The ratio of currency to deposits is the
A) currency drain ratio.
B) excess reserve ratio.
C) monetary reserve ratio.
D) reserve ratio.
E) currency ratio.
Dumping occurs when a foreign firm
A) pollutes international waters.
B) disposes of waste material internationally.
C) sells inferior output to foreigners.
D) sells its exports at a lower price than its cost of production.
E) sells its output at a lower price in a foreign country than in the country where it
produces the good.
Refer to Table 25.4.1. If Mengia’s official settlement balance was in surplus every year,
for which year or years can you say for sure there was a current account deficit?
A) year 1 only
B) year 2 only
C) years 2 and 3
D) years 1 and 2
E) years 3 and 4
If the CPI was 180 at the end of 2013, and 216 at the end of 2014, the inflation rate in
2014 was
A) 216 percent.
B) 36 percent.
C) 16.67 percent.
D) 20 percent.
E) 18 percent.
Rational ignorance suggests that a voter should stop acquiring more information about
an issue when
A) the marginal benefit from acquiring the information equals zero.
B) the total cost of acquiring the information is minimized.
C) the total benefit from acquiring the information is maximized.
D) the marginal cost of acquiring the information is equal to the marginal benefit
derived from the information.
E) the marginal cost of acquiring the information is greater than zero.
Mrs. Smith’s bakery shop is a firm in monopolistic competition. If in the short run Mrs.
Smith incurs an economic loss, she will keep producing as long as
A) price is less than average variable cost.
B) price is equal to marginal cost.
C) price is greater than or equal to average variable cost.
D) marginal revenue is greater than or equal to average variable cost.
E) marginal revenue is less than average variable cost.
Use the figure below to answer the following question.
Figure 9.3.2
Which one of the following statements about Figure 9.3.2 is true?
A) Point S is preferred to point Q, but S is not affordable.
B) Point R is not affordable.
C) Point T is preferred to point Q, but T is not affordable.
D) Points Q and S cost the same, but Q is preferred to S.
E) Point R is the best affordable point.
If the Bank of Canada wants to stimulate the economy to limit the effects of a
recessionary gap, then it ________ the overnight loans rate to ________ the real
interest rate and ________ investment.
A) lowers; lower; increase
B) lowers; raise; increase
C) raises; raise; decrease
D) lowers; lower; decrease
E) lowers; raise; decrease
The tragedy of the commons is the absence of incentives to
A) reduce marginal cost of common resources.
B) prevent underuse of common resources.
C) prevent overuse of common resources.
D) discover new common resources.
E) export wool in sixteenth-century England.
If Canadians suddenly develop a strong urge to escape the cold winter by taking
vacations in Hawaii, the
A) price of a vacation in Hawaii rises and the quantity demanded of Hawaiian vacations
decreases.
B) price of a skiing vacation in the mountains rises.
C) initial result of the change is a surplus of vacations in Hawaii, leading to a price rise.
D) price of airline tickets falls as ticket agents make deals in response to this change.
E) price of luggage will rise, because luggage and vacations are complements.
Refer to Table 3.1.1. Between 2013 and 2014, the price of coffee relative to the price of
tea ________, while the price of coffee relative to the price of cola ________.
A) rose; rose
B) rose; fell
C) fell; rose
D) fell; fell
E) fell; stayed constant
Refer to Figure 5.2.2 If the price is P1, consumer surplus is
A) A.
B) B plus C.
C) D plus E.
D) A plus B plus C.
E) A plus B plus C plus D plus E.
If we compare the United States to France, we see that potential GDP per person in
France is ________ than that in the United States because the French tax wedge is
________ than the U.S. tax wedge.
A) greater; larger
B) greater; smaller
C) less; larger
D) less; smaller
E) none of the above
When the price level is rising and, simultaneously, real GDP is decreasing,
A) the natural unemployment rate is rising.
B) the natural unemployment rate is falling.
C) stagflation is occurring.
D) the economy is experiencing an expansionary gap.
E) potential GDP is decreasing.
Choose the statements concerning neoclassical growth theory which are true.
1/ Neoclassical growth theory was developed in the late 19th century.
2/ The rate of technological change influences the economic growth rate but economic
growth does not influence the pace of technological change.
3/ Economic growth will stop if technology stops advancing.
4/ Technological change results from the choices people make in the pursuit of profit.
A) Statements 1 and 4 are correct.
B) Statements 3 and 4 are correct.
C) Statements 2 and 3 are correct.
D) Statements 1 and 3 are correct.
E) Statements 2 and 4 are correct.
Consider an initial budget line labelled RT in Figure 9.3.3. What would rotate the
budget line to RS?
A) a rise in the price of good X
B) a fall in the price of good X
C) a rise in the price of good Y
D) a decrease in the preference for good X
E) an increase in real income
When the marginal social cost of the production of Good A is greater than the marginal
private cost of the production of Good A, then
A) a competitive, unregulated market produces less than the efficient quantity of Good
A.
B) a competitive, unregulated market produces the efficient quantity of Good A.
C) a competitive, unregulated market produces more than the efficient quantity of Good
A.
D) the government should levy a tax on the production of Good A that is equal to the
horizontal distance between the two marginal cost curves.
E) a competitive, unregulated market does not create a deadweight loss.
The marginal cost for Morgan’s Marvellous Movies is given in the following table:
Table 5.2.2
If the firm sells the fifth movie at a price of $7, what is the producer surplus on that
movie?
A) $28
B) $3
C) $7
D) $6
E) $1
The idea that the demand for tire workers stems from the demand for automobiles is
A) the value of the marginal product of labour.
B) the value of the marginal product of tire workers.
C) the value of the marginal product of auto workers.
