If the Canadian dollar depreciates, it means that
A) one Canadian dollar buys less foreign currency.
B) inflation has eroded the purchasing power of Canadian money.
C) the Canadian economy is becoming less stable.
D) Canadians are buying too many imports.
E) prices in Canada are rising.
Consider an economy starting from a position of full employment. Which one of the
following occurs as a result of an advance in technology?
A) The price level falls.
B) Real GDP decreases in the short run.
C) An inflationary gap arises.
D) Factor prices rise in the long run, shifting the short-run aggregate supply curve
leftward.
E) The long-run aggregate supply curve shifts leftward to create the new long-run
equilibrium.
A good that is nonrival and excludable is a
A) private good.
B) public good.
C) government good.
D) natural monopoly good.
E) common resource.
Use the figure below to answer the following question.
Figure 1A.3.7
The slope of the line in Figure 1A.3.7 is
A) 1.
B) -1.
C) 1/2.
D) 2.
E) dependent on where you measure it.
Everything else remaining the same, a decrease in expected future income ________
current consumption expenditure and ________ saving.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; does not change
Discrimination allocates scarce housing
A) to those who are poor.
B) based on the self-interest of landlords.
C) to those who are lucky.
D) to those whose names are on waiting lists.
E) to those who are willing and able to pay.
If the supply of labour decreases, which of the following events will occur?
A) The wage rate will decrease and firms will increase the number of workers to the
point at which the value of marginal product equals the new wage rate.
B) The wage rate will decrease and firms will decrease the number of workers to the
point at which the value of marginal product equals the new wage rate.
C) The wage rate will increase and firms will decrease the number of workers to the
point at which the value of marginal product equals the new wage rate.
D) The wage rate will increase and firms will decrease the number of workers to the
point at which the value of marginal product is greater than the new wage rate.
E) The wage rate will increase and firms will decrease the number of workers to the
point at which the value of marginal product is less than the new wage rate.
Commodity substitution bias in the CPI refers to the fact that the CPI
A) takes into account the substitution of goods by consumers when relative prices
change.
B) takes no account of the substitution of goods by consumers when relative prices
change.
C) substitutes quality changes whenever they occur without taking account of the cost
of the quality changes.
D) substitutes relative prices for absolute prices of goods.
E) accounts for improved quality in price rises.
In a perfectly competitive market, the market demand curve is illustrated by
A) a downward-sloping curve.
B) a line that is vertical at the market output.
C) an upward-sloping curve.
D) a line that is horizontal at the market price.
E) a curve that is bowed towards the origin.
The Hotelling Principle is the idea that the price of a ________ is expected to rise at a
rate equal to the ________.
A) nonrenewable natural resource; inflation rate
B) unit of capital; interest rate
C) nonrenewable natural resource; interest rate
D) unit of capital; inflation rate
E) nonrenewable natural resource; percentage increase in demand
If the price elasticity of demand for peaches is 1.76 and the price elasticity of demand
for apples is 1.59, then consumers are
A) more sensitive to a change in the price of apples than they are to a change in the
price of peaches.
B) more sensitive to a change in the price of peaches than they are to a change in the
price of apples.
C) more likely to substitute strawberries for peaches than for apples.
D) more likely to substitute strawberries for apples than for peaches.
E) eating more peaches than apples.
Suppose a consumer spends all his income. His marginal utility per dollar on X is 4 and
marginal utility per dollar on Y is 2. We know that
A) utility can be increased by increasing the consumption of X and decreasing the
consumption of Y.
B) utility can be increased by decreasing the consumption of X and increasing the
consumption of Y.
C) the price of Y must be eight times the price of X.
D) utility is maximized.
E) the price of Y must be one-third the price of X.
Refer to the table below to answer the following question.
Table 21.3.3
Refer to Table 21.3.3. The IMF World Economic Outlook reports the price level data
given in the table. The region with the highest inflation rate in 2007 is ________. The
region with the highest inflation rate in 2008 is ________.
A) the Euro area; the United States
B) Japan; the United States
C) the Euro area; Japan
D) the United States; Japan
E) the United States; the Euro area
A perfect price-discriminating monopoly is
A) less efficient than a single-price monopoly.
B) more efficient than a single-price monopoly, but less efficient than a perfectly
competitive industry.
C) as efficient as a single-price monopoly.
D) more efficient than a perfectly competitive industry.
E) as efficient as a perfectly competitive industry.
A country opens up to trade. In an export industry, surplus has been redistributed from
A) consumers to producers.
B) producers to consumers.
C) producers to government.
D) government to consumers.
E) government to producers.
The price at which sellers are not willing to supply a good is $70 a unit. As the quantity
supplied of the good increases by one unit, the minimum price at which someone is
willing to sell that unit increased by $5. What is the equation of this supply curve?
A) P = 70 – 5QS
B) QS = 70 – 5P
C) P = 5 + 70QS
D) QS = 5 + 70P
E) P = 70 + 5QS
With higher fuel costs, airlines raise their average fare from $0.50 to $1.50 per
passenger kilometre and the number of passenger kilometres decreases from 2.5 million
a day to 1.5 million a day. Over this price range, the price elasticity of demand is
A) 2.
