If the money wage rate falls, then
A) the AD curve shifts rightward.
B) firms hire less labour.
C) the LAS curve shifts rightward.
D) the SAS curve shifts rightward.
E) the LAS curve and the SAS curve shift rightward.
The difference between the before-tax and after-tax rates is the
A) tax plug.
B) deadweight gain.
C) tax wedge.
D) taxation penalty.
E) deadweight loss.
Choose the statement that is incorrect.
A) Gains from trade do not bring gains for every single person.
B) Canadians, on average, gain from offshore outsourcing.
C) The losers from offshore outsourcing are those who have invested in the human
capital to do a specific job that has now gone offshore.
D) The costs from offshore outsourcing outweigh the gains.
E) Offshore outsourcing brings gains from trade identical to those of any other type of
trade.
Use the figure below to answer the following questions.
Figure 19.1.2
Consider the Lorenz curves in Figure 19.1.2. Which Lorenz curve corresponds to the
greatest income inequality?
A) A
B) B
C) C
D) D
E) impossible to tell without additional information
The equation of a line is y = 4 + 2x. What is the x-intercept of this line?
A) 4
B) -2
C) -1/2
D) 1/4
E) 0
Consider an economy starting from a position of full employment. Which one of the
following changes does not occur as a result of an increase in aggregate demand?
A) The price level rises.
B) Real GDP increases in the short run.
C) An inflationary gap arises.
D) Factor prices rise in the long run, shifting the short-run aggregate supply curve to the
left.
E) The long-run aggregate supply curve shifts rightward to create the new long-run
equilibrium.
In industrial countries, there is more reliance on ________, as opposed to ________ for
government revenue.
A) tariffs; tax collection
B) import quotas; tariffs
C) tariffs; import quotas
D) import quotas; tax collection
E) tax collection; tariffs
The reserves of a bank include
A) the cash in its vault plus the value of its chequable deposits.
B) the cash in its vault plus any deposits held on account at the Bank of Canada.
C) the cash in its vault plus any gold held for the bank at the Bank of Canada.
D) all of its common stock holdings, the cash in its vault, and all deposits held on
account with the Bank of Canada.
E) the cash in its vault plus any deposits held on account with the Bank of Canada plus
the value of any government bonds that it holds.
The marginal revenue curve for a single-price monopoly
A) is below its demand curve.
B) is the same as the demand curve.
C) lies above its demand curve.
D) is horizontal.
E) has a slope equal to the slope of the demand curve.
Which of the following is false?
A) Y = C + I + G + M – X
B) I = S + (T – G) + (M – X)
C) Y = C + S + T
D) Y + M = C + I + G + X
E) Y = C + I + G + X -M
If the marginal social benefit of a good equals the marginal private benefit of the good,
then the marginal external benefit of the good
A) equals the marginal private cost.
B) is zero.
C) equals the marginal social cost.
D) equals the marginal social benefit.
E) is increasing.
The equilibrium strategy for each firm in a duopolist’s dilemma is to ________. Firms
________ succeed in raising price and profits because each firm ________.
A) comply; do not; makes a smaller economic profit if it complies with the agreement,
but complying with the agreement is in the social interest, and most firms support the
social interest
B) comply; do; makes greater economic profit if it complies with the agreement,
regardless of how the other firm acts
C) cheat; do not; makes greater economic profit if it cheats on the agreement, regardless
of how the other firm acts
D) cheats; do; makes greater economic profit if it cheats on the agreement, regardless of
how the other firm acts
E) cheat; do; refuses to sell at any price below the monopoly price
Select the best statement about economic models.
A) An economic model must always be correct in its predictions or it must be
discarded.
B) An economic model is evaluated based on the realism of its assumptions.
C) An economic model should not generate predictions about actual events in the real
world, since it discusses only abstract events.
D) An economic model will be discarded if its predictions are often in conflict with the
facts.
E) Economic models are all false.
Which one of the following goods is nonexcludable?
A) a taxi
B) a toll bridge
C) the atmosphere
D) an art museum
E) cable TV
The Canadian long-run Phillips curve ________ when the expected inflation rate rises
and ________ when the expected inflation rate falls. The Canadian long-run Phillips
curve ________ when the natural unemployment rate increases and ________ when the
natural unemployment rate decreases.
A) does not shift; does not shift; does not shift; does not shift
B) does not shift; does not shift; shifts rightward; shifts leftward
C) shifts upward; shifts downward; shifts rightward; shifts leftward
D) shifts rightward; shifts leftward; does not shift; does not shift
E) shifts rightward; shifts leftward; shifts rightward; shifts leftward
A technological breakthrough lowers the cost of photocopiers. If the demand for
photocopiers is price inelastic, we predict that photocopier sales
A) fall and total revenue increases.
B) fall and total revenue decreases.
C) rise and total revenue increases.
D) rise and total revenue decreases.
E) rise, but changes in total revenue will depend on elasticity of supply.
Which of the following will shift the supply of loanable funds curve leftward?
