Question 1

If the natural unemployment rate is 5.5 percent,then the economy is at long-run equilibrium when the actual unemployment rate is

Accepted Answer

A)  more than 5.5 percent. 
B)  between 0 and 5.5 percent. 
C)  0 percent. 
D)  5.5 percent. 
E)  none of the above 
A)  more than 5.5 percent. 
B)  between 0 and 5.5 percent. 
C)  0 percent. 
D)  5.5 percent. 
E)  none of the above

Question 2

Explain the policy implications of the classical economists' beliefs.

Accepted Answer

The classical economists believed that t

Question 3

If the economy is self-regulating and in an inflationary gap,

Accepted Answer

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

Question 4

Business-cycle macroeconomics involves changes in Real GDP around a ____________ LRAS curve,while economic-growth macroeconomics deals with increases in Real GDP resulting from a ______________ LRAS curve.

Accepted Answer

A)  rightward-shifting; fixed 
B)  fixed; leftward shifting 
C)  leftward shifting; fixed 
D)  fixed; rightward-shifting 
A)  rightward-shifting; fixed 
B)  fixed; leftward shifting 
C)  leftward shifting; fixed 
D)  fixed; rightward-shifting

Question 5

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

Accepted Answer

A)  below; fall. 
B)  above; fall 
C)  below; rise 
D)  above; rise 
E)  none of the above 
A)  below; fall. 
B)  above; fall 
C)  below; rise 
D)  above; rise 
E)  none of the above

Question 6

The economy is currently operating at a point on its physical production possibilities frontier (physical PPF).It is

Accepted Answer

A)  producing Natural Real GDP and operating below the natural unemployment rate. 
B)  producing more than Natural Real GDP and operating above the natural unemployment rate. 
C)  producing more than Natural Real GDP and operating below the natural unemployment rate. 
D)  in long-run equilibrium. 
A)  producing Natural Real GDP and operating below the natural unemployment rate. 
B)  producing more than Natural Real GDP and operating above the natural unemployment rate. 
C)  producing more than Natural Real GDP and operating below the natural unemployment rate. 
D)  in long-run equilibrium.

Question 7

The structural unemployment rate is 1.7 percent,the frictional unemployment rate is 2.6 percent,and the economy's current unemployment rate is 3.9 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 8

Describe how Say's law can hold in a money economy,according to the classical economists.

Accepted Answer

In order for Say's law to hold in a mone

Question 9

Which of the following statements is true?

Accepted Answer

A)  The long-run aggregate supply (LRAS)curve shows the Real GDP the economy is prepared to supply at different price levels,assuming wage rates and all other resource prices have fully adjusted to eliminate a recessionary or inflationary gap. 
B)  Laissez-faire is a government policy of raising aggregate demand in order to eliminate a recessionary gap. 
C)  An economy can operate beyond its physical PPF,but not beyond its institutional PPF. 
D)  If the economy is self-regulating,it is always in long-run equilibrium. 
E)  a and c 
A)  The long-run aggregate supply (LRAS)curve shows the Real GDP the economy is prepared to supply at different price levels,assuming wage rates and all other resource prices have fully adjusted to eliminate a recessionary or inflationary gap. 
B)  Laissez-faire is a government policy of raising aggregate demand in order to eliminate a recessionary gap. 
C)  An economy can operate beyond its physical PPF,but not beyond its institutional PPF. 
D)  If the economy is self-regulating,it is always in long-run equilibrium. 
E)  a and c

Question 10

For saving to increase,consumption must decrease,ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 11

According to Say's law,there can be

Accepted Answer

A)  neither a general overproduction nor a general underproduction of goods. 
B)  a general overproduction but not a general underproduction of goods. 
C)  a general underproduction but not a general overproduction of goods. 
D)  both a general overproduction and a general underproduction of goods. 
A)  neither a general overproduction nor a general underproduction of goods. 
B)  a general overproduction but not a general underproduction of goods. 
C)  a general underproduction but not a general overproduction of goods. 
D)  both a general overproduction and a general underproduction of goods.

