Question 1

Explain how it is possible for the economy to produce at a point beyond its institutional production possibilities frontier (PPF),but not beyond its physical PPF.

Accepted Answer

The physical PPF represents the maximum

Question 2

If the economy is operating at a point beyond its institutional production possibilities frontier (institutional PPF),then the economy is

Accepted Answer

A)  producing Natural Real GDP and operating at the natural unemployment rate. 
B)  producing less than Natural Real GDP and operating below the natural unemployment rate. 
C)  producing more than Natural Real GDP and operating above the natural unemployment rate. 
D)  producing more than Natural Real GDP and operating below the natural unemployment rate. 
E)  none of the above 
A)  producing Natural Real GDP and operating at the natural unemployment rate. 
B)  producing less than Natural Real GDP and operating below the natural unemployment rate. 
C)  producing more than Natural Real GDP and operating above the natural unemployment rate. 
D)  producing more than Natural Real GDP and operating below the natural unemployment rate. 
E)  none of the above

Question 3

When there is a recessionary gap,(actual)Real GDP is __________ Natural Real GDP,and the (actual)unemployment rate is __________ the natural unemployment rate.

Accepted Answer

A)  greater than; less than 
B)  greater than; greater than 
C)  greater than; equal to 
D)  less than; greater than 
E)  less than; less than 
A)  greater than; less than 
B)  greater than; greater than 
C)  greater than; equal to 
D)  less than; greater than 
E)  less than; less than

Question 4

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

Accepted Answer

A)  an inflationary gap. 
B)  a recessionary gap. 
C)  long-run equilibrium. 
D)  none of the above 
A)  an inflationary gap. 
B)  a recessionary gap. 
C)  long-run equilibrium. 
D)  none of the above

Question 5

If the current unemployment rate is equal to the natural unemployment rate,then current Real GDP is

Accepted Answer

A)  greater than Natural Real GDP. 
B)  equal to Natural Real GDP. 
C)  equal to the Real GDP produced at full employment. 
D)  less than Natural Real GDP. 
E)  b and c 
A)  greater than Natural Real GDP. 
B)  equal to Natural Real GDP. 
C)  equal to the Real GDP produced at full employment. 
D)  less than Natural Real GDP. 
E)  b and c

Question 6

A natural disaster,such as the 2011 Japanese earthquake and tsunami,shifts the economy's ___________ curve _____________________.According to economists who believe that the economy is self-regulating,the result will be that the economy _____________be able to find its way back to Natural Real GDP without government intervention.

Accepted Answer

A)  SRAS; rightward; will 
B)  SRAS; leftward; will not 
C)  AD; leftward; will not 
D)  SRAS; leftward; will 
E)  AD; leftward; will 
A)  SRAS; rightward; will 
B)  SRAS; leftward; will not 
C)  AD; leftward; will not 
D)  SRAS; leftward; will 
E)  AD; leftward; will

Question 7

Which of the following is consistent with the classical position on wages and prices?

Accepted Answer

A)  Wages and prices are inflexible in the downward direction,but not in the upward direction. 
B)  Wages are inflexible in the downward direction,but prices are flexible. 
C)  Wages and prices are flexible. 
D)  Prices are inflexible in the downward direction,but wages are flexible. 
A)  Wages and prices are inflexible in the downward direction,but not in the upward direction. 
B)  Wages are inflexible in the downward direction,but prices are flexible. 
C)  Wages and prices are flexible. 
D)  Prices are inflexible in the downward direction,but wages are flexible.

Question 8

If an economy's institutional production possibilities frontier (institutional PPF)shifts rightward,the economy's

Accepted Answer

A)  natural unemployment rate rises. 
B)  natural unemployment rate falls. 
C)  Natural Real GDP declines. 
D)  physical PPF shifts leftward. 
E)  physical PPF shifts rightward. 
A)  natural unemployment rate rises. 
B)  natural unemployment rate falls. 
C)  Natural Real GDP declines. 
D)  physical PPF shifts leftward. 
E)  physical PPF shifts rightward.

Question 9

All economists agree that the economy is self-regulating.

Accepted Answer

A) True 
 B)False

Question 10

If the natural unemployment rate is 7 percent and the current unemployment rate is 5 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 a recessionary 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 a recessionary 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 11

An economy is producing its Natural Real GDP when the unemployment rate is equal to the __________ unemployment rate.

Accepted Answer

A)  frictional 
B)  structural 
C)  sum of the frictional unemployment rate and the structural 
D)  seasonal 
E)  cyclical 
A)  frictional 
B)  structural 
C)  sum of the frictional unemployment rate and the structural 
D)  seasonal 
E)  cyclical

Question 12

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

Accepted Answer

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

Question 13

-Refer to Exhibit 9-7.Which point is representative of the economy on its LRAS curve?

