Refer to Figure 19.1.1. The richest 20 percent of households receive what share of total
income?
A) 10 percent
B) 30 percent
C) 40 percent
D) 60 percent
E) 100 percent
Choose the statement that is incorrect.
A) A financial institution can be solvent but illiquid.
B) A firm is illiquid if it has made long-term loans with borrowed funds and is faced
with a sudden demand to repay more of what is has borrowed than its available cash.
C) Insolvency and illiquidity were at the core of a global financial meltdown in
2007-2008.
D) A financial institution’s net worth is the market value of what it has lent minus the
market value of what it has borrowed.
E) If a financial institution’s net worth is negative, the institution is solvent.
Firms will stop exiting a market only when
A) marginal revenue equals price.
B) marginal revenue equals marginal cost.
C) all remaining firms are making an economic profit.
D) all remaining firms are making zero economic profit.
E) marginal revenue equals average fixed cost.
Refer to Figure 1A.1.5. Which graph or graphs indicates no relationship between x and
y?
A) (a)
B) (b)
C) (c)
D) (c) and (d)
E) (a) and (b)
In a situation of inflationary pressure, an increase in the overnight loans rate results in
A) an increase in real GDP and the price level.
B) an increase in real GDP, but a fall in the price level.
C) an increase in real GDP, but no change in the price level.
D) a rise in the price level, but no change in real GDP.
E) a fall in the price level and a decrease in real GDP.
Refer to Table 6.2.2. What is the level of unemployment in millions of hours if the
minimum wage is set at $7 per hour?
A) 40
B) 30
C) 20
D) 10
E) zero
If the income elasticity of demand for chocolate chip cookies is 1.84, then chocolate
chip cookies are
A) a normal good and income elastic.
B) a normal good and income inelastic.
C) also price elastic.
D) an inferior good and income elastic.
E) an inferior good and income inelastic.
As the aggregate expenditure curve becomes steeper, the value of the multiplier
becomes
A) equal to the marginal propensity to save.
B) larger.
C) smaller.
D) negative.
E) greater than 1.
Which of the following statements concerning tariffs is NOT true?
A) A tariff increases domestic production.
B) A tariff creates revenue for the government.
C) A tariff decreases international trade.
D) A tariff leaves the price of imports unchanged.
E) A tariff decreases domestic consumption.
Hyperinflation is defined as
A) declining inflation rates.
B) rising but low inflation rates.
C) very high inflation rates.
D) very low inflation rates.
E) an increase in the price level.
Refer to Figure 11.3.2, which illustrates the short-run average and marginal cost curves.
The marginal cost curve is curve
A) A.
B) B.
C) C.
D) D.
E) B minus curve A
It is a disadvantage of ________ that retained profits are taxed twice.
It is a disadvantage of ________ that bad decisions are not checked by the need for
consensus.
A) a sole proprietorship; both a partnership and a sole proprietorship
B) a corporation; a sole proprietorship
C) both a partnership and a sole proprietorship; a partnership
D) a corporation; both a partnership and a sole proprietorship
E) both a corporation and a partnership; a sole proprietorship
Use the figure below to answer the following question.
Figure 13.1.1
Refer to Figure 13.1.1. The quantity demanded by the market is 8 million cubic metres
a month. This market is
A) a legal monopoly.
B) served by a perfect price discriminating monopoly.
C) served by many firms each making an economic profit.
D) served by many firms each incurring an economic loss.
E) a natural monopoly.
Consider a PPF that measures the production of quilts on the y-axis and the production
of pillows on the x-axis. As the firm moves along this PPF, the quantities of
A) all goods other than pillows and quilts are decreasing.
B) all goods other than pillows and quilts remain constant.
C) all goods other than pillows and quilts are increasing.
D) pillows and quilts produced increase together.
E) pillows and quilts produced decrease together.
A medical clinic has 10 workers. Each worker can produce a maximum of either 2 units
of medical services or 5 units of secretarial services a day. One day, the firm decides it
would like to produce 10 units of medical services and 30 units of secretarial services.
This output level is
A) efficient.
B) unattainable.
C) inefficient.
D) costless.
E) attainable if the firm reduces the number of its workers.
Refer to Fact 9.2.1. The news clip implies that the marginal rate of substitution is
________, which is likely ________ implication.
A) constant; a correct
B) constant; an incorrect
C) decreasing; an incorrect
D) decreasing; a correct
E) incorrect; an incorrect
Compared to the situation before international trade, after Canada exports a good,
production in Canada ________ and consumption in Canada ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) increases; does not change
If the equilibrium exchange rate is 110 yen per dollar and the current exchange rate is
120 yen per dollar, then the
A) supply curve of Canadian dollars shifts rightward.
B) demand curve for Canadian dollars shifts rightward.
C) supply curve of Canadian dollars shifts leftward.
D) demand curve for Canadian dollars shifts leftward.
E) dollar will depreciate.
Net domestic income at market prices equals GDP (income approach) minus
A) taxes.
B) corporate profits.
C) subsidies.
D) consumption expenditure.
