If the CPI was 95 at the end of 2013 and 105 at the end of 2014, what was the inflation
rate in 2014?
A) 10 percent
B) 105 percent
C) 9.5 percent
D) 5 percent
E) 10.5 percent
Refer to the figure below to answer the following questions.
The figure shows the market for shirts in Canada, where D is the domestic demand
curve and S is the domestic supply curve. The world price is $20 per shirt. Canada
imposes a tariff on imported shirts of $4 per shirt.
Figure 31.3.1
Refer to Figure 31.3.1. With the tariff, Canadians buy ________ million shirts per year.
A) 48
B) 32
C) 16
D) 24
E) 40
Which of the following statements is incorrect?
A) The labour force is equal to the number of people employed plus the number of
people unemployed.
B) The unemployment rate is the number of persons who are unemployed divided by
the labour force, all multiplied by 100.
C) The labour-force participation rate is the labour force divided by the working-age
population, all multiplied by 100.
D) The employment-to-population ratio is the number of people employed divided by
the working-age population, all multiplied by 100.
E) The involuntary part-time rate is the number of involuntary part-time workers
divided by the number employed, all multiplied by 100.
Choose the correct statement.
A) Exports include goods and services.
B) Imports include goods but not services.
C) Imports include services but not goods.
D) Exports include goods but not services.
E) Exports include services but not goods.
Refer to Fact 27.5.2. What is equilibrium real GDP for this economy?
A) 110
B) 55
C) 27.5
D) 70
E) 550
Consider a duopoly with collusion. If the duopoly maximizes profit,
A) each firm will produce the same amount.
B) each firm will produce its maximum output possible.
C) industry marginal revenue will equal industry marginal cost at the level of total
output.
D) industry demand will equal industry marginal cost at the level of total output.
E) price equals average total cost.
Some producers are chatting over a beer. Which one of the following quotations refers
to a movement along the supply curve?
A) “Wage increases have forced us to raise our prices.”
B) “Our new, sophisticated equipment will enable us to undercut our competitors.”
C) “Raw material prices have sky-rocketed; we will have to pass the cost on to our
customers.”
D) “We anticipate a big increase in demand. Our product price should rise, so we are
planning for an increase in output.”
E) “New competitors in the industry are causing prices to fall.”
The supply of a nonrenewable natural resource is determined by all of the following
factors except
A) the value of marginal product.
B) the known reserves of the natural resource.
C) the scale of current production facilities.
D) the expected future price.
E) the marginal cost of extraction.
25 basis points is
A) a quarter of a percentage point.
B) a quarter of the Bank of Canada’s target inflation rate.
C) the spread between the savings rate and the lending rate.
D) the spread between the bank rate and the settlement balances rate.
E) the gap by which real GDP exceeds potential GDP.
Which of the following is a suggestion for increasing Canadian economic growth rates?
A) Stimulate saving by taxing consumption.
B) Reduce the time period for patent protection to increase replication.
C) Put less public research funds into universities.
D) Protect our industries from foreign competition.
E) Tax education
Emperor Spring Rolls produces spring rolls. The market for spring rolls is perfectly
competitive, and the price of a spring roll is $3.50. The labour market is competitive,
and the wage rate is $28 a day. Table 18.2.3 shows the workers’ total product schedule.
To maximize its profit, Emperor produces ________ spring rolls a day.
A) 32
B) 44
C) 54
D) 62
E) 66
Means of coping with negative externalities include all of the following except
A) implementing abatement technology.
B) patents.
C) property rights.
D) Pigovian taxes.
E) cap-and-trade.
Goods that can be bought in any quantity desired are called
A) divisible goods.
B) invisible goods.
C) inferior goods.
D) services.
E) normal goods.
If A is an inferior good and consumer income rises, the demand for A
A) increases, and the equilibrium price and the equilibrium quantity increase.
B) increases and the equilibrium price rises, but the equilibrium quantity decreases.
C) decreases, and the equilibrium price and the equilibrium quantity decrease.
D) decreases and the equilibrium price falls, but the equilibrium quantity increases.
E) decreases, the equilibrium price rises, and the equilibrium quantity decreases.
A country opens up to trade and becomes an exporter of a good. Consumer surplus
________ and producer surplus ________.
A) decreases; increases
B) increases; decreases
C) remains unchanged; decreases
D) remains unchanged; increases
E) decreases; decreases
Refer to Figure 13.4.2. Assume this monopolist practises perfect price discrimination.
What is total revenue?
A) $110
B) $210
C) $310
D) $120
E) $105
Use the table below to answer the following question.
Table 12.2.4
Refer to Table 12.2.4. The market is perfectly competitive and there are 1,000 firms that
produce paper.
The top table sets out the market demand schedule for paper.
Each producer of paper has the costs shown in the bottom table when it uses its
least-cost plant size.
The market price is ________ a box and the market output is ________ boxes. The
output produced by each firm is ________ boxes. Each firm ________.
