Whenever actual reserves exceed desired reserves, the bank
A) can make new loans.
B) will go out of business.
C) needs to call in loans.
D) will borrow funds from another bank.
E) will raise the interest rate on its loans.
A cost that has been incurred and cannot be recovered is a
A) marginal cost.
B) sunk cost.
C) variable cost.
D) business cost.
E) significant cost.
Anything can be money as long as it
A) has low transactions costs.
B) is not too bulky.
C) has intrinsic worth.
D) meets the double coincidence of wants.
E) is acceptable as a medium of exchange.
Beginning at a long-run equilibrium, an increase in aggregate demand
A) increases the price level and in the long run increases real GDP.
B) increases the price level and in the long run decreases real GDP.
C) decreases the price level and in the long run increases real GDP.
D) decreases the price level and in the long run decreases real GDP.
E) increases the price level, but in the long run there is no change in real GDP.
The Canadian government increases its expenditure on goods and services in a time of
war or increased international tension. Starting from a position of long-run equilibrium,
what effect does this event have on Canada’s economy in the short run?
A) Real GDP increases and the price level rises.
B) Real GDP decreases and the price level falls.
C) Real GDP increases and the price level falls.
D) Real GDP decreases and the price level rises.
E) There is no change in either real GDP or the price level.
When the price of a bicycle falls from $220 to $180 and other things remain the same,
I. the quantity demanded of bicycles increases from 150 to 250 an hour.
II. the quantity demanded of skateboards decreases from 125 to 75 an hour.
III. the quantity demanded of bicycle helmets increases from 170 to 230 an hour.
Skateboards and bicycles are ________ because a fall in the price of a bicycle brings
________ in the quantity demanded of skateboards. The cross elasticity of demand for
skateboards with respect to bicycles is ________.
A) complements; an increase; -0.4
B) complements; a decrease; 0.4
C) substitutes; an increase; -2.5
D) substitutes; a decrease; 2.5
E) substitutes; a decrease; 0.4
Use the table below to answer the following questions.
Table 15.2.1
Refer to Table 15.2.1. This table includes the sentences that Bob and Joe will receive if
convicted. They have been apprehended by the police under the suspicion of
committing armed robbery. The two are immediately separated and questioned about
the case. Which one of the following observations is correct?
A) Bob would be smart to confess no matter what Joe does.
B) Joe would be smart not to confess no matter what Bob does.
C) Both Bob and Joe would be better off not confessing if they both do not confess.
D) Both Bob and Joe would be better off “coming clean” and confessing to their crime.
E) Both Bob and Joe have a dominant strategy of not confessing.
Which of the following is true for a perfect price-discriminating monopoly?
A) P = MR for each unit sold.
B) P = ATC for each unit sold.
C) P = MC for each unit sold.
D) P > MC for each unit sold.
E) P > MR for each unit sold.
If a rise in the price of good A from $9 to $11 results in an increase from 9,500 to
10,500 units supplied, then
A) supply is elastic.
B) supply is inelastic.
C) supply is unit elastic.
D) demand is elastic.
E) supply is perfectly inelastic.
When the price elasticity of demand is ________, demand for the good is elastic.
A) equal to infinity
B) greater than 1
C) equal to 1
D) between 1 and zero
E) equal to zero
Tariffs and import quotas both result in
A) lower levels of domestic production.
B) the domestic government gaining revenue.
C) lower levels of imports.
D) higher levels of domestic consumption.
E) an increase in demand.
Which one of the following topics does macroeconomics study?
A) decisions of individual firms
B) effects of government safety regulations on the price of cars
C) the performance of the global economy
D) prices of individual goods and services
E) effects of taxes on the price of gasoline
Refer to Figure 27.3.1. If investment increases by $25 billion, then real GDP increases
by
A) $25 billion.
B) $125 billion.
C) $50 billion.
D) $100 billion.
E) $75 billion.
Canada produces both lumber and wine. Canada exports lumber and imports wine. The
rest of the world imports Canadian lumber and exports wine to Canada. Canada has a
comparative advantage in producing ________. The rest of the world has a comparative
advantage in producing ________.
A) lumber; wine
B) wine; lumber
C) wine; wine
D) lumber; lumber
E) a good other than lumber or wine; wine
Use the table below to answer the following question.
Table 26.3.2
Refer to Table 26.3.2. The International Monetary Fund’s World Economic Outlook
database provides the data given in the table for India in 2004, 2005 and 2006.
The numbers in the table are consistent with
A) increases in long-run and short-run aggregate supply and even greater increases in
aggregate demand.
B) increases in short-run aggregate supply and increases in aggregate demand, but the
increases in aggregate demand are smaller than the increases in short-run aggregate
supply.
C) increases in long-run and short-run aggregate supply and even larger decreases in
aggregate demand.
