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The law of supply of foreign exchange tells us that, other things remaining the same,
A) the lower the exchange rate, the greater is the quantity of Canadian dollars supplied.
B) the higher the exchange rate, the greater is the quantity of Canadian dollars supplied.
C) the higher the exchange rate, the greater is the supply of Canadian dollars
D) the lower the exchange rate, the greater is the supply of Canadian dollars.
E) the lower the exchange rate, the smaller is the supply of Canadian dollars.
Suppose the working-age population in Tiny Town is 100 people. If 25 of these people
are not in the labour force, the ________ equals ________.
A) labour force; 75 people
B) unemployment rate; 25 percent
C) unemployment rate; 33 percent
D) employment-to-population ratio; 25 percent
E) employment-to-population ratio; 75 percent
Economists tend to
A) agree about efficiency and about fairness.
B) agree about efficiency but disagree about fairness.
C) disagree about efficiency but agree about fairness.
D) be more agreeable than philosophers about fairness.
E) be more disagreeable than philosophers about fairness.
The pursuit of wealth by capturing economic rent
A) is rent seeking.
B) is illegal in Canada.
C) is price discrimination.
D) creates a legal monopoly.
E) creates a natural monopoly.
In 2003, when music downloading first took off, Universal Music slashed the average
price of a CD from $21 to $15. The company expected the price cut to boost the
quantity of CDs sold by 30 percent, other things remaining the same. If you are making
the pricing decision at Universal Music, what would you do?
A) lower the price because demand is inelastic
B) raise the price because demand is elastic
C) raise the price because demand is inelastic
D) lower the price because demand is elastic
E) not change the price because demand is unit elastic
A firm shuts down if price is
A) above minimum average variable cost.
B) below minimum average variable cost.
C) above minimum average fixed cost.
D) less than marginal cost.
E) below average total cost.
Monopolistically competitive firms engaging in advertising will definitely achieve
which of the following?
A) an increase in demand
B) an increase in average total cost
C) an increase in total cost
D) Both B and C are correct.
E) A, B, and C are correct.
For a monopsonist facing an upward-sloping supply curve of labour, the marginal cost
of labour curve
A) intersects the value of marginal product curve of labour at the equilibrium wage rate.
B) is below and parallel to the supply of labour curve.
C) is identical to the supply of labour curve.
D) is above and parallel to the supply of labour curve.
E) is above the supply curve of labour.
The tendency for private saving to increase in response to growing government deficits
is known as the
A) crowding out effect.
B) money illusion effect.
C) Keynes effect.
D) Ricardo-Barro effect.
E) Mulroney-Harper effect.
We observe a decrease in the price level and a decrease in real GDP. Which of the
following is a possible explanation?
A) a decrease in the quantity of money
B) an increase in expected future income
C) an increase in factor prices
D) an increase in the quantity of capital
E) an increase in expected future profits
Refer to Table 2.4.1. Which one of the following is true?
A) The opportunity cost of producing more of good X is the same for both planets.
B) The opportunity cost of producing more of good Y is the same for both planets.
C) The opportunity cost of producing more of good X is lower in Vulcan.
D) The opportunity cost of producing more of good Y is lower in Vulcan.
E) Vulcans are smarter than Romulans.
Which one of the following statements best characterizes point B in Figure 3.2.1?
A) Producers would be unwilling to sell the 9,000th apple for less than $0.50.
B) The most that consumers would be willing to pay for the 9,000th apple is $0.50.
C) At a price of $0.50, consumers will be unwilling to buy any apples.
D) At a price of $0.50, there will be an apple shortage.
E) At point B, the market is in equilibrium.
Caitlin is working part-time at the Mr. G store, but wants to work full-time. She is
A) frictionally unemployed.
B) structurally unemployed.
C) not in the labour force.
D) cyclically unemployed.
E) counted as employed.
Which factor of production earns the most income?
A) capital
B) land
C) labour
D) entrepreneurship
E) the stock market
Lowering taxes on employment ________, which ________ the equilibrium quantity of
labour.
A) increases the supply of labour and the demand for labour; increases
B) increases the demand for labour; increases
C) increases the supply of labour; increases
D) decreases the supply of labour and increases the demand for labour; decreases
E) decreases the demand for labour and increases the supply of labour; decreases
If a rise in the price of good A from $9 to $11 results in an increase in quantity supplied
from 4,000 to 6,000 units, the elasticity of supply is
A) 0.5.
B) 0.8.
C) 1.0.
