Ron starts out in consumer equilibrium, consuming two goods, X and Y. Ron’s income
rises. At this point, we can definitely conclude that
A) MUX/PX> MUY/PY, and then Ron increases his consumption of X.
B) MUX/PX> MUY/PY, and then Ron decreases his consumption of X.
C) MUX/PX< MUY/PY, and then Ron increases his consumption of X.
D) MUX/PX< MUY/PY, and then Ron decreases his consumption of X.
E) none of the above.
The cyclical deficit
A) is a persistent economic phenomenon.
B) occurs when the economy is at full employment.
C) arises purely because real GDP does not equal potential GDP.
D) is an accumulation of the government debt.
E) exceeds the structural surplus.
Potential GDP is the level of real GDP at which
A) aggregate demand equals short-run aggregate supply.
B) there is full employment.
C) there is a recessionary gap.
D) there is over-full employment.
E) prices are sure to rise.
Tariffs
A) generate revenue for consumers.
B) generate revenue for the government.
C) encourage domestic consumers to buy more imports.
D) encourage domestic producers to produce less.
E) lower prices for consumers.
The money multiplier can also be calculated as ________, where a is the currency drain
ratio and b is the desired reserve ratio.
A) (a + b) (1 + b)
B) a (a + b)
C) (1 + a) (a + b)
D) (a + b) (1 + a)
E) (1 + b) (a + b)
Refer to the table below to answer the following questions.
Table 15.2.8
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. Smith’s strategy given what Dr. Jones may do?
A) Dr. Smith advertises no matter what Dr. Jones does.
B) Dr. Smith does not advertise no matter what Dr. Jones does.
C) Dr. Smith advertises only if Dr. Jones doesn’t advertise.
D) Dr. Smith advertises only if Dr. Jones advertises.
E) Dr. Smith does not advertise if Dr. Jones advertises.
Which one of the following is most liquid?
A) chequable deposits
B) real estate
C) government bonds
D) debit cards
E) cheques
The fact that a hockey star earns $3 million a year while a teacher earns $50,000
annually is an example of an economy facing the ________ question.
A) “what”
B) “how”
C) “where”
D) “for whom”
E) “when”
The fact that human wants cannot be fully satisfied with available resources is called
the problem of
A) opportunity cost.
B) scarcity.
C) normative economics.
D) marginal cost.
E) the big tradeoff.
A technological advance will shift
(1) TP, AP, and MP curves up.
(2) TP, AP, and MP down.
(3) TC, ATC, and MC curves up.
(4) TC, ATC, and MC curves down.
A) (1) and (3)
B) (1) and (4)
C) (2) and (3)
D) (2) and (4)
E) none of the above
Which one of the following transactions would be recorded as a positive entry in the
Canadian balance of payment accounts?
A) A Canadian tourist spends $3,000 while visiting France.
B) A Canadian tourist spends $3,000 while visiting Banff.
C) A Canadian citizen purchases a U.K. government bond.
D) A Canadian corporation sends interest payments on outstanding bonds to U.S.
citizens.
E) A French tourist spends $3,000 while visiting Banff.
An effective rent ceiling
A) increases producer surplus.
B) results in a producer surplus of zero.
C) sometimes increases producer surplus and sometimes decreases producer surplus.
D) decreases producer surplus.
E) decreases the supply of housing.
Gross investment
A) is the total amount spent on new capital.
B) includes only replacement investment.
C) equals wealth minus saving.
D) equals saving minus wealth.
E) is the change in the value of capital
Use the figure below to answer the following question.
Figure 12.3.3
Refer to Figure 12.3.3, which shows the cost curves and marginal revenue curve of a
firm in a perfectly competitive industry. The firm is
A) making an economic profit.
B) incurring an economic loss.
C) breaking even.
D) at its shutdown point.
E) larger than the other firms in the industry.
Which of the following quotes shows a contestable market in the widget industry?
A) “I am producing extra widgets, even though it costs me short-run profits, to stop
Wally’s Widgets from expanding into my market.”
B) “I am producing more widgets than Wally and I agreed to in our talk last week.”
C) “If only Wally and I could agree on a higher price, we could make more profits.”
D) “I have been spending extra on research and development of my new two-way
widget.”
E) None of the above
A constraint on union effectiveness is
A) the downward-sloping labour demand curve.
B) the minimum wage law.
C) the Fair Labour Standards Practices Act.
D) increasing export competitiveness.
E) the competition of other unions.
