Question 1

If the economy is self-regulating and in a recessionary gap,

Accepted Answer

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

Question 2

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; fallE) All of the above
F) B) and D)

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.F) A) and B)
G) B) and D)

Question 4

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

Accepted Answer

A)   below; soon rise
B)   above; soon rise
C)   below; soon fall
D)   above; remain unchanged
E)   none of the aboveF) B) and D)
G) A) and D)

Question 5

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

Accepted Answer

A)   there is a surplus of labor in the labor market.
B)   the economy is currently on its institutional PPF.
C)   the economy is currently in an inflationary gap.
D)   the labor market is in equilibrium.
E)   the actual unemployment rate is below the natural unemployment rate.F) All of the above
G) A) and B)

Question 6

Exhibit 9-5
 
-Refer to Exhibit 9-5.Picture 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)   GF) A) and E)
G) A) and B)

Question 7

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.E) A) and B)
F) None of the above

Question 8

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.E) B) and C)
F) All of the above

Question 9

All economists agree that the economy is self-regulating.

Accepted Answer

A) True 
 B)False

Question 10

According to classical economists,the economy

Accepted Answer

A)   always operates at a point below its institutional production possibilities frontier (PPF) .
B)   always operates close to or on its institutional PPF.
C)   seldom operates close to or on its institutional PPF.
D)   never operates close to or on its institutional PPF.E) All of the above
F) None of the above

Question 11

If the natural unemployment rate is 5.5 percent,then the economy is at full employment 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 aboveF) B) and D)
G) A) and B)

Question 12

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 aboveF) B) and E)
G) B) and C)

Question 13

Suppose the economy is self-regulating,the price level is 150,the quantity demanded of Real GDP and the quantity supplied of Real GDP in the short run both equal $4.3 trillion,and the quantity supplied of Real GDP in the long run is $4.1 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 150.

Accepted Answer

A)   is not; less
B)   is; more
C)   is; less
D)   is not; moreE) A) and C)
F) A) and D)

Question 14

When consumers start to spend less and save more,classical macroeconomists believe that interest rates will then ______________ resulting in a(n) ________________ in investment.

Accepted Answer

A)   rise; increase
B)   fall; increase
C)   fall; decrease
D)   rise; decreaseE) A) and C)
F) B) and D)

Question 15

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.E) B) and D)
F) None of the above

Question 16

The long-run aggregate supply (LRAS) curve is

Accepted Answer

A)   horizontal.
B)   vertical.
C)   positively sloped.
D)   negatively sloped.E) B) and C)
F) C) and D)

Question 17

Which of the following equations is correct?

Accepted Answer

A)   Saving = Disposable income + Consumption
B)   Saving = Disposable income x Consumption
C)   Disposable income = Consumption - Saving
D)   Saving = Disposable income - ConsumptionE) B) and C)
F) A) and C)

Question 18

When there is an inflationary gap,(actual) Real GDP is __________ Natural Real GDP,and the (actual) unemployment rate is __________ the natural rate of unemployment.

Accepted Answer

A)   greater than; less than
B)   greater than; greater than
C)   less than; greater than
D)   less than; less than
E)   less than; equal toF) None of the above
G) B) and C)

Question 19

Exhibit 9-6
 
-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.F) A) and E)
G) B) and C)

Question 20

Which of the following statements is true?

Accepted Answer

A)   The economy can operate outside (or beyond)  its institutional PPF and its physical PPF, but only for a short while.
B)   The economy can operate outside its physical PPF, if only for a short while, but can never operate outside its institutional PPF.
C)   The economy can operate outside its institutional PPF, if only for a short while, but can never operate outside its physical PPF.
D)   The economy can never operate outside its institutional PPF or its physical PPF, even for a short while.
E)   none of the aboveF) All of the above
G) B) and D)

Exam 9: Classical Macroeconomics and the Self Regulating Economy

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

Correct Answer
verified

If the economy is self-regulating and in a recessionary gap,

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

The long-run aggregate supply (LRAS) curve is

Correct Answer
verified

When consumers start to spend less and save more,classical macroeconomists believe that interest rates will then resulting in a(n) __ in investment.

Correct Answer
verified

Exhibit 9-6 -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

Correct Answer
verified

Which of the following statements is true?

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

Correct Answer
verified

Which of the following equations is correct?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

When there is an inflationary gap,(actual) Real GDP is Natural Real GDP,and the (actual) unemployment rate is the natural rate of unemployment.

Correct Answer
verified

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

Correct Answer
verified

According to classical economists,the economy

Correct Answer
verified

If the natural unemployment rate is 5.5 percent,then the economy is at full employment when the actual unemployment rate is

Correct Answer
verified

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

Correct Answer
verified

Exam 9: Classical Macroeconomics and the Self Regulating Economy

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

Correct AnswerverifiedShow Answer

If the economy is self-regulating and in a recessionary gap,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The long-run aggregate supply (LRAS) curve is

Correct AnswerverifiedShow Answer

When consumers start to spend less and save more,classical macroeconomists believe that interest rates will then ______________ resulting in a(n) ________________ in investment.

Correct AnswerverifiedShow Answer

Exhibit 9-6 -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

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

All economists agree that the economy is self-regulating.

Correct AnswerverifiedShow Answer

Which of the following equations is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When there is an inflationary gap,(actual) Real GDP is __________ Natural Real GDP,and the (actual) unemployment rate is __________ the natural rate of unemployment.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to classical economists,the economy

Correct AnswerverifiedShow Answer

If the natural unemployment rate is 5.5 percent,then the economy is at full employment when the actual unemployment rate is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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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.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

When consumers start to spend less and save more,classical macroeconomists believe that interest rates will then resulting in a(n) __ in investment.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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When there is an inflationary gap,(actual) Real GDP is Natural Real GDP,and the (actual) unemployment rate is the natural rate of unemployment.

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

Correct Answer
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