Refer to Figure 13.3.1. The efficient quantity is
A) 20 units.
B) 40 units.
C) 60 units.
D) 80 units.
E) zero units.
Refer to Figure 12.4.1, which shows the cost curves and marginal revenue curve of a
firm in a perfectly competitive market. In the long run,
A) firms that remain in the market will expand production.
B) market demand will increase.
C) market supply will increase.
D) firms will enter the market.
E) firms that remain in the market will reduce production.
Given the Canadian price level P, the foreign country price level P*, and the nominal
exchange rate E in foreign currency per Canadian dollar, the real exchange rate RER
equals
A) E (P*/P).
B) (P/P*) / E.
C) P (E/P*).
D) P E P*.
E) E (P/P*).
After-tax income equals
A) total income minus tax payments by households to governments.
B) total income minus tax payments by households to firms.
C) total income plus tax payments by households to governments.
D) market income plus cash payments to households by governments.
E) market income minus tax payments by households to governments.
Which of the following would not increase an existing budget deficit?
A) an increase in interest on the government debt
B) an increase in government expenditures on goods and services
C) an increase in government transfer payments
D) an increase in indirect taxes
E) a decrease in investment income
A change in the exchange rate, other things remaining the same, brings a
A) shift of the supply curve for Canadian dollars with no movement along the supply
curve.
B) change in the quantity of Canadian dollars supplied and a shift of the supply curve.
C) shift of the supply curve for Canadian with a movement along the demand curve.
D) change in the quantity of Canadian dollars supplied with no movement along the
supply curve.
E) change in the quantity of Canadian dollars supplied and a movement along the
supply curve.
Use the figure below to answer the following question.
Figure 17.2.3
Refer to Figure 17.2.3. The graph provides information about a waste disposal system
in a city of 1 million people. If the city installs the efficient capacity, then each person
pays ________ in taxes.
A) $125
B) $62.50
C) $250
D) zero
E) $31.25
Use the information below to answer the following questions.
Fact 15.2.1
Two firms, FastNet and SmartCast are the only Internet providers in a city. They have
identical costs and one firm’s service is a perfect substitute for the other firm’s service.
The industry is a natural duopoly. FastNet and SmartCast decide to collude and agree to
share the market equally.
Refer to Fact 15.2.1. Which of the following actions maximizes the industry’s economic
profit?
A) Both firms cheat on the agreement.
B) One firm cheats and one firm complies.
C) Both firms comply with the agreement.
D) New firms enter the market.
E) Both firms charge the price that would exist in a perfectly competitive market.
Refer to Table 3.5.1. Suppose the cost of production rises, causing supply to decrease
by 100 units at each price. The new equilibrium price is $________ and equilibrium
quantity is ________ units.
A) 70; 450
B) 70; 350
C) 50; 450
D) 50; 350
E) 60; 400
A natural monopoly good is
A) nonrival.
B) excludable.
C) rival.
D) nonexcludable.
E) both A and B.
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) the elimination of deadweight loss.
Which one of the following shifts the aggregate demand curve leftward?
A) a decrease in the interest rate
B) an increase in expected inflation
C) an increase in taxes
D) an increase in the price level
E) an increase in the money wage rate
A firm that discriminates has ________ a firm that does not discriminate and ________.
A) the same costs as; competes most often with firms from other countries
B) the same costs as; can successfully maximize profit in a competitive industry
C) lower costs than; drives other firms out of a competitive industry
D) higher costs than; competes most often with firms from other countries
E) higher costs than; cannot survive in a competitive industry
Suppose that investment increases by $10 billion. Which one of the following would
reduce the effect of this increase in autonomous expenditure on equilibrium real GDP in
the short run?
A) an increase in the marginal propensity to consume
B) a decrease in the marginal propensity to import
C) a decrease in the marginal tax rate
D) a steeper short-run aggregate supply curve
E) a flatter short-run aggregate supply curve
Growth eventually stops in neoclassical growth theory when
A) technology stops advancing.
B) saving increases.
C) discoveries are replicated.
D) the return on capital increases.
E) population growth lowers the real wage rate.
Use the table below to answer the following questions.
Table 2.4.2
Production for one week by Sheila and Bruce
Given the information in Table 2.4.2, can Sheila and Bruce gain by specialization?
A) Yes, but only if Bruce gets paid more than Sheila.
B) No, not under the given circumstances.
C) It depends on the wages each earns.
D) Only if they are married to each other.
E) Yes, if each specializes in the good in which he has a comparative advantage.
Increasing a tariff ________ the domestic quantity consumed of the good and ________
the domestic production of the good.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) decreases; does not change
The paradox of value as it applies to diamonds and water can be explained by
A) distinguishing between utility and price.
B) water having a high level of marginal utility relative to diamonds.
C) water having a low price relative to diamonds.
D) the fact that utility can’t be measured.
