The slope of a horizontal line is
A) positive.
B) negative.
C) zero.
D) infinite.
E) initially positive and then negative.
During the next hour John can choose one of the following three activities: playing
basketball, watching television, or reading a book. The opportunity cost of reading a
book
A) depends on how much the book cost when it was purchased.
B) is the value of playing basketball if John prefers that to watching television.
C) is the value of playing basketball and the value of watching television.
D) depends on how much John enjoys the book.
E) is the value of watching television if John prefers playing basketball to watching
television.
A market supply curve is
A) the horizontal sum of the individual supply curves.
B) downward sloping.
C) the vertical sum of the individual supply curves.
D) downward sloping initially, and then upward sloping.
E) represented by a line with a constant slope.
In Figure 31.1.2, with international trade ________ helicopters per year are produced in
Canada.
A) 360
B) 480
C) 720
D) 240
E) 600
A tax cut on capital income
A) does not affect potential GDP because the interest rate affects aggregate expenditure
only.
B) does not affect potential GDP because it has no impact on the supply of labour.
C) increases potential GDP because workers have greater incentives to work.
D) increases potential GDP because the supply of loanable funds increases.
E) increases potential GDP because households have more disposable income to spend.
Consider graph (b) of Figure 1A.1.5. Which one of the following statements is true?
A) x and y are negatively related.
B) x and y are unrelated.
C) x and y are positively related.
D) x and y move in opposite directions.
E) both A and D are correct.
Currency depreciation is a reduction in the
A) precious metal content in coins, such as the replacement of silver with copper in
quarters.
B) goods and services a currency can purchase within its own country, usually the result
of a period of inflation.
C) amount of foreign currency that can be obtained in trade for each unit of domestic
currency.
D) amount of domestic currency that must be exchanged for a unit of foreign exchange.
E) amount of domestic goods foreign currency can purchase.
Use the table below to answer the following question.
Table 20.4.2
Refer to Table 20.4.2. An economy produces only digital cameras, chocolate bars, and
watches.
The table gives the quantities produced and prices in 2012 and 2013.
The base year is 2012.
The chained-dollar real GDP in 2013 is
A) $34.
B) $25.
C) $147.
D) $109.
E) $36.
The concept of opportunity cost
A) is relevant only for European countries.
B) suggests that individuals can achieve all they want.
C) suggests a major increase in public education spending means a reduced expansion
in the public healthcare system.
D) is relevant only for developed countries.
E) is relevant only for developing countries.
A shortage is the amount by which quantity
A) demanded exceeds quantity supplied.
B) supplied exceeds quantity demanded.
C) demanded increases when the price rises.
D) demanded exceeds the equilibrium quantity.
E) supplied exceeds the equilibrium quantity.
Use the figure below to answer the following question.
Figure 1A.3.2
Refer to Figure 1A.3.2. The slope across the arc between A andB is
A) 1/2.
B) 2/3.
C) 1.
D) 2.
E) 3.
In a contestable market the Herfindahl-Hirschman Index is ________ and the market
behaves as if it is ________.
A) low; perfectly competitive
B) low; a monopoly
C) high; perfectly competitive
D) high; a monopoly
E) zero; perfectly competitive
If voters are rationally ignorant, the quantity of national defence provided by the
government will be
A) greater than the efficient quantity.
B) less than the efficient quantity.
C) the least costly quantity.
D) the quantity that maximizes the budget of the Department of National Defence.
E) both A and D are correct.
The budget line depends on
A) income only.
B) prices only.
C) income and prices.
D) preferences only.
E) preferences and prices.
As real GDP increases,
A) autonomous consumption increases.
B) planned investment increases.
C) exports increase.
D) imports increase.
E) imports decrease.
Refer to Table 16.3.1. The table shows marginal private benefit and the marginal social
benefit from the consumption of chemical fertilizer and the marginal social cost of the
production of fertilizer. If production is left to the private market, the market price is
A) $70 a unit.
B) $60 a unit.
C) $50 a unit.
D) $40 a unit.
E) $30 a unit.
Refer to Figure 13.4.2. Assume this monopolist practises perfect price discrimination.
What is the lowest price charged for tickets?
A) $0
B) $1.00
C) $3.50
D) $3.00
E) $2.00
The demand for loanable funds curve
A) is horizontal.
B) has a negative slope.
C) is vertical.
D) has a positive slope.
