Approximately, the real interest rate ________ the inflation rate ________ the nominal
interest rate.
A) plus; equals
B) equals; plus
C) equals; minus
D) minus; equals
E) times; divided by 100 equals
The minimum efficient scale is the smallest quantity of output at which
A) the long-run average cost curve reaches its lowest level.
B) the average total cost curve reaches its lowest level.
C) the average fixed cost curve reaches its lowest level.
D) economies of scale begin.
E) diminishing returns begin.
Refer to Fact 20.1.1. Peter’s gross investment in 2014 is
A) $2,800.
B) $3,800.
C) $1,800.
D) $7,800.
E) $5,800.
Who of the following would be counted as unemployed in Canada?
A) Doris only works five 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 is a college student with no job.
D) Maurice has been laid off from his job for 20 weeks but expects to be called back
soon.
E) Bogdan has been laid off from his job but does not expect to be called back, and is
not looking.
Product innovation and development is efficient if the marginal social cost of a new and
improved product ________ its marginal social benefit.
In monopolistic competition marginal revenue is less than price, so product innovation
is probably ________ to its efficient level.
A) is greater than; not pushed
B) equals; pushed
C) is greater than; pushed
D) equals; not pushed
E) is less than; not pushed
Use the information below to answer the following questions.
Fact 21.2.3
Oregon’s 5.6 percent unemployment rate hovers close the national average of 5.5
percent. A few years ago, Oregon had one of the highest unemployment rates in the
nation. To avoid rising unemployment, Oregon Governor Kulongoski introduced a plan
that provides public schools and universities with enough state funds to meet growing
demand for skilled workers. Also Kulongoski wants to use state and federal money for
bridges, roads, and buildings to stimulate more construction jobs.
Consider Fact 21.2.3. The main type of unemployment that Governor Kulongoski is
using policies to avoid is
A) structural and natural.
B) cyclical only.
C) natural only.
D) frictional and structural.
E) cyclical and natural.
Refer to Table 3.5.3. A new store opens up on the edge of campus, Great Wild North
Sportswear, which has the capacity to do as much business as all the existing
businesses. The quantity of t-shirts supplied doubles at each price. In addition, in a
television interview, Joe Cool shows off his designer sport t-shirt, setting off a new
craze that doubles business at the local sportswear establishments. The quantity of
t-shirts demanded doubles at each price. The new equilibrium price is $________ and
the new equilibrium quantity is ________ t-shirts per month.
A) 8; 400
B) 8; 200
C) 3; 400
D) 12; 240
E) 16; 400
One way to solve negative externality problems is
A) to organize a limited boycott of the products.
B) subsidize the externalities.
C) eliminate transactions costs when property rights are not legally established.
D) issue pollution permits to polluting firms and establish a system of cap-and-trade.
E) establish and enforce patents and copyrights.
On a graph of a production possibilities frontier, opportunity cost is represented by
A) a point on the horizontal axis.
B) a point on the vertical axis.
C) a ray through the origin.
D) the slope of the production possibilities frontier.
E) the x-axis intercept.
Which of the following markets will have the largest deadweight loss?
A) a single-price monopoly
B) a perfectly competitive market
C) a perfectly price discriminating monopoly
D) both B and C
E) both A and C
Refer to Table 26.3.1. Consider the economy represented in the table. The economy
eventually moves to its long-run equilibrium. In long-run equilibrium, the price level is
________ and real GDP is ________ billion.
A) 125; $550
B) 120; $600
C) 120; $500
D) 130; $600
E) 130; $500
During a recession, revenues
A) and government outlays decrease.
B) decrease and government outlays increase.
C) increase and government outlays decrease.
D) and government outlays increase.
E) remain constant and government outlays increase.
Economists usually agree with which of the following arguments that favour
protectionism?
A) the competition with cheap foreign labour defence
B) the job protection defence
C) the dumping defence
D) the infant-industry defence
E) none of the above. Economists generally agree that arguments in favour of protection
are flawed.
Which one of the following events shifts the demand curve for grape jelly to the right?
A) an increase in income if grape jelly is a normal good
B) a decrease in the price of strawberry preserves, a substitute for grape jelly
C) a decrease in the price of grape jelly
D) an increase in the price of peanut butter, a complement of grape jelly
E) a decrease in the population
In Figure 27.2.3, at the equilibrium level of real GDP, induced expenditure is
A) $28 billion.