A) $7.00; 250,000; 250; incurs an economic loss of $1,000 a week
B) $8.40; 350,000; 350; makes zero economic profit
C) $7.65; 300,000; 300; incurs an economic loss of $834 a week
D) $8.40; 350,000; 350; incurs an economic loss of $581 a week
E) $7.65; 350,000; 300; makes zero economic profit
Joe earns $100,000 per year. He pays a tax rate of 28 percent on the first $60,000 of
income and a tax rate of 15 percent on income above $60,000. This tax system is an
example of a ________ income tax.
A) progressive
B) proportional
C) regressive
D) flat
E) Both B and D are correct.
A monopsony exists when there is
A) a single buyer in a market.
B) a single seller in a market.
C) a small number of large buyers in a market.
D) a small number of large sellers in a market.
E) an agreement amongst sellers in a market to set prices.
A government budget deficit ________ the demand for loanable funds, ________ the
real interest rate, and ________ investment.
A) increases; decreases; crowds out
B) increases; increases; increases
C) decreases; increases; increases
D) decreases; increases; crowds out
E) increases; increases; crowds out
At the end of 2011, the government of France’s debt was €1,126 billion. (€ is euro, the
currency of France). In 2012, the government spent €1,067 billion and ended the year
with a debt of €1,304 billion. How much did the government receive in tax revenue in
2012?
A) €1,245 billion
B) €889 billion
C) €178 billion
D) €1,125 billion
E) €1,482 billion
A medical clinic has 10 workers. Each worker can produce a maximum of either 2 units
of medical services or 5 units of secretarial services a day. The opportunity cost of one
more unit of medical services is
A) 2 units of secretarial services.
B) 5 units of secretarial services.
C) 0.4 units of secretarial services.
D) 2.5 units of secretarial services.
E) dependent on the level of services.
Choose the correct statement about firms in monopolistic competition.
A) All firms make positive economic profit.
B) The price is set equal to marginal cost to achieve maximum economic profit.
C) Price is lower than in perfect competition.
D) Production always takes place at minimum average total cost.
E) The price is always greater than the marginal cost.
The headline “The Bank of Canada Has Cut the Bank Rate” suggests that the Bank of
Canada is trying to
A) lower inflationary pressures.
B) increase the overnight loans rate.
C) stimulate aggregate demand.
D) raise the value of the Canadian dollar.
E) help banks make profits.
According to the principle of diminishing marginal utility, as consumption of a good
increases, total utility
A) decreases and then eventually increases.
B) decreases at an increasing rate.
C) decreases at a decreasing rate.
D) increases at an increasing rate.
E) increases at a decreasing rate.
At the Stratford Festival Theatre no reservations are accepted on the day of the
performance; at matinees, reservations are accepted; at opening night performances
reservations are essential. On the day of the performance, Stratford Festival Theatre
allocates seats by ________; at matinees, it allocates seats by ________; at opening
night performances, it allocates seats by ________.
A) first-come, first served; a command system; a combination of first-come, first-served
and a command system
B) force; first-come, first-served; a command system
C) personal characteristics; personal characteristics; personal characteristics
D) a lottery; first-come, first-served; personal characteristics
E) first-come, first served; first-come, first-served; first-come, first-served
Both new Keynesian and new classical cycle theories claim that
A) animal spirits can trigger a business cycle.
B) shifts in the SAS curve are the main impulse for a business cycle.
C) unexpected changes in aggregate demand trigger a business cycle.
D) expected changes in the quantity of money can trigger a business cycle.
E) a change in the price of oil is the major cause of a business cycle.
Everything else remaining the same, autonomous consumption
A) increases as disposable income decreases.
B) increases as disposable income increases.
C) does not change as disposable income changes.
D) is usually assumed to be zero.
E) decreases as disposable income decreases.
If the equation of a straight line is y = 6 + 3x, then the slope is
A) -3 and the y-intercept is 6.
B) -3 and the y-intercept is -2.
C) 3 and the y-intercept is 6.
D) 3 and the y-intercept is -2.
E) 3 and the y-intercept is -6.
If the marginal product of a baker is 10 loaves of bread, and the price of a loaf of bread
is $2, the baker’s value of marginal product is
A) $2.00.
B) $20.00.
C) $0.20.
D) $5.00.
E) $12.00.
A production possibilities frontier is negatively sloped because
A) more goods are purchased as price falls.
B) of opportunity cost.
C) some resources are unused.
D) there is not enough capital in the economy.
E) of increasing consumption.
The Canadian money multiplier is calculated as the
A) change in monetary base divided by the change in deposits.
B) change in quantity of bank notes divided by the change in monetary base.
C) change in monetary base divided by the change in monetary holdings of households.
D) change in the quantity of money divided by the change in the monetary base.
E) change in monetary base divided by the change in quantity of money.
Which of the following quotes best illustrates the idea of average product?
A) “If I have 10 workers on my assembly line, I can produce 13 tables a day.”
B) “If I add an 11th worker, I can produce 1 extra table a day.”
C) “Each worker produces 2 tables a day.”
D) “I find if I add an extra shift at night, table production only rises by 80 percent
because I need more maintenance time on the assembly line.”
E) “If I double workers and double the assembly line, I can make 120 percent more
tables.”
A star athlete can afford a garage full of exotic cars while other people can only afford
to take a city bus for transportation. This is an example of an economy facing the
________ question.
A) “what”
B) “how”
C) “for whom”
D) “where”
E) “when”