E) distinguishing between total utility and marginal utility.
Refer to Figure 11.4.4, which illustrates the long-run average total cost curve. Given an
increase in output from Q1 to Q2,
A) economies of scale exist.
B) diseconomies of scale exist.
C) constant returns to scale exist.
D) average total cost is increasing.
E) average total cost is decreasing.
If the natural unemployment rate increases, the long-run Phillips curve ________, the
short-run Phillips curve ________, and the expected inflation rate ________.
A) does not shift; does not shift; does not change
B) shifts rightward; shifts rightward; does not change
C) does not shift; shifts rightward; rises
D) shifts rightward; curve does not shift; falls
E) shifts rightward; shifts rightward; falls
Consider the following events:
Event 1: Growth in the world economy slows.
Event 2: The world price of oil rises.
Event 3: Canadian labour productivity declines.
Choose the statement that is correct.
A) A classical macroeconomist and a monetarist recommend that taxes be kept low to
avoid disincentive effects for all of the events and a Keynesian recommends active
fiscal policy and monetary policy to offset all events.
B) All macroeconomists believe that the economy requires active fiscal policy and
monetary policy to keep the economy out of recession.
C) A classical macroeconomist and a monetarist recommend an increase in the quantity
of money for all events.
D) A Keynesian recommends no action for all of the events.
E) A Keynesian recommends active fiscal policy but not monetary policy for events 1
and 2 and monetary policy but not fiscal policy for event 3.
An import quota directly restricts ________ and is designed to protect domestic
________.
A) exports; consumers only
B) exports; producers only
C) imports; consumers only
D) imports; producers only
E) imports; producers and consumers
Which business cycle theory emphasizes that, because of previously negotiated wage
agreements, both expected and unexpected fluctuations in aggregate demand can
change real GDP?
A) the new classical cycle theory
B) the new Keynesian cycle theory
C) the monetarist cycle theory
D) the Keynesian cycle theory
E) the real business cycle theory
Use the figure below to answer the following questions.
Figure 5.3.1
Refer to Figure 5.3.1. The efficient quantity is
A) 250 units.
B) 200 units.
C) 150 units.
D) 100 units.
E) 50 units.
Mr. Brown opens his restaurant as a sole proprietorship. After a year of disastrous
reviews, he has gone deeply into debt. His liability is
A) zero; he has already lost all his money.
B) the amount of his original investment.
C) limited only by his entire wealth.
D) limited to assets owned by the restaurant.
E) depends upon how much money he has in his savings account.
A cyclical deficit occurs when
A) government outlays are greater than revenues.
B) government outlays are less than revenues.
C) there is a deficit due to the fact real GDP is greater than potential GDP.
D) there is a deficit due to the fact real GDP is less than potential GDP.
E) there is a deficit even when real GDP equals potential GDP.
The unemployment rate is supposed to measure ________. It is an imperfect measure
because ________.
A) the number of unemployed plus the number of discouraged searchers expressed as a
percentage of the labour force; it excludes the discouraged searchers because Statistics
Canada considers them as employed
B) the percentage of the working-age population who are unemployed; it is impossible
to count everyone in the working-age population
C) the percentage of the labour force who are unemployed; it is impossible to count
everyone in the labour force
D) the underutilization of labour resources; it excludes some underutilized labour and
some unemployment is unavoidable
E) the underutilization of labour resources; it includes part-time workers and excludes
discouraged workers
There is an increase in the price of broccoli because of the disastrous weather that
destroyed half of this year’s spinach crop. Choose the statement that is correct.
A) The demand curve for broccoli shifted rightward and the cross elasticity of demand
for broccoli with respect to the price of spinach is positive.
B) The demand curve for broccoli shifted rightward and the cross elasticity of demand
for broccoli with respect to the price of spinach is negative.
C) The supply curve of broccoli shifted rightward and the cross elasticity of demand for
broccoli with respect to the price of spinach is positive.
D) The supply curve of broccoli shifted rightward and the cross elasticity of demand for
broccoli with respect to the price of spinach is negative.
E) The demand curve for broccoli shifted leftward and the cross elasticity of demand
for broccoli with respect to the price of spinach is negative.
Refer to Table 12.2.1, which gives the total revenue schedule and total cost schedule of
a perfectly competitive firm. If the firm produces 3 units of output, it will
A) make an economic profit of $4.
B) make an economic profit of $90.
C) incur an economic loss of $4.
D) break even.
E) incur an economic loss of $86.
Refer to Table 1A.3.3. When x equals 5, the slope is
A) 5.
B) -2.
C) +2.
D) 0.
E) infinite.
Suppose a country’s population grows by 2 percent a year and, at the same time, its real
GDP grows by 5 percent a year. Real GDP per person is increasing by ________ a year.
A) 2 percent
B) 5 percent
C) 10 percent
D) 16 percent
E) 3 percent