B) $150 billion.
C) $225 billion.
D) $347 billion.
E) $375 billion.
Comparing the distribution of income after taxes and benefits to the distribution of
market income, it is true that the distribution of income after taxes and benefits is
________ the distribution of market income.
A) more equally distributed than
B) less equally distributed than
C) more equally distributed only for the middle quintile than
D) as equally distributed as the
E) more equally distributed for the bottom two quintiles and less equally distributed for
the top three quintiles than
If the supply of a good is perfectly elastic, then a tax on the good will be paid
A) completely by the buyers.
B) completely by the sellers.
C) equally by the buyers and sellers.
D) mostly but not completely by the buyers.
E) mostly but not completely by the sellers.
A rise in the price level
A) decreases aggregate expenditure and produces a movement up along the aggregate
demand curve.
B) decreases aggregate expenditure and produces a rightward shift of the aggregate
demand curve.
C) decreases aggregate expenditure and produces a leftward shift of the aggregate
demand curve.
D) has no effect on aggregate expenditure.
E) increases aggregate expenditure, but has no effect on the aggregate demand curve.
If Canada imposes a tariff on imported steel, the tariff
A) raises the Canadian price of imported steel.
B) decreases the Canadian production of steel.
C) increases the total Canadian consumption of steel.
D) decreases employment in the Canadian steel industry.
E) all of the above
Who benefits from imports?
A) domestic consumers
B) domestic producers
C) foreign consumers
D) domestic workers in the industry
E) None of the above benefit.
Lucky buys hats for $20, but Lucky will not sell one of her hats for less than $35.
Lucky is
A) displaying the endowment effect.
B) making decisions using her prefrontal cortex.
C) exhibiting bounded self-interest.
D) showing unbounded willpower.
E) a behavioural economist.
If the average tax rate decreases as income increases, the income tax is
A) progressive.
B) proportional.
C) negative.
D) regressive.
E) redistributive.
In a world with no money, costs are expressed in terms of other goods. If one video
game costs two hamburgers, and a hamburger costs three pops, how many pops would
it take to buy a video game?
A) 5
B) 3
C) 6
D) 3/2
E) 1/6
Refer to Table 10.2.1. If the price of labour is $10 per unit and the price of capital is $20
per unit, which method is economically efficient?
A) 1 only
B) 2 only
C) 3 only
D) all of the above
E) 1 and 3 only
In Figure 7.2.1, with international trade, ________ million shirts per year are produced
in Canada.
A) 48
B) 32
C) 20
D) 56
E) 16
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. Suppose the government
passes a minimum wage law that prohibits anyone from hiring labour at less than $6.50
per hour. The monopsonist will hire
A) 50 hours of labour.
B) 75 hours of labour.
C) 62.5 hours of labour.
D) 100 hours of labour.
E) 125 hours of labour.
Table 7.3.1 shows the Canadian supply of and demand for widgets. Widgets are
available on the world market for $7. If the Canadian government imposes a tariff of
$1, how many widgets will Canada import?
A) 32 million
B) 24 million
C) 16 million
D) 28 million
E) 40 million
If the quantity of carrots demanded increases by a small percentage when income
increases by a large amount, we know that the demand for carrots is
A) price elastic.
B) price inelastic.
C) income inferior.
D) income elastic.
E) income inelastic.
Refer to Fact 3.5.1. An increase in the price of Pepsi, a substitute for coffee will
A) increase the price and the quantity demanded of coffee.
B) increase the price and the quantity supplied of coffee.
C) decrease the price and the quantity demanded of coffee.
D) decrease the price and the quantity supplied of coffee.
E) increase the supply of coffee.
A monopolistically competitive firm has excess capacity because in the
A) long run, average total cost exceeds minimum average total cost.
B) short run, marginal revenue exceeds marginal cost.
C) long run, it makes an economic profit.
D) short run, average total cost is less than average variable cost.
E) long run, average total cost is less than average variable cost.
If nominal GDP increased by 11 percent during a year while real GDP increased by
only 5 percent, then the
A) price level decreased by 6 percent.
B) price level increased by 16 percent.
C) price level remained steady but real output fell by 6 percent.
D) unemployment rate fell during the year.
E) price level increased by 6 percent.