The demand for a good will be more price inelastic,
A) the higher is its price.
B) the larger is the percentage of income spent on it.
C) the longer is the passage of time since a price change.
D) the smaller the supply of the good.
E) the fewer substitutes are available for the good.
If a 4 percent decrease in income (at a constant price) results in a 2 percent decrease in
the consumption of dweedles then
A) the income elasticity of demand for dweedles is negative.
B) dweedles are a necessity and a normal good.
C) dweedles are a luxury and a normal good.
D) dweedles are an inferior good.
E) the price elasticity of demand for dweedles is negative.
Refer to Figure 19.3.2. For the employer to hire 40 hours per week of both high-skilled
and low-skilled labour,
A) high-skilled workers would have to earn a wage rate that is twice that of the
low-skilled workers.
B) high-skilled workers would have to earn a wage rate that is less than that of the
low-skilled workers.
C) high-skilled workers would have to earn a wage that is $2 more than the wage paid
to low-skilled workers.
D) low-skilled workers would have to earn a wage that is $2 more than the wage paid to
high-skilled workers.
E) high-skilled workers need to earn a wage that is between zero and $2 more than
low-skilled workers.
If goods X and Y are substitutes in production, then a rise in the price of good X
A) increases the demand for good Y.
B) decreases the demand for good Y.
C) increases the supply of good Y.
D) decreases the supply of good Y.
E) might change the supply of Y; it depends on whether X and Y are also substitutes.
Of the following items, which one would be considered as investment in the National
Income and Expenditure Accounts?
A) The purchase of a new van by a potter who packs it with his wares and travels to art
shows on weekends.
B) The purchase of 100 shares of Bell Canada stock on the Toronto Stock Exchange.
C) The purchase of a 100-year-old house that was put on the protected historic sites list.
D) The purchase of a Canadian government bond.
E) Your purchase of a new car.
If the interest rate is above the equilibrium rate, how is equilibrium achieved in the
money market?
A) People buy goods to get rid of their excess money, lowering the price of goods and
lowering the interest rate.
B) People sell goods to get rid of their excess money, lowering the price of goods and
lowering the interest rate.
C) People sell bonds to get rid of their excess money, lowering the price of bonds and
lowering the interest rate.
D) People sell bonds to get rid of their excess money, raising the price of bonds and
lowering the interest rate.
E) People buy bonds to get rid of their excess money, raising the price of bonds and
lowering the interest rate.
In neoclassical growth theory, if the rate of return on capital increases due to a
technological advance, then
A) the rate of return on capital will eventually decline.
B) capital per hour of labour will decrease.
C) real GDP per hour of labour will decrease.
D) the rate of return on capital will never decline.
E) population growth will explode.
In general,
(1) opportunity cost is greater than accounting cost.
(2) opportunity cost is less than accounting cost.
(3) economic profit is greater than accounting profit.
(4) economic profit is less than accounting profit.
A) 1 only
B) 1 and 3
C) 1 and 4
D) 2 and 3
E) 2 and 4
Use the figure below to answer the following question.
Figure 12.3.5
Refer to Figure 12.3.5, which shows the cost curves and the marginal revenue curve for
a perfectly competitive firm. To maximize its profit, the firm produces ________ units
of output and the price is ________ a unit.
A) 30; $40
B) 30; $30
C) 20; $40
D) 20; $30
E) 30; $32.50
Initially, a perfectly competitive market that has 1,000 firms is in long-run equilibrium.
Then 100 firms in the industry adopt a new technology that reduces the average cost of
producing the good. In the short run, the price ________, firms with the new
technology make ________ economic profit, and firms with the old technology
________.
A) remains the same; zero; incur an economic loss
B) remains the same; positive; break even
C) falls; positive; incur an economic loss
D) remains the same; positive; incur an economic loss
E) falls; break even; incur an economic loss
Total income equals
A) market income minus payments to firms by governments.
B) market income plus cash payments to households by governments.
C) the wages, interest, rent, and profit earned in factor markets before paying income
taxes.
D) the wages, interest, rent, and profit earned in factor markets after paying income
taxes.
E) market income minus cash payments to households by governments.
Use the figure below to answer the following questions.
Figure 24.5.1
Refer to Figure 24.5.1. Everything else remaining the same, which graph best shows an
increase in real GDP?
A) (a)
B) (b)
C) (c)
D) (d)
E) (a) and (c)
A property right is
A) any commodity or token that is generally acceptable as a means of payment.
B) an economic unit that hires factors of production and organizes those factors to
produce and sell goods and services.
C) any arrangement that enables buyers and sellers to get information and to do
business with each other.
D) a social arrangement that governs the ownership, use, and disposable of anything
that people value.
E) a medium of exchange.
The first can of Coke gives 15 units of utility to Witney, while the second can of Coke
increases her total utility to 23. What is the marginal utility of the second can of Coke?