Accepted Answer

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

Question 14

Suppose the economy's short-run equilibrium level is at a point to the left 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 15

The classical economists felt that there would be no general overproduction of goods because of

Accepted Answer

A)  wage-price flexibility. 
B)  the law of diminishing utility. 
C)  the law of comparative advantage. 
D)  contestable markets. 
A)  wage-price flexibility. 
B)  the law of diminishing utility. 
C)  the law of comparative advantage. 
D)  contestable markets.

Question 16

When the current state of the economy is such that Real GDP is greater than Natural Real GDP,the economy is in a(n)____________________ gap.In this situation,the (actual)unemployment rate is ___________ than the natural unemployment rate,and there is a ________________ in the labor market.

Accepted Answer

A)  recessionary; greater; shortage 
B)  inflationary; less; shortage 
C)  inflationary; greater; surplus 
D)  recessionary; greater; surplus 
E)  recessionary; less; shortage 
A)  recessionary; greater; shortage 
B)  inflationary; less; shortage 
C)  inflationary; greater; surplus 
D)  recessionary; greater; surplus 
E)  recessionary; less; shortage

Question 17

If the natural unemployment rate is 5.5 percent,then the economy is in a recessionary gap when the actual unemployment rate is

Accepted Answer

A)  greater than 5.5 percent. 
B)  between 0 and 5.5 percent. 
C)  0 percent. 
D)  5.5 percent. 
A)  greater than 5.5 percent. 
B)  between 0 and 5.5 percent. 
C)  0 percent. 
D)  5.5 percent.

Question 18

-Refer to Exhibit 9-6.If the economy is self-regulating and currently at point 1,the real balance effect is operational and relevant between points

Accepted Answer

A)  3 and 4. 
B)  1 and 2. 
C)  1 and 4. 
D)  1 and 3. 
E)  2 and 3. 
A)  3 and 4. 
B)  1 and 2. 
C)  1 and 4. 
D)  1 and 3. 
E)  2 and 3.

Question 19

If an economy is operating __________ its institutional production possibilities frontier,it is producing __________ output than it would be at full employment.

Accepted Answer

A)  below; less 
B)  below; more 
C)  above; less 
D)  above; more 
E)  a and d 
A)  below; less 
B)  below; more 
C)  above; less 
D)  above; more 
E)  a and d

Question 20

Suppose the AD curve and the SRAS curve intersect to the right of the LRAS curve.Which of the following is true?

Accepted Answer

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

Exam 9: Perfect Competition

Explain how it is possible for the economy to produce at a point beyond its institutional production possibilities frontier (PPF),but not beyond its physical PPF.

If the economy is operating at a point beyond its institutional production possibilities frontier (institutional PPF),then the economy is

When there is a recessionary gap,(actual)Real GDP is __________ Natural Real GDP,and the (actual)unemployment rate is __________ the natural unemployment rate.

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

If the current unemployment rate is equal to the natural unemployment rate,then current Real GDP is

Which of the following is consistent with the classical position on wages and prices?

If an economy's institutional production possibilities frontier (institutional PPF)shifts rightward,the economy's

All economists agree that the economy is self-regulating.

If the natural unemployment rate is 7 percent and the current unemployment rate is 5 percent,then the economy is

An economy is producing its Natural Real GDP when the unemployment rate is equal to the __________ unemployment rate.

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

-Refer to Exhibit 9-7.Which point is representative of the economy on its LRAS curve?

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

The classical economists felt that there would be no general overproduction of goods because of

When the current state of the economy is such that Real GDP is greater than Natural Real GDP,the economy is in a(n)____________________ gap.In this situation,the (actual)unemployment rate is ___________ than the natural unemployment rate,and there is a ________________ in the labor market.

If the natural unemployment rate is 5.5 percent,then the economy is in a recessionary gap when the actual unemployment rate is

-Refer to Exhibit 9-6.If the economy is self-regulating and currently at point 1,the real balance effect is operational and relevant between points

If an economy is operating __________ its institutional production possibilities frontier,it is producing __________ output than it would be at full employment.

Suppose the AD curve and the SRAS curve intersect to the right of the LRAS curve.Which of the following is true?

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

When there is a recessionary gap,(actual)Real GDP is Natural Real GDP,and the (actual)unemployment rate is the natural unemployment rate.

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

When the current state of the economy is such that Real GDP is greater than Natural Real GDP,the economy is in a(n)______________ gap.In this situation,the (actual)unemployment rate is _ than the natural unemployment rate,and there is a ____________ in the labor market.

If an economy is operating its institutional production possibilities frontier,it is producing output than it would be at full employment.