E) depreciation.
Some sales managers are talking shop. Which one of the following quotations refers to
a leftward shift of the demand curve?
A) “Since our competitors raised their prices, our sales have doubled.”
B) “It has been an unusually mild winter; our sales of wool scarves are down from last
year.”
C) “We decided to cut our prices, and the increase in our sales has been remarkable.”
D) “The Green movement has sparked an increase in our sales of biodegradable
products.”
E) “More firms are producing biodegradable products.”
The real interest rate
A) can never be negative.
B) is approximately equal to the nominal interest rate plus the inflation rate.
C) is approximately equal to the nominal interest rate minus the inflation rate.
D) increases when the inflation rate increases.
E) is determined in the market for money.
Complete the following sentence. Given Fact 2.4.2,
A) there will be gains from trade, no matter what Brenda and Agnes specialize in, as
long as they specialize.
B) there will be gains from trade only if Agnes specializes in the production of Y and
Brenda in X.
C) there will be gains from trade only if Agnes becomes faster at producing X.
D) there will be no gains from trade because Agnes has an absolute advantage.
E) there will be gains from trade if Agnes specializes in the production of X and Brenda
in Y.
Which one of the following correctly describes how price adjustment eliminates a
shortage?
A) As the price rises, the quantity demanded decreases and the quantity supplied
increases.
B) As the price rises, the quantity demanded increases and the quantity supplied
decreases.
C) As the price falls, the quantity demanded decreases and the quantity supplied
increases.
D) As the price falls, the quantity demanded increases and the quantity supplied
decreases.
E) As the price falls, the quantity demanded increases and the quantity supplied
increases.
The demand curve for labour will shift leftward as a result of
A) a decrease in the wage rate.
B) an increase in the wage rate.
C) a decrease in the price of a substitute factor of production.
D) an increase in the price of a substitute factor of production.
E) an increase in the price of the firm’s output.
A production quota
A) increases the marginal social cost of production.
B) lowers the price and increases the marginal social cost of production.
C) increases demand for the good.
D) raises the price and decreases the marginal social cost of production.
E) makes production more efficient.
Which of the following statements by politicians is talking about the business cycle?
A) “Canadian unemployment is falling due to the upturn in the economy.”
B) “Crime rates increase every spring as the school year ends.”
C) “An average of 220,000 new jobs are created each year in Canada.”
D) “More capital investment will create more jobs.”
E) “Business always rises just before Christmas.”
R8 is
A) long-term unemployment.
B) the official unemployment rate.
C) comparable to the official U.S. rate.
D) short-term unemployment.
E) the total underemployment rate.
A good has an income elasticity of +0.5. An increase in income from $15,000 to
$25,000 will lead to a
A) 2.5 percent increase in the quantity demanded of the good.
B) 5 percent increase in the quantity demanded of the good.
C) 5 percent decrease in the quantity demanded of the good.
D) 25 percent decrease in the quantity demanded of the good.
E) 25 percent increase in the quantity demanded of the good.
Which of the graphs in Figure 9.2.1 shows perfect complements?
A) (a)
B) (b)
C) (c)
D) (d)
E) (c) and (d)
Excess capacity in monopolistically competitive firms occurs because
A) each firm faces a demand that is perfectly elastic.
B) each firm builds a huge plant.
C) the existence of slightly differentiated products, serving almost the same purpose,
causes a waste of precious natural resources.
D) firms produce an output that is less than the output at minimum average total cost.
E) marginal cost is too high.
The price of a good will fall if
A) there is a shortage of the good.
B) demand for the good increases.
C) there is a surplus of the good.
D) the supply of the good decreases.
E) demand for the good does not change.
Figure 17.3.1 shows the marginal private cost cure, marginal social cost curve, and
marginal social benefit curve for cod, a common resource. To achieve an efficient
quantity, the price of an ITQ is set at
A) $3 a kilogram.
B) $6 a kilogram.
C) $4 a kilogram.
D) $5 a kilogram.
E) $1 a kilogram.
The purpose of calculating the concentration ratio is
A) to obtain the firm’s total profit.
B) to obtain the firm’s production cost.
C) to measure the losses the firm incurred.
D) to measure the extent to which the market is dominated by a small number of firms.
E) to distinguish between the firm’s total profit and production cost.
Suppose that a country’s government expenditures are $500 billion, net taxes are $400
billion, saving is $200 billion, and investment is $250 billion. The country has a
government budget
A) surplus and a private sector surplus.
B) surplus and a private sector deficit.
C) deficit and a private sector surplus.
D) deficit and a private sector deficit.
E) surplus and a private sector balance.
Use the table below to answer the following questions.
Table 8.2.1
Refer to Table 8.2.1. Consider Sam’s utility from sailing and skiing. If the price of
sailing is $10 per hour and the price of skiing is $20 per hour, Sam will choose to spend
A) all his time sailing.
B) all his time skiing.
C) more time sailing than skiing.
D) more time skiing than sailing.
E) the same amount of time sailing and skiing, since they give the same amount of
utility.