For a cartel to succeed,
A) it does not need the cooperation of a majority of firms in the industry.
B) there must be free entry of rival firms.
C) consumers must have alternative products available to satisfy the same need.
D) no major producer can remain outside the agreement of the cartel.
E) the industry must have an elastic demand.
A ________ macroeconomist believes that the economy is self-regulating and always at
full employment. A ________ macroeconomist believes the economy requires active
help from fiscal policy and monetary policy to maintain full employment.
A) Keynesian; new Keynesian
B) classical; monetarist
C) classical; Keynesian
D) new classical; monetarist
E) monetarist; classical
In a market that moves from a situation of no trade to a situation where a good is
imported, in the importing country the price of the good ________, and producer
surplus ________.
A) rises; increases
B) falls; decreases
C) does not change; increases
D) does not change; decreases
E) rises; decreases
In 2012, Northland had real GDP of $4.21 billion and a population of 2.98 million. In
2013, real GDP was $4.59 billion and population was 2.97 million. Northland’s real
GDP per person in 2013 was
A) $1,545.
B) $380.
C) $1,413.
D) $132.
E) $1.41.
Nominal GDP will increase
A) only if the average level of prices rises.
B) only if the quantity of goods and services produced increases.
C) only if the unemployment rate rises.
D) only if both the average level of prices rises and the quantity of goods and services
produced increases.
E) if either the average level of prices rises or the quantity of goods and services
produced increases.
Choose the statement that is incorrect.
A) According to the Ricardo-Barro effect, taxpayers are rational people who know that
a budget deficit today means that future taxes will be higher and future disposable
incomes will be smaller.
B) According to the Ricardo-Barro effect, a budget deficit has no effect on either the
real interest rate or investment.
C) Most economists believe that the Ricardo-Barro effect holds in the market for
loanable funds.
D) According to the Ricardo-Barro effect, the quantity of loanable funds demanded
increases when a government budget deficit occurs, and private saving and the private
supply of loanable funds increase to match the quantity of loanable funds demanded.
E) All of the above statements are correct.
In one year, Brazil exported more than 1.8 billion kilograms of coffee to the rest of the
world. We can conclude that
A) Brazil’s coffee producers lose from this trade.
B) coffee consumers in the rest of the world lose from this trade.
C) Brazil’s coffee consumers lose from this trade.
D) coffee producers in the rest of the world gain from this trade.
E) Brazil’s government loses from this trade.
Use the information below to answer the following questions.
Fact 7.3.1
Before 1995, trade between Canada and Mexico was subject to tariffs. In 1995, Mexico
joined NAFTA and all Canadian and Mexican tariffs have gradually been removed.
Refer to Fact 7.3.1. With the removal of the tariffs, the quantity of Canadian imports
from Mexico ________, and the quantity of Canadian exports to Mexico ________.
A) increases; decreases
B) decreases; decreases
C) decreases; increases
D) increases; does not change
E) increases; increases
The Latin term ceteris paribus means
A) “Innocent until proven guilty.”
B) “Fallacies are composed.”
C) “Compositions are fallacious.”
D) “The whole is not the sum of the parts.”
E) “If all other relevant things remain the same.”
The present value of a future payment of money will be lower the
A) higher the interest rate or the further in the future the payment.
B) lower the interest rate or the further in the future the payment.
C) higher the interest rate or the nearer the date of the future payment.
D) lower the interest rate or the nearer the date of the future payment.
E) lower the interest rate, independent of the date of the future payment.
If the current account is in deficit and the capital and financial account is also in deficit,
then the official settlements account balance is
A) negative.
B) positive.
C) probably close to zero, but could be either negative or positive.
D) zero.
E) equal to the sum of the current account and the capital account.
If individuals A and B can both produce only goods X and Y, and A does not have a
comparative advantage in the production of either X or Y, then we know
A) B has an absolute advantage in the production of X and Y.
B) A and B have the same opportunity costs for X and for Y.
C) B has a comparative advantage in the production of both X and Y.
D) the gains from trade will be large but only in one direction.
E) A must have lower opportunity costs of production for both goods.
When the price of a good increased by 6 percent, the quantity demanded of it decreased
3 percent. Most likely, this good ________ and ________.
A) is a necessity; has poor substitutes
B) has poor substitutes; is a luxury
C) is a necessity; has good substitutes
D) is a luxury; is narrowly defined
E) is a luxury; has experienced a recent price change
Prior to international trade, if the price of good X is lower in country A than in country
B,
A) country B has an absolute advantage in the production of good X.
B) country B has a comparative advantage in the production of good X.
C) country A has an absolute advantage in the production of good X.
D) country A has a comparative advantage in the production of good X.
E) country B should stop producing good A.
Of the following, in which decade were Canada’s tariffs at their lowest level?
A) 1990s
B) 1970s
C) 1950s
D) 1930s
E) 1890s
Consider Table 23.3.6. If the Ricardo-Barro effect occurs, and if the government’s
budget becomes a deficit of $2.0 trillion, what is the quantity of investment?
