Question 1

Exhibit 9-1 
-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

Question 2

If Real GDP is less than Natural Real GDP,then the (actual) unemployment rate is

Accepted Answer

A)  less than the natural unemployment rate.
B)  equal to the natural unemployment rate.
C)  greater than the natural unemployment rate.
D)  less than or greater than the natural unemployment rate,but we cannot determine which one.
E)  b and d

Question 3

Exhibit 9-5 
-The frictional unemployment rate is 2.5 percent,the structural unemployment rate is 3.1 percent,and the economy's current unemployment rate is 5.6 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 4

According to classical economists,if interest rates are flexible,

Accepted Answer

A)  saving will equal investment.
B)  saving may be greater than investment.
C)  saving may be less than investment.
D)  any of the above

Question 5

Suppose the economy is self-regulating,the price level is 120,the quantity demanded of Real GDP and the quantity supplied of Real GDP in the short run both equal $5.7 trillion,and the quantity supplied of Real GDP in the long run is $5.2 trillion.Given all of this information,we can conclude that the economy ____________ in short run equilibrium,and that the price level in long run equilibrium will be _____________ than 120.

Accepted Answer

A)  is not;less
B)  is;greater
C)  is;less
D)  is not;greater

Question 6

An inflationary 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.

Question 7

All economists agree that the economy is self-regulating.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 9-5 
-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

Question 9

Exhibit 9-7 
-Refer to Exhibit 9-7.Which point is representative of the economy in a recessionary gap?

Accepted Answer

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

Question 10

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.

Question 11

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

Question 12

When the economy is producing the level of output equal to natural Real GDP,the unemployment rate is equal to

Accepted Answer

A)  zero.
B)  the natural unemployment rate.
C)  the frictional unemployment rate.
D)  the structural unemployment rate.

Question 13

Which of the following statements is true?

Accepted Answer

A)  If current Real GDP is greater than Natural Real GDP,the economy is in a recessionary gap.
B)  If current Real GDP is less than Natural Real GDP,the economy is in long-run equilibrium.
C)  Wages are flexible if the economy is self-regulating.
D)  Wages rise but prices remain constant in long-run equilibrium.
E)  All economists believe the economy is self-regulating.

Question 14

Exhibit 9-3 
-Refer to Exhibit 9-3.If the economy is in short-run equilibrium at point A,

Accepted Answer

A)  the (actual) unemployment rate is less than the natural unemployment rate.
B)  the (actual) unemployment rate is equal to the natural unemployment rate.
C)  the (actual) unemployment rate is greater than the natural unemployment rate.
D)  the relationship between the (actual) unemployment rate and the natural unemployment rate cannot be determined from the available information.

Question 15

Exhibit 9-5 
-Refer to Exhibit 9-5.Imagine an AD curve intersecting an SRAS curve at Point K 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 16

In a self-regulating economy,a recessionary gap will be eliminated by falling wages which will shift the SRAS curve to the right.

Accepted Answer

A) True 
 B)False

Question 17

Exhibit 9-5 
-A laissez-faire macroeconomic policy,based on a __________ in self regulating properties of the economy,implies __________ by the government.

Accepted Answer

A)  belief;active policymaking
B)  belief;noninterference
C)  disbelief;active policymaking
D)  disbelief;noninterference

Question 18

If Real GDP is less than Natural Real GDP,the economy is in

Accepted Answer

A)  an inflationary gap.
B)  a recessionary gap.
C)  an unemployment gap.
D)  a real gap.

Question 19

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

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

Exam 9: Classical Macroeconomics and the Self-Regulating Economy

Exhibit 9-7 -Refer to Exhibit 9-7.Which point is representative of the economy in a recessionary gap?

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

Correct Answer
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According to classical economists,if interest rates are flexible,

Correct Answer
verified

If Real GDP is less than Natural Real GDP,then the (actual) unemployment rate is

Correct Answer
verified

An inflationary gap exists when AD and SRAS

Correct Answer
verified

If Real GDP is less than Natural Real GDP,the economy is in

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Exhibit 9-5 -If the current Real GDP is less than Natural Real GDP,then the economy is

Correct Answer
verified

Exhibit 9-5 -A laissez-faire macroeconomic policy,based on a in self regulating properties of the economy,implies by the government.

Correct Answer
verified

According to Say's law,

Correct Answer
verified

In a self-regulating economy,a recessionary gap will be eliminated by falling wages which will shift the SRAS curve to the right.

Correct Answer
verified

When the economy is producing the level of output equal to natural Real GDP,the unemployment rate is equal to

Correct Answer
verified

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

Correct Answer
verified

Exhibit 9-5 -The frictional unemployment rate is 2.5 percent,the structural unemployment rate is 3.1 percent,and the economy's current unemployment rate is 5.6 percent.The economy is in

Correct Answer
verified

Exhibit 9-3 -Refer to Exhibit 9-3.If the economy is in short-run equilibrium at point A,

Correct Answer
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All economists agree that the economy is self-regulating.

Correct Answer
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Exam 9: Classical Macroeconomics and the Self-Regulating Economy

Exhibit 9-7 -Refer to Exhibit 9-7.Which point is representative of the economy in a recessionary gap?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to classical economists,if interest rates are flexible,

Correct AnswerverifiedShow Answer

If Real GDP is less than Natural Real GDP,then the (actual) unemployment rate is

Correct AnswerverifiedShow Answer

An inflationary gap exists when AD and SRAS

Correct AnswerverifiedShow Answer

If Real GDP is less than Natural Real GDP,the economy is in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Exhibit 9-5 -If the current Real GDP is less than Natural Real GDP,then the economy is

Correct AnswerverifiedShow Answer

Exhibit 9-5 -A laissez-faire macroeconomic policy,based on a __________ in self regulating properties of the economy,implies __________ by the government.

Correct AnswerverifiedShow Answer

According to Say's law,

Correct AnswerverifiedShow Answer

In a self-regulating economy,a recessionary gap will be eliminated by falling wages which will shift the SRAS curve to the right.

Correct AnswerverifiedShow Answer

When the economy is producing the level of output equal to natural Real GDP,the unemployment rate is equal to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Exhibit 9-5 -The frictional unemployment rate is 2.5 percent,the structural unemployment rate is 3.1 percent,and the economy's current unemployment rate is 5.6 percent.The economy is in

Correct AnswerverifiedShow Answer

Exhibit 9-3 -Refer to Exhibit 9-3.If the economy is in short-run equilibrium at point A,

Correct AnswerverifiedShow Answer

All economists agree that the economy is self-regulating.

Correct AnswerverifiedShow Answer

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

Correct Answer
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Exhibit 9-5 -A laissez-faire macroeconomic policy,based on a in self regulating properties of the economy,implies by the government.

Correct Answer
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Correct Answer
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