Business cycles are
A) irregular, with some having two recessions and no expansion.
B) predictable, with a recession following a trough.
C) unpredictable, but always have two phases and two turning points.
D) unpredictable, and don’t always have two phases and two turning points.
E) predictable, with an expansion following a trough.
The economic benefit of a patent or copyright must be balanced against
A) the external benefit from the good.
B) the external cost of the good.
C) the marginal private cost of the good.
D) the cost of temporary monopoly.
E) the marginal social cost of the good.
Which one of the following is most likely to be a natural monopoly?
A) sandwich shops
B) printing services
C) welding services
D) automotive service
E) electric utilities
Which of the following quotations best describes purchasing power parity?
A) “The recent high Canadian interest rate has increased demand for the Canadian
dollar.”
B) “The market feeling is that the Canadian dollar is overvalued and will likely
depreciate.”
C) “The price of bananas is the same in Canada and the United States, adjusting for the
exchange rate.”
D) “The expected depreciation of the Canadian dollar is currently lowering demand for
it.”
E) “Goods purchased in Canada are cheaper then in the United States.”
Marginal utility theory predicts that a rise in the price of a banana results in
A) the demand curve for bananas shifting rightward.
B) the demand curve for bananas shifting leftward.
C) a movement upward along the demand curve for bananas.
D) a movement downward along the demand curve for bananas.
E) the demand curve for bananas shifting rightward and the supply curve for bananas
shifting rightward.
The idea of fairness that has been developed to deal with the big tradeoff is the idea that
A) fair distribution of the economic pie is the one that costs the richest person the least
amount of money.
B) fair distribution of the economic pie is the one that makes everyone equal.
C) we should treat other people as we would like to be treated.
D) fair distribution of the economic pie is the one that makes the poorest person as well
off as possible.
E) we need to make a bigger economic pie.
If a turnip is an inferior good, then, ceteris paribus, an increase in the price of a turnip
will
A) decrease the demand for turnips.
B) increase the demand for turnips.
C) decrease the supply of turnips.
D) increase the supply of turnips.
E) decrease the quantity of turnips demanded.
The Bank of Canada does not do which of the following?
A) supervise chartered banks
B) lend money to the public
C) act as a lender of last resort to banks
D) issue bank notes
E) hold government of Canada securities
Suppose the price of a television set rises by 10 percent. Which one of the following
would we expect to be the most elastic following such a price change?
A) the momentary supply of television sets
B) the short-run supply of television sets
C) the long-run supply of television sets
D) the momentary demand for television sets
E) the normal demand for television sets
Toyota Plans to Build a Better Company
Toyota will continue to produce 3 million cars per year and use the balance of its
resources to upgrade its workers’ skills and create new technology. In three years’ time,
Toyota plans to produce better cars and be more productive.
Consider Toyota’s PPF, which measures cars on the x-axis and new skills and new
technology on the y-axis. Toyota’s opportunity cost of upgrading workers’ skills and
creating new technology is
A) increased worker productivity.
B) zero.
C) more cars produced in the future.
D) fewer cars produced in the current year.
E) dependent on whether other car manufacturers also upgrade workers’ skills and
create new technology.
Deflation occurs when
A) aggregate demand increases at a persistently slower rate than aggregate supply.
B) aggregate demand increases at a persistently faster rate than aggregate supply.
C) the growth rate of potential GDP slows.
D) the quantity of money remains constant.
E) the quantity theory of money is disregarded.
Consider Table 23.2.2. If planned saving increases by $0.5 trillion at each real interest
rate, what is the new equilibrium real interest rate?
A) 5.5 percent a year
B) 5 percent a year
C) 4.5 percent a year
D) 6.0 percent a year
E) There is no new equilibrium real interest rate.
Which of the following statements about Canada’s international trade in 2013 is
correct?
A) The value of Canada’s imports exceeded the value of Canada’s exports.
B) The value of Canada’s exports was about 45 percent of the value of total expenditure
in Canada.
C) Canada imported only goods.
D) Canada was the world’s second largest trader.
E) Canada exported only goods.
A tradeoff exists when
A) we move from a point within the production possibilities frontier (PPF) to a point on
the PPF.
B) we move from a point on the PPF to a point within the PPF.
C) the PPF shifts outward.
D) we move along the PPF.
E) the PPF shifts towards the origin.
You have the choice of going on vacation to Florida for one week, staying at work for
the week, or spending the week doing fix-up projects around your house. If you decide
to go to Florida, the opportunity cost of the trip is
A) working and doing fix-up projects.
B) working or doing fix-up projects, depending on which you would have done
otherwise.
C) working, because you would be giving up dollars.
D) nothing because you will enjoy the trip to Florida.
E) variable depending on the weather you leave behind in Canada.
If the rate of interest is 15 percent per year, the present value of the $200 to be received
in two years is
A) $170.00.
B) $185.00.
C) $173.91.
D) $264.50.
E) $151.23.
Which one of the following statements is false?
A) The average total cost curve and average variable cost curve are U-shaped.
B) The gap between the average total cost curve and the average variable cost curve
equals marginal cost.
