Which of the following statements concerning tariffs is NOT true?
A) A tariff results in a deadweight loss.
B) A tariff creates revenue for the government.
C) A tariff decreases international trade.
D) A tariff leaves the price of imports unchanged.
E) A tariff decreases consumer surplus.
An increase in education and training
A) increases labour productivity.
B) increases aggregate hours.
C) decreases real GDP growth.
D) increases the employment-to-population ratio.
E) is an increase in physical capital.
Why does the Bank of Canada pay close attention to the core inflation rate in addition
to the overall CPI inflation rate?
A) The core rate is more volatile and therefore a better predictor of trend inflation.
B) The core rate includes taxes, while the overall CPI rate does not.
C) The core rate has a lower average value and therefore makes the Bank look better.
D) The core rate is less volatile and a better predictor of future CPI inflation.
E) The core rate excludes eight volatile prices and is therefore more likely to stay
within the target band.
When a good is nonrival and nonexcludable, it is a
A) natural monopoly good.
B) private good.
C) regulated good.
D) public good.
E) common resource.
When Dominant Pizza is willing to sell a pizza to a student who lives on-campus at a
lower price than it sells the identical pizza to a student who lives a block away from the
campus, the pizza firm is
A) implementing unfair pricing practices.
B) incurring a loss on on-campus sales.
C) eliminating all competition.
D) located close to the campus.
E) practising price discrimination.
Consider the revenue and cost curves in Figure 13.3.3. If this is a single-price
monopoly, what area is producer surplus?
A) IHD
B) KHD
C) KEA
D) IEAC
E) None of the above
If you can find someone to swap what you have for what you want, then
A) money is necessary for the exchange to work.
B) specialization is impossible in the society in which you live.
C) there exists a double coincidence of wants.
D) there exists a double system of money.
E) there exists a monetary exchange system.
Suppose that the Hot Dog House can produce hotdogs at a constant cost of $0.25 each.
If the Hot Dog House sells hotdogs for $0.50 each, then the Hot Dog House
A) receives a producer surplus.
B) will raise the price of hot dogs.
C) will allow consumers to receive a consumer surplus.
D) has no producer surplus.
E) has an opportunity cost of $0.50 a hot dog.
Use the information below to answer the following questions.
Fact 24.4.1
The Bank of Speedy Creek has chosen the following initial balance sheet:
Refer to Fact 24.4.1. Based on the Bank of Speedy Creek’s initial balance sheet, what is
its desired reserve ratio?
A) 4 percent
B) 8 percent
C) 12.5 percent
D) 25 percent
E) 40 percent
The fraction of a change in disposable income that is saved is the
A) marginal propensity to consume.
B) marginal propensity to save.
C) marginal propensity to dispose.
D) marginal tax rate.
E) saving function.
Compared to the situation before international trade, after Canada imports a good,
production in Canada ________ and consumption in Canada ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; increases
In the price range above minimum average variable cost, a perfectly competitive firm’s
supply curve is
A) horizontal at the market price.
B) vertical at zero output.
C) the same as its marginal cost curve.
D) the same as its average variable cost curve.
E) the same as its total variable cost curve.
As the ________ interest rate rises ________.
A) nominal; the demand for loanable funds curve shifts rightward
B) real; the demand for loanable funds curve shifts rightward
C) nominal; the demand for loanable funds curve shifts leftward
D) real; a movement occurs up along the demand for loanable funds curve
E) real; a movement occurs down along the demand for loanable funds curve
Outlays as a percentage of provincial GDP are the highest in ________, whereas the
largest transfers from the federal government are made to ________.
A) Ontario; Northern Canada and the Atlantic provinces
B) British Columbia; Northern Canada and the Atlantic provinces
C) Alberta; Northern Canada and the Atlantic provinces
D) Northern Canada; Northern Canada and the Atlantic provinces
E) Northern Canada and the Atlantic provinces; Quebec
Cost-push inflation can result from an initial
A) decrease in personal income taxes.
B) increase in personal income taxes.
C) increase in government expenditure.
D) increase in the money wage rate.
E) increase in transfer payments.
If a 10 percent increase in price results in an 18 percent increase in quantity supplied,
the elasticity of supply is
A) 0.3.
B) 0.6.
C) 1.2.
D) 1.8.
E) 9.0.
Refer to Figure 16.2.3. A tax of ________ per tonne is necessary to achieve the efficient
output of ________ tonnes of paper.
A) $14; 50
B) $14; 30
C) $13; 40
D) $2; 50
E) $2; 40
Economies of scale refer to the range of output over which
A) long-run average cost rises as output increases.
B) marginal cost exceeds average cost.
C) long-run average cost falls as output increases.
D) the marginal product of labour decreases.
E) marginal product equals average product.
Increasing taxes on business and investment ________ short-run aggregate supply and
________ potential GDP.
A) increases; does not change
B) decreases; does not change
C) decreases; decreases
D) does not change; does not change
E) increases; decreases
Monetary policy is difficult to conduct because
A) the monetary policy transmission process is long and drawn out.
