In the circular flow diagram, aggregate expenditure includes
A) consumption expenditure, saving, investment and government expenditure.
B) saving, investment, and taxes.
C) consumption expenditure, investment, government expenditure, and taxes.
D) consumption expenditure, investment, government expenditure and net exports.
E) government expenditure, transfer payments, and taxes.
Tariffs
A) generate revenue for consumers.
B) generate revenue for the government.
C) encourage domestic consumers to buy more imports.
D) encourage domestic producers to produce less.
E) lower prices for consumers.
Use the information below to answer the following questions.
Fact 12.4.1
Franklin is a fiddlehead farmer. He sold 10 bags of fiddleheads last month, with total
fixed cost of $100 and total variable cost of $50.
Refer to Fact 12.4.1. If the price of fiddleheads last month was $15 per bag, Franklin
A) should have shut down because total revenue did not cover total variable cost.
B) incurred an economic loss of $135.
C) made zero economic profit.
D) made an economic profit of $50.
E) made an economic profit of $100.
Suppose that the banking system has excess reserves of $10 million, the desired reserve
ratio is 10 percent and the currency drain ratio is 40 percent. By how much will the
quantity of money increase?
A) $12.5 million
B) $28 million
C) $50 million
D) $40 million
E) $22 million
The wealthiest 10 percent of Canadian families own approximately
A) 10 percent of the wealth.
B) 17 percent of the wealth.
C) 56 percent of the wealth.
D) 67 percent of the wealth.
E) 80 percent of the wealth.
When Erika’s income increases by 6 percent, her demand for tickets to professional
hockey games increases by 3 percent. Erika’s demand for tickets is income ________.
For Erika, hockey tickets are ________ good.
A) elastic; a normal
B) inelastic; an inferior
C) elastic; an inferior
D) inelastic; a normal
E) inelastic; a normative
Refer to Figure 16.2.3. The unregulated outcome in the paper market is
A) a quantity of 40 tonnes and a price of $11 a tonne.
B) a quantity of 40 tonnes and a price of $13 a tonne.
C) a quantity of 50 tonnes and a price of $12 a tonne.
D) a quantity of 50 tonnes and a price of $14 a tonne.
E) a quantity of 60 tonnes and a price of $13 a tonne.
Stagflation is the result of
A) a decrease in aggregate demand.
B) a decrease in short-run aggregate supply.
C) an increase in aggregate demand.
D) an increase in short-run aggregate supply.
E) a decrease in short-run aggregate supply combined with a simultaneous increase in
aggregate supply.
A tariff is a tax that is imposed by the ________ country when an ________ good
crosses its international boundary.
A) exporting; imported
B) importing; exported
C) exporting; exported
D) importing; imported
E) importing or exporting; imported or exported
Refer to Table 11.3.2, which gives Tania’s total cost schedule. When output increases
from 8 to 12 teapots, the marginal cost of one of the 4 teapots is
A) $20.
B) $5.
C) $1.
D) $6.67.
E) $2.
Use the table below to answer the following questions.
Table 15.2.5
Refer to Table 15.2.5. Two software firms have developed an identical new software
application. They are debating whether to give the new application away free and then
sell add-ons or sell the application at $30 a copy. The payoff matrix is above and the
payoffs are profits in millions of dollars. What is Firm 1’s best strategy?
A) Give away the application regardless of what Firm 2 does.
B) Sell the application at $30 a copy regardless of what Firm 2 does.
C) Give away the application only if Firm 2 sells the application.
D) Give away the application only if Firm 2 gives away the application.
E) Sell the application only if Firm 2 sells the application.
Use the table below to answer the following question.
Table 20.2.8
Refer to Table 20.2.8. The base year is 2013 and the table gives the quantities produced
and the prices in 2013 and 2014. Real GDP in 2014 using the base-year method is
A) $6,400.
B) $6,100.
C) $5,900.
D) $5,800.
E) $7,100.
Refer to Table 3.5.2. Professor Hyper publishes a new study, showing that coffee raises
the test performance of students. Students double their demand for coffee and the
quantity of coffee demanded at each price doubles. In addition, a premature frost
destroys half the coffee trees and the supply of coffee is cut in half. The new
equilibrium price is $________ and the new equilibrium quantity is ________ cups a
day.
A) 1.10; 400
B) 1.10; 1,600
C) 1.10; 800
D) 1.50; 800
E) 1.50; 400.
A fall in the price of a good from $11.50 to $8.50 results in an increase in the quantity
demanded from 19,200 to 20,800 units. The price elasticity of demand is
A) 0.27.
B) 3.75.
C) 0.08.
D) 8.0.
E) 30.
According to real business cycle theory, an increase in productivity ________ the
demand for loanable funds, ________ the demand for labour, and ________ the supply
of labour. The real interest rate will ________.
A) increases; increases; does not change; fall
B) increases; increases; does not change; rise
C) decreases; decreases; decreases; fall
D) increases; increases; increases; rise
E) increases; increases; increases; fall
Marginal benefit is the
A) total benefit from an activity.