D) an output demand.
E) a derived demand.
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
Refer to Table 15.2.8. Libertyville has two optometrists, Dr. Smith and Dr. Jones. Each
optometrist can choose to advertise his service or not. The incomes of each optometrist,
in thousands of dollars, are given in the payoff matrix above. Which of the following
statements correctly describes Dr. Jones’ strategy given what Dr. Smith may do?
A) Dr. Jones advertises no matter what Dr. Smith does.
B) Dr. Jones does not advertise no matter what Dr. Smith does.
C) Dr. Jones advertises only if Dr. Smith doesn’t advertise.
D) Dr. Jones advertises only if Dr. Smith advertises.
E) Dr. Jones does not advertise if Dr. Smith advertises.
New technology has allowed oil to be pumped from much deeper offshore oil fields
than before. For example, 28 deep ocean rigs operate in the deep waters of the Gulf of
Mexico. Deep ocean sources have ________ the world price of oil. Those who benefit
from drilling for oil in the Gulf of Mexico are ________.
A) raised; both consumers and suppliers
B) lowered; both consumers and suppliers
C) raised; consumers only
D) lowered; consumers only
E) raised; consumers and the government
In monopolistic competition, advertising costs
A) are variable costs.
B) can result in the firm producing an amount of output such that its average total cost
is lower than if it did not advertise.
C) shift the ATC curve downward.
D) shift the AVC curve upward.
E) shift the MC curve upward.
Which of the following events shifts the aggregate expenditure curve and also shifts the
aggregate demand curve?
I. a decrease in investment
II. a change in the price level
III. an increase in exports
A) I and II
B) I and III
C) II and III
D) I, II, and III
E) all of the above
For which one of the following is demand likely to be most inelastic?
A) diamonds
B) insulin for a diabetic
C) potatoes
D) gasoline
E) books
If the market for Twinkies is in equilibrium, then
A) Twinkies must be a normal good.
B) producers would like to sell less at the current price.
C) consumers would like to buy less at the current price.
D) the quantity supplied equals the quantity demanded.
E) the supply of Twinkies will never increase and the demand for Twinkies will never
decrease.
Use the figure below to answer the following questions.
Figure 18.3.1
Refer to Figure 18.3.1. This figure shows the value of marginal product of labour curve,
the labour supply curve, and the marginal cost of labour curve. If this labour market is
competitive, the wage rate is
A) $3 an hour.
B) $5 an hour.
C) $6 an hour.
D) $7 an hour.
E) greater than $7 an hour.
The lower the exchange rate, the
A) larger is the quantity of Canadian dollars supplied in the foreign exchange market.
B) larger is the quantity of Canadian dollars demanded in the foreign exchange market.
C) smaller is the quantity of Canadian dollars supplied in the foreign exchange market.
D) smaller is the quantity of Canadian dollars demanded in the foreign exchange
market.
E) Both B and C are correct.
Refer to Table 2.1.2. According to this production possibilities frontier,
A) a combination of 6 kilograms of butter and 1 gun leaves some resources unused.
B) a combination of 0 butter and 4 guns is attainable.
C) resources are equally useful in all activities.
D) the opportunity cost of producing guns increases as more guns are produced.
E) the opportunity cost of producing guns decreases as more guns are produced.
The ________ principle is the proposition that people should pay taxes equal to the
benefits they receive from the services provided by government.
The ________ principle is the proposition that people should pay taxes according to
how easily they can bear the burden of the tax.
A) benefits; ability-to-pay
B) equality; fairness
C) services; burden
D) ability-to-pay; benefits
E) efficient; inefficient
Which one of the following is a balance of payments account?
A) current account
B) borrowing account
C) official lending account
D) net interest account
E) public account
Consider Devon’s total utility from snorkeling and windsurfing in Table 8.2.1. Suppose
Devon’s total income is $35. If the price of windsurfing rises to $20 per hour, what is
Devon’s cross elasticity of demand of snorkeling with respect to the price of
windsurfing?
A) 1.0
B) 0.67
C) 1.5
D) 10
E) 1.33
Use the information below to answer the following questions.
Fact 10.4.1 GameStop Racks Up the Points
No retailer has more cachet among gamers than GameStop. For now, only Wal-Mart has
a larger market share”21.3% last year. GameStop’s share was 21.1% last year, and may
well overtake Wal-Mart this year. But if new women gamers prefer shopping at Target
to GameStop, Wal-Mart and Target might erode GameStop’s market share.
Refer to Fact 10.4.1. According to the news clip, the U.S. video game market is
A) a market.
B) an oligopoly.
C) perfectly competitive.
D) monopolistically competitive.
E) a monopoly.
Refer to Table 12.2.3, which gives the total cost schedule for Brenda’s Balloon Shop, a
perfectly competitive firm. The marginal cost of increasing production from 4 balloons
an hour to 5 balloons an hour is
A) $1.00.
B) $4.50.
C) $4.70.
D) $4.80.
E) $4.40.
Use the table below to answer the following question.
Table 13.2.1
Refer to Table 13.2.1. Minnie’s Mineral Springs, a single-price monopoly, faces the
market demand schedule given in the table. Minnie will not produce a quantity at which
the market demand for water is inelastic because when demand is inelastic she can
________ the quantity produced, which ________.
A) increase; increases total revenue, decreases total cost, and increases economic profit
B) increase; increases total revenue and increases total cost, but the increase in total
cost is less than the increase in total revenue
C) decrease; increases total revenue, decreases total cost, and increases economic profit
D) decrease; decreases total revenue and decreases total cost, but the decrease in total
cost is less than the decrease in total revenue
E) decrease; increases total revenue, does not change total cost, and increases economic
profit