A) $6.5 trillion
B) $6.0 trillion
C) $5.5 trillion
D) $5.0 trillion
E) $10 trillion
When the price of a bicycle falls from $220 to $180 and other things remain the same,
I. the quantity of bicycles demanded increases from 150 to 250 an hour.
II. the quantity of skateboards demanded decreases from 125 to 75 an hour.
III. the quantity of bicycle helmets demanded increases from 170 to 230 an hour.
Bicycle helmets and bicycles are ________ because a fall in the price of a bicycle
brings ________ in the quantity demanded of bicycle helmets. The cross elasticity of
demand for bicycle helmets with respect to bicycles is ________.
A) complements; an increase; -1.5
B) substitutes; a decrease; 1.5
C) substitutes; an increase; -0.67
D) complements; a decrease; 0.67
E) complements; an increase; 1.5
Which of the following is not a factor of production?
A) Timmy who is developing a production schedule for a new product
B) 175 shares of Microsoft stock
C) Vans used by a bakery company for deliveries
D) Wilderness areas that have yet to be developed
E) National parks
When the interest rate falls in the money market, the quantity of money demanded
________ and the quantity of money supplied ________.
A) increases; remains unchanged
B) increases; decreases
C) remains unchanged; decreases
D) remains unchanged; remains unchanged
E) decreases; increases
Use the information below to answer the following questions.
Fact 20.1.2
Classify each of the following items as a final good or an intermediate good, and
identify which is a component of consumption expenditure, investment, or government
expenditure on goods and services:
Item 1. A DVD bought by a household
Item 2. A new airplane bought by WestJet
Item 3. Aluminum sheets bought by Boeing
Item 4. A new limousine for the prime minister
Refer to Fact 20.1.2. Item 1 is ________ and item 2 is ________.
A) an intermediate good; a final good that is consumption expenditure
B) a final good that is consumption expenditure; a final good that is investment
C) a final good that is consumption expenditure; a final good that is consumption
expenditure
D) an intermediate good; a final good that is investment
E) an intermediate good; an intermediate good
Refer to the figure below to answer the following questions.
Figure 25.3.1
In Figure 25.3.1, suppose the demand for dollars temporarily increases so that the
demand curve shifts to D1. To maintain the target exchange rate, the Bank of Canada
A) sells dollars.
B) buys dollars.
C) must violate interest rate parity but not purchasing power parity.
D) must raise the target exchange rate.
E) must lower the target exchange rate.
The quantity of loanable funds demanded increases when
A) expected profit decreases.
B) the real interest rate rises.
C) the real interest rate falls.
D) the supply of loanable funds decreases.
E) wealth increases.
The present value of the $50 that will be received next year is $40. What is the interest
rate?
A) 10 percent
B) 8 percent
C) 20 percent
D) 50 percent
E) 25 percent
Use the figure below to answer the following questions.
Figure 6.1.1
Consider the market for rental housing illustrated in Figure 6.1.1 when the demand
curve is D0. The equilibrium in an unregulated market is
A) 1,500 rooms rented at $150 a month.
B) 1,500 rooms rented at $200 a month.
C) 1,750 rooms rented at $175 a month.
D) 1,750 rooms rented at $200 a month.
E) 2,000 rooms rented at $150 a month.
Wealth differs from income because
A) income is a stock and wealth is a flow.
B) wealth is derived from income.
C) income is what you earn and wealth is what you own.
D) income is what you own and wealth is what you earn.
E) wealth is preferable to income.
The effects of offshoring from opening up call centres in India are similar to the effects
from
A) free trade.
B) tariffs.
C) import quota.
D) voluntary export restraints.
E) export subsidies.
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, and if the firm inflates its
costs as much as possible, the regulated price will be
A) P0.
B) P1.
C) P2.
D) P3.
E) either P0or P3.
At full employment, the unemployment rate
A) should be zero.
B) is greater than zero percent due to natural unemployment.
C) increases as the price level rises.
D) decreases as the price level falls.
E) averages 6 percent.
Which statement about incomes earned by factors of production isfalse?
A) Land earns rent.
B) Natural resources earn rent.
C) Labour earns wages.
D) Capital earns profit.
E) Entrepreneurship earns profit.
Refer to Figure 26.3.5. Potential GDP is
A) $13 trillion.
B) $13.5 trillion.
C) more than $13 trillion and less than $13.5 trillion.
D) less than $13 trillion.
E) 100
Refer to Table 3.4.1. If the price is $3, then the shortage is
A) zero units.
B) 1,050 units.
C) 180 units.
D) 600 units.
E) 160 units.
A decrease in the price level
A) increases aggregate expenditure and produces a movement down along the
aggregate demand curve.
B) increases aggregate expenditure and produces a rightward shift of the aggregate
demand curve.
C) increases aggregate expenditure and produces a leftward shift of the aggregate
demand curve.
D) has no effect on aggregate expenditure.
E) increases aggregate expenditure, but has no effect on the aggregate demand curve.
Refer to Table 26.3.1. As this economy moves to long-run equilibrium, the
A) SAS curve shifts leftward.
B) SAS curve shifts rightward.
C) AD curve shifts rightward.
D) AD curve shifts leftward.
E) LAS curve shifts leftward.
As the quantity of hot dogs demanded increases,
A) the marginal social benefit from a hot dog decreases.
B) the marginal social cost of a hot dog decreases.
C) the quantity of hot dogs supplied increases.
D) the hot dog market becomes more efficient.
E) the hot dog market becomes less efficient.