Question 1

In the long run,changes in aggregate demand will affect the level of Real GDP (but not the price level)in a self-regulating economy.

Accepted Answer

A) True 
 B)False

Question 2

-Refer to Exhibit 9-5.Point G 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 3

A necessary condition for a money economy to be self-regulating is that

Accepted Answer

A)  wages must be flexible in an upward direction,but not in a downward direction. 
B)  the economy must always be operating on its institutional production possibilities frontier. 
C)  wages must be flexible in a downward direction,but not in an upward direction. 
D)  interest rates must be flexible in the credit market. 
E)  none of the above 
A)  wages must be flexible in an upward direction,but not in a downward direction. 
B)  the economy must always be operating on its institutional production possibilities frontier. 
C)  wages must be flexible in a downward direction,but not in an upward direction. 
D)  interest rates must be flexible in the credit market. 
E)  none of the above

Question 4

-Refer to Exhibit 9-4.Assume the economy is self-regulating and currently is in long-run equilibrium with the price level equal to P5.If something happens that shifts the AD curve to the AD1 position,the economy will eventually settle down at a long-run equilibrium point of __________.

Accepted Answer

A)  P5,Q3. 
B)  P4,Q4. 
C)  P3,Q3. 
D)  P3,Q5. 
E)  P4,Q2. 
A)  P5,Q3. 
B)  P4,Q4. 
C)  P3,Q3. 
D)  P3,Q5. 
E)  P4,Q2.

Question 5

Suppose the economy is self-regulating and the (actual)unemployment rate is less than the natural unemployment rate.This means that the economy is producing a level of output

Accepted Answer

A)  above its natural level and will eventually cut back on output. 
B)  below its natural level and will eventually increase output. 
C)  below its natural level but no forces exist to automatically increase output. 
D)  above its natural level and institutional constraints will automatically be reduced so as to allow the economy to continue producing this level. 
E)  none of the above 
A)  above its natural level and will eventually cut back on output. 
B)  below its natural level and will eventually increase output. 
C)  below its natural level but no forces exist to automatically increase output. 
D)  above its natural level and institutional constraints will automatically be reduced so as to allow the economy to continue producing this level. 
E)  none of the above

Question 6

The structural unemployment rate is 1.5 percent,the frictional unemployment rate is 3.1 percent,and the economy's current unemployment rate is 6.9 percent.The economy is in

Accepted Answer

A)  a recessionary gap producing less than Natural Real GDP. 
B)  an inflationary gap producing more than Natural Real GDP. 
C)  long-run equilibrium. 
D)  an inflationary gap producing Natural Real GDP. 
E)  a recessionary gap producing more than Natural Real GDP. 
A)  a recessionary gap producing less than Natural Real GDP. 
B)  an inflationary gap producing more than Natural Real GDP. 
C)  long-run equilibrium. 
D)  an inflationary gap producing Natural Real GDP. 
E)  a recessionary gap producing more than Natural Real GDP.

Question 7

Say's law states that

Accepted Answer

A)  demand creates its own supply. 
B)  the more supply there is,the lower prices are. 
C)  supply creates supply. 
D)  supply creates its own demand. 
E)  none of the above 
A)  demand creates its own supply. 
B)  the more supply there is,the lower prices are. 
C)  supply creates supply. 
D)  supply creates its own demand. 
E)  none of the above

Question 8

If the economy is producing Natural Real GDP,then the

Accepted Answer

A)  current unemployment rate is greater than the natural unemployment rate. 
B)  current unemployment rate is less than the natural unemployment rate. 
C)  economy is at full employment. 
D)  economy is operating at the natural unemployment rate. 
E)  c and d 
A)  current unemployment rate is greater than the natural unemployment rate. 
B)  current unemployment rate is less than the natural unemployment rate. 
C)  economy is at full employment. 
D)  economy is operating at the natural unemployment rate. 
E)  c and d

Question 9

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

Accepted Answer

A)  wages and prices will fall. 
B)  wages will fall,but prices will rise. 
C)  neither wages nor prices will change. 
D)  wages will rise,but prices will fall. 
E)  wages and prices will rise. 
A)  wages and prices will fall. 
B)  wages will fall,but prices will rise. 
C)  neither wages nor prices will change. 
D)  wages will rise,but prices will fall. 
E)  wages and prices will rise.

Question 10

If the natural unemployment rate is 5.5 percent,then the economy is in an inflationary gap when the actual unemployment rate is

Accepted Answer

A)  greater than 5.5 percent. 
B)  less than 5.5 percent. 
C)  0 percent. 
D)  5.5 percent. 
A)  greater than 5.5 percent. 
B)  less than 5.5 percent. 
C)  0 percent. 
D)  5.5 percent.

Question 11

-Refer to Exhibit 9-6.If the economy is self-regulating and currently at point 1,it follows that

Accepted Answer

A)  there is a surplus of labor in the labor market. 
B)  the economy is currently on its institutional PPF. 
C)  the economy is currently in an inflationary gap. 
D)  the labor market is in equilibrium. 
E)  the actual unemployment rate is below the natural unemployment rate. 
A)  there is a surplus of labor in the labor market. 
B)  the economy is currently on its institutional PPF. 
C)  the economy is currently in an inflationary gap. 
D)  the labor market is in equilibrium. 
E)  the actual unemployment rate is below the natural unemployment rate.

