An assumption of the new growth theory is that
A) people earn a subsistence real wage in the long run.
B) all technological advances are the result of chance.
C) the marginal product of all types of capital increases as more capital is accumulated.
D) the growth rate of labour productivity depends on people’s ability to innovate.
E) technological advances encourage international trade.
Each of the following would be considered a macroeconomic topic except
A) the reasons for a decrease in the unemployment rate.
B) the cause of recessions.
C) the effect of the government budget deficit on inflation.
D) the determination of aggregate income.
E) the selection of production techniques.
When the price of good A rises, the supply curve of good B shifts rightward. Which of
the following statements are true?
A) A and B are substitutes.
B) A and B are complements.
C) A and B are substitutes in production.
D) A and B are complements in production.
E) A is a factor used in the production of B.
In monopolistic competition, firms can make an economic profit in
A) the short run but not in the long run.
B) the short run and in the long run.
C) the long run but not in the short run.
D) neither the short run nor the long run.
E) always in the short run and sometimes but not frequently in the long run.
The Ricardo-Barro effect holds that
A) equal increases in taxes and government expenditures have no effect on equilibrium
real GDP.
B) a government budget deficit has no effect on the real interest rate.
C) a government budget deficit crowds out private investment.
D) a government budget deficit induces a decrease in saving that magnifies the
crowding out effect.
E) a government budget deficit increases the real interest rate.
In Figure 7.2.2, Canada ________ helicopters per year.
A) exports 480
B) exports 720
C) imports 480
D) imports 240
E) exports 240
The fish stocks in the Atlantic fishing industry have decreased. As a result, we would
expect
A) an increase in the demand for meat (e.g., beef) because meat is a complement of
fish.
B) a fall in the price of fish, leading to a decrease in the demand for meat, because meat
and fish are substitutes.
C) a fall in the price of fish, leading to an increase in the demand for meat, because
meat and fish are substitutes.
D) an increase in the demand for meat because meat is a substitute for fish.
E) a rise in the price of fish, leading to a decrease in the demand for meat, because meat
and fish are complements.
Refer to Figure 6.3.2. The buyers’ share of the tax is
A) zero.
B) $0.50.
C) $1.00.
D) $1.50.
E) $2.00.
When the government of Alberta chooses to build more roads, the required resources
are no longer available to provide better healthcare facilities. This situation illustrates
the concept of
A) marginal benefit.
B) monetary cost.
C) opportunity cost.
D) human capital.
E) entrepreneurship.
For which one of the following will demand be the most price elastic?
A) daily newspapers
B) Ontario newspapers
C) Toronto newspapers
D) the Toronto Star
E) Each of the above will exhibit the same price elasticity of demand.
Cindy has $70 a month to spend, and she can spend as much time as she likes playing
golf and tennis. The price of an hour of golf is $10, and the price of an hour of tennis is
$5. If Cindy equalizes the marginal utility per hour from golf and from tennis, she
A) can increase her total utility by spending less time golfing and more time playing
tennis.
B) can increase her total utility by spending more time golfing and less time playing
tennis.
C) maximizes her total utility.
D) can increase her total utility only if the price of golf decreases.
E) cannot increase her total utility.
Use the figure below to answer the following questions.
Figure 17.3.1
Figure 17.3.1 shows the marginal private cost curve, marginal social cost curve, and
marginal social benefit curve for cod, a common resource. The equilibrium quantity in
an unregulated market is
A) 0 kilograms a week.
B) 4,000 kilograms a week.
C) 3,000 kilograms a week.
D) 5,000 kilograms a week.
E) 1,000 kilograms a week.
Which of the following are business cycle theories that regard fluctuations in aggregate
demand as the factor that creates business cycles?
I. Keynesian cycle theory
II. real business cycle theory
III. monetarist cycle theory
A) I only
B) I and II
C) I and III
D) I, II and III
E) II and III
Refer to Figure 6.3.2. Government revenue from the tax is
A) zero.
B) $100.
C) $300.
D) $400.
E) $600.
From an examination of data on income and wealth, it can be concluded that
A) wealth distribution is more equal than income distribution.
B) income distribution is more equal than wealth distribution.
C) wealth distribution is equal to income distribution.
D) income and wealth are the same.
E) income and wealth are unrelated.
Gross domestic product is
A) the final value of all goods produced in a country in a given time period.
