Question 1

Say's law states that demand creates its own supply.

Accepted Answer

A) True 
 B)False

Question 2

In a self-regulating economy,wages will fall and prices will rise when there is an inflationary gap.

Accepted Answer

A) True 
 B)False

Question 3

In a self-regulating economy,inflationary and recessionary gaps produce shifts of the

Accepted Answer

A)  AD curve that maintain the short-run equilibrium point. 
B)  AD curve that move the economy to a long-run equilibrium point. 
C)  SRAS curve that maintain the short-run equilibrium point. 
D)  SRAS curve that move the economy to a long-run equilibrium point. 
A)  AD curve that maintain the short-run equilibrium point. 
B)  AD curve that move the economy to a long-run equilibrium point. 
C)  SRAS curve that maintain the short-run equilibrium point. 
D)  SRAS curve that move the economy to a long-run equilibrium point.

Question 4

The classical economists felt that saving would be equal to investment because

Accepted Answer

A)  wages are flexible. 
B)  prices of domestic goods are flexible. 
C)  interest rates are flexible. 
D)  prices of imports are flexible. 
A)  wages are flexible. 
B)  prices of domestic goods are flexible. 
C)  interest rates are flexible. 
D)  prices of imports are flexible.

Question 5

When the economy is in a recessionary gap,the labor market is experiencing a surplus.

Accepted Answer

A) True 
 B)False

Question 6

If the economy is self-regulating,then it follows that

Accepted Answer

A)  recessionary and inflationary gaps are temporary economic states. 
B)  wages will fall when the economy is in a recessionary gap. 
C)  wages will rise when the economy is in an inflationary gap. 
D)  the economy is always in long-run equilibrium. 
E)  a,b and c 
A)  recessionary and inflationary gaps are temporary economic states. 
B)  wages will fall when the economy is in a recessionary gap. 
C)  wages will rise when the economy is in an inflationary gap. 
D)  the economy is always in long-run equilibrium. 
E)  a,b and c

Question 7

The unemployment rate is equal to the natural unemployment rate at

Accepted Answer

A)  some point within the interior of the physical PPF but beyond the institutional PPF. 
B)  some point within the interior of the physical PPF,but we cannot locate it with more accuracy. 
C)  some point within the interior of the institutional PPF,but we cannot locate it with more accuracy. 
D)  every point on the institutional PPF. 
E)  every point on the physical PPF. 
A)  some point within the interior of the physical PPF but beyond the institutional PPF. 
B)  some point within the interior of the physical PPF,but we cannot locate it with more accuracy. 
C)  some point within the interior of the institutional PPF,but we cannot locate it with more accuracy. 
D)  every point on the institutional PPF. 
E)  every point on the physical PPF.

Question 8

It is possible for the economy to be producing at a point that lies beyond its institutional production possibilities frontier (PPF),but not its physical PPF.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is true?

Accepted Answer

A)  The economy can operate outside (or beyond)its institutional PPF and its physical PPF,but only for a short while. 
B)  The economy can operate outside its physical PPF,if only for a short while,but can never operate outside its institutional PPF. 
C)  The economy can operate outside its institutional PPF,if only for a short while,but can never operate outside its physical PPF. 
D)  The economy can never operate outside its institutional PPF or its physical PPF,even for a short while. 
E)  none of the above 
A)  The economy can operate outside (or beyond)its institutional PPF and its physical PPF,but only for a short while. 
B)  The economy can operate outside its physical PPF,if only for a short while,but can never operate outside its institutional PPF. 
C)  The economy can operate outside its institutional PPF,if only for a short while,but can never operate outside its physical PPF. 
D)  The economy can never operate outside its institutional PPF or its physical PPF,even for a short while. 
E)  none of the above

Question 10

If the current unemployment rate is less than the natural unemployment rate,then the economy is

Accepted Answer

A)  in long-run equilibrium. 
B)  in an inflationary gap. 
C)  in a recessionary gap. 
D)  producing at full employment. 
E)  b and d 
A)  in long-run equilibrium. 
B)  in an inflationary gap. 
C)  in a recessionary gap. 
D)  producing at full employment. 
E)  b and d

Question 11

If the structural unemployment rate is 2 percent,the frictional unemployment rate is 3 percent,and the current unemployment rate is 8 percent,then the economy is in a recessionary gap.

