Among the following, the domestic government gains the most revenue when it
A) imposes an import quota.
B) eliminates an import quota.
C) encourages freer trade.
D) imposes a tariff.
E) increases the demand for a domestically-produced good.
The substitution effect influences food purchases because when the price of a certain
food rises, other things remaining the same, ________. Consumers ________.
A) the relative price of all food rises; purchase less of the food that has experienced the
price increase and more of all other foods
B) its relative price does not change because most likely the prices of all other foods
will also rise; continue to purchase all foods, but in smaller quantities
C) its relative price rises; purchase more of a different food that is less expensive
D) the relative price of all food rises; continue to purchase all foods, but in smaller
quantities
E) its relative price rises; purchase less of all foods
A price taker is a firm that
A) must lower its price if it wants to sell more output.
B) sets the market price.
C) cannot influence the market price.
D) is incurring an economic loss.
E) can raise its price if it lowers output.
If two consumption points are on different indifference curves, then one point is
A) a substitute for the other.
B) preferred to the other.
C) a complement of the other.
D) a normal good and the other point is an inferior good.
E) more expensive than the other.
In Canada, the low-income cut-off level for a family is when ________ or more of
income is spent on food, shelter, and clothing.
A) 33.6 percent
B) 43.6 percent
C) 53.6 percent
D) 63.6 percent
E) 73.6 percent
The Laffer curve shows that increasing ________ increases ________ when ________
low.
A) tax revenue; potential GDP; tax revenue is
B) the tax rate; tax revenue; the tax rate is
C) potential GDP; tax revenue; tax revenue is
D) government outlays; the budget deficit; government expenditure is
E) investment; potential GDP; the interest rate is
Choose the correct equation.
A) TFC = TC/Q
B) TFC = TC – AVC
C) TFC = TC – TVC
D) TFC = TVC/Q
E) TFC = TVC – TC
Suppose that the money prices of raw materials rise. With no action by the Bank of
Canada,
I. the aggregate demand curve shifts rightward and the price level rises.
II. the aggregate demand curve shifts rightward and the aggregate supply curve shifts
leftward.
III. the initial outcome is lower employment and a rise in the price level.
A) I only
B) II only
C) III only
D) I and II only
E) I, II, and III
A view of the sunset is
A) excludable and rival.
B) nonexcludable and nonrival.
C) nonexcludable and rival.
D) excludable and nonrival.
E) a private good.
Long-run aggregate supply will increase for all of the following reasons except
A) a fall in the money wage rate.
B) an increase in human capital.
C) the introduction of new technology.
D) an increase in the full-employment quantity of labour.
E) an increase in the quantity of capital.
A person driving while talking on a cellphone creates ________. A beautiful sunset
creates ________.
A) a negative production externality; a positive consumption externality
B) a negative production externality; no externality
C) a negative consumption externality; a positive consumption externality
D) a negative consumption externality; no externality
E) a negative consumption externality; a positive production externality
Suppose that in China, investment is $400 billion, saving is $400 billion, tax revenues
are $500 billion, exports are $300 billion, and imports are $200 billion. The government
budget ________ the supply of loanable funds, which ________ the real interest rate
and ________ investment.
A) surplus increases; lowers; decreases
B) surplus decreases; raises; increases
C) surplus increases; lowers; increases
D) deficit decreases; raises; decreases
E) surplus increases; raises; decreases
The value of marginal product of oil is the ________ influence on demand. The greater
the quantity of oil used, the ________ is the value of marginal product of oil.
A) speculative; greater
B) fundamental; greater
C) fundamental; smaller
D) speculative; smaller
E) none of the above
The purchase of government bonds by the Bank of Canada
A) decreases bank reserves.
B) increases bank loans.
C) decreases the price of bonds.
D) fights inflation.
E) tightens credit conditions.
Which of the following items is money in Canada today?
A) your loan to pay for school fees
B) your Visa card
C) cash in CIBC’s cash machines
D) Bank of Canada dollar bills in your wallet
E) cash in CIBC’s cash machines and Bank of Canada dollar bills in your wallet
Refer to Table 8.2.2. What is the total utility if 3 bags of popcorn and 2 bottles of pop
are consumed?
A) 150
B) 310
C) 490
D) 660
E) 100
A fall in the price of a good from $10.50 to $9.50 results in an increase in the quantity
demanded from 18,800 to 21,200 units. The price elasticity of demand is
A) 0.8.
