The supply of loanable funds is the relationship between the quantity of loanable funds
supplied and ________, other things remaining the same.
A) real GDP
B) the price level
C) the real interest rate
D) the inflation rate
E) the nominal interest rate
Suppose the marginal product of energy equals the average product of energy. This
implies that
A) marginal product is negative.
B) average product is at its maximum value.
C) marginal product is at its maximum value.
D) the marginal product curve is upward sloping.
E) average product is at its minimum value.
When price rises from $1.50 to $2.50, quantity supplied increases from 9,000 to 11,000
units. What is the price elasticity of supply?
A) 0.4
B) 0.8
C) 2.5
D) 4.0
E) -0.4
The marginal cost curve slopes upward due to
A) diminishing marginal utility.
B) diminishing marginal returns.
C) technological inefficiency.
D) economic inefficiency.
E) none of the above
Refer to Table 11.2.1 which gives Tania’s total product schedule. The marginal product
when the number of workers increases from 1 to 2 is
A) 3 teapots.
B) 12 teapots.
C) 7 teapots.
D) 9 teapots.
E) 6 teapots.
Use the table below to answer the following question.
Table 1A.3.1
Refer to Table 1A.3.1. Assuming y is plotted on the vertical axis, the slope of the line is
A) constant at -2.
B) -2 when x is between 1 and 3.
C) -2 when x is between 1 and 3, and then +2 when x is between 4 and 5.
D) -2 when x is between 4 and 5.
E) constant at +2.
A market in which firms can enter and leave so easily that firms in the market face
competition from potential entrants is called a
A) contestable market.
B) cartel.
C) limit pricing market.
D) monopolistic competition market.
E) natural oligopoly.
A private subsidy on a good
A) is similar to a tax because it decreases the production of the good being subsidized.
B) increases demand for the good.
C) punishes those who consume or produce the subsidized good.
D) has no effect on the quantity of the good produced.
E) increases production of that good.
“The rich face higher income tax rates than the poor” is an example of
A) a normative statement.
B) a positive statement.
C) a predictive statement.
D) a theoretical statement.
E) an analytical statement.
A factory produces vacuum cleaners and floor polishers. The factory adopts a new
technology that allows it to use fewer resources to build floor polishers. With this new
technology, the opportunity cost of producing a vacuum cleaner ________ and the
factory is ________ efficient.
A) remains the same; less
B) equals the opportunity cost of producing a floor polisher; more
C) increases; equally
D) decreases; more
E) increases; more
The marginal cost for Morgan’s Marvellous Movies is given in the following table:
Table 5.2.3
If the firm sells the first movie at a price of $7, what is the producer surplus on that
movie?
A) $28
B) $3
C) $7
D) $6
E) $1
If the current account is in surplus and the capital and financial account is also in
surplus, then the official settlements account balance is
A) negative.
B) positive.
C) probably close to zero, but could be either negative or positive.
D) zero.
E) equal to the sum of the current account and the capital account.
Suppose the market for loanable funds is in equilibrium. If expected profit falls, the
equilibrium real interest rate ________ and the quantity of loanable funds ________.
A) falls; decreases
B) falls; increases
C) rises; increases
D) rises; decreases
E) falls; increases or decreases but we don’t know for sure
Refer to Figure 1A.3.10. The figure shows a relationship between two variables, x and
y. The slope at point B is
A) 2.
B) -2.
C) 0.25.
D) -0.25.
E) 0.5.
The marginal private cost curve (MC) is a positively-sloped straight line starting at the
origin. If marginal external cost increases as output increases, then the marginal social
cost curve is a positively-sloped straight line
A) parallel to and above the MC curve.
B) parallel to and below the MC curve.
C) starting at the origin, above the MC curve, and with a slope greater than the MC
curve.
D) starting at the origin, below the MC curve, and with a slope less than the MC curve.
E) starting above the origin, with a slope less than the MC curve.
As real GDP decreases,
A) induced consumption decreases.
B) planned investment increases.
C) exports increase.
D) imports increase.
E) induced consumption increases.
Larry consumes only beer (B) and chips (C). The magnitude of the slope of his budget
line (with beer measured on the vertical axis) is
A) PC/Y.
B) PCPB.
C) Y/PC.
D) Y/PB.
E) PC/PB.
What is a disadvantage of a corporation relative to a sole proprietorship or partnership?
A) Owners have unlimited liability.
B) Profits are taxed twice: as corporate profits and as dividend income and capital gains
to stockholders.
C) high cost of capital
D) perpetual life
E) dies with the owner
Refer only to the information in Figure 19.3.1. At any given wage rate,
A) more hours of low-skilled labour will be demanded than high-skilled labour.
B) more hours of high-skilled labour will be demanded than low-skilled labour.
C) more hours of low-skilled labour will be supplied than high-skilled labour.
D) more hours of high-skilled labour will be supplied than low-skilled labour.
E) both B and C are correct.
Refer to Figure 16.2.2. This figure shows the demand curve, the marginal private cost
curve and the marginal social cost curve of good A. How many units of good A are
produced in an unregulated market?
A) 0 units
B) 5 units
C) 6 units
D) 8 units
E) 9 units
According to real business cycle theory, if the Bank of Canada increases the quantity of
money when real GDP decreases, real GDP
A) will increase but only temporarily.
B) will increase permanently.
C) and the price level will both be unaffected.
D) will be unaffected, but the price level will rise.
E) will decrease due to the inefficiencies introduced into production as a result.
The demand for low-skilled labour is derived from the
A) work left undone by the high-skilled workers.
B) marginal cost of production.
C) lower wage rate of the labour.
D) supply of the high-skilled labourers.
E) value of marginal product of low-skilled labour.
If households believe they will experience higher income in the near future, there is a
A) rightward shift of the supply of loanable funds curve.
B) leftward shift of the supply of loanable funds curve.
C) movement up along the supply of loanable funds curve.
D) movement down along the demand for loanable funds curve.
E) rightward shift of the demand for loanable funds curve.
Refer to Figure 22.3.2. If the real wage is $20 an hour, a labour
A) shortage will occur and the real wage will rise.
B) shortage will occur and the real wage will fall.
C) surplus will occur and the real wage will rise.
D) surplus will occur and the real wage will fall.
E) surplus will occur and the demand for labour will increase.
Suppose a candy manufacturer can triple its production of fudge by doubling its
production facility for making fudge. This indicates the presence of
A) constant returns to scale.
B) economies of scale.
C) diseconomies of scale.
D) market constraints.
E) the law of diminishing returns.
In Figure 23.2.4, the economy is at point A on the supply of loanable funds curve SLF0.
What happens if the real interest rate rises?
A) Nothing; the economy would remain at point A.
B) There is a movement to a point such as B on the supply of loanable funds curve
SLF0.
C) The supply of loanable funds curve shifts rightward to a curve such as SLF2.
D) The supply of loanable funds curve shifts leftward to a curve such as SLF1.
E) The supply of loanable funds curve becomes steeper.
An increase in oil prices to a country that is a net importer of oil shifts
A) both the short-run aggregate supply and long-run aggregate supply curves rightward.
B) both the short-run aggregate supply and long-run aggregate supply curves leftward.
C) the short-run aggregate supply curve leftward, but leaves the long-run aggregate
supply curve unchanged.
D) the long-run aggregate supply curve rightward, but leaves the short-run aggregate
supply curve unchanged.
E) the short-run aggregate supply curve leftward, but shifts the long-run aggregate
supply curve rightward.
Refer to Fact 10.3.1. Paying executives with stock will
A) discourage the CEO.
B) decrease CEO compensation and make them work harder.
C) tie the CEO’s compensation to the company’s fortunes.
D) limit the size of corporations.
E) increase the size of corporations.
Which of the following situations illustrates how fiscal policy can influence aggregate
demand?
A) The Bank of Canada raises interest rates so people plan to buy less consumer
durables. As a result, aggregate demand decreases.
B) Investors, anticipating an erosion of financial wealth due to inflation, decide to save
more. As a result, aggregate demand decreases.
C) The government reduces the goods and services tax. As a result, consumption
expenditure increases and aggregate demand increases.
D) The exchange rate value of the Canadian dollar rises. As a result, people living near
the U.S.-Canada border increase their imports of goods and net exports decrease.
E) The government increases its expenditures. The demand for loanable funds
increases, which raises the real interest rate. Investment increases.
How many sides does a market have?
A) one side – buyers
B) one side – sellers
C) two sides – buyers and sellers
D) three sides – buyers, sellers, and the government
E) two sides – domestic and foreign
SaskWidget produces plastic parts. At the beginning of the year, they held $24 million
worth of capital. At the end of the year, they held $20 million worth of capital. One can
conclude that
A) net investment increased by $4 million.
B) gross investment decreased by $4 million.
C) gross investment increased by $4 million.
D) depreciation exceeded gross investment by $4 million.
E) depreciation equals $4 million.
A union is formed to restrict labour supply in a previously perfectly competitive labour
market. If the union succeeds in raising the wage, everything else remaining the same,
A) employment will fall.
B) employment will rise.
C) employment will not change.
D) the total wage bill will rise.
E) the total wage bill will fall.
Government expenditure on goods and services
A) includes transfer payments.
B) includes expenditure by all levels of government on goods and services.
C) is always greater than consumption expenditure.
D) plus consumption expenditure equals aggregate expenditure.
E) plus consumption expenditure plus investment equals aggregate expenditure.