Refer to the table below to answer the following question.
Table 23.3.4
Refer to Table 23.3.4. The table shows an economy’s demand for loanable funds
schedule and the private supply of loanable funds schedule when the government’s
budget is balanced. If the government budget deficit is $1.0 trillion, the real interest rate
is ________ percent a year, the quantity of investment is ________ trillion, and the
quantity of private saving is ________ trillion.
A) 7; $5.5; $8.5
B) 7; $8.5; $5.5
C) 5; $6.5; $7.5
D) 3; $6.5; $7.0
E) 5; $7.5; $6.5
The economy is in a recession, the recessionary gap is large, and there is a budget
deficit. The budget deficit is ________. Automatic fiscal policy is ________ the output
gap.
A) totally composed of a cyclical deficit; increasing
B) total composed of a structural deficit; increasing
C) at least partly composed of a cyclical deficit; decreasing
D) totally composed of a cyclical deficit; decreasing
E) at least partly composed of a cyclical deficit; increasing
When Coffee ‘n’ Cream in Victoria, British Columbia hires two students, 64 customers
can be served in one hour. Suppose the manager of the restaurant observes that after
hiring the third student, 80 customers are being served in one hour. The marginal
product of the third student is ________ customers per hour.
A) 4
B) 16
C) 8
D) 26.67
E) 32
Refer to Table 28.4.1. The table gives points on the short-run Phillips curve for the
country of Ruritania. If the expected inflation rate is 10 percent, and the inflation rate
unexpectedly rises to 12 percent and stays there for some period of time, the expected
inflation rate becomes ________ percent and the natural unemployment rate is
________ percent.
A) 12; 4
B) 10; 4
C) 10; 6
D) 12; 6
E) 12; 5
If the economy is in a recession and the federal government is running a deficit, then an
expansion would
A) automatically balance the budget.
B) automatically increase the deficit.
C) automatically decrease the deficit.
D) leave the deficit unchanged.
E) increase the deficit only if the interest rate rises.
If the Bank of Canada is concerned with inflation it will ________ the overnight loans
rate to ________.
A) raise; increase aggregate demand
B) lower; increase aggregate demand
C) raise; decrease aggregate demand
D) lower; decrease aggregate demand
E) raise; increase potential GDP
At the beginning of the year, your wealth is $10,000. During the year, you have an
income of $90,000 and you spend $80,000 on consumption goods and services. You pay
no taxes. Your wealth at the end of the year is
A) $20,000.
B) $0.
C) $90,000.
D) $100,000.
E) $10,000.
Canada’s balance of payments accounts are the
A) current account, capital and financial account, and net interest account.
B) capital and financial account, official settlements account, and merchandise trade
account.
C) current account, capital and financial account, and official settlements account.
D) official settlements account, current account, and net interest account.
E) capital and financial account, current account, and merchandise trade account.
When firms in monopolistic competition make an economic profit,
A) firms enter the industry, which increases demand for the product of the firms
originally in the market.
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 decreases for the firms that were originally in
the industry.
E) eventually the market will become a monopoly.
The slope of the line in Figure 1A.3.1 is
A) 0.50.
B) 0.75.
C) 1.00
D) 1.25.
E) 1.50.
When a government has a budget surplus, the surplus
A) helps finance investment.
B) crowds-out private saving.
C) must be subtracted from private saving.
D) increases the world real interest rate.
E) decreases the demand for loanable funds.
Which of the following applies to the tragedy of the commons?
I. In the absence of government action, there is an absence of incentives to prevent the
overuse of the common resource.
II. When consumers take account of the marginal social benefit and marginal social
cost, overuse of the resource occurs.
III. Even with government action, it is impossible for an efficient level of output to be
achieved.
A) I only
B) I and II
C) II and III
D) I, II, and III
E) None of the above
The short-run aggregate supply curve indicates
A) the relationship between the price level and real GDP demanded by consumers,
investors, governments, and net exporters.
B) the relationship between the price level and the natural unemployment rate.
C) the relationship between the purchasing power of wages and the quantity of labour
supplied by households.
D) the relationship between the quantity of real GDP supplied and the price level when
the money wage rate, the prices of other resources, and potential GDP remain constant.
E) the various quantities of real GDP producers supply at different income levels.
Use the figure below to answer the following question.
Figure 12.4.4
Refer to Figure 12.4.4, which shows the cost curves for a perfectly competitive firm. If
all firms in the market have the same cost curves and the price is $16 per unit,
A) the market is in long-run equilibrium.
B) in the long run, firms will leave this market.
C) in the long run, the price will fall as new firms enter the market.
D) the firm is making zero economic profit.
E) none of the above
Refer to Table 2.1.1. The opportunity cost of increasing the production of Y from 16 to
36 units is
A) 4 units of X.
B) 8 units of X.
C) 12 units of X.
D) 16 units of X.
E) 20 units of Y.
Which one of the following would unions be most likely to support?
A) increased barriers to imports
B) eased immigration restrictions
C) a decrease in the minimum wage
D) decreasing demand for the goods their workers produce
E) decreasing the marginal product of its workers
At the equilibrium exchange rate,
A) the demand for dollars equals the supply of dollars.
B) a shortage may exist but a surplus may not exist.
C) a surplus may exist but a shortage may not exist.
D) the quantity of dollars demanded equals the quantity of dollars supplied.
E) the Canadian dollar is trading for 100 U.S. cents per Canadian dollar.
In a country with a working-age population of 30 million, 18 million are employed, 2
million are unemployed, and 2 million of the employed are working part-time, half of
whom wish to work full-time. The unemployment rate is
A) 10 percent.
