Refer to Figure 28.2.2. The vertical distance between SAS0 and SAS1 represents the
A) actual inflation rate.
B) expected increase in real GDP.
C) actual decrease in real GDP.
D) expected inflation rate.
E) expected decrease in the real wage rate.
The closer the Lorenz curve is to the line of equality,
A) the more equal is the distribution.
B) the less equal is the distribution.
C) the more unfair is the income distribution.
D) the richer are the highest 5 percent of households.
E) the poorer are the highest 5 percent of households.
What are the main categories of the federal government outlays?
A) transfer payments, expenditures on goods and services, and debt interest
B) indirect taxes, farmers’ subsidies, and debt interest
C) personal income taxes, expenditures on goods and services, and debt interest
D) investment income, debt interest and transfer payments
E) property taxes and sales taxes.
Which of the following benefits flow from the application of an inflation-control target?
A) If actual inflation exceeds the target range, the Bank of Canada can induce a
recession to correct the matter.
B) The monetary authorities can change the target range whenever they feel it is
appropriate.
C) People can make decisions with an understanding that inflation rates will remain
relatively low.
D) Financial market traders have a clearer understanding of the Bank of Canada’s
intentions.
E) Both C and D
Which of the following will definitely result in an increase in the equilibrium price?
A) an increase in both demand and supply
B) a decrease in both demand and supply
C) an increase in demand combined with a decrease in supply
D) a decrease in demand combined with an increase in supply
E) an increase in supply combined with a decrease in demand
A sole proprietorship
A) dies with the owner.
B) is the same as a partnership.
C) always bring a higher return to its owner than a corporation brings to its owners.
D) is a not-for-profit firm.
E) has a complex management structure.
At full employment, there is no
A) natural unemployment.
B) unemployment.
C) cyclical unemployment.
D) structural unemployment.
E) frictional unemployment.
Suppose that a U.S. dollar can earn interest of 5 percent a year in Chicago and a
Canadian dollar can earn interest of 7 percent a year in Winnipeg. Will money flow
from Chicago to Winnipeg?
A) Yes, because the returns on money are higher in Winnipeg.
B) No, because the outflow of U.S. funds would create a decrease in the U.S. dollar
value, penalizing investors when they attempted to recover their funds.
C) No, if investors expect that the Canadian dollar will appreciate by at least 2 percent
per year.
D) No, if investors expect the U.S. dollar to appreciate by at least 2 percent per year.
E) No, as long as the U.S. dollar maintains higher purchasing power than the Canadian
dollar.
Use the table below to answer the following question.
Table 20.2.7
Table 20.2.7 shows items of income and expenditure in an economy. GDP equals
A) $1,242 billion.
B) $435 billion.
C) $802 billion.
D) $875 billion.
E) $2,267 billion.
Which diagram is used by economists to illustrate the distribution of income or wealth?
A) Lorenz curve
B) normal bell-shaped distribution
C) wage differential curve
D) low-income cut-off curve
E) marginal revenue product diagram
An example of common resource is
A) fish in the ocean.
B) air traffic control.
C) the Ambassador Bridge which goes between Windsor Ontario and Detroit.
D) the Internet.
E) national defence.
The four-firm concentration ratio in an industry is 75 percent.
Total sales in the industry are $800 million and total economic profit in the industry is
$500 million. Normal profit for each firm is zero.
From this information we know that
A) economic profit of any four firms is at least $667 million.
B) total sales from the four largest firms is $600 million.
C) economic profit of the four largest firms is $375 million.
D) total sales from any four firms is at least $1,067 million.
E) economic profit of the four largest firms is $500 million.
Suppose the demand curve for good X is horizontal. This shows that the demand for
good X is
A) unit elastic.
B) inelastic.
C) perfectly elastic.
D) perfectly inelastic.
E) elastic.
Canada imports cars from Japan. If Canada imposes a tariff on cars imported from
Japan, Canadian
A) consumers will lose and Japanese producers will gain.
B) tariff revenue will equal the loss of Canadian consumer surplus.
C) consumers will lose and Canadian producers will gain.
D) car manufacturers will gain revenue equal to the revenue lost by Japanese car
manufacturers.
E) producers will lose and Japanese consumers will gain.
As a method of resource allocation, force
A) plays a crucial negative role but not a positive role.
