Question 1

If the economy is currently operating below its institutional production possibilities frontier (institutional PPF),it is

Accepted Answer

A)  in long-run equilibrium. 
B)  in a recessionary gap. 
C)  in an inflationary gap. 
D)  definitely not self-regulating. 
E)  b and d 
A)  in long-run equilibrium. 
B)  in a recessionary gap. 
C)  in an inflationary gap. 
D)  definitely not self-regulating. 
E)  b and d

Question 2

The institutional production possibilities frontier illustrates the different combinations of goods that society can obtain given

Accepted Answer

A)  the constraints of finite resources and the current state of technology. 
B)  the price level. 
C)  its institutional constraints. 
D)  the natural rate of unemployment. 
E)  the constraints of finite resources and the current state of technology and institutional constraints. 
A)  the constraints of finite resources and the current state of technology. 
B)  the price level. 
C)  its institutional constraints. 
D)  the natural rate of unemployment. 
E)  the constraints of finite resources and the current state of technology and institutional constraints.

Question 3

Refer to Exhibit 9-8.The level of total expenditures (TE)in this economy is currently ______________ billion.

Accepted Answer

A)  $10,600 
B)  $10,900 
C)  $11,200 
D)  $8,900 
A)  $10,600 
B)  $10,900 
C)  $11,200 
D)  $8,900

Question 4

-Refer to Exhibit 9-4.Assuming the economy is in an inflationary gap at a short-run equilibrium point with the price level at P2,the movement toward long-run equilibrium will be

Accepted Answer

A)  down and along AD1. 
B)  up and along AD2. 
C)  down and along SRAS1. 
D)  up and along SRAS2. 
E)  down and along SRAS2. 
A)  down and along AD1. 
B)  up and along AD2. 
C)  down and along SRAS1. 
D)  up and along SRAS2. 
E)  down and along SRAS2.

Question 5

Which of the following is most nearly consistent with Say's law?

Accepted Answer

A)  When a person produces one good,he or she plans to demand other goods. 
B)  When a person produces a good,he or she plans to sell it. 
C)  When a person buys a good,he or she plans to pay for it with money. 
D)  When a person goes to work,he or she plans to produce. 
A)  When a person produces one good,he or she plans to demand other goods. 
B)  When a person produces a good,he or she plans to sell it. 
C)  When a person buys a good,he or she plans to pay for it with money. 
D)  When a person goes to work,he or she plans to produce.

Question 6

Suppose the economy's short-run equilibrium is at a point to the right of Natural Real GDP.Which of the following statements is true?

Accepted Answer

A)  The economy is in an inflationary gap. 
B)  The economy is in a recessionary gap. 
C)  The economy is in long-run equilibrium. 
D)  This situation is actually impossible. 
A)  The economy is in an inflationary gap. 
B)  The economy is in a recessionary gap. 
C)  The economy is in long-run equilibrium. 
D)  This situation is actually impossible.

Question 7

If the economy is self-regulating,explain the correct sequence of events that occurs once the economy is in a recessionary gap to move the economy to long-run equilibrium.

Accepted Answer

The actual unemployment rate is greater

Question 8

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

Accepted Answer

A)  in a recessionary gap. 
B)  at Natural Real GDP. 
C)  in an inflationary gap. 
D)  at full-employment Real GDP. 
A)  in a recessionary gap. 
B)  at Natural Real GDP. 
C)  in an inflationary gap. 
D)  at full-employment Real GDP.

Question 9

-Refer to Exhibit 9-3.The economy is in short-run equilibrium and has an inflationary gap at point

Accepted Answer

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

Question 10

-Refer to Exhibit 9-1.If the economy is self-regulating,the price level is

Accepted Answer

A)  lower in short-run equilibrium than in long-run equilibrium. 
B)  lower in long-run equilibrium than in short-run equilibrium. 
C)  higher in long-run equilibrium than in short-run equilibrium. 
D)  lower when the economy is in a recessionary gap than when it is in long-run equilibrium. 
E)  a and c 
A)  lower in short-run equilibrium than in long-run equilibrium. 
B)  lower in long-run equilibrium than in short-run equilibrium. 
C)  higher in long-run equilibrium than in short-run equilibrium. 
D)  lower when the economy is in a recessionary gap than when it is in long-run equilibrium. 
E)  a and c

Question 11

According to classical economists,the relationship between the amount of funds households plan to save and the interest rate is

Accepted Answer

A)  indirect. 
B)  inverse. 
C)  direct. 
D)  independent. 
A)  indirect. 
B)  inverse. 
C)  direct. 
D)  independent.

Question 12

-Refer to Exhibit 9-4.Assume the economy is currently in long-run equilibrium with the price level equal to P3.If foreigners begin to buy more U.S.goods,the economy will,in the short run,move to price level equal to _________ and Real GDP equal to _________?

Accepted Answer

A)  P2; Q4. 
B)  P3; Q3. 
C)  P4; Q2. 
D)  P4; Q4. 
E)  P5; Q3. 
A)  P2; Q4. 
B)  P3; Q3. 
C)  P4; Q2. 
D)  P4; Q4. 
E)  P5; Q3.

Question 13

-Refer to Exhibit 9-5.Point B 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

If the economy is in long-run equilibrium,the actual unemployment rate is less than the natural unemployment rate.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  wages must be relatively high. 
B)  the labor market must always be in equilibrium. 
C)  the interest rate must be above its equilibrium level. 
D)  wages must be flexible in both an upward and downward direction. 
E)  none of the above 
A)  wages must be relatively high. 
B)  the labor market must always be in equilibrium. 
C)  the interest rate must be above its equilibrium level. 
D)  wages must be flexible in both an upward and downward direction. 
E)  none of the above

Question 16

-Refer to Exhibit 9-4.Which of the following is true at the Real GDP level of Q3?