Question 12

If the economy is currently in a recessionary gap,

Accepted Answer

A)  all economists will agree that the economy can remove itself from the recessionary gap without government intervention. 
B)  some economists will argue that the economy can remove itself from the recessionary gap without government intervention. 
C)  no economist will state that the economy can remove itself from the recessionary gap without government intervention. 
D)  all economists will agree that over time the recessionary gap will worsen. 
A)  all economists will agree that the economy can remove itself from the recessionary gap without government intervention. 
B)  some economists will argue that the economy can remove itself from the recessionary gap without government intervention. 
C)  no economist will state that the economy can remove itself from the recessionary gap without government intervention. 
D)  all economists will agree that over time the recessionary gap will worsen.

Question 13

The long-run aggregate supply (LRAS)curve is

Accepted Answer

A)  horizontal. 
B)  vertical. 
C)  positively sloped. 
D)  negatively sloped. 
A)  horizontal. 
B)  vertical. 
C)  positively sloped. 
D)  negatively sloped.

Question 14

According to the classical economists,which of the following statements is false?

Accepted Answer

A)  There is a direct relationship between the amount individuals save and the interest rate. 
B)  There is a direct relationship between the amount business firms invest and the interest rate. 
C)  As the interest rate rises,the quantity supplied of loanable funds rises. 
D)  Interest rate flexibility will ensure that saving is equal to investment. 
A)  There is a direct relationship between the amount individuals save and the interest rate. 
B)  There is a direct relationship between the amount business firms invest and the interest rate. 
C)  As the interest rate rises,the quantity supplied of loanable funds rises. 
D)  Interest rate flexibility will ensure that saving is equal to investment.

Question 15

Suppose the AD curve and the SRAS curve intersect to the left 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.

Question 16

A recessionary gap exists if (actual)Real GDP is __________ Natural Real GDP.

Accepted Answer

A)  less than 
B)  greater than 
C)  equal to 
D)  b and c 
E)  none of the above 
A)  less than 
B)  greater than 
C)  equal to 
D)  b and c 
E)  none of the above

Question 17

-Refer to Exhibit 9-7.Which point is representative of the economy experiencing labor market shortages?

Accepted Answer

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

Question 18

-Refer to Exhibit 9-5.Imagine an AD curve intersecting an SRAS curve at Point J 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

Question 19

Describe the difference between business-cycle macroeconomics and economic-growth macroeconomics.

Accepted Answer

Business-cycle macroeconomics involves c

Question 20

When the economy is producing Real GDP at the level at which the LRAS curve intersects the AD curve the economy is

Accepted Answer

A)  in a recessionary gap. 
B)  in long-run equilibrium. 
C)  in an inflationary gap. 
D)  operating at less than full-employment output. 
A)  in a recessionary gap. 
B)  in long-run equilibrium. 
C)  in an inflationary gap. 
D)  operating at less than full-employment output.

Exam 9: Perfect Competition

If the natural unemployment rate is 5.5 percent,then the economy is at long-run equilibrium when the actual unemployment rate is

Explain the policy implications of the classical economists' beliefs.

If the economy is self-regulating and in an inflationary gap,

Business-cycle macroeconomics involves changes in Real GDP around a ____________ LRAS curve,while economic-growth macroeconomics deals with increases in Real GDP resulting from a ______________ LRAS curve.

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

The economy is currently operating at a point on its physical production possibilities frontier (physical PPF).It is

The structural unemployment rate is 1.7 percent,the frictional unemployment rate is 2.6 percent,and the economy's current unemployment rate is 3.9 percent.The economy is in

Describe how Say's law can hold in a money economy,according to the classical economists.

Which of the following statements is true?

For saving to increase,consumption must decrease,ceteris paribus.

According to Say's law,there can be

If the economy is currently in a recessionary gap,

The long-run aggregate supply (LRAS)curve is

According to the classical economists,which of the following statements is false?

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

A recessionary gap exists if (actual)Real GDP is __________ Natural Real GDP.

-Refer to Exhibit 9-7.Which point is representative of the economy experiencing labor market shortages?

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

Describe the difference between business-cycle macroeconomics and economic-growth macroeconomics.

When the economy is producing Real GDP at the level at which the LRAS curve intersects the AD curve 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

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Business-cycle macroeconomics involves changes in Real GDP around a LRAS curve,while economic-growth macroeconomics deals with increases in Real GDP resulting from a __ LRAS curve.

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