B) plays a crucial positive role but not a negative role.
C) plays a crucial role for both good and ill.
D) is always better than majority rule.
E) is always better than first-come, first-served.
“The rich face higher income tax rates than the poor, which is not good since it is the
rich who provide jobs for the poor.” This is an example of
A) a normative statement.
B) a positive statement.
C) a negative statement.
D) a theoretical statement.
E) a descriptive statement.
Consider Table 23.2.2. What is the equilibrium quantity of saving?
A) $6.5 trillion
B) $6.0 trillion
C) $5.5 trillion
D) $5.0 trillion
E) $4.5 trillion
In an unregulated housing market with no rent ceiling,
A) marginal social cost is greater than marginal social benefit.
B) marginal social benefit is greater than marginal social cost.
C) marginal social benefit equals marginal social cost.
D) marginal social benefit is negative.
E) marginal social cost is negative.
How can the Bank of Canada use the bank rate to regulate the overnight loans rate?
A) The overnight loans rate is set at a quarter percentage point above the bank rate,
which in turn is set by the Bank of Canada.
B) The bank rate is set at the settlement balances rate plus 0.25 percentage points.
C) The bank rate is set at 0.25 percentage points below the settlement balances rate,
which is used to determine the overnight loans rate.
D) The overnight loans rate is set at 25 basis points above the bank rate.
E) The bank rate is set at the target overnight rate plus 0.25 percentage points.
Between 1999 and 2008, Canada was
A) a net borrower from the rest of the world.
B) a net lender to the rest of the world.
C) neither a borrower nor a lender to the rest of the world.
D) borrowing and lending in equal amounts with the rest of the world.
E) none of the above
Total cost is $20 at 4 units of output and $36 at 6 units of output. Between 4 and 6 units
of output, marginal cost
A) is less than average total cost.
B) is equal to average total cost.
C) is equal to average variable cost.
D) is greater than average total cost.
E) equals average fixed cost.
A cost-price inflation spiral results if the policy response to stagflation is to keep
A) decreasing aggregate demand.
B) decreasing short-run aggregate supply.
C) increasing aggregate demand.
D) increasing short-run aggregate supply.
E) doing nothing.
Use the table below to answer the following questions.
Table 27.1.2
Refer to Table 27.1.2. When saving is zero, what is the level of disposable income?
A) $325
B) $400
C) $475
D) $550
E) $625
The ________ of a future amount of money is the amount that, if invested today, will
grow to be as large as that future amount when the interest it earns is taken into account.
A) current value
B) future value
C) present value
D) market value
E) profit value
Consider the economy of NoTax, where the government expenditure multiplier is 2.5. If
the government desires to shift the AD curve rightward by $5 billion, the correct
increase in government expenditure is
A) $2 billion.
B) $2.5 billion.
C) $3 billion.
D) $7.5 billion.
E) $8.33 billion.
The expenditure approach measures GDP by adding together
A) wages, salaries and supplementary labour income, and other factor incomes.
B) wages, salaries and supplementary labour income, other factor income, subsidies
paid by the government, indirect taxes paid, and income of nonfarm unincorporated
businesses.
C) compensation of employees, rental income, corporate profits, net interest,
proprietors’ income, indirect taxes paid, and capital consumption expenditures, and by
subtracting subsidies paid by the government.
D) the total expenditures of consumers, firms, net exporters, and by governments at all
levels.
E) the total expenditures of consumers and firms.
If a market is shared equally by four firms, the Herfindahl-Hirschman Index is
A) 1/4.
B) 4.
C) 25.
D) 100.
E) 2,500.
Which market is an example of a market for goods?
A) labour market
B) haircut market
C) manufactured input market
D) apple market
E) energy market
Use the figure below to answer the following questions.
Figure 1A.4.3
In Figure 1A.4.3, x is
A) positively related to y and negatively related to z.
B) positively related to both y and z.
C) negatively related to y and positively related to z.
D) negatively related to both y and z.
E) greater than z.
A movement down along the short-run Phillips curve results from an unanticipated
A) decrease in aggregate demand.
B) increase in aggregate demand.
C) decrease in short-run aggregate supply.
D) increase in short-run aggregate supply.
E) increase in the natural unemployment rate.