B) additional benefit from a decrease in an activity.
C) additional benefit from an increase in an activity.
D) opportunity cost of a decrease in an activity.
E) opportunity cost of an increase in an activity.
Refer to Table 3.5.1. Suppose a problem develops with car-seat heaters – they
malfunction and occasionally cause serious burns. As a result, demand decreases by 100
heaters at each price. Simultaneously, the cost of production rises, and supply decreases
by 100 heaters at each price. The new equilibrium price is $________ and the new
equilibrium quantity is ________ heaters per month.
A) 70; 450
B) 70; 350
C) 50; 450
D) 50; 350
E) 60; 300
Income maintenance programs include all of the following programs except
A) social security programs.
B) workers’ compensation.
C) Canada Pension Plan.
D) employment insurance.
E) the minimum wage.
The structural deficit is the deficit
A) in a recession.
B) in an expansion.
C) that would occur at potential GDP.
D) caused by the business cycle.
E) that would occur at the trough of the business cycle.
The first can of Sprite Jack drinks give him 22 units of utility and the second can gives
him an additional 12 units of utility. How many units of utility do the two cans of Sprite
give Jack?
A) 17
B) 46
C) 34
D) 2
E) 36
The North American economy is ________ and is becoming ________ competitive.
A) uncompetitive; less
B) competitive; more
C) competitive; less
D) uncompetitive; more
E) currently an oligopolistic market; more
In Figure 1A.3.3, the slope across arc AB is
A) 1/2.
B) 1.
C) 3/2.
D) 5/2.
E) 5/3.
Refer to Table 20.2.4. Net investment is equal to
A) $250.
B) $210.
C) $510.
D) $560.
E) $150.
The demand for loanable funds is the relationship between the quantity of loanable
funds demanded and the ________, other things remaining the same.
A) real interest rate
B) nominal interest rate
C) inflation rate
D) price level
E) quantity of loanable funds supplied
Use the figure below to answer the following questions.
Figure 1A.3.1
In Figure 1A.3.1, if household income increases by $1 000, household expenditure will
A) increase by $1,333.
B) decrease by $1,333.
C) remain unchanged.
D) increase by $1,000.
E) increase by $750.
Model A is superior to model B if
A) it contains more real world detail than model B.
B) it contains fewer unrealistic assumptions than model B.
C) its predictions correspond more closely to the facts than the predictions of model B.
D) it is preferred by a majority of researchers in a public opinion poll.
E) it is scientifically “elegant.”
Use the information below to answer the following questions.
Fact 9.3.1
Marc has an income of $20 and spends it on two goods, root beer (measured on the
vertical axis) and chips (measured on the horizontal axis). The price of root beer is $1 a
can. The price of chips is $0.50 a bag. Initially, Marc chooses to consume 10 cans of
root beer and 20 bags of chips. Then the price of root beer rises to $1.50 per can and the
price of chips falls to $0.25 a bag.
Refer to Fact 9.3.1. Marc’s initial marginal rate of substitution was
A) not calculable with the information given.
B) equal to 2 cans of root beer given up for each bag of chips gained.
C) equal to 1 can of root beer given up for each bag of chips gained.
D) equal to 10 cans of root beer given up for each bag of chips gained.
E) equal to 1/2 can of root beer given up for each bag of chips gained.
Refer to Table 15.2.10. Firm A and Firm B are the only producers of soap powder. They
collude and agree to share the market equally. The equilibrium ________ a dominant
strategy equilibrium because the strategy in this game is for a firm ________.
A) is; to comply regardless of the other firm’s choice
B) is not; to comply when the other firm cheats and to cheat when the other firm
complies
C) is; to cheat regardless of the other firm’s choice
D) is not; to comply when the other firm complies and to cheat when the other firm
cheats
E) is; to comply when the other firm cheats and to cheat when the other firm complies
The purchase of a new home is categorized as
A) consumption expenditure.
B) consumption expenditure and investment.
C) investment only if the home owners take out a mortgage.
D) investment.
E) consumption expenditure only if the home owners do not take out a mortgage.
Which of the following quotes best illustrates the idea of fixed cost?
A) “As we increase output, per-unit costs fall.”
B) “My primary source of overhead cost is the cost of running the head office.”
C) “If I need to, I can negotiate more overtime with my work force to meet unexpected
orders.”
D) “If I double the number of workers and trucks, I get only 80 percent more packages
delivered.”
E) None of the above
Which one of the following people would be counted as unemployed in Canada?
A) Veena is not working, but she is looking for a full-time job.
B) Kathy has stopped looking for work since she was unable to find a suitable job
during a one-month search.
C) Sharon is a college student with a job.
D) Christos was laid off from his job a month ago and has not been looking for a new
job, as he is waiting for a severance package from his former employer.
E) Benoit was laid off when his firm closed down two months ago and has not been
looking for work, as he is going back to school.
Refer to Fact 12.4.2. Exxon Mobil’s decision will ________ economic profit of other
gasoline retailers, everything else remaining the same.
A) increase
B) decrease
C) not change
D) increase or not change
E) decrease or not change