Question 1

According to the classical theorists,it is impossible to have a

Accepted Answer

A)  surplus of a particular product. 
B)  shortage of a particular product. 
C)  decrease in the demand for a product. 
D)  decrease in the supply of a product. 
E)  general overproduction of products.

Question 2

The frictional unemployment rate is 1.5 percent,the structural unemployment rate is 3.4 percent,and the economy's current unemployment rate is 4.9 percent.The economy is in

Accepted Answer

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

Question 3

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

Accepted Answer

A)  A or B 
B)  C 
C)  D or E 
D)  F 
E)  G

Question 4

The number of unpaid internships is more likely to rise in an economy when the economy is in a recessionary gap and wage rates are constant than when wage rates are falling.

Accepted Answer

A) True 
 B)False

Question 5

-Refer to Exhibit 9-5.Point C 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

Question 6

If the economy is in long-run equilibrium,

Accepted Answer

A)  prices will rise but wages will remain constant. 
B)  neither prices nor wages will change. 
C)  it is producing Natural Real GDP. 
D)  prices will remain constant but wages may rise. 
E)  b and c

Question 7

When the economy is in an inflationary gap,the labor market is experiencing a _____________.In a self-regulating economy,wage rates will then ___________ and the ______________ curve will shift __________________.

Accepted Answer

A)  shortage; rise; SRAS; leftward 
B)  shortage; fall; SRAS; leftward 
C)  surplus; rise; AD; rightward 
D)  shortage; fall; AD; rightward 
E)  surplus; fall; SRAS; rightward

Question 8

Refer to Exhibit 9-8.If saving increases by $500 billion,the new level of consumption will equal ______________.According to classical economists investment would _______________ and total expenditures would ________________________.

Accepted Answer

A)  $6,500 billion; then decrease by $500 billion; fall by $500 billion 
B)  $6,500 billion; then increase by $500 billion; fall by $500 billion 
C)  $7,500 billion; remain constant; fall by $500 billion 
D)  $6,500 billion; then increase by $500 billion; remain constant

Question 9

Economic-growth macroeconomics deals with increases in Real GDP due to a rightward-shifting AD curve.

Accepted Answer

A) True 
 B)False

Question 10

A person who believes the economy is self-regulating also believes that

Accepted Answer

A)  when there is a surplus in the labor market,the wage rate falls,and when there is a shortage in the labor market,the wage rate rises. 
B)  it is better if the economy is in an inflationary gap than a recessionary gap. 
C)  prices are flexible but wages are not. 
D)  the economy is always in long-run equilibrium. 
E)  the real balance effect does not operate in a recessionary gap.

Question 11

In the classical view of the credit market,a rise in saving produces a rise in investment via a

Accepted Answer

A)  rising interest rate. 
B)  falling interest rate. 
C)  rising price level. 
D)  falling price level.

Question 12

If the economy is in a recessionary gap,

Accepted Answer

A)  Real GDP is greater than Natural Real GDP. 
B)  Real GDP is equal to Natural Real GDP. 
C)  Real GDP is less than Natural Real GDP. 
D)  the (actual)unemployment rate is less than the natural unemployment rate. 
E)  a and d

Question 13

-Refer to Exhibit 9-1.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

Question 14

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

Accepted Answer

A)  A or B 
B)  C 
C)  D or E 
D)  F 
E)  G

Question 15

-Refer to Exhibit 9-5.Assume that the economy starts off at point A on graph (2)with an effective minimum wage law in place.After inflation erodes the purchasing power of the minimum wage and eliminates the constraining influence of the minimum wage law on the unskilled labor market,the economy is likely to move to a point such as

Accepted Answer

A)  B. 
B)  G. 
C)  F. 
D)  C. 
E)  None of the above,because the minimum wage has no influence on the amount of goods produced.

Question 16

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

Accepted Answer

A)  the AD curve will shift to the right and pass through point 4. 
B)  the SRAS curve will shift to the left and pass through point 2. 
C)  the economy is currently operating below its physical PPF and above its institutional PPF. 
D)  the SRAS curve will shift to the right and pass through point 3.

Question 17

-Refer to Exhibit 9-3.The economy is in long-run equilibrium at point

Accepted Answer

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

Question 18

-Refer to Exhibit 9-4.Assume the economy is self-regulating and currently is in long-run equilibrium with the price level equal to P3.After an initial increase in U.S.exports,the economy will move to long-run equilibrium by a shift from

Accepted Answer

A)  AD3 to AD1. 
B)  SRAS1 to SRAS2. 
C)  SRAS2 to SRAS1. 
D)  AD3 to AD2. 
E)  none of the above

Question 19

In a barter economy,Say's law implies there

Accepted Answer

A)  can be a general overproduction of goods. 
B)  can be a general underproduction of goods. 
C)  cannot be a general overproduction or underproduction of goods. 
D)  can be a general overproduction of goods but never a general underproduction of goods.

Question 20

According to Say's law,in a money economy a reduction in consumption spending causes a __________ shift of the saving curve and therefore a __________ in the interest rate.

Accepted Answer

A)  leftward; rise 
B)  leftward; fall 
C)  rightward; rise 
D)  rightward; fall

Exam 9: Perfect Competition

According to the classical theorists,it is impossible to have a

The frictional unemployment rate is 1.5 percent,the structural unemployment rate is 3.4 percent,and the economy's current unemployment rate is 4.9 percent.The economy is in

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

The number of unpaid internships is more likely to rise in an economy when the economy is in a recessionary gap and wage rates are constant than when wage rates are falling.

-Refer to Exhibit 9-5.Point C 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,

When the economy is in an inflationary gap,the labor market is experiencing a _______.In a self-regulating economy,wage rates will then _ and the curve will shift ________.

Refer to Exhibit 9-8.If saving increases by $500 billion,the new level of consumption will equal ______.According to classical economists investment would _ and total expenditures would __________________.

Economic-growth macroeconomics deals with increases in Real GDP due to a rightward-shifting AD curve.

A person who believes the economy is self-regulating also believes that

In the classical view of the credit market,a rise in saving produces a rise in investment via a

If the economy is in a recessionary gap,

-Refer to Exhibit 9-1.The economy is currently producing Q₁.At this level of Real GDP,the economy is in

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

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

-Refer to Exhibit 9-3.The economy is in long-run equilibrium at point

-Refer to Exhibit 9-4.Assume the economy is self-regulating and currently is in long-run equilibrium with the price level equal to P₃.After an initial increase in U.S.exports,the economy will move to long-run equilibrium by a shift from

In a barter economy,Say's law implies there

According to Say's law,in a money economy a reduction in consumption spending causes a shift of the saving curve and therefore a in the interest rate.