B) the market value of all goods and services produced in a country during a given time
period.
C) the market value of all the final goods and services produced in a country during a
given time period.
D) the average value of output produced in a country in a given time period.
E) the market value of all the intermediate goods and services produced in a country
during a given time period.
A production function is the relationship between the maximum output attainable and
the
A) price of output.
B) change in technology.
C) demand for output.
D) quantities of inputs used.
E) amount of labour used.
The efficient scale of provision of a public good occurs where
A) total benefit is at a maximum.
B) total benefit is at a minimum.
C) marginal social benefit is at a maximum.
D) marginal social benefit minus marginal social cost equals zero.
E) marginal social cost is at a minimum.
When 2,000 hamburgers a day are produced, the marginal social benefit from the
2000th hamburger is $1.50 and its marginal social cost is $1.00. And when 7,500
hamburgers a day are produced, the marginal social benefit from the 2000th hamburger
is $1.00 and its marginal social cost is $1.50. The efficient quantity of hamburgers is
________ a day
A) less than 2,000
B) between 2,000 and 7,500
C) more than 7,500
D) zero
E) 2,000
Economic profit equals total revenue minus
A) the cost of resources bought in the market.
B) the implicit rental rate.
C) the opportunity cost of production.
D) the cost of resources supplied by the owner.
E) the cost of resources owned by the firm.
Which one of the following is a balance of payments account?
A) capital and financial account
B) foreign exchange account
C) saving account
D) trade account
E) all of the above
Which of the following shifts the supply curve of Canadian dollars rightward?
A) An increase in the demand for foreign goods by Canadians
B) A decrease in the demand for Canadian goods by foreigners
C) The dollar is expected to appreciate.
D) U.S. interest rates fall.
E) Canadian interest rates rise.
Full-employment equilibrium occurs when
A) aggregate demand equals short-run aggregate supply.
B) all who are willing and able to work, are working.
C) real GDP equals potential GDP.
D) real GDP equals potential GDP and the wage level is set so that the GDP deflator
equals 100.
E) all who are willing and able to work are working, and the wage level is set so that
the GDP deflator equals 100.
Wages, salaries, and supplementary labour income are components of which approach
to measuring GDP?
A) income approach
B) expenditure approach
C) injections approach
D) output approach
E) value-added approach
Which of the following events leads to a rise in the price of oranges?
A) a rise in the price of apples if apples and oranges are substitutes
B) a scientific discovery that oranges cause hair loss
C) a decrease in income if oranges are a normal good
D) good growing weather in Florida
E) a technological improvement in the production of oranges
Use the figure below to answer the following questions.
Figure 1A.3.4
Figure 1A.3.4 illustrates two variables, x and y, which are
A) negatively related, with slope becoming closer to 0 as x increases from 2 to 16.
B) negatively related, with slope becoming farther from 0 as x increases from 2 to 16.
C) positively related, with slope becoming closer to 0 as x increases from 2 to 16.
D) positively related, with slope becoming farther from 0 as x increases from 2 to 16.
E) positively related, with the slope unchanging as x increases from 2 to 16.
Norland has the budget deficit of $15 billion. According to the government economists,
Norland has a structural deficit of $3 billion. What is a cyclical deficit in Norland?
A) $18 billion
B) $15 billion
C) $10 billion
D) $12 billion
E) zero
The night before a history test, you decide to go to the movies instead of reviewing your
notes. You get 60 percent on your test compared with the 75 percent that you normally
score. You ________ a tradeoff and the opportunity cost of your evening at the movies
was ________.
A) faced; the 15 percent fall in your grade
B) did not face; zero
C) did not face; the 15 percent fall in your grade
D) faced; the mark of 60 percent on your test
E) did not face; the mark of 60 percent on your test
A firm is producing the profit-maximizing amount of output when it is producing where
its ________ curve intersects its ________ curve.
A) marginal cost; average total cost
B) marginal cost; average variable cost
C) marginal cost; marginal revenue
D) average total cost; average variable cost
E) total cost; total revenue
When considering rent seeking, which of the following is TRUE?
A) The anti-free trade group generally will lobby more than the pro-free trade group.
B) The pro-free trade group generally will lobby more than the anti-free trade group.
C) Usually only the anti-free trade group is concerned about what is best for society at
large.
D) Only the pro-free trade group is concerned about the government’s revenue from
tariffs.
E) None of the above