.1 trillion.Given all of this information,we can conclude that the economy ____________ in short run equilibrium,and that the price level in long run equilibrium will be _____________ than 150.

Accepted Answer

A)  is not; less 
B)  is; more 
C)  is; less 
D)  is not; more 
A)  is not; less 
B)  is; more 
C)  is; less 
D)  is not; more

Question 9

Classical economics refers to an era in the history of economic thought that stretched from the late 1600s to the mid-1800s.

Accepted Answer

A) True 
 B)False

Question 10

If Real GDP is less than Natural Real GDP,the economy is in

Accepted Answer

A)  an inflationary gap. 
B)  a recessionary gap. 
C)  an unemployment gap. 
D)  a real gap. 
A)  an inflationary gap. 
B)  a recessionary gap. 
C)  an unemployment gap. 
D)  a real gap.

Question 11

-Refer to Exhibit 9-1.The economy is currently producing Q1.If an economist believes the economy can move itself without government intervention to QN,then the economist believes that the

Accepted Answer

A)  LRAS curve will shift leftward until it intersects the SRAS and AD curves at Q1. 
B)  AD curve will shift rightward and intersect the SRAS curve at point B. 
C)  SRAS curve will shift rightward and intersect the AD curve at point A. 
D)  economy will likely stay "stuck" in short-run equilibrium. 
A)  LRAS curve will shift leftward until it intersects the SRAS and AD curves at Q1. 
B)  AD curve will shift rightward and intersect the SRAS curve at point B. 
C)  SRAS curve will shift rightward and intersect the AD curve at point A. 
D)  economy will likely stay "stuck" in short-run equilibrium.

Question 12

-Refer to Exhibit 9-7.Which point is representative of the economy in a recessionary gap?

Accepted Answer

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

Question 13

-Refer to Exhibit 9-5.Point A on graph (2)would correspond to the intersection of an AD curve and a SRAS curve at which point(s)on graph (1)?

Accepted Answer

A)  I or J 
B)  K 
C)  L or M 
D)  I or L 
E)  J or M 
A)  I or J 
B)  K 
C)  L or M 
D)  I or L 
E)  J or M

Question 14

-Refer to Exhibit 9-1.The economy is currently producing Q1.An economist who believes wages are flexible in the downward direction would most likely argue that

Accepted Answer

A)  it is likely the economy will soon move to point B. 
B)  it is likely the economy will soon move to point A. 
C)  it is not likely the economy will move to point A without government intervention. 
D)  Real GDP will soon take a downturn. 
A)  it is likely the economy will soon move to point B. 
B)  it is likely the economy will soon move to point A. 
C)  it is not likely the economy will move to point A without government intervention. 
D)  Real GDP will soon take a downturn.

Question 15

If the natural unemployment rate is 5 percent and the current unemployment rate is 6 percent,then the economy is

Accepted Answer

A)  producing a level of Real GDP that is greater than the level of natural Real GDP. 
B)  in an inflationary gap. 
C)  producing a level of Real GDP that is less than the level of natural Real GDP. 
D)  a and b 
E)  b and c 
A)  producing a level of Real GDP that is greater than the level of natural Real GDP. 
B)  in an inflationary gap. 
C)  producing a level of Real GDP that is less than the level of natural Real GDP. 
D)  a and b 
E)  b and c

Question 16

According to classical economists,if interest rates are flexible,

Accepted Answer

A)  saving will equal investment. 
B)  saving may be greater than investment. 
C)  saving may be less than investment. 
D)  any of the above 
A)  saving will equal investment. 
B)  saving may be greater than investment. 
C)  saving may be less than investment. 
D)  any of the above

Question 17

Using the aggregate demand and aggregate supply (AD-SRAS)framework,explain how a large-scale natural disaster would be expected to impact the economy.Discuss how an economist who believes the economy is self-regulating would view the longer term impact of such a disaster,and whether they would advocate the need for government intervention.

Accepted Answer

A large-scale natural disaster represent

Question 18

Some economists believe the economy is self-regulating.What does this mean?

Accepted Answer

A)  It means the economy can remove itself from recessionary and inflationary gaps and produce at Natural Real GDP. 
B)  It means the economy is always in long-run equilibrium producing Natural Real GDP. 
C)  It means that inflationary gaps naturally change into recessionary gaps. 
D)  It means that recessionary gaps naturally change into inflationary gaps. 
E)  c and d 
A)  It means the economy can remove itself from recessionary and inflationary gaps and produce at Natural Real GDP. 
B)  It means the economy is always in long-run equilibrium producing Natural Real GDP. 
C)  It means that inflationary gaps naturally change into recessionary gaps. 
D)  It means that recessionary gaps naturally change into inflationary gaps. 
E)  c and d

Question 19

When the economy is producing the level of output equal to natural Real GDP,the unemployment rate is equal to

Accepted Answer

A)  zero. 
B)  the natural unemployment rate. 
C)  the frictional unemployment rate. 
D)  the structural unemployment rate. 
A)  zero. 
B)  the natural unemployment rate. 
C)  the frictional unemployment rate. 
D)  the structural unemployment rate.

Question 20

-Refer to Exhibit 9-5.Imagine an AD curve intersecting an SRAS curve at Point M on graph (1).Which point(s)would this correspond to on graph (2)?

Accepted Answer

A)  A or B 
B)  C 
C)  E or F 
D)  F 
E)  G 
A)  A or B 
B)  C 
C)  E or F 
D)  F 
E)  G

Exam 9: Perfect Competition

According to Say's law,

-Refer to Exhibit 9-3.If the economy is in equilibrium at point B,

If the economy is self-regulating and in a recessionary gap,what happens?

Due to their belief in interest rate flexibility,the classical economists argued that saving is matched by an equal amount of investment.

An inflationary gap exists when AD and SRAS

Classical macroeconomists assert that "saving" is the same as "not spending at all".

-Refer to Exhibit 9-7.Which point is representative of the economy with an unemployment rate that is greater than the natural unemployment rate?

Classical economics refers to an era in the history of economic thought that stretched from the late 1600s to the mid-1800s.

If Real GDP is less than Natural Real GDP,the economy is in

-Refer to Exhibit 9-1.The economy is currently producing Q1.If an economist believes the economy can move itself without government intervention to QN,then the economist believes that the

-Refer to Exhibit 9-7.Which point is representative of the economy in a recessionary gap?

-Refer to Exhibit 9-5.Point A on graph (2)would correspond to the intersection of an AD curve and a SRAS curve at which point(s)on graph (1)?

-Refer to Exhibit 9-1.The economy is currently producing Q1.An economist who believes wages are flexible in the downward direction would most likely argue that

If the natural unemployment rate is 5 percent and the current unemployment rate is 6 percent,then the economy is

According to classical economists,if interest rates are flexible,

Some economists believe the economy is self-regulating.What does this mean?

When the economy is producing the level of output equal to natural Real GDP,the unemployment rate is equal to

-Refer to Exhibit 9-5.Imagine an AD curve intersecting an SRAS curve at Point M on graph (1).Which point(s)would this correspond to on graph (2)?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

-Refer to Exhibit 9-1.The economy is currently producing Q₁.If an economist believes the economy can move itself without government intervention to Q_N,then the economist believes that the

-Refer to Exhibit 9-1.The economy is currently producing Q₁.An economist who believes wages are flexible in the downward direction would most likely argue that