D) 2.0.
E) 20.0.
The law of demand applies to food because when the price of food rises, there is
A) a substitution effect that offsets the income effect.
B) an income effect but no substitution effect.
C) both a substitution effect and an income effect.
D) a substitution effect but no income effect.
E) a substitution effect and a complement effect.
A perfectly vertical demand curve indicates that the price elasticity of demand for the
good is
A) zero.
B) greater than zero but less than 1.
C) 1.
D) greater than 1.
E) negative.
Stagflation can result from
A) a leftward shift of the demand curve.
B) a rightward shift of the demand curve.
C) a leftward shift of the short-run aggregate supply curve.
D) a rightward shift of the short-run aggregate supply curve.
E) a rightward shift of the long-run aggregate supply curve.
Utility is similar to temperature because
A) both are positive.
B) both are negative.
C) both have units of measurement that are arbitrary.
D) both are observable.
E) both are measured in the same scale.
Use the figure below to answer the following questions.
Figure 30.3.1
Refer to Figure 30.3.1. Everything else remaining the same, which graph best illustrates
the effect of the Bank of Canada lowering the overnight loans rate?
A) (a) only
B) (b) only
C) (c) only
D) (d) only
E) Both (a) and (c)
The more perfectly a monopoly can price discriminate, the
A) smaller its output and the lower its profit.
B) smaller its output and the higher its profit.
C) larger its output and the lower its profit.
D) larger its output and the higher its profit.
E) greater is consumer surplus.
A technological improvement in the production of good A
A) decreases the supply of A.
B) increases the demand for A.
C) decreases the equilibrium price of A and decreases the equilibrium quantity.
D) decreases the quantity demanded of A.
E) increases the supply of A.
Refer to Figure 18.3.2. Suppose this industry is initially in a monopsony situation and
then the government introduces a minimum wage of $8 per hour. Choose the correct
statement.
A) The wage rate rises, but employment decreases.
B) The wage rate rises, but employment stays the same.
C) The wage rate rises to $8 per hour, and employment increases to 800 hours.
D) The wage rate rises to $8 per hour, and employment increases to 600 hours.
E) The wage rate rises to $8 per hour, and employment increases to 500 hours.
Mr. Shaw has a small factory in Estevan, Saskatchewan. He will continue hiring labour
as long as the value of marginal product of labour ________ the wage rate.
A) is greater than
B) is less than
C) is less than or equal to
D) determines
E) maximizes
If a price decrease results in an increase in total revenue, then demand is
A) inelastic.
B) unit elastic.
C) perfectly inelastic.
D) equal to supply.
E) elastic.
Use the table below to answer the following questions.
Table 27.1.3
Refer to Table 27.1.3. Autonomous consumption is equal to
A) $0.
B) $65.
C) $100.
D) $260.
E) $400.
Consider all the effects of fiscal policy. An income tax cut
A) increases both real GDP and the price level.
B) increases real GDP but decreases the price level.
C) increases real GDP but leaves the price level unchanged.
D) increases real GDP and the price level may rise or fall.
E) does not change real GDP or the price level.
Use the information below to answer the following questions.
Fact 22.2.1
China was the largest economy for centuries because everyone had the same type of
economy"subsistence"and so the country with the most people would be economically
biggest. Then the Industrial Revolution sent the West on a more prosperous path. Now
the world is returning to a common economy, this time technology- and
information-based, so once again population triumphs.
Consider Fact 22.2.1. China's was the world's largest economy until 1890 because
A) people in all countries had approximately the same subsistence level of income.
B) the Industrial Revolution gave the greatest growth to the countries with the largest
populations.
C) it was the country with the largest land mass.
D) it was a large exporter of goods and services.
E) it had a diverse climate.
Consider a monopolistically competitive industry in long-run equilibrium. Suppose
there is a large increase in wages that raises the costs for all firms. What happens within
each firm in the short run?
A) They will be forced to close down due to the excess costs.
B) They will continue producing as before, cushioned by their previous excess profits.
C) They will expand output and try to make up for lost profits.
D) They will lower prices and try to steal customers away from their rivals.
E) They will decrease production and produce the quantity at which marginal revenue
equals the new (higher) marginal cost curve; this means a rise in price.
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
A) the quantity produced is efficient but price is too low.
B) the quantity produced is less than the efficient quantity.
C) the quantity produced is greater than the efficient quantity.
D) the quantity produced is efficient but the price is too high.
E) the externality is eliminated.
