Refer to Table 21.3.1. The reference base period is 2014. The CPI in 2002 is
A) 100.
B) 157.
C) 129.
D) 63.
E) 152.
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 the market is unregulated, then the
price is
A) P1.
B) P4.
C) below P1.
D) P2.
E) P3.
Which of the following statements are true regarding “positive” statements?
I. They describe what “ought to be.”
II. They describe what is believed about how the world appears.
III. They can be tested as to their truthfulness.
A) I and II
B) II and III
C) I and III
D) I, II and III
E) None of the statements are true.
A 3 percent rise in the price of orange juice decreases the quantity of orange juice
demanded by 9 percent and increases the quantity of apple juice demanded by 15
percent. The price elasticity of demand for orange juice is ________. The cross
elasticity of demand for apple juice with respect to the price of orange juice is
________.
A) -3; 5
B) 3; 5
C) 0.33; 0.2
D) -0.33; 0.2
E) 0.33; -5
The greater the value of marginal product of labour,
A) the greater is the supply of labour.
B) the greater is the demand for labour.
C) the greater is the marginal cost of production.
D) the greater is unemployment.
E) the lower is the wage rate.
Which one of the following flows from firms to households?
A) goods and services
B) factor services
C) payments for goods and services
D) payments for loans
E) loans
If investment increases by $200, and as a result income increases by $800, then the
A) multiplier is 1/4.
B) slope of the AE curve is 0.75.
C) slope of the AE curve is 1/4.
D) multiplier is 3.
E) none of the above
Use the figure below to answer the following questions.
Figure 14.2.1
Refer to Figure 14.2.1. If this firm is in monopolistic competition, it will produce an
output level
A) of 40 units.
B) of 60 units.
C) of 80 units.
D) that is less than 40 units.
E) that is impossible to determine without information concerning the rival firms.
In 2013, Canada had
A) a structural deficit and a cyclical deficit.
B) a structural deficit and a cyclical surplus.
C) a structural surplus and a cyclical deficit.
D) a structural surplus and a cyclical surplus.
E) a balanced structural budget and a cyclical deficit.
Use the figure below to answer the following questions.
Figure 11.4.2
Refer to Figure 11.4.2, which illustrates the short-run average total cost curves for four
different plant sizes. Which curve represents the average total cost for the largest of the
four plant sizes?
A) ATCA
B) ATCB
C) ATCC
D) ATCD
E) either ATCC or ATCD
At a price of $10 a unit in Figure 3.4.2,
A) there is a surplus of 200 units.
B) there is a shortage of 200 units.
C) there is a surplus of 400 units.
D) there is a shortage of 400 units.
E) quantity will rise.
Refer to Table 2.4.1. For Vulcan, the opportunity cost of producing an additional unit of
X is
A) 4 units of Y.
B) 2 units of Y.
C) 2/3 units of Y.
D) 1 unit of Y.
E) dependent upon how many units of X are already produced.
Which of the following exchange rate policies uses a target exchange rate, but allows
the target to change?
A) crawling peg
B) flexible exchange rate
C) fixed exchange rate
D) moving target
E) flexible target exchange rate
Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
Refer to Table 2.4.1. Which one of the following is true?
A) Romulus has both an absolute advantage and a comparative advantage in the
production of Y.
B) Romulus has both an absolute advantage and a comparative advantage in the
production of X.
C) Vulcan has a comparative advantage in the production of X.
D) Romulus has a comparative advantage in the production of X.
E) Vulcan should specialize in the production of X.
Mrs. Smith’s bakery shop is a firm in monopolistic competition. She is currently selling
a box of bread for $16. The firm’s marginal cost is $7 and marginal revenue is $7. To
maximize economic profit Mrs. Smith
A) shuts down.
B) decreases output so that marginal revenue exceeds marginal cost.
C) continues to produce the same level of output.
D) increases output so that marginal cost exceeds marginal revenue.
E) decreases output so that marginal cost equals the output price.
Suppose the quantity of gasoline is measured in litres and the price of gasoline is
measured in dollars. The price elasticity of demand is 0.67. If the price of gasoline is
then measured in cents rather than in dollars, the price elasticity of demand would be
A) 6.7.
B) 67.0.
C) 0.67.
D) 0.0067.
E) negative.
Consider Table 18.2.2. If the price of apples is $0.50 per kilogram, and the wage rate
for apple pickers is $7.50 per hour, then the number of pickers that Wendy will hire is
A) 1.
B) 3.
C) 5.
D) 7.
E) 8.