Accepted Answer

A) True 
 B)False

Question 12

-Refer to Exhibit 9-2.The economy is currently producing Q1.At this level of Real GDP,the economy is experiencing

Accepted Answer

A)  a shortage in the labor market. 
B)  a surplus in the labor market. 
C)  neither a shortage nor a surplus in the labor market. 
D)  all of the above are equally likely 
A)  a shortage in the labor market. 
B)  a surplus in the labor market. 
C)  neither a shortage nor a surplus in the labor market. 
D)  all of the above are equally likely

Question 13

When the natural unemployment rate is less than the actual unemployment rate,the economy is in a recessionary gap.

Accepted Answer

A) True 
 B)False

Question 14

When consumers start to spend less and save more,classical macroeconomists believe that interest rates will then ______________ resulting in a(n)________________ in investment.

Accepted Answer

A)  rise; increase 
B)  fall; increase 
C)  fall; decrease 
D)  rise; decrease 
A)  rise; increase 
B)  fall; increase 
C)  fall; decrease 
D)  rise; decrease

Question 15

-Refer to Exhibit 9-1.The unemployment rate is lower at

Accepted Answer

A)  Q1 than QN. 
B)  QN than Q1. 
C)  point A than point B. 
D)  point B than point A. 
A)  Q1 than QN. 
B)  QN than Q1. 
C)  point A than point B. 
D)  point B than point A.

Question 16

In a self-regulating economy,inflationary and recessionary gaps

Accepted Answer

A)  never occur. 
B)  are eliminated by forces internal to the economy,without government intervention. 
C)  are eliminated by timely actions of government policymakers. 
D)  are the desirable results of microeconomic price adjustments. 
A)  never occur. 
B)  are eliminated by forces internal to the economy,without government intervention. 
C)  are eliminated by timely actions of government policymakers. 
D)  are the desirable results of microeconomic price adjustments.

Question 17

If Real GDP is greater than Natural Real GDP,the economy is in a(n)

Accepted Answer

A)  frictional gap. 
B)  structural gap. 
C)  recessionary gap. 
D)  inflationary gap. 
A)  frictional gap. 
B)  structural gap. 
C)  recessionary gap. 
D)  inflationary gap.

Question 18

A recessionary 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 19

If the current Real GDP is less than Natural Real GDP,then the economy is

Accepted Answer

A)  in long-run equilibrium. 
B)  in a recessionary gap. 
C)  in an inflationary gap. 
D)  possibly in short-run equilibrium. 
E)  b and d 
A)  in long-run equilibrium. 
B)  in a recessionary gap. 
C)  in an inflationary gap. 
D)  possibly in short-run equilibrium. 
E)  b and d

Question 20

In order for Say's law to hold in a money economy,

Accepted Answer

A)  there must be more than four goods. 
B)  funds saved must give rise to an equal amount of funds earned. 
C)  funds saved must give rise to an equal amount of funds invested. 
D)  none of the above 
A)  there must be more than four goods. 
B)  funds saved must give rise to an equal amount of funds earned. 
C)  funds saved must give rise to an equal amount of funds invested. 
D)  none of the above

Exam 9: Perfect Competition

Say's law states that demand creates its own supply.

In a self-regulating economy,wages will fall and prices will rise when there is an inflationary gap.

In a self-regulating economy,inflationary and recessionary gaps produce shifts of the

The classical economists felt that saving would be equal to investment because

When the economy is in a recessionary gap,the labor market is experiencing a surplus.

If the economy is self-regulating,then it follows that

The unemployment rate is equal to the natural unemployment rate at

It is possible for the economy to be producing at a point that lies beyond its institutional production possibilities frontier (PPF),but not its physical PPF.

Which of the following statements is true?

If the current unemployment rate is less than the natural unemployment rate,then the economy is

If the structural unemployment rate is 2 percent,the frictional unemployment rate is 3 percent,and the current unemployment rate is 8 percent,then the economy is in a recessionary gap.

-Refer to Exhibit 9-2.The economy is currently producing Q1.At this level of Real GDP,the economy is experiencing

When the natural unemployment rate is less than the actual unemployment rate,the economy is in a recessionary gap.

When consumers start to spend less and save more,classical macroeconomists believe that interest rates will then ______________ resulting in a(n)________________ in investment.

-Refer to Exhibit 9-1.The unemployment rate is lower at

In a self-regulating economy,inflationary and recessionary gaps

If Real GDP is greater than Natural Real GDP,the economy is in a(n)

A recessionary gap exists when AD and SRAS

If the current Real GDP is less than Natural Real GDP,then the economy is

In order for Say's law to hold in a money economy,

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 9-2.The economy is currently producing Q₁.At this level of Real GDP,the economy is experiencing

When consumers start to spend less and save more,classical macroeconomists believe that interest rates will then resulting in a(n)__ in investment.