B) 1.25.
C) 1.2.
D) 8.0.
E) 2.4.
Refer to Table 27.3.1. Autonomous expenditure is
A) $100 billion.
B) $125 billion.
C) $50 billion.
D) $500 billion.
E) zero.
The Laffer Curve has been criticized by mainstream economists because
A) there is no theoretical possibility of higher tax rates leading to lower tax revenues.
B) higher tax rates do not create negative incentive effects.
C) tax cuts are just spent, not saved as predicted by the theory.
D) savers look only at real interest rates, not nominal interest rates.
E) empirically, tax cuts have not led to higher tax revenues.
Given Fact 2.4.2, what would be the total output of X and Y in an eight-hour day if
Agnes and Brenda each specialized in producing the good in which they have a
comparative advantage?
A) 3 units of X and 5 units of Y
B) 8 units of X and 16 units of Y
C) 8 units of X and 32 units of Y
D) 24 units of X and 40 units of Y
E) 16 units of X and 8 units of Y
Which one of the following is false?
A) Y = C + I + G + M – X
B) Y – C – I – G – X + M = 0
C) X – M = Y – C – I – G
D) Y + M = C + I + G + X
E) Y = C + I + G + X – M
An increase in labour productivity ________ the real wage rate and an increase in
population ________ the real wage rate.
A) raises; lowers
B) raises; raises
C) lowers; lowers
D) lowers; raises
E) raises; does not change
The Government of Canada promises to produce more defence goods without any
decrease in the production of other goods. This promise is valid
A) if Canada is producing at a point outside its PPF.
B) if Canada is producing at a point on its PPF.
C) if Canada is producing at a point inside its PPF.
D) only if the PPF shifts rightward.
E) only if technology advances or capital increases.
A golf club manufacturer pays its workers based on the number of sets of clubs they
produce. This firm
A) organizes production based on a command system.
B) does not have a principal-agent problem.
C) is a sole proprietorship.
D) organizes production based on an incentive system.
E) is a corporation.
Refer to Table 11.3.1, which gives Tania’s total cost schedule. The average total cost of
producing 16 teapots per day is
A) $2.
B) $5.
C) $3.33.
D) $7.50.
E) $5.51.
Use the information below to answer the following questions.
Fact 11.1.1
January 31, 2008: Starbucks will open 75 more stores abroad than originally predicted,
for a total of 975.
February 25, 2008: For three hours on Tuesday, Starbucks will shut down every single
one of its 7,100 stores so that baristas can receive a refresher course.
June 2, 2008: Starbucks replaces baristas with vending machines.
July 18, 2008: Starbucks is closing 616 stores by the end of March.
Refer to Fact 11.1.1. The decisions made on ________ are short-run decisions because
they ________.
A) January 31 and July 18; change the number of stores but not necessarily the number
of employees
B) February 25 and June 2; change a variable factor of production but not a fixed factor
of production
C) February 25, June 2, and July 18; deal with stores located in the United States
D) June 2 and July 18; are the more recent decisions
E) none of the above
Refer to the table below to answer the following question.
Table 23.3.2
Refer to Table 23.3.2. The table shows an economy’s demand for loanable funds and
supply of loanable funds schedules when the government’s budget is balanced. The
quantity of loanable funds demanded increases by $1 trillion at each real interest rate
and the quantity of loanable funds supplied increases by $2 trillion at each real interest
rate. If the government wants investment to be $9 trillion, it must ________ its budget
balance by ________ trillion.
A) increase; $1
B) decrease; $1
C) increase; $1.5
D) decrease; $1.5
E) increase; $2
When a Canadian firm implements offshore outsourcing, consumers in Canada
________, and workers in Canada in the industry that is being outsourced ________.
A) gain; neither gain nor lose
B) lose; lose
C) lose; gain
D) gain; lose
E) gain; gain
One difference between perfect competition and monopolistic competition is
A) firms in a perfectly competitive market produce similar but slightly different
products.
B) in perfect competition, the product produced has no close substitutes.
C) monopolistic competition has barriers to entry, whereas perfect competition has
none.
D) firms in monopolistic competition have some degree of market power.
E) a small number of firms compete in a monopolistically competitive market and a
large number of firms compete in a perfectly competitive market.
Changes in all of the following shift the supply curve of loanable funds EXCEPT
A) the real interest rate.
B) wealth.
C) disposable income.
D) expected future income.
E) default risk.