If diseconomies of scale are present,
A) average total cost is decreasing.
B) the long-run average cost curve has a negative slope.
C) economies of scale are also present.
D) the long-run average cost curve has a positive slope.
E) the average total cost shifts downward.
Choose the statement that is incorrect.
A) Fractional-reserve banking is a system in which banks keep a fraction of their
depositors’ funds as a cash reserve and lend the rest.
B) Fractional-reserve banking was invented by gold prospectors in the Canadian Yukon
during the gold rush.
C) 100 percent reserve banking is a system in which banks keep the full amount of their
depositors’ funds as a cash reserve.
D) The requirement to hold 100 percent reserves lowers bank profits.
E) The Austrian School of economists say that fractional-reserve banking violates
property rights because the bank has no legal right to lend a deposit to someone else.
If the inflation rate is positive, the price level in an economy is
A) falling rapidly.
B) rising.
C) constant.
D) falling slowly.
E) zero.
If factor prices remain constant, an increase in aggregate demand
A) increases the price level and increases real GDP.
B) increases the price level and decreases real GDP.
C) decreases the price level and increases real GDP.
D) decreases the price level and decreases real GDP.
E) increases the price level, and leaves real GDP unchanged.
Import quotas
A) are the same as tariffs.
B) are not used by Canada.
C) set the minimum percentage of the value of a product that must consist of imported
components.
D) benefit society.
E) set the maximum number of units of a good that can be imported in a given time
period.
If opportunity costs are increasing, then the production possibilities frontier
A) will be bowed out and have a positive slope.
B) will be positively sloped.
C) will be linear and have a negative slope.
D) will be bowed out and have a negative slope.
E) reflects the fact that available resources are equally useful in all production
activities.
Marginal utility theory assumes that when Kelly decreases the number of hockey games
that she attends each week from 3 to 2, her
A) total utility increases.
B) income increases.
C) marginal utility increases.
D) total utility is maximized.
E) marginal utility is maximized.
According to the law of diminishing returns, along the aggregate production function,
an additional unit of
A) capital produces more output than an additional unit of labour.
B) labour decreases output.
C) labour produces more output than the previous unit.
D) labour produces less output than the previous unit.
E) labour increases the real wage rate.
Complete the following sentence. Financial capital is
A) one of the “gifts of nature.”
B) the tools and machines that are used to produce goods and services.
C) money, stocks, and bonds.
D) used in the production of goods and services.
E) land.
Refer to Table 1A.3.2. Suppose that w is measured along the x-axis. The slope of the
line relating w and u is
A) +3.
B) -3.
C) -2/3.
D) +3/2.
E) -3/2.
Between 1960 and 2010, growth rates in real GDP per person in Hong Kong, Korea,
Singapore, Taiwan, and China ________ the growth rate of real GDP per person in
Canada.
China’s real GDP per person in 2010 is approximately equal to real GDP per person in
Hong Kong in ________.
A) exceeded; 1998
B) were less than; 1988
C) were less than; 1976
D) exceeded; 1976
E) were approximately equal to; 1968
The larger the gap between the Lorenz curve and the line of equality,
A) the greater is the equality in the income distribution.
B) the less is the inequality in the income distribution.
C) the poorer are the top 50 percent of households.
D) the richer are the lowest 50 percent of households.
E) the greater is the inequality in the income distribution.
Which one of the following happens automatically if the economy goes into a
recession?
A) Government outlays increase and revenues do not change.
B) Revenues decrease and government outlays do not change.
C) The government budget deficit increases or the government budget surplus
decreases.
D) The government budget deficit decreases.
E) Both government outlays and revenues increase, and the deficit stays the same.
Choose the statement or statements that are correct.
I. The value of one more unit of a good or service is its marginal benefit.
II. Marginal benefit equals the total amount we spend on a good or service.
III. Marginal benefit is the maximum amount willingly paid for another unit of a good
or service.
A) I only
B) II only
C) I and III
D) III only
E) I, II, and III
A positive statement is
A) always true.
B) always false.
C) about what ought to be.
D) what is currently believed about the way the world operates.
E) an opinion that cannot be verified.
As the ________ interest rate increases, the quantity of loanable funds demanded
________.
A) real; increases
B) real; decreases
C) nominal; increases
D) nominal; decreases
E) none of the above. There is no relationship between interest rates and loanable funds.
Which one of the following statements about the budget line is false? The budget line
A) separates affordable consumption points from unaffordable consumption points.
B) is based on fixed prices.
C) is based on fixed income.
D) is based on fixed quantities.
E) constrains consumer choices.