D) decreases in long-run and short-run aggregate supply and even greater decreases in
aggregate demand.
E) increases in short-run aggregate supply and no change in aggregate demand.
When would the exchange rate rise the most?
A) The supply of and demand for dollars both increase.
B) The supply of dollars increases, and the demand for dollars decreases.
C) The supply of dollars decreases, and the demand for dollars increases.
D) The supply of and demand for dollars both decrease.
E) The Bank of Canada intervenes.
Which one of the following is considered to be money?
A) a chequable deposit
B) a blank cheque
C) a credit card
D) a debit card
E) a Canada Savings Bond
Which of the following would be considered a microeconomic topic?
A) the severity of a recession
B) the cause of unemployment in the economy
C) the effect of the government budget deficit on inflation
D) the determination of aggregate income
E) the study of how wages are set for mine workers
Refer to Figure 14.2.3. Assume this firm faces demand curve D2. At the
profit-maximizing output level, the firm
A) incurs an economic loss.
B) makes zero economic profit.
C) makes an economic profit.
D) is not in a long-run equilibrium.
E) is producing at its efficient scale.
Refer to Fact 3.5.1. A technological improvement lowers the cost of producing coffee.
At the same time, preferences for coffee decrease. The equilibrium quantity of coffee
A) increases.
B) decreases.
C) remains the same.
D) increases or decreases depending on whether the price of coffee falls or rises.
E) increases, decreases, or remains the same depending on the relative shifts of the
demand and supply curves.
An outcome is considered efficient if
A) it is the best available choice for an individual.
B) as many people as possible are happy about the outcome.
C) it is not possible to make someone better off without making anyone else worse off.
D) everyone makes the same income.
E) there is the smallest difference possible between the highest income earned and the
lowest income earned.
If consumption is $8,000 when disposable income is $10,000, the marginal propensity
to consume
A) is 0.50.
B) is 0.75.
C) is 0.80.
D) is 1.25.
E) cannot be determined from the information given.
Which one of the following is not generally a transactions cost?
A) the fee to a broker for buying stocks
B) the cost of a lawyer who drafts a contract
C) the cost of hiring someone to find you a supplier of raw materials
D) the cost of the owner’s time in a sole proprietorship
E) the cost of phone calls made to find a buyer
Advertising costs are ________ costs and the per unit cost of advertising ________ as
production increases.
A) fixed; increases
B) variable; increases
C) fixed; decreases
D) variable; does not change
E) variable; decreases
In Australia, the quantity of M1 is $150 billion, the currency drain ratio is 33 percent of
deposits and the reserve ratio is 8 percent. What is the monetary base?
A) $46.24 billion
B) $49.50 billion
C) $12.00 billion
D) $395.12 billion
E) $39.50 billion
An example of a perfectly competitive industry is the
A) airline industry.
B) beer industry.
C) running shoe industry.
D) fast food industry.
E) wheat industry.
The reference base year is 2013.
To calculate the chained-dollar real GDP in 2012 we calculate
A) the value of the final goods and services produced in 2014 valued at the prices that
prevailed in 2014.
B) the value of the final goods and services produced in 2014 valued at the prices that
prevailed in the base year.
C) nominal GDP in 2014 multiplied by price level.
D) the value of final goods and services produced in the base year valued at the 2014
prices.
E) the base-year GDP and add the average of the increases in real GDP calculated using
2013 prices and 2014 prices.
The buyer pays most of a tax if supply is relatively elastic because
A) the buyer cannot easily substitute to other markets.
B) the seller can easily substitute to other markets.
C) the government forces the seller to bear the burden.
D) there is a black market for this good.
E) the seller cannot easily substitute to other goods.
An example of a nonrenewable natural resource is
A) oil.
B) Lake Erie.
C) rain.
D) sunshine.
E) the St. Lawrence River.
The marginal cost of producing one more hot dog is $1.00. The price of a hot dog is
$1.50. The producer surplus from selling one more hotdog is
A) $1.00.
B) $1.50.
C) $0.50.
D) zero.
E) $2.50.
The market for maple syrup is perfectly competitive. Suppose that the market is in
long-run equilibrium when the market demand for maple syrup increases. All of the
following occur except
A) in the long run, firms make an economic profit.
B) the price rises in the short run.
C) the equilibrium quantity increases.
D) in the short run, existing firms make an economic profit.
E) the number of firms in the long run is greater than the number of firms in the short
run.
Which one of the following is an income flow from firms to households?
A) goods and services
B) factor services
C) payments for goods and services
D) payments for factor services
E) loans
If AE = 50 + 0.6Y and Y = 200, then unplanned inventories
A) increase by 75.
B) increase by 30.
C) decrease by 75.
D) decrease by 30.
E) do not change and equilibrium exists.