Consider the data in Table 1A.4.1. Suppose z increases from 4 to 5. What will happen to
the graph of the relationship between x and y?
A) It will shift to the right.
B) It will shift to the left.
C) It will become positively sloped.
D) both A and C
E) both B and C
Use the information below to answer the following question.
Fact 27.1.2 Canadians’ Wealth Rises
Gains in stock markets and increased house prices boosted Canadians’ wealth in the first
quarter of 2014. On a per capita basis, household wealth rose to $222,600. Statistics
Canada also reported that consumption expenditure increased by $4 billion in the first
quarter of 2014.
Consider Fact 27.1.2. A rise in household wealth does all of the following except
A) decreases saving.
B) shifts the saving function upward.
C) shifts the consumption function upward.
D) increases consumption expenditure.
E) increases autonomous consumption.
Consumer surplus is
A) the difference between the maximum price consumers are willing to pay and the
minimum price producers are willing to accept.
B) the excess of the benefit received from a good over the amount paid for it.
C) the total value to consumers of a good.
D) equal to the area under the demand curve.
E) the total amount paid for a good.
Which one of the following news headlines definitely concerns the social interest?
A) McDonald’s Moves into Salads
B) Starbucks Expands in China
C) E Coli Test Results Must be Posted on Beaches
D) Microsoft to Make Windows8 Available Online
E) The Maple Leafs Win the Stanley Cup
Refer to Figure 16.2.1. The figure shows the marginal private cost curve, the marginal
social cost curve and the market demand curve. If a constant per unit tax is imposed that
generates an efficient allocation of resources, then producers receive a per unit price of
A) zero.
B) P4.
C) P3.
D) P2.
E) P1.
The winners from a tariff on imports are
A) producers and government.
B) producers only.
C) consumers only.
D) consumers, producers, and government.
E) government only.
If some firms in the industry make an economic profit, then
A) the industry cannot be perfectly competitive.
B) the industry must be monopolistically competitive.
C) rival firms will enter if there are no barriers to entry.
D) the firms must practice product differentiation.
E) the industry must be an oligopoly.
In the circular flow model,
A) households are sellers of factor services in goods markets.
B) households are buyers of goods and services in the factor markets.
C) firms are sellers of the factors in factor markets.
D) firms are sellers of goods and services in goods markets.
E) firms are buyers of goods and services in final markets.
Refer to Figure 14.2.2. To maximize economic profit, this firm in monopolistic
competition produces an output
A) of 40 units.
B) of 70 units.
C) of 60 units.
D) of less than 40 units.
E) that cannot be determined without information concerning rival firms.
27.5 Mathematical Note: The Algebra of the Keynesian Model
Use the information below to answer the following questions.
Fact 27.5.1
The economy of Beverly Hills has a consumption function of C = 10 + 0.8Y, investment
equal to 6, government expenditure equal to 10, exports equal to 10, and an import
function of M = 0.1Y.
Refer to Fact 27.5.1. What is the equation for the aggregate expenditure curve for this
economy?
A) AE = 16 + 0.7Y
B) AE = 36 – 0.7Y
C) AE = 26 + 0.8Y
D) AE = 36 + 0.9Y
E) AE = 36 + 0.7Y
A union leader who claims that “higher wages increase living standards without causing
unemployment” believes that the demand for labour is
A) income elastic.
B) income inelastic.
C) perfectly elastic.
D) perfectly inelastic.
E) unit elastic.
In a country with a working-age population of 20 million, 13 million are employed, 1.5
million are unemployed, and 1 million of the employed are working part-time, half of
whom wish to work full-time. The size of the labour force is
A) 20 million.
B) 15.5 million.
C) 14.5 million.
D) 13 million.
E) 11.5 million.
Initially the exchange rate between the South Korean won and the Canadian dollar is
950 won per dollar. If the exchange rate rises to 1,000 won per dollar and the Canadian
and South Korean price levels do not change, then in the short run the real exchange
rate
A) rises.
B) falls.
C) does not change.
D) either rises, falls, or remains the same but we don’t know for sure.
E) is 1,000 won per dollar.
Suppose that in response to a decrease in real interest rates, a person decides to reduce
his supply of labour today and increase it in the future. This behaviour is most
consistent with the
A) new classical cycle theory.
B) Keynesian cycle theory.
C) new Keynesian cycle theory.
D) real business cycle theory.
E) monetarist cycle theory.
If households’ disposable income decreases, then
A) households’ saving will decrease.
B) households’ saving will increase.
C) the supply of loanable funds decreases.
D) a movement occurs down along the supply of loanable funds curve.
E) Both A and C are correct.
The curve in Figure 19.1.3 is the
A) line of fairness.
B) line of equality.
C) learning curve.
D) wage differential curve.
E) Lorenz curve.