B) 0.18.
C) 5.6.
D) 50.
E) 0.5.
Which one of the following will definitely lower the equilibrium price?
A) an increase in both demand and supply
B) a decrease in both demand and supply
C) an increase in demand combined with a decrease in supply
D) a decrease in demand combined with an increase in supply
E) a decrease in supply combined with an increase in demand
If the labour force participation rate is rising and the working-age population is not
changing, then the
A) size of the labour force is rising.
B) number of unemployed people is rising and the size of the labour force is falling.
C) size of the labour force is falling.
D) number of unemployed people is falling and the size of the labour force is rising.
E) number of employed people must be increasing.
If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded, the
price elasticity of demand is
A) 0.8.
B) 1.25.
C) 8.
D) 0.125.
E) 80.
According to public choice theory, a voter will tend to be well informed if the issue in
question
A) is complicated and difficult to understand.
B) affects everyone a little.
C) is of special interest to a small group to which the voter does not belong.
D) has a large direct effect on the voter.
E) is important even if it does not directly affect the voter.
The labour supply curve may eventually become “backward bending” at high wages
because
A) the income effect of the higher wage is dominated by the substitution effect.
B) the income effect of the higher wage dominates the substitution effect of the higher
wage.
C) firms will demand added productivity from the workers as the wage reaches very
high levels.
D) firms will demand longer hours in trade for the higher wages.
E) people get tired of working so many hours and refuse to increase their labour supply.
Use the figure below to answer the following questions.
Figure 9.3.1
Consider the budget line and indifference curve in Figure 9.3.1. If the price of good X is
$1 a unit, then the price of good Y is
A) $0.75 a unit.
B) $1 a unit.
C) $1.25 a unit.
D) $2 a unit.
E) $1.33 a unit.
Market demand is the
A) sum of the prices that each individual is willing to pay for each quantity demanded.
B) sum of the quantity demanded by each individual at each price.
C) sum of the consumer surplus of each individual.
D) difference between the maximum amount each individual is willing to pay for a
good and the market price.
E) difference between the market price and the maximum amount each individual is
willing to pay for a good.
Refer to Figure 28.1.1. Suppose the economy moves from point D to point B.
According to the monetarist theory of the business cycle, what could have caused this
movement?
A) a decrease in the money wage rate
B) an increase in uncertainty about future sales and profits
C) an increase in the growth rate of the quantity of money
D) an increase in the money wage rate
E) a decrease in exports
Refer to Figure 14.2.6, which shows the demand curve, marginal revenue curve and
cost curves faced by Gap. Gap’s economic ________ is ________ a day.
A) loss; $8,000
B) loss; $13,000
C) profit; $7,200
D) profit; $13,000
E) loss; $8,960
Which one of the following correctly describes how price adjustment eliminates a
surplus?
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 demand for substitutes decreases, which eliminates the surplus.
All of the following statements are correct except
A) knowledge about one process spills over into other segments of the economy.
B) additional knowledge makes people more productive, and there seems to be no
tendency for the additional productivity from additional knowledge to diminish.
C) knowledge has no external benefit.
D) knowledge might be an exception to the principle of diminishing marginal benefit.
E) it is necessary to use public policies to ensure that those who develop new ideas have
incentives to encourage an efficient level of effort.
In Figure 23.2.3, if the real interest rate is constant at 6 percent and and expected profit
rises, the amount of loanable funds demanded will be
A) less than $450 billion.
B) $450 billion.
C) between $300 billion and $450 billion.
D) greater than $450 billion.
E) zero.
An economy has a fixed price level, no imports, and no income taxes. MPC is 0.5 and
real GDP is $300 billion. Businesses increase investment by $10 billion. The new level
of real GDP is
A) $320 billion.
B) $20 billion.
C) $5 billion.
D) $305 billion.
E) $300 billion.
The first-come, first-served method of resource allocation allocates resources to
A) the wealthiest.
B) people who are willing to take risks.
C) people who are not willing to take risks.
D) the first in line.
E) honest, hard-working people.
Use the table below to answer the following questions.
Table 18.2.2
Wendy owns an apple orchard and she employs students
to pick the apples. In an hour they can pick the following amounts:
Refer to Table 18.2.2. If the price of apples is $0.50 per kilogram, the value of marginal
product of the 5th student is
A) $0.50 an hour.
B) $72.50 an hour.
C) $14.50 an hour.
D) $12.50 an hour.
E) $10 an hour.
Technological change ________ the demand for high-skilled workers and ________ the
demand for low-skilled workers. As a result, income inequality ________.
A) increases; decreases; decreases
B) increases; decreases; increases
C) increases; increases; decreases
D) decreases; decreases; increases
E) increases; does not change; increases
Refer to Figure 27.1.1. When disposable income is $500 billion, saving is equal to
A) disposable income.
B) zero.
C) $20 billion.
D) consumption expenditure.
E) $40 billion.