If the saving function is S = -25 + 0.4YD, then the consumption function is
A) C = 25 + 0.6Y.
B) C = -25 + 0.4YD.
C) C = 25 – 0.4YD.
D) C = 25 + 0.6YD.
E) C = 25 + 0.4YD.
The exchange rate equals
A) the real exchange rate divided by the foreign price level.
B) the real exchange rate multiplied by the foreign price level, divided by the domestic
price level.
C) the real exchange rate multiplied by the domestic price level, divided by the foreign
price level.
D) the real exchange rate when the inflation rate is less than 2 percent a year.
E) the real exchange rate when the government budget is balanced.
Refer to Figure 20.1.1, which shows the circular flow of expenditure and income for
Venus. During 2014, A was $100, B was $50, C was $30 and D was $10. How much is
aggregate expenditure?
A) $50
B) $75
C) $90
D) $100
E) $30
Which one of the following people would be counted as unemployed in Canada?
A) Doris works only 5 hours a week but is looking for a full-time job.
B) Kanhaya has stopped looking for work since he was unable to find a suitable job
during a two-month search.
C) Sharon recently began looking for work after staying at home for 10 years to look
after her children.
D) Maurice is on a two-month vacation out of the country but is still looking for a job
using the Internet.
E) Taylor is a homemaker.
All of the following statements are true except:
A) An externality is a cost or a benefit that affects someone other than the seller or the
buyer of a good.
B) When an electric utility does not consider the cost of pollution when it decides how
much power to produce, the result is overproduction.
C) An electric utility creates an external cost by burning coal.
D) All externalities create overproduction.
E) An external cost creates overproduction.
The price elasticity of demand for purses is measured in
A) dollars.
B) purses.
C) dollars per purse.
D) purses per dollar.
E) none of the above
The total amount spent on new capital is
A) wealth.
B) gross investment.
C) depreciation.
D) net investment.
E) saving.
The circular flow diagram illustrates the expenditures made by
A) households only.
B) households and firms only.
C) households and investors only.
D) firms, households, and governments only.
E) households, firms, governments, and the rest of the world.
Refer to Figure 14.2.4. The figure represents a monopolistically competitive firm in
short-run equilibrium. In the long run,
A) new firms enter, and each existing firm’s demand curve shifts leftward.
B) new firms enter, and each existing firm’s demand curve shifts rightward.
C) existing firms exit, and each remaining firm’s demand curve shifts leftward.
D) existing firms exit, and each remaining firm’s demand curve shifts rightward.
E) the equilibrium is the same as in the short run.
Between 1976 and 2011, the Canadian Gini ratio ________, which means income
inequality in Canada ________.
A) increased; increased
B) increased; decreased
C) increased; did not change
D) decreased; decreased
E) decreased; did not change
Martha consumes cake and muffins. Suppose Martha’s income doubles and the prices of
cake and muffins also double. Martha’s budget line
A) shifts leftward but the slope does not change.
B) remains unchanged.
C) shifts rightward but the slope does not change.
D) shifts rightward and becomes steeper.
E) shifts rightward and becomes flatter.
A strategy in which a player cooperates in the current period if the other player
cooperated in the previous period, but the player cheats in the current period if the other
player cheated in the previous period is called a
A) tit-for-tat strategy.
B) trigger strategy.
C) duopoly strategy.
D) dominant firm strategy.
E) Nash strategy.
The quantity of shoes produced is measured along the x-axis of a bowed-outward
production possibilities frontier and the quantity of shirts produced is measured along
the y-axis. As you move down towards the right along the production possibilities
frontier, the marginal cost of
A) a pair of shoes decreases.
B) a pair of shoes increases.
C) a shirt remains constant.
D) a shirt increases or decreases but we don’t know for sure.
E) a pair of shoes and a shirt is equal at the midpoint between the x-axis and the y-axis.
Use the figure below to answer the following questions.
Figure 4.1.2
Figure 4.1.2 illustrates a linear demand curve. If the price falls from $13 to $11,
A) total revenue increases.
B) total revenue decreases.
C) total revenue remains unchanged.
D) total revenue initially increases then decreases.
E) total revenue initially decreases then increases.
At 2012 prices, the value of production in 2013 was 2 percentage points higher than in
2012.
At 2013 prices, the value of production in 2013 was 4 percentage points higher than in
2012.
The chained-dollar real GDP is ________ in 2013 than in 2012.
A) 4 percent greater
B) 3 percent greater
C) 3 percent smaller
D) 2 percent smaller
E) 2 percent greater
Which of the following will have the most elastic demand?