B) the tools available don’t work.
C) politicians frequently block the policy’s intended outcomes.
D) the interest rate always rises.
E) it takes several years for the real GDP growth rate to respond to a change in the
interest rate.
Henelyn lost her job as a factory worker when she was replaced by a robotic machine.
Now she is looking for a new job. Henelyn is
A) frictionally unemployed.
B) structurally unemployed.
C) not unemployed.
D) cyclically unemployed.
E) not in the labour force.
Karen consumes chocolate and candles. When Karen is at her best affordable point, she
is
A) on or inside her budget line, on her highest attainable indifference curve, and has a
marginal rate of substitution between chocolate and candles that is equal to the relative
price of chocolate and candles.
B) on the indifference curve that is closest to the origin and minimizing the marginal
rate of substitution.
C) on the indifference curve that is farthest from the origin and maximizing the
marginal rate of substitution.
D) on her budget line, on her highest attainable indifference curve, and has a marginal
rate of substitution between chocolate and candles that is equal to the relative price of
chocolate and candles.
E) on her budget line, on her highest attainable indifference curve, and maximizing the
marginal rate of substitution.
When the Bank of Canada fights inflation by implementing an open market operation,
the supply of reserves curve shifts ________ and the supply of money curve shifts
________.
A) leftward; leftward
B) leftward; rightward
C) rightward; leftward
D) rightward; rightward
E) none of the above
For three years, there was no technological change in Longland but capital per hour of
labour increased from $10 to $20 to $30 and real GDP per hour of labour increased
from $3.80 to $5.70 to $7.13. Then in the fourth year, capital per hour of labour
remained constant but real GDP per hour of labour increased to $10. Longland
________ experience diminishing returns because ________.
A) does; in the fourth year capital per hour of labour does not change
B) does; as capital per hour of labour increases, real GDP per hour of labour increases
but by smaller amounts
C) does not; as capital per hour of labour increases, real GDP per hour of labour also
increases
D) does not; in the fourth year capital per hour of labour does not change
E) does; all countries experience diminishing returns
Suppose you are consuming hot dogs and Cokes and believe you are receiving
maximum total utility from the meal for your entire budget of $12. The price of a hot
dog is $2 and the price of a Coke is $2. Which one of the following can you conclude?
A) The total utility from hot dogs is maximized.
B) The marginal utilities from hot dogs and Cokes divided by the quantity of each good
must be equal.
C) The total utilities from hot dogs and Cokes must be equal.
D) You are purchasing three hot dogs and three Cokes.
E) The marginal utilities from hot dogs and Cokes must be equal.
Refer to Figure 11.2.1 which illustrates Tania’s total product curve. Which one of the
following statements is true?
A) The points above the curve are attainable and inefficient.
B) The points below the curve are attainable and inefficient.
C) The points below the curve are inefficient and unattainable.
D) The points on the curve are efficient and unattainable.
E) Marginal product is equal at every point on the total product curve.
In a partnership, each partner is legally liable for
A) all the debts of the partnership.
B) the fraction of the debts corresponding to the fraction of ownership.
C) 50 percent of the debt.
D) all debts of the partnership limited by the personal wealth of the partner.
E) an amount of debt limited to the amount of the partner’s investment in the
partnership.
One criticism of the Bank of Canada’s focus on an inflation control target is that
A) if inflation falls below the target range, a recession will result.
B) if inflation edges above the target range, the Bank decreases aggregate demand and
could create a recession.
C) the Bank pays too much attention to unemployment and real GDP growth and not
enough to inflation control.
D) it makes setting expectations of inflation difficult.
E) the Bank rarely achieves its target.
In a command system, resources are allocated by
A) people who show interest to use the resources.
B) people who are able to pay for the resources.
C) market price.
D) the order of someone in authority.
E) those people who come first in line.
The law of diminishing marginal returns refers to the tendency for the ________ to
eventually decrease as more labour is employed, everything else remaining the same.
A) average total cost
B) marginal cost
C) total product
D) marginal product of labour
E) average product of labour
Some producers are chatting over a beer. Which one of the following quotations refers
to a leftward shift of the supply curve?
A) “Wage increases have forced us to raise our prices.”
B) “Our new, sophisticated equipment will enable us to undercut our competitors.”
C) “Raw material prices have sky-rocketed; we will have to pass the cost on to our
customers.”
D) “We anticipate a big increase in demand. Our product price should rise, so we are
planning for an increase in output.”
E) Both A and C
“As domestic car prices have increased, consumers have found foreign cars to be a
better bargain. Consequently, domestic car sales have fallen and foreign car sales have
risen.” Based on this information alone, there has been a
A) shift in the demand curves for both domestic and foreign cars.
B) shift in the supply curves for both domestic and foreign cars.
C) movement along the demand curves for both domestic and foreign cars.
D) movement along the demand curve for domestic cars and a shift of the demand
curve for foreign cars.
E) shift of the demand curve for domestic cars and a movement along the demand curve
for foreign cars.