A) 24 units
B) 8 units
C) 38 units
D) 11.5 units
E) 7.5 units
If Canada imposes a tariff on imported cars,
A) Canada’s demand curve for cars shifts rightward.
B) Canada’s demand curve for cars shifts leftward.
C) Canada’s supply curve of cars shifts rightward.
D) Canada’s supply curve of cars shifts leftward.
E) the price in Canada rises but neither Canada’s demand curve nor Canada’s supply
curve shifts.
The distribution of world income is ________ the distribution of Canadian income.
A) more equal than
B) equal to
C) not comparable to
D) equal to the distribution of Canadian wealth and more equal than
E) less equal than
Discretionary fiscal policy
A) requires action by Parliament.
B) is triggered by the state of the economy.
C) involves only a change in government outlays and no change in revenues.
D) involves only a change in personal income tax rates.
E) occurs during recessions but not during expansions.
Suppose you think that the Canadian dollar exchange rate will appreciate against the
U.S. dollar over the next month. What should you do now in anticipation of profit?
A) Buy Canadian dollars.
B) Buy U.S. dollars.
C) Sell Canadian dollars.
D) Sell U.S. dollars.
E) Do both A and D.
Refer to Fact 18.4.1. The Hotelling Principle ________ apply to Canada’s water
because the Hotelling Principle ________.
A) does; applies to renewable resources and water is a renewable resource
B) does; only applies when the interest rate is falling
C) does not; applies to nonrenewable resources but water is a renewable resource
D) does not; only applies when the interest rate is rising
E) does; applies when interest rates are relatively low
Use the figure below to answer the following questions.
Figure 27.5.2
Refer to Figure 27.5.2. The equation of the consumption function is
A) C = 200 + 0.8YD.
B) C = 200 + 800YD.
C) C = 200 + 0.75YD.
D) C = 200 + 0.25YD.
E) C = 200 + 200YD.
In Canada
A) the M1 multiplier is less than the M2 multiplier.
B) the money multiplier increases when the desired reserve ratio increases.
C) the money multiplier increases when the currency drain ratio increases.
D) the M1 multiplier decreases over time.
E) the M2 multiplier decreases over time.
Refer to Figure 5.2.2. If the price is P0, then the value of the last unit consumed is
A) P0.
B) P1.
C) equal to area A + B + C.
D) 0.
E) P1– P0.
Consider the natural monopoly depicted in Figure 13.5.2. If a regulatory agency sets a
price just sufficient for the firm to make zero economic profit, what output will it
produce?
A) Q4
B) Q0
C) Q1
D) Q2
E) Q3
Which of the following does not contribute to achieving faster growth?
A) increased research and development
B) improvement in the quality of education
C) provision of international aid to developing nations
D) slowing down international trade so that more countries become self-sufficient
E) increased saving
Use the figure below to answer the following question.
Figure 11.2.2
Refer to Figure 11.2.2 which shows Tania’s average product curve and marginal product
curve. The point of maximum average product is point
A) B.
B) C.
C) D.
D) E.
E) F.
In Canada ________ percent of the adult population have completed high school and
________ percent have a college or university degree.
A) 23; 93
B) 93; 53
C) 93; 23
D) 100; 53
E) 53; 23
A system of cap-and-trade is used to reduce acid rain caused by emissions from electric
power utilities. Which of the following statements is true?
A) Market forces determine both the demand for pollution permits and their supply.
B) Public choice determines both the demand for pollution permits and their supply.
C) Market forces determine the demand for pollution permits, and property rights
determine their supply.
D) Property rights determine the demand for pollution permits, and the government
determines their supply.
E) Market forces determine the demand for marketable permits, and the government
determines their supply.
Competition between two political parties will cause those parties to propose policies
A) that are quite different.
B) that are quite similar.
C) of rational ignorance.
D) that reduce the well-being of middle-income families and increasing the well-being
of the rich and the poor.
E) that equate total costs and total benefits.
If real GDP is less than potential GDP, then the economy is
A) not in short-run equilibrium.
B) in a full-employment equilibrium.
C) in an above full-employment equilibrium.
D) in a below full-employment equilibrium.
E) in long-run equilibrium.
A rise in the price level
A) shifts the AD curve rightward and brings a movement up along the AE curve.
B) shifts the AE curve upward and brings a movement down along the AD curve.
C) shifts the AE curve downward and brings a movement up along the AD curve.
D) shifts the AD curve leftward and brings a movement down along the AE curve.
E) shifts the AE curve downward and shifts the AD curve rightward.
When a firms “dumps” some of its output in another country, it
A) creates an environmental hazard in the receiving country.
B) sells its output abroad at a price lower than it costs to produce the output.
C) increases the total level of employment in the importing country.
D) is specializing according to comparative advantage.
E) creates for itself an absolute advantage.
Which of the following increases Canadian GDP?
A) I shovel my own driveway.
B) I sell my used Honda.
C) The production and sale of flour to a bakery
D) The purchase of a CD made in China
E) The ice cream I buy from my grocery store