B) 9.1 percent.
C) 14.3 percent.
D) 11.1 percent.
E) 2 percent.
Which of the following assets is the most liquid?
A) a Canada Savings Bond
B) a credit card
C) a house
D) cash
E) a line of credit
Refer to Table 15.2.4. The marketers of Budweiser Light beer and Miller Lite beer must
decide whether or not to offer new advertising campaigns promoting their products. The
payoffs in the table are the economic profit made by Bud and Miller. Which one of the
following observations is correct?
A) This is a game described as a prisoners’ dilemma.
B) If Bud offers a new advertising campaign and Miller does not, Bud will earn a $100
profit.
C) If Bud offers a new advertising campaign, then Miller will be better off by not
offering a new advertising campaign.
D) Both Bud and Miller would be better off if they could collude and agree to
coordinate their new advertising campaigns.
E) If Miller does not offer a new advertising campaign, then Bud is better off if it
doesn’t offer a new advertising campaign.
Property rights
A) discourage economic growth by discouraging the development of new ideas and
ways of doing things.
B) encourage investment but discourage entrepreneurial activity, so the effect on
economic growth is uncertain.
C) encourage economic growth by creating incentives to invest in capital.
D) reduce the efficiency of government, which reduces economic growth over time.
E) encourage entrepreneurial activity but discourage investment, so the effect on
economic growth is uncertain.
Which one of the following would cause a production possibilities frontier to shift
outward?
A) an increase in the stock of capital
B) an increase in the production of consumption goods
C) bad weather
D) a decision to fully utilize unemployed resources
E) a decrease in the population
The marginal product of capital is the
A) change in total product resulting from a 1-unit increase in the quantity of labour
employed, holding the quantity of the capital constant.
B) change in total product resulting from a 1-unit increase in the quantity of capital
employed, holding the quantity of the labour constant.
C) total product divided by the total quantity of capital employed, holding the quantity
of the labour constant.
D) total product divided by the total quantity of labour employed, holding the quantity
of the capital constant.
E) change in the quantity of capital used resulting from a 1-unit increase in total
product, holding constant the quantity of labour.
The overnight loans rate is the interest rate
A) banks charge their best loan customers.
B) banks pay on term deposits.
C) the Bank of Canada pays on reserves held by banks.
D) the Bank of Canada charges when it lends reserves to banks.
E) on overnight loans that the big banks make to each other.
Which one of the following statements is false?
A) Total variable cost plus total fixed cost equals total cost.
B) Marginal cost equals the change in total cost divided by the change in output.
C) Average total cost is calculated by dividing total cost by the level of output.
D) The average cost curve is U-shaped.
E) The total cost curve is U-shaped.
Which one of the following is not likely to be an outcome of a rent ceiling?
A) a black market for rent-controlled housing
B) long waiting lists of potential renters for rent-controlled housing
C) a short-run shortage of housing
D) a black market price below the rent ceiling
E) increased search activity for rent-controlled housing
Which one of the following people would be counted as unemployed in Canada?
A) Simone is currently working but expects to be laid off by the end of the month,
before next month’s survey can be completed.
B) Ruth is a 14-year-old student and has been looking for an after-school job every day
for the past month.
C) Sarah has been looking for a job but is taking a month-long break from the
job-seeking effort due to her lack of skills.
D) Rebekah is a recent graduate looking for work.
E) Ron has quit looking because he believes that there is no work available for him.
Suppose the dollar-yen foreign exchange rate changes from 140 yen per dollar to 130
yen per dollar. Then the yen has
A) depreciated against the dollar, and the dollar has appreciated against the yen.
B) depreciated against the dollar, and the dollar has depreciated against the yen.
C) appreciated against the dollar, and the dollar has appreciated against the yen.
D) appreciated against the dollar, and the dollar has depreciated against the yen.
E) neither appreciated nor depreciated, but the dollar has depreciated against the yen.
As a percentage of provincial GDP, provincial government outlays are highest in
A) Alberta.
B) Newfoundland and Labrador.
C) the Yukon Territory.
D) Nunavut.
E) Quebec.
Canada produces both lumber and wine. Canada exports lumber and imports wine. The
rest of the world imports Canadian lumber and exports wine to Canada. If Canada did
not trade with the rest of the world, then the equilibrium price of lumber would be
________ in Canada than the rest of the world, and the equilibrium price of wine would
be ________ in Canada than the rest of the world.
A) lower; higher
B) higher; lower
C) higher; higher
D) lower; lower
E) the same or lower; the same or higher
Refer to the table below to answer the following question.
Table 31.1.3
Refer to Table 31.1.3. The table shows a country’s demand and supply schedules. At
what world price would the country export?
A) at only $8 a unit
B) any price below $8
C) a price of $6 a unit
D) a price of $4 a unit
E) any price above $8 a unit
Which of the following can put a bank under stress?
A) a widespread fall in asset prices
B) a significant currency drain
C) an increase in the number of customers using tellers
D) an increase in the number of customers applying for loans
E) Both A and B are correct.
Use the figure below to answer the following question.
Figure 4.1.1
Figure 4.1.1 illustrates a linear demand curve. Comparing the price elasticity in the $2
to $3 price range with the elasticity in the $8 to $9 range, we can conclude
A) that demand is more elastic in the $8 to $9 price range.
B) that demand is more elastic in the $2 to $3 price range.
C) that the price elasticity of demand is the same in both price ranges.
D) nothing without numerical information about quantities.
E) that the price elasticity of demand is zero in both price ranges because the demand
curve is a straight-line demand curve.