A) frozen desserts
B) ice cream
C) strawberry ice cream
D) a banana split made with strawberry and chocolate ice cream
E) a banana split with Nestle strawberry and chocolate ice cream
A firm in a perfectly competitive industry is maximizing its economic profit by
producing 500 units of output. At 500 units of output, which one of the following must
be false?
A) MC < AVC
B) MC < ATC
C) MC > ATC
D) MR < ATC
E) MR > AVC
Choose the statement that is incorrect.
A) Capital consists of the tools, instruments, machines, buildings, and other
constructions that have been produced in the past and that businesses now use to
produce goods and services.
B) A market for capital services is a rental market.
C) The services of the capital that a firm owns and operates have an implicit price that
arises from depreciation and interest costs.
D) Capital is a factor of production.
E) Most capital services are traded in a market.
An industry with a high four-firm concentration ratio may have little monopoly power
if
A) its production is geographically concentrated.
B) its barriers to entry are low.
C) its barriers to entry are high.
D) there are no international producers of the product.
E) there are no close substitutes for its product.
Use the table below to answer the following questions.
Table 26.3.3
Refer to Table 26.3.3. When the economy is at its short-run macroeconomic
equilibrium, the price level is
A) 90.
B) 110.
C) 100.
D) 120.
E) 130.
A Canadian tariff imposed on items that can be produced more cheaply abroad
A) benefits Canadians by making these goods cheaper.
B) makes the goods more expensive in foreign markets.
C) creates a deadweight loss.
D) equalizes the cost of production between Canada and foreign producers.
E) increases total surplus.
Short-run supply is
A) more elastic than momentary supply but less elastic than long-run supply.
B) less elastic than momentary supply but more elastic than long-run supply.
C) less elastic than both momentary and long-run supply.
D) more elastic than both momentary and long-run supply.
E) as elastic as either the momentary or the long-run supply.
Which one of the following is not a service of depository institutions?
A) lowering the cost of borrowing
B) providing a place for reserve account deposits
C) pooling risk
D) creating liquidity
E) lowering the cost of monitoring borrowers
The official definitions of money can include all of the following except
A) currency outside banks.
B) personal chequable deposits.
C) non-chequable deposits.
D) deposits at trust and mortgage loan companies.
E) cheques.
Refer to Figure 6.1.1. Suppose the demand for rental housing is shown by demand
curve D1, and there is a rent ceiling of $150 per room. What is the highest amount that
would be expended on search activity?
A) $200
B) $150
C) $100
D) $50
E) $0
Use the information below to answer the following questions.
Fact 12.1.1 Money in the Bank
Two gas stations stand on opposite sides of the road: Rutter’s Farm Store and Sheetz gas
station. Rutter’s doesn’t even have to look across the highway to know when Sheetz
changes its price for gas. When Sheetz raises the price, Rutter’s pumps are busy. When
Sheetz lowers prices, there’s not a car in sight. Both gas stations survive but each has no
control over the price.
Refer to Fact 12.1.1. Each of these gas stations has little control over the price of
gasoline because
A) the price of gasoline is determined by head office.
B) lowering the price will eliminate competition and the government mandates that
gasoline stations must have competition.
C) if it raises its price, the station will lose customers.
D) the price of gasoline is set according to the price of oil.
E) the demand for gasoline is perfectly inelastic.
When the inflation rate is zero, the
A) real interest rate equals the nominal interest rate.
B) demand for loanable funds increases.
C) supply of loanable funds decreases.
D) nominal interest rate is zero.
E) real interest rate is negative.
Use the table below to answer the following questions.
Table 18.2.1
Refer to Table 18.2.1. If the firm can sell all the output it wants for the price of $5 a
unit, what is the value of marginal product of the 6th worker?
A) $20
B) $0
C) $25
D) $40
E) $185
If Harold can increase production of good X without decreasing production of any other
good, then Harold
A) is producing on his production possibilities frontier.
B) is producing outside his production possibilities frontier.
C) is producing inside his production possibilities frontier.
D) must have a linear production possibilities frontier.
E) must prefer good X to any other good.
A firm’s markup is
A) the firm’s total profit.
B) the firm’s total cost.
C) the amount by which price exceeds marginal cost.
D) the amount by which price exceeds average variable cost.
E) the amount by which price is less than marginal cost.
In an economy, autonomous spending is $20 trillion and the slope of the AE curve is
0.8.
The equation of the AE curve is
A) AE = 0.2Y-20.
B) AE = 20 + 0.2Y.
C) AE = 20 + 0.8Y.
D) AE = 0.8Y – 20.
E) AE = 20 – 0.8Y.
In the United Kingdom, the currency drain ratio is 0.38 and the desired reserve ratio is
0.002. The U.K. money multiplier is
A) 2.62.
B) 0.38.
C) 0.28.
D) 2.77.
E) 3.61.