Refer to Figure 16.2.1. The figure shows the marginal private cost curve, the marginal
social cost curve and the market demand curve. If a constant per unit tax is imposed that
generates an efficient allocation of resources, then consumers pay a per unit price of
A) zero.
B) P1.
C) P2.
D) P3.
E) P4.
Given the data in Table 1A.4.1, holding y constant, the graph of x and z
A) is a negatively sloped line.
B) is a positively sloped line.
C) reaches a maximum.
D) reaches a minimum.
E) shows that x and z are not related.
The bank rate is the interest rate
A) banks charge their very best loan customers.
B) banks pay on term deposits.
C) the Bank of Canada pays on reserves held by banks.
D) the Bank of Canada charges when it lends reserves to the big banks.
E) received for holding Government of Canada Treasury Bills.
Unions try to raise minimum wages because
A) they wish to encourage employment among the poor.
B) they wish to help those on minimum wages.
C) this will decrease the supply of labour in their industry.
D) this will increase the demand for labour in their industry.
E) they want the minimum wage to be a living wage.
The funds used to buy physical capital are
A) net investment.
B) financial capital.
C) saving.
D) wealth.
E) investment.
A decrease in disposable income
A) has no effect on the supply of loanable funds curve.
B) shifts the supply of loanable funds curve rightward.
C) shifts the supply of loanable funds curve leftward.
D) creates a movement up along the supply of loanable funds curve.
E) creates a movement down along the supply of loanable funds curve.
A consumer will buy a good when
A) consumer surplus is greater than or equal to the price.
B) marginal benefit is positive.
C) marginal benefit is greater than or equal to the price.
D) consumer surplus is positive.
E) consumer surplus is greater than producer surplus.
Assume that the leather market is a perfectly competitive market. The market demand
curve for leather is ________ and each individual leather producer’s demand curve is
________.
A) vertical; downward sloping
B) downward sloping; horizontal
C) downward sloping; vertical
D) horizontal; horizontal
E) horizontal; downward sloping
A country opens up to trade. In an import industry, surplus has been redistributed from
A) producers to consumers.
B) consumers to producers.
C) government to consumers.
D) producers to government.
E) government to producers.
Which of the following are correct? According to the law of diminishing returns,
(1) marginal product eventually rises.
(2) marginal product eventually falls.
(3) marginal cost eventually rises.
(4) marginal cost eventually falls.
A) (1) and (3)
B) (1) and (4)
C) (2) and (3)
D) (2) and (4)
E) (4)
Choose the statement that is incorrect.
A) Wage differences drive international trade.
B) High-wage workers have high productivity.
C) International trade can improve the opportunities of people in developing countries
and increase their incomes.
D) By trading with poor countries, we increase the demand for the goods that these
countries produce and increase the demand for their labour.
E) Free trade creates some jobs and destroys other jobs.
Assuming r is the rate of interest, to compute the present value of a dollar to be
received a year from today, you
A) multiply the dollar by r.
B) divide the dollar by (1 – r).
C) multiply the dollar by (1 + r).
D) divide the dollar by r.
E) divide the dollar by (1 + r).
Refer to the table below to answer the following questions.
Table 23.2.1
Refer to Table 23.2.1. Private saving is
A) -$15 million.
B) $40 million.
C) $25 million.
D) $20 million.
E) $80 million.
An externality is defined as
A) an additional cost imposed by the government on producers.
B) an additional gain received by consumers from decisions made by the government.
C) a cost or benefit that arises from production and falls on someone other than the
producer, or a cost or benefit that arises from consumption and falls on someone other
than the consumer.
D) a marginal social cost.
E) the additional amount consumers have to pay to consume an additional amount of a
good or service.
Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to
produce the cars. Pacifica could be accused of
A) avoiding import quotas.
B) increasing its gains from trade.
C) dumping.
D) engaging in learning-by-doing.
E) exploiting a comparative advantage.
Refer to Figure 18.3.1. This figure shows the value of marginal product of labour curve,
the labour supply curve, and the marginal cost of labour curve. If this labour market is
competitive, the quantity of labour employed is
A) zero hours.
B) 50 hours.
C) 75 hours.
D) 100 hours.
E) greater than 100 hours.
The purchase of government bonds by the Bank of Canada
A) raises the overnight loans rate.
B) decreases bank reserves.
C) decreases the supply of loanable funds.
D) increases aggregate demand.
E) decreases the quantity of money.
Which one of the following would be included in the calculation of GDP by the
expenditure approach?
