Real money is equal to
A) nominal income divided by the velocity of circulation.
B) nominal income divided by the price level.
C) nominal money divided by the price level.
D) the price level divided by nominal money.
E) nominal money divided by nominal income.
Suppose a hurricane causes extensive devastation, destroying houses, roads, schools
and factories. What would be the effect of this hurricane on a production possibilities
frontier consisting of consumption goods and capital goods?
A) It would shift outward at all points.
B) It would shift inward at all points.
C) There would be a movement along the existing production possibilities frontier
towards a less capital-intensive point.
D) There would be a movement along the existing production possibilities frontier
towards a more capital-intensive point.
E) There would be a movement from the existing production possibilities frontier
inwards towards a point with unused or misallocated resources.
Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup
increases by 10 percent, and the cross elasticity of demand is -2, the quantity of ice
cream demanded
A) increases by 5 percent.
B) increases by 20 percent.
C) decreases by 5 percent.
D) decreases by 20 percent.
E) decreases by 2 percent.
A consumer’s best affordable point occurs
A) inside the budget line.
B) outside the budget line.
C) on the budget line.
D) at a point that cannot be determined.
E) at a corner on the budget line, with only one good consumed.
Which of the following “other things” are not held constant along a demand curve?
A) income
B) prices of related goods
C) the price of the good itself
D) preferences
E) expected future income and credit
Use the table below to answer the following questions.
Table 6.2.1
Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City. In
an unregulated market,
A) there is no teenage unemployment and the wage rate is $6 per hour.
B) there is no teenage unemployment and the wage rate is $5 per hour.
C) teenage unemployment is 400 hours and the wage rate is $6 per hour.
D) teenage unemployment is 400 hours and the wage rate is $5 per hour.
E) the minimum wage is $7 per hour.
If the cross elasticity of demand between beef and bison is 1.5, then a 3 percent increase
in the price of beef will lead to
A) a 4.5 percent increase in the quantity of bison demanded.
B) a 4.5 percent decrease in the quantity of bison demanded.
C) a 2 percent increase in the quantity of bison demanded.
D) a 2 percent decrease in the quantity of bison demanded.
E) a 0.5 percent increase in the quantity of bison demanded.
Consider policy actions in a financial and banking crisis. ________ addresses the
problem of ________.
A) The extension of deposit insurance; solvency
B) An open market operation; liquidity
C) Swapping government securities for toxic assets; solvency
D) Buying bank shares; liquidity
E) Fair value accounting; liquidity
Consider the demand curve in Figure 5.2.1. If the price of the good is $4, what is the
consumer surplus?
A) $32.50
B) $25.00
C) $20.00
D) $12.50
E) none of the above
An oligopoly is a market structure in which there
A) are a few buyers but many sellers.
B) are no barriers to entry.
C) are many independent sellers.
D) are a few goods sold by many sellers.
E) is a temptation to collude.
A sudden, end-of-summer heat wave increases the demand for air conditioners and
catches suppliers with no reserve inventories. The momentary supply for air
conditioners is
A) perfectly elastic.
B) perfectly inelastic.
C) elastic.
D) shown by an upward-sloping curve.
E) shown by a horizontal curve.
Refer to Figure 29.3.1, which shows the outlays and revenues for the government of
Pianoland. If real GDP equals $550 billion, the structural deficit is
A) zero.
B) $60 billion.
C) a surplus of $60 billion.
D) a surplus of $40 billion.
E) unknown given the available information.
Refer to Fact 25.4.1. What is the net exports?
A) -2 billion turkeys
B) -1 billion turkeys
C) 3 billion turkeys
D) -3 billion turkeys
E) 1 billion turkeys
Real income in terms of a good is defined as
A) income divided by the quantity consumed of a good.
B) the income of a producer of that good.
C) the price of one good divided by the price of another good.
D) dollar income.
E) income divided by the price of a good.
Bottled water and health club memberships are
A) substitutes.
B) complements.
C) substitutes in production.
D) complements in production.
E) inferior goods.
If the money wage rate is $15.00 an hour and the price level is 120, the real wage rate is
A) $8.50 an hour.
B) $10.75 an hour.
C) $12.50 an hour.
D) $15.00 an hour.
E) $18 an hour.
If production is not at an efficient level, which of the following must be true?
A) Marginal social benefit exceeds marginal social cost.
B) Marginal social cost exceeds marginal social benefit.
C) Production will increase.
D) Production will decrease.
E) none of the above
In an economy lacking property rights, it would be ________ to realize the gains from
trade, and there would be ________ specialization compared to an economy with
property rights.
