Download Homework 9—Chapter 9 1) When the economy is at its full

Homework 9—Chapter 9
Exhibit 9-3
1)
to
A)
B)
C)
D)
When the economy is at its full employment Real GDP, the unemployment rate is equal
2)
A)
B)
C)
D)
If Real GDP is less than Natural Real GDP, the economy is in
an inflationary gap.
a recessionary gap.
an unemployment gap.
a real gap.
8) Refer to Exhibit 9-3. The economy is in
short-run equilibrium and has an inflationary
gap at point
A) A.
B) B.
C) C.
D) D.
E) E.
3)
is
A)
B)
C)
D)
If the SRAS curve intersects the AD curve to the left of Natural Real GDP, the economy
zero.
the natural unemployment rate.
the frictional unemployment rate.
the structural unemployment rate.
in a recessionary gap.
at Natural Real GDP.
in an inflationary gap.
at full-employment Real GDP.
4) If the SRAS curve intersects the AD curve to the right of Natural Real GDP, the
economy is
A) in a recessionary gap.
B) at Natural Real GDP.
C) in an inflationary gap.
D) at full-employment Real GDP.
5) If the natural unemployment rate is 5 percent and the current unemployment rate is 6
percent, then the economy is
A) producing more Real GDP than it does at full employment.
B) in an inflationary gap.
C) producing less Real GDP than it does at full employment.
D) a and b
E) b and c
6)
A)
B)
C)
D)
The long-run aggregate supply (LRAS) curve is
horizontal.
vertical.
positively sloped.
negatively sloped.
7) Suppose the economy's short-run equilibrium point is to the left of the Natural Real
GDP. Which of the following is true?
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.
B)
C)
D)
E)
B.
C.
D.
E.
9) Refer to Exhibit 9-3. The economy is in
short-run equilibrium and has a recessionary
gap at point
A) A.
10) Refer to Exhibit 9-3. If the economy is in short-run equilibrium at point A,
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.
11) Refer to Exhibit 9-3. If the economy is in short-run equilibrium at point C,
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.
12) Refer to Exhibit 9-3. If the economy is in equilibrium at point B,
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.
13)
A)
B)
C)
D)
In a "self-regulating" economy, inflationary and recessionary gaps
never occur.
are eliminated by forces internal to the economy, without government intervention.
are eliminated by timely actions of economic policymakers.
are the desirable results of microeconomic price adjustments.
14) The institutional production possibilities frontier illustrates the different combinations of
goods that society can obtain given
A) the constraints of finite resources and the current state of technology.
B) the price level.
C) its institutional constraints.
D) the natural rate of unemployment.
E) the constraints of finite resources and the current state of technology and institutional
constraints.
D
E
B
All Other Goods
15) The more institutional constraints that exist in a particular society,
A) the closer the institutional PPF will lie to the physical PPF.
B) the farther out from the origin the institutional PPF will lie.
C) the closer to the origin the institutional PPF will lie.
D) the closer to the origin the institutional PPF will lie and the farther out from the origin
the physical PPF will lie.
C
A
16) 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.
A) leftward; rise
B) leftward; fall
C) rightward; rise
D) rightward; fall
17)
A)
B)
C)
D)
E)
Say's law says
demand creates its own supply.
the more supply there is, the lower prices are.
supply creates supply.
supply creates its own demand.
none of the above
18)
A)
B)
C)
D)
According to classical economists, if interest rates are flexible,
saving will equal investment.
saving may be greater than investment.
saving may be less than investment.
any of the above
Exhibit 9-6 
19) Refer to Exhibit 9-6. If
the economy is self-regulating
and currently at point 1, it
follows that
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.
Institutional PPF
Physical PPF
Good X
Exhibit 9-7
20)
gap?
A)
B)
C)
D)
Refer to Exhibit 9-7. Which point is representative of the economy in an inflationary
A
B
C
E
21) Refer to Exhibit 9-7. Which point is representative of the economy experiencing labor
market shortages?
A) A
B) B
C) C
D) E