E) slopes downward at high real interest rates and slopes upward at low real interest
rates.
The value of intermediate goods is not counted in GDP
A) to keep from including goods that reduce society’s welfare.
B) because of the tremendous difficulty in keeping track of all the intermediate goods
produced in an economy as large as Canada.
C) because they are only sold in factor markets.
D) to avoid counting their value twice and overstating the value of GDP.
E) because they are not consumed in the current year.
Import quotas
A) are the same as tariffs.
B) are not used by Canada.
C) set the minimum percentage of the value of a product that must consist of imported
components.
D) benefit society.
E) set the maximum number of units of a good that can be imported in a given time
period.
Automatic 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.
Statements about “what ought to be” are called
A) positive statements.
B) normative statements.
C) economic statements.
D) scientific statements.
E) hypotheses.
Use the figure below to answer the following question.
Figure 27.5.1
This figure describes the relationship between consumption expenditure and disposable
income.
Refer to Figure 27.5.1. The equation of the consumption function is
A) C = 100 + 0.8Y.
B) C = 100 + 0.8YD.
C) C = 100 + 0.2YD.
D) C = 100 + 0.6YD.
E) C = 500 + 0.8YD.
Which statement is true for an inferior good?
A) The substitution effect is positive; as price rises, consumption increases.
B) The income effect is absent; as income increases, consumption remains constant.
C) The income effect works in the opposite direction to the substitution effect.
D) The good is of poor workmanship.
E) The income effect works in the same direction as the substitution effect.
Which one of the following people is frictionally unemployed? A steel worker who
A) loses her job because of technological change.
B) is laid off but expects to be called back soon.
C) gives up her job because she retires.
D) decides to leave the labour force and become a full-time student.
E) becomes discouraged and stops looking for a job.
A tariff is imposed on a good. This ________ the quantity supplied, ________ the
quantity demanded, and ________ the price in the home country.
A) increases; decreases; raises
B) increases; does not change; does not change
C) increases; increases; raises
D) increases; decreases; lowers
E) decreases; increases; lowers
Which of the following statements regarding monopolist competition is FALSE?
A) Resources are used efficiently when marginal social benefit equals marginal social
cost.
B) A greater degree of product variety creates a loss because the quantity produced is
less than the efficient quantity.
C) Monopolistic competition is definitely inefficient because price exceeds marginal
cost.
D) Compared to a situation with total product uniformity, monopolist competition
might be efficient.
E) A firm in monopolistic competition produces a quantity that is less than the efficient
scale.
If the real interest rate is above the equilibrium real interest rate,
A) lenders are unable to find borrowers willing to borrow all of the available funds and
the real interest rate falls.
B) borrowers are unable to borrow all of the funds they want to borrow and the real
interest rate rises.
C) lenders are unable to find borrowers willing to borrow all of the available funds and
the real interest rate rises.
D) borrowers are unable to borrow all of the funds they want to borrow and the real
interest rate falls.
E) a shortage of loanable funds exists.
In consumer equilibrium, a consumer equates the
A) total utility from each good.
B) marginal utility from each good.
C) total utility per dollar on each good.
D) marginal utility per dollar on each good.
E) total income spent on each good with total utility from each good.
Complete the following sentence. Net exports equals
A) exports divided by imports.
B) exports plus imports.
C) exports minus imports.
D) imports minus exports.
E) foreign borrowing by residents of Canada minus domestic borrowing by
nonresidents of Canada.
Refer to Table 6.3.2. You are in the business of producing and selling hamburgers,
French fries, pizza, and ice cream. The mayor of your city plans to impose a sales tax
on one of these products. Based on the elasticities in the table, on which of these goods
would your customers prefer to be taxed?
A) hamburgers
B) French fries
C) pizza
D) ice cream
E) Your customers are indifferent about which good is taxed.
A structural deficit
A) is present only if real GDP is greater than potential.
B) exists even if real GDP equals potential.
C) equals the cyclical deficit plus the actual deficit.
D) is greater than a cyclical deficit.
E) occurs when the economy is in a recession.
Canada’s anti-combine law dates from the
A) 1880s.
B) 1910s.
C) 1930s.
D) 1960s.
E) 1980s.
For the regulated natural monopoly, an average cost pricing rule sets price equal to
A) marginal cost.
B) total fixed cost.
C) average variable cost.
D) average fixed cost.
E) average total cost.