Consider the market for hot dogs. If this market becomes a monopoly, then there will be
A) underproduction of hot dogs.
B) overproduction of hot dogs.
C) a deadweight loss in the market for hot dogs.
D) an efficient quantity of hot dogs.
E) both A and C are correct.
A firm that uses the latest technology ________ technologically efficient because
________.
A) is not necessarily; the firm might not use the least amount of inputs to produce a
given output
B) is not necessarily; new technology is more expensive than old technology
C) is; efficiency is about costs rather than when the technology was developed
D) is; new technology isn’t developed unless it is efficient
E) is; most consumers want access to the latest technology
If the economy is in a recession, and the government has a budget deficit, then there
A) must be a structural deficit.
B) must be a structural surplus.
C) may be a structural deficit, but not a structural surplus.
D) may be a structural surplus, but not a structural deficit.
E) may be either a structural surplus or deficit.
Use the table below to answer the following question.
Table 15.3.1
Consider the game shown in Table 15.3.1 based on potential gas prices between two
competitors. The game is played repeatedly and the result is a cooperative equilibrium.
The payoffs in the table show the economic profit of the firms. The most likely outcome
is
A) a cycle of first $0.95/litre, then $1.15/litre, etc.
B) Hare sets her prices at $1.15/litre, and Turtle sets his at $0.95/litre.
C) Hare sets her prices at $0.95/litre, and Turtle sets his at $1.15/litre.
D) both set their prices at $1.15/litre.
E) both set their prices at $0.95/litre.
Use the table below to answer the following questions.
Table 10.2.2
Three methods of making one medical hologram
In Table 10.2.2, which method of making a medical hologram is technologically
efficient?
A) 1 only
B) 2 only
C) 3 only
D) all of the above
E) 1 and 3 only
Shelly’s budget line is shown in Figure 9.1.1. Which points are affordable given her
income and current prices?
A) A only
B) B only
C) C only
D) D only
E) A, C, and D
Economic profit equals
A) total fixed cost plus total variable cost.
B) total revenue minus marginal cost.
C) marginal revenue minus marginal cost.
D) total revenue minus total cost.
E) total revenue minus total variable cost.
When labour productivity increases, the demand for labour curve ________ and the
supply of labour curve ________.
A) shifts rightward; shifts rightward
B) shifts rightward; does not shift
C) shifts leftward; shifts rightward
D) shifts leftward; does not shift
E) shifts rightward; shifts leftward
Since 1960, Canadian labour force participation rate has ________ and the
unemployment rate has ________.
A) trended higher; trended higher
B) trended lower; varied over the business cycle
C) varied over the business cycle; trended higher
D) trended higher; varied over the business cycle
E) trended higher; trended lower
Along the short-run Phillips curve, if the actual unemployment rate falls below the
natural unemployment rate, the
A) actual inflation rate will be equal to the expected inflation rate.
B) actual inflation rate will be greater than the expected inflation rate.
C) actual inflation rate will be less than the expected inflation rate.
D) actual inflation rate may be greater than, equal to, or less than the expected inflation
rate
E) expected inflation rate will fall to zero.
If the cross elasticity of demand between peanut butter and jelly is negative, then
A) a rise in the price of peanut butter results in a rise in the equilibrium price of jelly.
B) a rise in the price of peanut butter results in a fall in the equilibrium price of jelly.
C) a rise in the price of peanut butter has no effect on the equilibrium price of jelly.
D) a fall in the price of peanut butter results in a fall in the equilibrium price of jelly.
E) peanut butter and jelly are substitutes.
Markets
I. enable buyers and sellers to get information.
II. are defined by economists as geographical locations where trade occurs.
III. have evolved because they facilitate trade.
Which of the above statements are correct?
A) I only
B) III only
C) I and III only
D) II and III only
E) I, II and III
As soon as diminishing returns set in, a firm’s
A) marginal product increases.
B) average fixed cost decreases.
C) marginal cost decreases.
D) marginal cost increases.
E) total cost decreases.
An increase in disposable income shifts the supply of loanable funds curve
A) leftward and decreases the real interest rate.
B) leftward and increases the real interest rate.
C) rightward and decreases the real interest rate.
D) rightward and increases the real interest rate.
E) rightward and the demand for loanable funds curve leftward.
Refer to Figure 5.3.1. At the efficient quantity, the price is
A) $20 a unit.
B) $15 a unit.
C) $10 a unit.
D) $5 a unit.
E) zero.