A) more difficult; less
B) more difficult; more
C) easier; less
D) easier; more
E) none of the above
The two big economic questions include all of the following except
A) what to produce.
B) why to produce.
C) how to produce.
D) for whom to produce.
E) can choices made in the pursuit of self-interest also promote the social interest.
Which of the following statements about Canada’s long-term growth trends is false?
A) Economic growth rates have been steady, except for the business cycle.
B) Economic growth rates show periods of slow and high growth.
C) Economic growth rates were faster in the 1990s than in the 1980s.
D) Economic growth rates have slightly faster in the United States than in Canada.
E) African countries have fallen further behind Canada in recent years.
Which of the following statements is true?
A) Final goods and services produced abroad by Canadians are part of Canadian GDP.
B) Final goods and services produced in Canada by foreigners are part of the foreign
country’s GDP.
C) Final goods and services produced in Canada by foreigners are part of Canada’s
GDP.
D) Final goods and services produced in Canada by foreigners are imports.
E) Final goods and services produced in Canada by foreigners are exports.
Which of the following is true?
I. As the real interest rate increases, people increase the quantity they save.
II. The supply of loanable funds curve is downward sloping.
III. As disposable income increases, the supply of loanable funds curve becomes
steeper.
A) I and III only
B) II and III only
C) I only
D) III only
E) I, II, and III
Refer to Figure 6.2.1. If the minimum wage is set at $6 per hour, what is the level of
unemployment in millions of hours?
A) 50
B) 40
C) 20
D) 10
E) 0
Real GDP is $2,000 billion, the GDP deflator is 120 (a price level of 1.2), and the
velocity of circulation is 5. Nominal GDP is
A) $24 billion.
B) $600 billion.
C) $2,000 billion.
D) $2,400 billion.
E) $166.67 billion.
Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the
consumption of bison meat by 24 percent. Such a price rise will induce consumers to
spend
A) more of their income on bison.
B) the same amount of their income on bison as before.
C) less of their income on bison.
D) more on products that are complements of bison.
E) zero dollars on bison meat.
Refer to Table 26.3.3. With no interference from the central bank or the government, the
A) short-run aggregate supply curve will shift rightward.
B) short-run aggregate supply curve will shift leftward.
C) long-run aggregate supply curve will shift rightward.
D) long-run aggregate supply curve will shift leftward.
E) Both A and C will occur.
If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue,
then Saudi Arabia believes the demand for oil is
A) income inelastic.
B) income elastic.
C) elastic.
D) inelastic.
E) unit elastic.
Refer to Figure 19.3.2. At a wage rate of $5, an employer would hire
A) the same amount of high-skilled workers and low-skilled workers.
B) 20 hours of low-skilled labour and 40 hours of high-skilled labour.
C) 60 hours of low-skilled labour and 20 hours of high-skilled labour.
D) 20 hours of low-skilled labour and 60 hours of high-skilled labour.
E) 40 hours of low-skilled labour and 60 hours of high-skilled labour.
Refer to Fact 14.3.3. After the advertising begins, the average total cost of a jacket sold
in this store is
A) $200.00.
B) $175.00.
C) $150.00.
D) $125.00.
E) $100.00.
If constant returns to scale are present,
A) average total cost is decreasing.
B) average total cost is increasing.
C) the LRAC curve is horizontal.
D) the LRAC curve is downward sloping.
E) the LRAC curve is upward sloping.
Marginal product of labour is the increase in total product that results from a
A) one-unit increase in the quantity of labour employed, other inputs remaining the
same.
B) one-unit increase in the quantity of fixed inputs employed, holding the quantity of
labour constant.
C) one-unit increase in both the quantity of variable and fixed inputs.
D) change in the cost of labour.
E) 1 percent change in the quantity of labour and the quantity of capital employed.
Consider the revenue and cost curves in Figure 13.3.3. What is the difference in
consumer surplus between a single-price monopoly and a perfectly competitive market?
A) EADH
B) EABH
C) ABD
D) ACD
E) FHDC
Suppose the country of Mooland imposes tariffs on imported beef from the country of
Aqualand. As a result of the tariffs, the
A) price of beef in Mooland falls.
B) quantity of beef exported by Mooland increases.
C) quantity of beef imported by Mooland decreases.
D) quantity of beef imported by Mooland increases.
E) price of beef in Mooland does not change.
Reducing a tariff ________ the domestic production of the good and ________ the total
domestic consumption of the good.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; increases
________ is the interest rate that the Bank of Canada charges on short-term loans that it
makes to major depository institutions when the banking system is temporarily short of
reserves.
A) Bank rate
B) The overnight loans rate
C) The Treasury bill rate
D) Prime
E) The federal funds rate