If the Bank of Canada sets a target exchange rate that is higher than the current
exchange rate, then
A) the Bank must sell dollars.
B) the Bank must buy dollars.
C) the Bank can do nothing in the short run.
D) the Bank will print more dollars for foreign distribution.
E) the Bank should rethink its policy.
The main functions of markets include
A) promoting the social interest, but not the self-interest.
B) selling goods, but not factors of production.
C) enabling buyers and sellers to get information about each other.
D) establishing a physical location for business transactions.
E) promoting the self-interest, but not the social interest.
Firms cope with uncertainty and incomplete information by using
A) sole proprietorship, limited liability, and market coordination.
B) ownership, incentive pay, and long-term contracts.
C) team production, economies of scale, and transactions costs.
D) the market, the firm, and internal organization.
E) team production, economies of scale, and transaction costs.
If the average tax rate increases as income increases, the income tax is
A) progressive.
B) proportional.
C) negative.
D) regressive.
E) excessive.
Environment Canada was created in
A) 1971.
B) 1961.
C) 1981.
D) 1991.
E) 2001.
Other things remaining the same, if education costs rise substantially, we would expect
to see
A) a decrease in the value of marginal product of high-skilled workers.
B) a decrease in the demand for high-skilled workers.
C) an increase in the supply of high-skilled workers.
D) an increase in the number of high-skilled workers employed.
E) an increase in the wages received by high-skilled workers.
Refer to Figure 6.2.1. Suppose a $5 per hour minimum wage is in force. What is the
lowest wage per hour an unemployed person would be willing to accept?
A) $2
B) $3
C) $4
D) $5
E) $1
Which of the following is the best definition of economics?
A) the study of how a provincial government allocates tax dollars
B) the study of how consumers spend their income
C) the study of how producers decide what inputs to hire and what outputs to produce
D) the study of how individuals, businesses, governments, and entire societies make
choices as they cope with scarcity and the incentives that influence and reconcile those
choices
E) the study of how consumers and producers meet each other at the market
The buyer pays most of a tax if demand is relatively inelastic because
A) the buyer cannot easily substitute to other markets.
B) the buyer can easily substitute to other markets.
C) the government forces the seller to bear the burden of the tax.
D) there is a black market for this good.
E) the seller cannot easily substitute to other goods.
The price elasticity of demand for airplane travel one year in advance of the departure
date is most likely to be
A) equal to infinity.
B) equal to zero.
C) between zero and 1.
D) equal to 1.
E) greater than 1.
When the efficient quantity is produced
A) marginal social benefit equals marginal social cost.
B) the quantity demanded equals the quantity supplied.
C) resources are used in the activities in which they are most highly valued.
D) the sum of consumer surplus and producer surplus is maximized.
E) all of the above.
Use the figure below to answer the following question.
Figure 9.2.2
Figure 9.2.2 shows three indifference curves for Brenda. Which one of the following is
not true?
A) Brenda would be equally happy consuming at either point B or point C.
B) Brenda prefers consuming at point B to consuming at point A.
C) Brenda prefers consuming at point D to consuming at either point B or point C.
D) The marginal rate of substitution is higher at point C than at point B.
E) Brenda prefers consuming at point D to consuming at point A.
If an increase in output from 5 to 10 teapots increases total cost from $100 to $200, the
marginal cost of one of those 5 teapots is
A) $10.
B) $20.
C) $22.
D) $25.
E) dependent upon the amount of extra labour used.
Refer to the table below to answer the following question.
Table 27.2.1
Table 27.2.1 gives the aggregate expenditure schedule. Equilibrium expenditure is equal
to
A) $4 trillion.
B) $3 trillion.
C) $5 trillion.
D) zero.
E) $2 trillion.
Refer to Fact 18.3.1. The union can try to increase the demand for labour by doing all of
the following except
A) supporting more immigration and increasing the number of low-skilled workers in
New York.
B) supporting minimum wage laws.
C) supporting “buy-American” policies.
D) creating training programs to boost productivity.
E) encouraging people to buy goods produced by union labour.
Use the information below to answer the following questions.
Fact 14.3.3
Suppose that Roots’ marginal cost of a jacket is a constant $125.00 and the total fixed
cost at one of its stores is $1,500 a day. This store sells 20 jackets a day, which is its
profit-maximizing number of jackets. Then the stores nearby start to advertise their
jackets. The Roots store now spends $2,000 a day advertising its jackets, and its
profit-maximizing number of jackets sold jumps to 70 a day.
Refer to Fact 14.3.3. Before the advertising begins, the average total cost of a jacket
sold in this store is
A) $200.00.
B) $175.00.
C) $150.00.
D) $125.00.
E) $100.00.
Use the figure below to answer the following question.