Consider the Lorenz curves in Figure 19.1.2. Which point indicates that the richest 20
percent of families earn 60 percent of the income?
A) a
B) b
C) c
D) d
E) the origin
If a country imposes a tariff on an imported good, the tariff ________ the price in the
importing country and ________ the quantity of imports.
A) raises; increases
B) raises; does not change
C) lowers; does not change
D) lowers; increases
E) raises; decreases
If the nominal interest rate is 11 percent and the inflation rate is 9 percent, then the real
interest rate is approximately
A) 2 percent.
B) 20 percent.
C) 4 percent.
D) 18 percent.
E) -2 percent.
Because an oligopoly has a small number of firms,
A) each firm can act like a monopoly.
B) the firms may legally form a cartel.
C) the HHI for the industry is small.
D) the four-firm concentration ratio for the industry is small.
E) the firms are interdependent.
Frictional unemployment
A) includes discouraged searchers.
B) is voluntary part-time unemployment.
C) includes workers who have lost their jobs due to an economic downturn.
D) is unemployment associated with normal labour turnover.
E) occurs when changes in technology change the skills needed to perform jobs.
The Acme Stereo Company had capital of $24 million at the beginning of the year. At
the end of the year, the firm had a capital stock of $20 million. Its
A) net investment was some amount but we need more information to determine the
amount.
B) net investment was $4 million for the year.
C) gross investment was zero.
D) net investment was -$4 million for the year.
E) depreciation was $4 million.
One criticism of social security programs such as the Guaranteed Income Supplement is
that
A) it promotes efficiency rather than equity.
B) it helps equity but hurts efficiency.
C) it gives too much money to the elderly.
D) it gives too much money to the poor.
E) it gives too much money to the rich.
Use the information below to answer the following questions.
Fact 27.3.1
An economy has a fixed price level, no imports, and no income taxes. MPC is 0.5 and
real GDP is $200 billion. Businesses increase investment by $2 billion.
Consider Fact 27.3.1. The multiplier is
A) 0.5.
B) 2.0.
C) 2.5.
D) 0.75
E) 0.8.
Everything else remaining the same, an increase in the quantity of money
A) shifts the aggregate demand curve rightward.
B) shifts the aggregate demand curve leftward.
C) shifts the aggregate supply curve leftward.
D) shifts the aggregate supply curve rightward.
E) creates a movement down along the aggregate demand curve.
When the iPhone5 was introduced, the demand for iPhone5 protective cases increased.
This information tells us that the iPhone5 and iPhone5 protective cases are
A) substitutes and their indifference curves are close to straight lines.
B) substitutes and their indifference curves are close to L-shaped.
C) complements and their indifference curves are close to L-shaped.
D) complements and their indifference curves have a constant marginal rate of
substitution.
E) substitutes and their indifference curves have a constant marginal rate of substitution.
A tariff imposed by Canada on Japanese cars ________ the price of cars in Canada and
________ the quantity of Japanese cars imported into Canada.
A) raises; increases
B) raises; decreases
C) lowers; increases
D) lowers; decreases
E) raises; does not change
The market structure in which natural or legal barriers prevent the entry of new firms
and a small number of firms compete is
A) monopoly.
B) monopolistic competition.
C) perfect competition.
D) oligopoly.
E) imperfect monopoly.
If Soula is maximizing her utility and consuming two goods that have the same
marginal utility, she
A) buys only one.
B) buys equal quantities of both.
C) is paying the same price for each good.
D) receives the same total utility from each good.
E) none of the above
The change in total utility that results from a one-unit increase in the quantity of a good
consumed is
A) additional utility.
B) marginal utility.
C) average utility.
D) marginal utility per dollar.
E) fractional utility.
Use the figure below to answer the following questions.
Figure 2.2.1
In Figure 2.2.1, the curve labeled B shows
A) the bottles of pop that people are willing to forgo to get another bicycle.
B) the bicycles that people are willing to forgo to get another bottle of pop.
C) the bottles of pop that people must forgo to get another bicycle.
D) that the benefits from producing more bicycles is greater than the benefits from
producing more pop.
E) that the benefits from producing more pop is greater than the benefits from
producing more bicycles.
A market with a single firm but no barriers to entry is known as
A) a natural monopoly.
B) a contestable market.
C) a perfectly competitive market.
D) monopolistic competition.
E) an oligopoly.
The cross elasticity of demand between Coca-Cola and Pepsi-Cola is ________. From
this information, we know that Coke and Pepsi are ________.
A) positive; normal goods
B) positive; complements
C) negative; substitutes
D) positive; substitutes
E) negative; complements
Inflation that starts because aggregate demand increases is called
A) cost-push inflation.
B) demand-pull inflation.
C) anticipated inflation.
D) unanticipated inflation.
E) political inflation.