A) the purchase of 20 shares of a new issue of IBM stock
B) the purchase of an original eighteenth century work of art
C) the value of your brother’s services when he mows the lawn for the family
D) the cost of adding a new kitchen to your house
E) the income you pay to your gardener
Use the figure below to answer the following question.
Figure 1A.4.1
Given the data in the following table, which one of the graphs in Figure 1A.4.1
correctly represents the relationship among x, y, and z?
A) (a)
B) (b)
C) (c)
D) (d)
E) (b) and (c)
Use the figure below to answer the following questions.
Figure 1A.1.5
The graphs in Figure 1A.1.5 are examples of
A) dot graphs.
B) graphs that show no relationship between x and y.
C) dot diagrams.
D) scatter diagrams.
E) none of the above.
Preferences for brussels sprouts increase. The price of brussels sprouts will not change
if the price elasticity of
A) demand is 0.
B) demand is 1.
C) supply is 0.
D) supply is 1.
E) supply is infinity.
In one year, Brazil exported more than 1.8 billion kilograms of coffee to the rest of the
world. We can conclude that
A) Brazil has comparative advantage in coffee production.
B) Brazil has an absolute advantage in coffee production.
C) the rest of the world has a comparative advantage in coffee production.
D) the rest of the world has an absolute advantage in coffee production.
E) Brazil’s government has placed a tariff on coffee.
If the CPI was 228 at the end of 2013 and 236 at the end of 2014, what was the inflation
rate in 2014?
A) 8 percent
B) 236 percent
C) 3.5 percent
D) 3.4 percent
E) 4 percent
If the wage rate decreases, the substitution effect gives a household the incentive to
A) raise its reservation wage.
B) increase leisure and decrease work.
C) increase work and decrease work.
D) increase both work and leisure.
E) decrease both work and leisure.
When we use PPP we can make valid international comparisons of real GDP because
we
A) calculate the value of goods and services produced in two countries using the same
quantities.
B) use data provided by the IMF.
C) use the price data provided by the two countries but not the quantities.
D) calculate the value of goods and services produced in two countries using the same
prices.
E) use official government data.
Comparing the core inflation rate to the Consumer Price Index, the core inflation rate
A) controls for the biases of the CPI.
B) measures all goods produced, not just consumer goods.
C) uses current period quantities, not base period quantities.
D) excludes the volatile elements of the CPI.
E) includes volatile elements not in the CPI.
If the marginal utilities from two goods are not equal, then the consumer
A) cannot be in equilibrium.
B) should increase consumption of the good with the lower marginal utility.
C) should decrease consumption of the good with the lower marginal utility.
D) may possibly be in equilibrium.
E) will definitely be in equilibrium.
Consider Fact 25.3.1. If Australia followed a ________ exchange rate, they would
________ Australian dollars to void the fall in the value of the Australian dollar.
A) fixed; buy
B) fixed; sell
C) flexible; buy
D) flexible sell
E) crawling peg; sell
The economy is in a recession, the recessionary gap is large, and there is a budget
deficit. If a discretionary increase in government expenditure occurs, the structural
deficit ________ or the structural surplus ________.
A) increases; decreases
B) decreases; increases
C) increases; increases
D) decreases; decreases
E) does not change; does not change
The marginal propensity to consume is calculated as
A) consumption expenditure divided by the change in disposable income.
B) the change in consumption expenditure divided by disposable income.
C) consumption expenditure divided by total disposable income.
D) the change in consumption expenditure divided by saving.
E) the change in consumption expenditure divided by the change in disposable income.
In Table 17.2.1, which of the proposals would be supported by political parties
according to the principle of minimum differentiation?
A) Current income distribution
B) Proposal A
C) Proposal B
D) Proposal C
E) Proposal A or C
Which of the following statements is false?
A) A consumer possesses a preference map.
B) An indifference curve is a line that shows combinations of goods among which a
consumer is indifferent.
C) A consumer has only one indifference curve.
D) The marginal rate of substitution is the rate at which a consumer will give up good y
to get an additional unit of good x and remain on the same indifference curve.
E) If the indifference curve is steep, the marginal rate of substitution is high.
If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks
demanded is 8,000 per year, there is a ________ in the market and the price will
________.
A) shortage; rise
B) shortage; fall
C) surplus; rise
D) surplus; fall
E) surplus; either rise or fall depending on whether supply increases to meet the surplus
The value of a good relates to
A) total utility, while price relates to consumer surplus.
B) consumer surplus, while price relates to total utility.
C) marginal utility, while price relates to consumer surplus.
D) marginal utility, while price relates to total utility.
E) total utility, while price relates to marginal utility.