Figure 1A.4.4
Complete the following sentence. In Figure 1A.4.4, z is
A) positively related to x and negatively related to y.
B) negatively related to x and positively related to y.
C) positively related to both x and y.
D) negatively related to both x and y.
E) related to y but not related to x.
Consider an initial budget line labelled RS in Figure 9.3.3. If the budget line becomes
RT, the income effect is illustrated by the move from point
A) A to B.
B) A to C.
C) A to D.
D) B to C.
E) B to D.
In Table 27.1.3, at which of the following values of disposable income is there positive
saving?
A) zero
B) $100
C) $200
D) all values over $300
E) all values under $300
The aggregate expenditure curve and the aggregate demand curve are
A) not related at all.
B) the same curve, just with different names.
C) linked because if the price level rises, the aggregate expenditure curve shifts
downward, and the aggregate demand curve shifts leftward.
D) linked because if the price level rises, the aggregate expenditure curve shifts
downward, and there is a movement up along the aggregate demand curve.
E) linked because if the price level rises, the aggregate expenditure curve shifts
downward, and there is a movement down along the aggregate demand curve.
Refer to the table below to answer the following questions.
Table 19.4.2
Refer to Table 19.4.2. The table shows three tax payment schemes. Which tax payment
plan reduces inequality?
A) Plan A
B) Plan A and Plan C
C) Plan C
D) Plan B
E) Plan A, Plan B, and Plan C
What is the Taylor Rule?
A) The overnight loan rate is set in response to the current inflation rate and to the
current estimate of the output gap.
B) The monetary base is set in response to the current inflation rate and to the current
estimate of the output gap.
C) The monetary base should grow at a rate equal to the target inflation rate plus the
long-term real GDP growth rate minus the medium-term velocity growth rate.
D) The money supply should grow at a rate equal to the long-run real growth rate.
E) The money supply should be regulated by setting the exchange rate equal to
purchasing power parity with other countries.
Use the table below to answer the following question.
Table 11.2.4
Refer to Table 11.2.4. The table gives the total product schedule of workers who harvest
corn. Diminishing marginal returns begin when the ________ is hired.
A) 1st labourer
B) 2nd labourer
C) 3rd labourer
D) 4th labourer
E) There are no diminishing marginal returns since total product always rises.
In general, the higher the proportion of resources devoted to technological research in
an economy, the
A) greater will be current consumption.
B) faster the production possibilities frontier will shift outward.
C) faster the production possibilities frontier will shift inward.
D) closer it will come to having a comparative advantage in the production of all goods.
E) more bowed out will be the shape of the production possibilities frontier.
The saving function shows the relationship between saving and
A) the interest rate.
B) the price level.
C) disposable income.
D) consumption.
E) nominal income.
The two big approaches to thinking about fairness are
A) it’s not fair if my income is less than yours and it’s not fair if my opportunities in life
are less than yours.
B) it’s not fair if the result isn’t fair and it’s not fair if the rules aren’t fair.
C) the fairness of democracy and the fairness of central planning.
D) the fairness of income equality and the fairness of educational equality.
E) it’s not fair if you are treated unkindly and it’s not fair if you treat someone unkindly.
In any year, real GDP
A) must always be less than potential GDP.
B) might be greater than, less than, or equal to potential GDP.
C) will always be greater than potential GDP because of the tendency of nations to
incur inflation.
D) always equals potential GDP.
E) increases if potential GDP increases, and decreases if potential GDP decreases.
The Internet is ________ natural resource. Power generated by wind turbines is
________ natural resource.
A) not a; a nonrenewable
B) a renewable; a renewable
C) a renewable; a nonrenewable
D) not a; a renewable
E) not a; not a
Which one of the following newspaper quotations describes a leftward shift of the LAS
curve?
A) “The decrease in consumer spending may lead to a recession.”
B) “The increase in consumer spending is expected to lead to inflation, without any
increase in real GDP.”
C) “Recent higher wage settlements are expected to cause higher inflation this year.”
D) “Growth has been unusually high the last few years due to more women entering the
work force.”
E) “The recent tornadoes destroyed many factories in Calgary and Edmonton.”
Refer to the production possibilities frontier in Figure 2.1.2. Suppose that 50 units of Y
are currently being produced. Then
A) 7 units of X are being produced.
B) 6 units of X can be produced if all resources are used and assigned to the task for
which they are the best match.
C) 9 units of X can be produced if all resources are used and assigned to the task for
which they are the best match.
D) resources are not being fully utilized.
E) 6 units of X are being produced.
Deflation ends with
A) an increase in the growth rate of the money stock.
B) a one-time increase in the quantity of money.
C) a rise in the interest rate.
D) a decrease in the growth rate of the money stock.
E) a one-time decrease in the quantity of money.