Question

6) Japan's population increased by 3 percent in 2010. As a result, which of the following occurred?

I.   an increase in potential GDP

II. a rightward shift in the long-run aggregate supply curve

III. a rightward shift in the short-run aggregate supply curve.

A) I, II and III.

B) III only.

C) I and II only.

D) II and III.

AACSB: Analytical Skills

7) Keynesian economists believe that

A) the economy automatically adjusts towards full employment.

B) monetary policy causes business cycles.

C) there are no business cycles.

D) activist government policy is needed to get the economy to full employment.

8) A recessionary gap occurs when

A) the short-run aggregate supply curve shifts rightward.

B) real GDP is less than potential GDP.

C) the economy is at its long-run equilibrium.

D) government interferes with the economy.

9) Classical economists believe that the economy

A) requires activist government intervention to reach its potential level of GDP.

B) is self-regulating and does not require government intervention.

C) can be affected by only monetary policy.

D) is persistently below its potential level of GDP.

10) The impulse leading to business cycles in the Keynesian model is changes in

A) the structural deficit.

B) open market operations.

C) business confidence.

D) the expected future price level.

please answer everything and correct thankyou

Answer 1

6. Option A I,2,3 .Growth of the population or an increase in the labor force participation rate, both of which increase the quantity of labor available for production. If population increases, by, say, migration of adults, these migrants will become workers in the economy. If an economy has more workers it has the potential to produce more goods and services. Therefore GDP will increase.The long run aggregate supply curve (LRAS) is determined by all factors of production – size of the workforce, size of capital stock, levels of education and labour productivity.If there was an increase in investment or growth in the size of the labour force this would shift the LRAS curve to the right.

7. Option D activist government policy is needed to get the economy to full employment.Keynesian economists believe government can implement policy proposals that can positively impact the economy.

8.Option B when real GDP is less than potential GDP.

A recessionary gap (or below full employment equilibrium ) occurs when real GDP is less than potential GDP and that brings a falling price level. A recessionary gap occurs when the SRAS curve and the AD curve intersect to the left of the potential GDP line.

9.Option B. is self-regulating and does not require government intervention.

The classical economists believe that the market is always clear because price would adjust through the interactions of supply and demand. Since the market is self-regulating, there is no need to intervene.

10.Option C Business Confidence. It is an economic indicator that measures the amount of optimism or pessimism that business managers feel about the prospects of their companies/ organizations. It also provides an overview of the state of the economy.In simple words it is the expected future sales and profits of business organizations.