Question 12

Suppose the economy is self-regulating,the price level is 120,the quantity demanded of Real GDP and the quantity supplied of Real GDP in the short run both equal $5.7 trillion,and the quantity supplied of Real GDP in the long run is $5.2 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 120.

Accepted Answer

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

Question 13

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

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 14

In a self-regulating economy,a recessionary gap will be eliminated by falling wages which will shift the SRAS curve to the right.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

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

Question 16

If the economy is self-regulating and current Real GDP is less than Natural Real GDP,the economy is operating __________ the natural unemployment rate and wages will __________.

Accepted Answer

A)  below; soon rise 
B)  above; soon rise 
C)  below; soon fall 
D)  above; remain unchanged 
E)  none of the above 
A)  below; soon rise 
B)  above; soon rise 
C)  below; soon fall 
D)  above; remain unchanged 
E)  none of the above

Question 17

Classical economics refers to an era in the history of economic thought that stretched from about

Accepted Answer

A)  1750 to the early 1900s. 
B)  1935 to the 1970s. 
C)  1800 to the mid 1900s. 
D)  1600 to the mid 1800s. 
A)  1750 to the early 1900s. 
B)  1935 to the 1970s. 
C)  1800 to the mid 1900s. 
D)  1600 to the mid 1800s.

Question 18

A laissez-faire macroeconomic policy,based on a __________ in self-regulating properties of the economy,implies __________ by the government.

Accepted Answer

A)  belief; active policymaking 
B)  belief; noninterference 
C)  disbelief; active policymaking 
D)  disbelief; noninterference 
A)  belief; active policymaking 
B)  belief; noninterference 
C)  disbelief; active policymaking 
D)  disbelief; noninterference

Question 19

If Real GDP is less than Natural Real GDP,then the (actual)unemployment rate is

Accepted Answer

A)  less than the natural unemployment rate. 
B)  equal to the natural unemployment rate. 
C)  greater than the natural unemployment rate. 
D)  less than or greater than the natural unemployment rate,but we cannot determine which one. 
E)  b and d 
A)  less than the natural unemployment rate. 
B)  equal to the natural unemployment rate. 
C)  greater than the natural unemployment rate. 
D)  less than or greater than the natural unemployment rate,but we cannot determine which one. 
E)  b and d

Question 20

If the SRAS curve intersects the AD curve to the right of Natural Real GDP,the economy is

Accepted Answer

A)  in a recessionary gap. 
B)  in either a recessionary gap or an inflationary gap,but we need more information to determine which one. 
C)  in an inflationary gap. 
D)  at full-employment Real GDP. 
A)  in a recessionary gap. 
B)  in either a recessionary gap or an inflationary gap,but we need more information to determine which one. 
C)  in an inflationary gap. 
D)  at full-employment Real GDP.

Exam 9: Perfect Competition

In the long run,changes in aggregate demand will affect the level of Real GDP (but not the price level)in a self-regulating economy.

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

A necessary condition for a money economy to be self-regulating is that

-Refer to Exhibit 9-4.Assume the economy is self-regulating and currently is in long-run equilibrium with the price level equal to P5.If something happens that shifts the AD curve to the AD1 position,the economy will eventually settle down at a long-run equilibrium point of __________.

Suppose the economy is self-regulating and the (actual)unemployment rate is less than the natural unemployment rate.This means that the economy is producing a level of output

The structural unemployment rate is 1.5 percent,the frictional unemployment rate is 3.1 percent,and the economy's current unemployment rate is 6.9 percent.The economy is in

Say's law states that

If the economy is producing Natural Real GDP,then the

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

If the natural unemployment rate is 5.5 percent,then the economy is in an inflationary gap when the actual unemployment rate is

-Refer to Exhibit 9-6.If the economy is self-regulating and currently at point 1,it follows that

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

In a self-regulating economy,a recessionary gap will be eliminated by falling wages which will shift the SRAS curve to the right.

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

If the economy is self-regulating and current Real GDP is less than Natural Real GDP,the economy is operating __________ the natural unemployment rate and wages will __________.

Classical economics refers to an era in the history of economic thought that stretched from about

A laissez-faire macroeconomic policy,based on a __________ in self-regulating properties of the economy,implies __________ by the government.

If Real GDP is less than Natural Real GDP,then the (actual)unemployment rate is

If the SRAS curve intersects the AD curve to the right of Natural Real GDP,the economy is

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 9-4.Assume the economy is self-regulating and currently is in long-run equilibrium with the price level equal to P₅.If something happens that shifts the AD curve to the AD₁ position,the economy will eventually settle down at a long-run equilibrium point of __________.

If the economy is self-regulating and current Real GDP is less than Natural Real GDP,the economy is operating the natural unemployment rate and wages will .

A laissez-faire macroeconomic policy,based on a in self-regulating properties of the economy,implies by the government.