A) a decrease in the real interest rate
B) a decrease in real wealth
C) a decrease in disposable income
D) a decrease in expected future income
E) a decrease in default risk
To make choices, people must
A) be able to carry out complex mathematical calculations.
B) have unlimited resources.
C) be free from government constraint.
D) have unlimited access to information at no cost.
E) evaluate the values of alternative actions.
Which one of the following would not likely be a firm with economies of scale?
A) an electrical production plant
B) a steel mill
C) a telephone company
D) a firm that produces handmade cabinetry
E) a multi-store dry-cleaning firm
Billy Jean loves to read and she has decided that she will buy all of her books at the
bookstore at the outlet mall. One day she is in Chapters and sees a book from the Globe
and Mail Best Sellers list that she wants to read and she decides to buy it.
Buying the book means that she will not be able to take her Mom out for coffee this
week. Billy Jean’s decision is an example of
A) bounded economics.
B) bounded self-interest.
C) bounded willpower.
D) bounded rationality.
E) bounded anomalies.
Refer to the table below to answer the following questions.
Table 7.3.1
Canada’s Market for Widgets
Table 7.3.1 shows the Canadian supply of and demand for widgets. Widgets are
available on the world market for $7. If the Canadian government imposes a tariff of
$1, the domestic selling price will be ________ and quantity bought will be ________.
A) $6; 48 million
B) $7; 44 million
C) $8; 16 million
D) $8; 24 million
E) $8; 40 million
Choose the statement that is incorrect.
A) The federal government debt was 5 percent of GDP in 1970.
B) The debt-to-GDP ratio increased slightly during the 2008-2009 recession.
C) The debt-to-GDP ratio increased from 1974 through 1997, and then began to
decrease.
D) The government debt increases when the government has a budget deficit.
E) As a percentage of real GDP, the federal government debt was greater in 2014 than
in 1970.
When Jim is at his best affordable point, the budget line
A) is steeper than the highest attainable indifference curve.
B) is flatter than the highest attainable indifference curve.
C) does not touch the highest attainable indifference curve.
D) is tangent to the highest attainable indifference curve.
E) intersects the highest attainable indifference curve.
The defining feature of the classical view of macroeconomics is that the economy is
A) rarely at full employment.
B) driven by expectations called “animal spirits.”
C) self-regulating and always at full employment.
D) constantly bombarded by shocks that arise from the uneven pace of technological
change.
E) the most significant influence on aggregate demand is expectations.
Use the figure below to answer the following questions.
Figure 1A.2.4
Which curve or curves in Figure 1A.2.4 shows a positive relationship between
unemployment and inflation?
A) A
B) A and B
C) B, C, and D
D) A and C
E) none of the curves.
Compared to growth in other countries, between 1960 and 2010 Canada
A) fell behind most other countries.
B) dramatically caught up to and passed other countries.
C) worsened dramatically versus the United States, but did better versus other
countries.
D) did as well or better than most countries except certain Asian countries.
E) none of the above
Refer to Table 20.2.4. Gross investment is equal to
A) $460.
B) $260.
C) $400.
D) $560.
E) $250.
The price of a good increases relative to other goods. Which one of the following
statements must be true? The resulting
A) income effect is negative.
B) income effect is positive.
C) substitution effect is negative.
D) substitution effect is positive.
E) income effect is zero.
A constant marginal rate of substitution between two goods implies
A) the goods are perfect complements.
B) the goods are imperfect substitutes.
C) the goods are both inferior.
D) one good is normal and one good is inferior.
E) the goods are perfect substitutes.
If the price elasticity of demand is 2, then a 1 percent fall in price
A) doubles the quantity demanded.
B) decreases the quantity demanded by half.
C) increases the quantity demanded by 2 percent.
D) decreases the quantity demanded by 2 percent.
E) increases the quantity demanded by 0.5 percent.
When a firm is a “price taker,” the firm
A) can charge any price that it wants to charge, that is, “take” any price it chooses.
B) pays a fixed price for all of its fixed inputs.
C) will accept (“take”) the lowest price that its customers offer.
D) pays a fixed price for all of its variable inputs.
E) cannot influence the market price of the good that it sells.
The marginal propensity to consume
A) is equal to zero when disposable income equals consumption expenditure.
B) is equal to 1 minus the slope of the saving function.
C) is negative when saving is positive.
D) increases as the economy moves upward along the consumption function.
E) is greater than the slope of the 45-degree line.
Refer to Table 12.2.1, which gives the total revenue schedule and total cost schedule of
a perfectly competitive firm. The marginal revenue received from the sale of the 4th
unit of output is
A) $3.
B) $15.
C) $10.
D) $120.
E) $30.
A change in the price of the good measured on the vertical axis changes ________ of
the budget line.
A) the slope and y-intercept
B) the slope and x-intercept
C) the x– and y-intercepts but not the slope
D) only the slope
E) only the y-intercept
An art museum decides to offer tours by having visitors listen to CDs rather than have
tour guides. The museum is answering the ________ question.
A) “what”
B) “who”
C) “how”
D) “where”
E) “when”