Accepted Answer

A)  The unemployment rate is equal to the natural unemployment rate. 
B)  The cyclical unemployment rate is zero. 
C)  The economy is in long-run equilibrium. 
D)  all of the above 
E)  none of the above 
A)  The unemployment rate is equal to the natural unemployment rate. 
B)  The cyclical unemployment rate is zero. 
C)  The economy is in long-run equilibrium. 
D)  all of the above 
E)  none of the above

Question 17

According to classical economists,

Accepted Answer

A)  spending equals saving. 
B)  saving equals income. 
C)  income equals wealth. 
D)  none of the above 
A)  spending equals saving. 
B)  saving equals income. 
C)  income equals wealth. 
D)  none of the above

Question 18

-Refer to Exhibit 9-4.When AD and SRAS cross at the point at which the price level is equal to P1 and Real GDP is equal to Q3,the economy is in

Accepted Answer

A)  a recessionary gap. 
B)  an inflationary gap. 
C)  long-run equilibrium. 
D)  a and c 
E)  b and c 
A)  a recessionary gap. 
B)  an inflationary gap. 
C)  long-run equilibrium. 
D)  a and c 
E)  b and c

Question 19

-Refer to Exhibit 9-6.If the economy is self-regulating and currently at point 1,what is going to happen?

Accepted Answer

A)  Wages rise,the SRAS curve shifts to the right until it passes through point 3; in long-run equilibrium the price level is lower and Real GDP is higher than at point 1. 
B)  Wages fall,the SRAS curve shifts to the left until it passes through point 2; in long-run equilibrium the price level is higher and Real GDP is lower that at point 1. 
C)  Wages fall,the SRAS curve shifts to the right until it passes through point 3; in long-run equilibrium the price level is lower and Real GDP is higher than at point 1. 
D)  Wages rise,the AD curve shifts to the right until it passes through point 4; in long-run equilibrium the price level and Real GDP are higher than at point 1. 
E)  Prices rise,the AD curve shifts to the right until it passes through point 4; in long-run equilibrium the price level and Real GDP are higher than at point 1. 
A)  Wages rise,the SRAS curve shifts to the right until it passes through point 3; in long-run equilibrium the price level is lower and Real GDP is higher than at point 1. 
B)  Wages fall,the SRAS curve shifts to the left until it passes through point 2; in long-run equilibrium the price level is higher and Real GDP is lower that at point 1. 
C)  Wages fall,the SRAS curve shifts to the right until it passes through point 3; in long-run equilibrium the price level is lower and Real GDP is higher than at point 1. 
D)  Wages rise,the AD curve shifts to the right until it passes through point 4; in long-run equilibrium the price level and Real GDP are higher than at point 1. 
E)  Prices rise,the AD curve shifts to the right until it passes through point 4; in long-run equilibrium the price level and Real GDP are higher than at point 1.

Question 20

According to Say's law,

Accepted Answer

A)  if there is demand for a good,someone will supply it. 
B)  production creates demand sufficient to purchase all goods and services produced. 
C)  supply and demand work together to determine price. 
D)  trading takes longer in a barter economy than in a money economy. 
E)  none of the above 
A)  if there is demand for a good,someone will supply it. 
B)  production creates demand sufficient to purchase all goods and services produced. 
C)  supply and demand work together to determine price. 
D)  trading takes longer in a barter economy than in a money economy. 
E)  none of the above

Exam 9: Perfect Competition

If the economy is currently operating below its institutional production possibilities frontier (institutional PPF),it is

The institutional production possibilities frontier illustrates the different combinations of goods that society can obtain given

Refer to Exhibit 9-8.The level of total expenditures (TE)in this economy is currently ______________ billion.

-Refer to Exhibit 9-4.Assuming the economy is in an inflationary gap at a short-run equilibrium point with the price level at P2,the movement toward long-run equilibrium will be

Which of the following is most nearly consistent with Say's law?

Suppose the economy's short-run equilibrium is at a point to the right of Natural Real GDP.Which of the following statements is true?

If the economy is self-regulating,explain the correct sequence of events that occurs once the economy is in a recessionary gap to move the economy to long-run equilibrium.

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

-Refer to Exhibit 9-3.The economy is in short-run equilibrium and has an inflationary gap at point

-Refer to Exhibit 9-1.If the economy is self-regulating,the price level is

According to classical economists,the relationship between the amount of funds households plan to save and the interest rate is

-Refer to Exhibit 9-4.Assume the economy is currently in long-run equilibrium with the price level equal to P3.If foreigners begin to buy more U.S.goods,the economy will,in the short run,move to price level equal to _________ and Real GDP equal to _________?

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

If the economy is in long-run equilibrium,the actual unemployment rate is less than the natural unemployment rate.

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

-Refer to Exhibit 9-4.Which of the following is true at the Real GDP level of Q3?

According to classical economists,

-Refer to Exhibit 9-4.When AD and SRAS cross at the point at which the price level is equal to P1 and Real GDP is equal to Q3,the economy is in

-Refer to Exhibit 9-6.If the economy is self-regulating and currently at point 1,what is going to happen?

According to Say's law,

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.Assuming the economy is in an inflationary gap at a short-run equilibrium point with the price level at P₂,the movement toward long-run equilibrium will be

-Refer to Exhibit 9-4.Assume the economy is currently in long-run equilibrium with the price level equal to P₃.If foreigners begin to buy more U.S.goods,the economy will,in the short run,move to price level equal to _ and Real GDP equal to _?

-Refer to Exhibit 9-4.Which of the following is true at the Real GDP level of Q₃?

-Refer to Exhibit 9-4.When AD and SRAS cross at the point at which the price level is equal to P₁ and Real GDP is equal to Q₃,the economy is in