C) The gap between the average total cost curve and the average variable cost curve
narrows as output increases.
D) The marginal cost curve intersects the average variable cost curve at minimum
average variable cost.
E) The marginal cost curve intersects the average total cost curve at minimum average
total cost.
Which one of the following topics does microeconomics study?
A) reasons for a fall in the price of orange juice
B) the effect of a rise in the Canadian dollar on Canada’s exports
C) effect of interest rates on national economic growth
D) effect of the government budget deficit on employment
E) determination of total production in a country
Which of the following occurs with both perfectly price-discriminating and single-price
monopolies?
A) The amount of output is inefficient.
B) All consumer surplus goes to the monopoly.
C) Deadweight loss is created.
D) There is a redistribution of consumer surplus to the monopoly.
E) Demand is perfectly elastic.
If Canada imposes a tariff on imported cars,
A) Canada’s demand curve for cars shifts rightward.
B) Canada’s demand curve for cars shifts leftward.
C) Canada’s supply curve of cars shifts rightward.
D) Canada’s supply curve of cars shifts leftward.
E) the price of a car in Canada rises but neither Canada’s demand curve nor Canada’s
supply curve shifts.
Which one of the following statements is true about the indifference curves for two
goods that are close but not perfect substitutes?
A) The indifference curves are negatively-sloped straight lines.
B) The indifference curves are L-shaped.
C) The marginal rate of substitution is constant.
D) The marginal rate of substitution decreases as more of the good measured on the
x-axis and less of the good measured on the y-axis are consumed.
E) The marginal rate of substitution is negative.
Use the figure below to answer the following question.
Figure 1A.2.2
In Figure 1A.2.2, the variables x and y
A) move in the same direction.
B) are negatively related.
C) are always equal.
D) are unrelated
E) are positively related.
Consider Fact 21.2.1. Choose the statement that is incorrect.
If the labour market is working properly, there is still unemployment because
A) there are always firms laying off workers, and these workers search for another job.
B) there are always discouraged searchers.
C) there are always workers leaving one job to search for another job.
D) there are always workers who have left the labour market in the past and are
entering the labour market to search for work.
E) there are always students who have finished school who are entering the labour
market to search for work.
Mr. Smith’s firm competes in a perfectly competitive market. The firm is currently
hiring 30 workers. The value of marginal product of the last worker is $7.00 per hour.
The wage rate is $8.00 per hour. To increase profit, Mr. Smith should
A) continue hiring 30 workers because the firm earns a surplus of $1.00 on each worker
hired.
B) increase the price of the firm’s product so that the value of marginal product
increases to $8.00 per hour.
C) decrease the price of the firm’s product so that the value of marginal product
increases to $8.00 per hour.
D) decrease the number of workers until the value of marginal product of labour equals
$8.00.
E) increase the number of workers until the value of marginal product of labour equals
$8.00.
In the Canadian economy, the command system
A) is not used at all.
B) is used occasionally inside firms and government departments.
C) is used only by private companies.
D) is used extensively in place of markets.
E) is used extensively inside firms and government departments.
Refer to Table 4.1.1. Demand is unit elastic when the price falls from
A) $8 to $7.
B) $7 to $6.
C) $6 to $5.
D) $5 to $4.
E) $4 to $3.
Refer to Table 15.2.1. This table includes the sentences that Bob and Joe will receive if
convicted. They have been apprehended by the police under the suspicion of
committing armed robbery. The two are immediately separated and questioned about
the case. Which one of the following observations is correct?
A) If Joe confesses, Bob would be better off not confessing.
B) If Bob confesses, Joe would be better off confessing.
C) The outcome of the game, assuming Joe and Bob cannot collude, is they will both go
free.
D) If Joe does not confess, Bob would be better off confessing.
E) The outcome of the game, assuming Joe and Bob cannot collude, is they will both
confess.
Which one of the following variables has an induced component?
A) investment
B) consumption
C) exports
D) government expenditure on goods and services
E) consumption and investment
Refer to the table below to answer the following question.
Table 7.2.2
Table 7.2.2 shows a country’s demand and supply schedules. Based on Table 7.2.2, at
what world price would the country export?
A) at only $8 a unit
B) any price below $8
C) a price of $6 a unit
D) a price of $4 a unit
E) any price above $8 a unit
An increase in autonomous expenditure shifts the AE curve
A) upward but leaves its slope unchanged.
B) upward and the curve becomes steeper.
C) downward but leaves its slope unchanged.
D) downward and the curve becomes steeper.
E) upward and the curve becomes less steep.
Given that pollution is a by-product of some production processes,
A) GDP accountants adjust GDP downward.
B) GDP accountants adjust GDP upward.
C) GDP accountants do not adjust GDP unless pollution is a serious problem.
D) GDP tends to overstate economic well-being.
E) GDP tends to understate economic well-being.
The price of one good divided by the price of another good is
A) an absolute price.
B) a relative price.
C) a marginal price.
D) a demand price.
E) a money price.
Use the figure below to answer the following questions.
Figure 5.2.2
Refer to Figure 5.2.2. If the price is P0, 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.