If the economy is currently in a recessionary gap, Select one:

b. some economists will argue that the economy can remove the gap itself.

a. all economists will argue that the economy can remove the gap itself.

c. no economist will argue that the economy can remove the gap itself.

d. all economists will argue that over time the recessionary gap will worsen.

If the natural unemployment rate is 5 percent and the current unemployment rate is 6 percent, then the economy is Select one:

c. producing less Real GDP than it does at full employment.

a. producing more Real GDP than it does at full employment.

When the economy is producing Real GDP at a level at which the LRAS curve intersects the AD curve the economy is Select one:

d. operating at less than full-employment output.

Suppose the economy's short-run equilibrium point is to the right of the Natural Real GDP. Which of the following is true? Select one:

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.

In a "self-regulating" economy, inflationary and recessionary gaps Select one:

b. are eliminated by forces internal to the economy, without government intervention.

c. are eliminated by timely actions of economic policymakers.

d. are the desirable results of microeconomic price adjustments

In a self-regulating economy, inflationary and recessionary gaps produce shifts of the Select one:

c. SRAS curve that maintain the short-run equilibrium point.

d. SRAS curve that move the economy to a long-run equilibrium point.

b. AD curve that move the economy to a long-run equilibrium point.

a. AD curve that maintain the short-run equilibrium point.

The physical production possibilities frontier illustrates the different combinations of goods that society can produce given Select one:

e. the constraints of finite resources and the current state of technology and institutional constraints.

d. the natural rate of unemployment.

c. its institutional constraints.

a. the constraints of finite resources and the current state of technology.

The economy can operate Select one:

c. under its physical PPF but not under its institutional PPF.

b. on both its institutional PPF and its physical PPF, but not at the same time.

a. beyond its institutional PPF but not beyond its physical PPF.

The institutional production possibilities frontier illustrates the different combinations of goods that society can obtain given Select one:

e. the constraints of finite resources and the current state of technology and institutional constraints.

d. the natural rate of unemployment.

a. the constraints of finite resources and the current state of technology.

c. its institutional constraints.

The more institutional constraints that exist in a particular society, Select one:

c. the closer to the origin the institutional PPF will lie.

b. the farther out from the origin the institutional PPF will lie.

a. the closer the institutional PPF will lie to the physical PPF.

d. the closer to the origin the institutional PPF will lie and the farther out from the origin the physical PPF will lie.

The natural rate of unemployment exists at Select one:

d. every point on the institutional PPF.

b. some point within the interior of the physical PPF, but we cannot locate it with more accuracy.

c. some point within the interior of the institutional PPF, but we cannot locate it with more accuracy.

a. some point within the interior of the PPF but outside the limits of the institutional PPF.

e. every point on the physical PPF.

A laissez-faire macroeconomic policy, based on a __________ in self regulating properties of the economy, implies __________ by the government. Select one:

c. disbelief, active policymaking

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

c. equal to the Real GDP produced at full employment.

a. greater than Natural Real GDP.

A necessary condition for the economy to be self-regulating is that Select one:

d. wages must be flexible in both an upward and downward direction.

a. wages must be relatively high.

b. the labor market must always be in equilibrium.

c. the interest rate must be above its equilibrium level.

If the economy is in long-run equilibrium, Select one:

d. prices will remain constant but wages may rise.

a. prices will rise but wages will remain constant.

b. neither prices nor wages will change.

c. it is producing Natural Real GDP.

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

b. wages will rise, but prices will fall.

d. wages will fall, but prices will rise.

e. neither wages nor prices will change.

A necessary condition for a money economy to be self-regulating is that Select one:

d. interest rates must be flexible in the credit market.

c. wages must be flexible in a downward direction, but not in an upward direction.

b. the economy must always be operating on its institutional production possibilities frontier.

a. wages must be flexible in an upward direction, but not in a downward direction.

In order for Say's law to hold in a money economy, Select one:

c. funds saved must give rise to an equal amount of funds invested.

a. there must be more than four goods.

b. funds saved must give rise to an equal amount of funds earned.

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

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

According to classical economists, if the amount of funds households save is greater than the amount of funds firms invest, then Select one:

a. the interest rate will fall, ultimately moving to a level where the amount of funds households plan to save equals the amount of funds firms plan to invest.

c. the interest rate will remain constant and people will simply buy more goods.

d. more money will he used for leisure purposes, since households save in order to consume leisure at some later time.

b. the interest rate will rise, ultimately moving to a level where the amount of funds households plan to save equals the amount of funds firms plan to invest.

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

b. the law of diminishing utility.

c. the law of comparative advantage.

Which of the following statements is false? Select one:

a. The classical economists believed that government should manage the economy.

c. The classical economists believed that the economy was self-regulating.

d. The classical economists believed equilibrium output would be full-employment output.

b. The classical economists believed in a policy of laissez-faire.

According to Say's law, Select one:

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.

a. if there is demand for a good, someone will supply it.

Which of the following equations is correct? Select one:

d. Saving = Disposable income - Consumption

a. Saving = Disposable income + Consumption

b. Saving = Disposable income x Consumption

c. Disposable income = Consumption - Saving

Mac 9

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

When the economy is at its full employment Real GDP, the unemployment rate is equal to
Select one:

b. the natural unemployment rate.

d. the structural unemployment rate.

c. the frictional unemployment rate.

a. zero.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

c. sum of the frictional unemployment rate and the structural

e. cyclical

d. seasonal

b. structural

a. frictional

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If Real GDP is less than Natural Real GDP, the economy is in
Select one:

b. a recessionary gap.

d. a real gap.

c. an unemployment gap.

a. an inflationary gap.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

a. in a recessionary gap.

b. at Natural Real GDP.

c. in an inflationary gap.

d. at full-employment Real GDP.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If the SRAS curve intersects the AD curve to the right of Natural Real GDP, the economy is
Select one:

c. in an inflationary gap.

d. at full-employment Real GDP.

b. at Natural Real GDP.

a. in a recessionary gap.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

c. greater than the natural unemployment rate.

a. less than the natural unemployment rate.

b. equal to the natural unemployment rate.

d. equal to full employment.

e. b and d

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If Real GDP is greater than Natural Real GDP, the economy is in a(n)
Select one:

d. inflationary gap.

c. recessionary gap.

b. structural gap.

a. frictional gap.

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Mac 9

When the economy is at its full employment Real GDP, the unemployment rate is equal toSelect one:

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

If Real GDP is less than Natural Real GDP, the economy is inSelect one:

If the SRAS curve intersects the AD curve to the left of Natural Real GDP, the economy isSelect one:

If the SRAS curve intersects the AD curve to the right of Natural Real GDP, the economy isSelect one:

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

If Real GDP is greater than Natural Real GDP, the economy is in a(n)Select one:

If the economy is currently in a recessionary gap,Select one:

If the natural unemployment rate is 5 percent and the current unemployment rate is 6 percent, then the economy isSelect one:

The long-run aggregate supply (LRAS) curve isSelect one:

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Popular Resources on Wayground

When the economy is at its full employment Real GDP, the unemployment rate is equal to
Select one:

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

If Real GDP is less than Natural Real GDP, the economy is in
Select one:

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

If the SRAS curve intersects the AD curve to the right of Natural Real GDP, the economy is
Select one:

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

If Real GDP is greater than Natural Real GDP, the economy is in a(n)
Select one:

If the economy is currently in a recessionary gap,
Select one:

If the natural unemployment rate is 5 percent and the current unemployment rate is 6 percent, then the economy is
Select one:

The long-run aggregate supply (LRAS) curve is
Select one: