The largest component of GDP using the expenditure approach is
A) investment.
B) consumption expenditure.
C) exports.
D) government expenditure.
E) imports.
Refer to Figure 20.1.1, which shows the circular flow of expenditure and income for
Venus. During 2014, A was $100, B was $50, C was $30 and D was $10. What is
aggregate income?
A) $25
B) $50
C) $75
D) $90
E) $100
Refer to Fact 3.5.1. If there is an increase in the wages of farm workers who harvest
coffee beans, the equilibrium quantity of coffee
A) increases.
B) decreases.
C) remains the same.
D) increases or decreases depending on the slope of the supply and demand curves.
E) increases or decreases depending on the relative shifts of the supply and demand
curves.
Which of the following three statements is true? Human capital
A) decreases your value of marginal product.
B) lowers your wages.
C) may reduce your income while you are accumulating it.
D) All of the above statements are true.
E) None of the above three statements is true.
Sergio is maximizing utility in his consumption of beer and bubble gum. If the price of
beer is greater than the price of bubble gum, then we know
A) Sergio buys more beer than bubble gum.
B) Sergio buys more bubble gum than beer.
C) the marginal utility from the last purchased beer is greater than the marginal utility
from the last purchased bubble gum.
D) the marginal utility from the last purchased bubble gum is greater than the marginal
utility from the last purchased beer.
E) the marginal utilities from the last purchased beer and bubble gum are equal.
Marginal product
A) is always negative.
B) equals the slope of the total product curve.
C) is always zero.
D) lies between zero and one.
E) equals average product minus total product.
The devices the government can use to achieve a more efficient allocation of resources
in the presence of external benefits include all of the following except
A) intellectual property rights.
B) subsidies.
C) public production.
D) pollution permits.
E) patents.
The Industrial Revolution in England was largely the result of
A) growth in human capital.
B) population growth.
C) technological innovations that were financed mainly by government spending.
D) technological innovations encouraged by the patent system.
E) the elimination of the patent system.
A negative externality results in
A) underproduction.
B) zero production.
C) overproduction.
D) efficient production.
E) zero deadweight loss.
A country
A) imports those goods in which it has a comparative advantage.
B) exports those goods in which it has a comparative advantage.
C) imports goods produced in countries with lower wage rates.
D) exports goods produced by domestic industries with low wages relative to its trading
partners.
E) B and D are correct.
Refer to Table 6.3.1. Suppose a sales tax of $2 a unit is imposed on the good described
in the table. The sellers’ share of the tax is
A) $2.00.
B) $1.50.
C) $1.00.
D) $0.
E) $2.50.
If there is an unplanned increase in inventories, aggregate planned expenditure is
A) greater than real GDP and firms increase production.
B) greater than real GDP and firms decrease production.
C) less than real GDP and firms increase production.
D) less than real GDP and firms decrease production.
E) less than real GDP and firms decrease investment.
The fact that your fourth slice of pizza does not generate as much satisfaction as your
third slice is an example of
A) consumer surplus.
B) diminishing total utility.
C) diminishing marginal utility.
D) the paradox of value.
E) the law of demand.
Use the information below to answer the following questions.
Fact 27.5.2
The economy of Tinseltown has a consumption function of C = 15 + 0.7Y , investment
equal to 8, government expenditure equal to 12, exports equal to 20, and an import
function of M = 0.2Y.
Refer to Fact 27.5.2. What is the equation for the aggregate expenditure curve for this
economy?
A) AE = 35 + 0.5Y
B) AE = 55 + 0.7Y
C) AE = 55 + 0.9Y
D) AE = 45 – 0.5Y
E) AE = 55 + 0.5Y
Firm A can produce a unit of output with 10 hours of labour and 5 units of capital. Firm
B can produce a unit of output with 5 hours of labour and 10 units of capital. Firm C
can produce a unit of output with 10 hours of labour and 10 units of capital. If the prices
of labour and material are $10 and $5, respectively which firm is technologically
efficient?
A) A only
B) B only
C) C only
D) A and B
E) A and C
When a minimum wage is set above the equilibrium wage rate,
A) unemployment decreases.
B) job search activity decreases.
C) the supply of workers decreases.
D) unemployment increases.
E) the supply of workers increases.
The key Canadian financial institutions include all of the following except
A) commercial banks.
B) trust and loan companies.
C) credit unions and caisses populaires.
D) pension funds.
E) ATMs.
In Figure 7.2.2, with international trade, ________ helicopters per year are produced in
Canada.
A) 360
B) 480
C) 720
D) 240
E) 600
All grapefruit juice producers have decided to blend tangerine juice with grapefruit
juice. This blend results in a higher cost of production, but studies show that consumers
prefer the taste of the blend to straight grapefruit juice. What will happen to the
equilibrium price and quantity of grapefruit juice?
A) The equilibrium price falls and the equilibrium quantity increases.
B) The equilibrium quantity increases but the effect on the equilibrium price is
uncertain.
C) The equilibrium price rises but the effect on the equilibrium quantity is uncertain.
D) The equilibrium price rises and the equilibrium quantity increases.
E) The equilibrium price rises and the equilibrium quantity remains unchanged.
Use the information below to answer the following questions.
Fact 1.4.1 Costco
When Costco opened a gas bar just off Highway 401, the neighbourhood was swamped
with cars as drivers lined up to get the discount of 10 cents a litre.
Refer to Fact 1.4.1. The opportunity cost of a litre of gas is
A) the time that you would have spent doing something other than lining up to buy a
litre of gasoline.
B) the amount of money that a consumer saves by buying gasoline at Costco.
C) the 10 cent discount on a litre of gasoline.
D) the pleasure that motorists receive from buying cheaper gasoline.
E) zero if you drive an electric car.
The Canadian price level rises. This event
A) increases short-run aggregate supply.
B) increases the quantity of real GDP supplied.
C) decreases the quantity of real GDP supplied.
D) increases long-run aggregate supply.
E) decreases short-run aggregate supply.
Geneva is not at her consumer equilibrium for movies and music downloads. Why?
A) Her average utility from movies does not equal her average utility from music
downloads.
B) Her total utility from movies does not equal her total utility from music downloads.
C) Her marginal utility from the last movie she attended does not equal her marginal
utility from the last music download she downloaded.
D) Her average utility from movies does not equal her total utility from music
downloads.
E) Her marginal utility per dollar from the last movie she attended does not equal her
marginal utility per dollar from her last music download.
Everything else remaining the same, an increase in the interest rate increases saving and
A) increases aggregate demand through the international substitution effect.
B) decreases aggregate demand through the international substitution effect.
C) increases aggregate demand through the intertemporal substitution effect.
D) decreases aggregate demand through the intertemporal substitution effect.
E) increases aggregate demand through the wealth effect.
The existence of a large number of firms in monopolistic competition
A) means that each firm has a small market share.
B) makes it possible for each firm’s price to deviate by a large amount from the average
price of the other firms.
C) means that a firm must pay attention to the behaviour of all of its competitors.
D) makes collusion highly likely.
E) means that each firm is a price taker.
When firms in monopolistic competition incur an economic loss,
A) firms enter the industry and produce better products.
B) firms exit the industry, and demand increases for the products of the firms that
remain.
C) firms exit the industry, and demand decreases for the firms that remain in the
industry.
D) firms enter the industry, and demand increases for the firms that were originally in
the industry.
E) the industry will eventually disappear.
The tax system at both the federal and provincial levels is
A) progressive.
B) regressive.
C) proportional.
D) a combination of proportional and regressive.
E) a combination of progressive and regressive.
For a private good, the economy’s marginal social benefit curve is the ________ sum of
the individual marginal benefit curves and for a public good, the economy’s marginal
social benefit curve is the ________ sum of the individual marginal benefit curves.
A) vertical; vertical
B) vertical; horizontal
C) horizontal; vertical
D) horizontal; horizontal
E) horizontal and vertical; vertical and horizontal
Which of the following will lower the price level for sure?
A) The AD curve shifts rightward and the SAS curve shifts leftward.
B) The AD curve shifts rightward and the SAS curve remains unchanged.
C) The SAS curve shifts leftward.
D) The LAS curve shifts leftward.
E) The AD curve shifts leftward and the SAS curve shifts rightward.
The paradox of value
A) is that values are the same for different people.
B) is that economists can calculate marginal utility, even though utility is unmeasurable.
C) is resolved by an appeal to the law of diminishing total utility.
D) remains unresolved by economists.
E) is resolved by an appeal to the difference between marginal utility and total utility.
In a repeated game, punishments that result in heavy damages are an incentive for
players to adopt the strategies that result in a ________ equilibrium.
A) contestable
B) strategic
C) complementary
D) cooperative
E) satisfying
A market economy tends to ________ goods with negative externalities and ________
goods with positive externalities.
A) overproduce; overproduce
B) overproduce; underproduce
C) underproduce; overproduce
D) underproduce; underproduce
E) produce; consume
The profits of a sole proprietorship are
A) taxed twice.
B) subject to a corporate tax.
C) not taxed.
D) exempt from taxation.
E) treated as the owner’s income.
A positive statement is
A) about what ought to be.
B) about what is.
C) always true.
D) capable of evaluation as true or false by observation and measurement.
E) about what is AND capable of evaluation as true or false by observation and
measurement.