Which point in Figure 19.1.2 indicates that the richest 20 percent of families earn 40
percent of the income?
A) a
B) b
C) c
D) d
E) the origin
Use the table below to answer the following questions.
Table 8.1.1
Refer to Table 8.1.1. The value of B is
A) 30.
B) 47.
C) 42.
D) 18.
E) 0.
The problem of scarcity applies
A) to all countries, regardless of their level of development.
B) only in industrially developed countries because resources are scarce in these
countries.
C) only in developing countries because resources are scarce in these countries
D) only in countries that are over-populated
E) only in countries that use natural resources in most of their production processes
In real business cycle theory, the supply of labour
A) increases if the nominal interest rate rises.
B) is independent of the real interest rate.
C) decreases if the real interest rate rises.
D) decreases if the real interest rate falls.
E) decreases if the real wage rate decreases.
Nominal money is equal to real
A) money times the price level.
B) GDP times the price level.
C) GDP times the GDP deflator.
D) money divided by the price level.
E) GDP times real money.
The cost of the CPI basket in base-period prices is $200 and the cost of the CPI basket
in current-period prices is $450. The CPI in the current year is
A) 450.
B) 225.
C) 300.
D) 250.
E) 44.44.
If each household made the same amount of income, then the Lorenz curve would be
A) not defined, because it measures income inequality not income equality.
B) the line of poverty.
C) the line of equality.
D) a right angle.
E) horizontal.
Which one of the following variables can change without creating a shift of the
aggregate demand curve?
A) the interest rate
B) price level
C) the tax rate
D) expectations about inflation
E) monetary policy
Use the figure below to answer the following question.
Figure 13.2.4
Refer to Figure 13.2.4. Grannie’s is the only cake bakery on Coastal Island. The graph
shows Grannie’s demand curve, marginal revenue curve, and marginal cost curve.
Grannie’s profit-maximizing price is ________ a cake and its profit-maximizing output
is ________ cakes a week.
A) $28; 12
B) $16; 12
C) $36; 2
D) $16; 24
E) $24; 16
Refer to Figure 1A.3.4. In Figure 1A.3.4, the slope at point B
A) lies between -2/3 and -1.
B) lies between -3/4 and -3/2.
C) lies between -2/3 and -4/3.
D) lies between 1 and 3/2.
E) is greater than 3/2.
If prices at Wendy’s rise, more consumers buy their meals at McDonald’s and fewer
consumers buy their meals at Wendy’s. This is an example of
A) consumers’ action to boycott Wendy’s.
B) outlet substitution.
C) commodity substitution.
D) new good bias.
E) quality change bias.
Which of the following results in a rightward shift of your indifference curves for
gasoline and movie rentals?
A) an increase in the price of a litre of gasoline with no change in the price of a movie
rental
B) an increase in the price of a movie rental with no change in the price of a litre of
gasoline
C) an increase in income if gasoline and movie rentals are normal goods
D) a decrease in the price of a litre of gasoline or a decrease in the price of a movie
rental
E) none of the above
Capture theory states that
A) public officials favour consumers over producers.
B) regulations promote the attainment of an efficient outcome.
C) regulations lead to deadweight loss.
D) regulation eliminates economic profit.
E) rate of return regulation is best for all parties.
Refer to Fact 6.5.1. With no penalty on buyers, if a penalty for breaking the law is
imposed on sellers at more than $5 a disc, the equilibrium price of an illegal disc
A) rises and the quantity sold decreases.
B) rises and the quantity sold increases.
C) falls below $3 and the quantity sold decreases.
D) rises to a price between $3 and $8 and the equilibrium quantity does not change.
E) falls below $3 and the quantity sold increases.
What will happen in the long run if firms in monopolistic competition incur economic
loss?
A) Firms will continue producing and endure the losses.
B) Firms will leave the industry until the remaining firms make positive economic
profit.
C) Firms will ask the government for financial aid.
D) Firms will leave the industry until the remaining firms make zero economic profit.
E) The level of investment in this industry will increase to boost the economy.
The proposition that protection is necessary to allow an infant industry to grow into a
mature industry so that it can compete in world markets is the
A) infant-maturity argument.
B) infant-industry argument.
C) new industry proposition.
D) growth proposition.
E) dynamic comparative advantage argument.
Refer to Figure 24.5.1. Everything else remaining the same, which graph best shows a
decrease in real GDP?
A) (a)
B) (b)
C) (c)
D) (d)
E) (a) and (c)
Usually the imposition of trade barriers affecting a particular good benefits ________
people domestically, each of whom gains a ________.
A) a few; little
B) a few; lot
C) many; little
D) many; lot
E) We can’t determine the relative benefits from the imposition of trade barriers.
Refer to Figure 16.3.1. The figure shows the marginal private benefit curve, the
marginal social benefit curve, and the market supply curve. If a voucher is given to
consumers that generates an efficient outcome, then producers receive a price of
A) zero.
B) P1 per unit.
C) P2 per unit.
D) P3 per unit.
E) P4 per unit.
All of the following statements are true except
A) total revenues have no strong trends.
B) revenues include corporate income taxes, personal income taxes; indirect taxes and
investment income.
C) the main source of fluctuations in revenues is corporate income taxes.
D) indirect taxes decreased during the 2000s.
E) personal income taxes decreased during the 2000s.
Suppose new information leads people to expect future appreciation of the Canadian
dollar. Then all of the following occurs except
A) the demand for dollars increases.
B) the supply of dollars decreases.
C) the current exchange rate rises.
D) the interest rate must rise.
E) none of the above
When the Bank of Canada fights recession by lowering the overnight loan rate, the
supply of loanable funds curve shifts ________, and the aggregate demand curve shifts
________.
A) leftward; leftward
B) leftward; rightward
C) rightward; leftward
D) rightward; rightward
E) rightward and the demand for loanable funds curve shifts rightward; rightward
Use the figure below to answer the following questions.
Figure 28.2.3
Refer to Figure 28.2.3. Assume that the figure illustrates an economy initially in
equilibrium at the intersection of the SAS0 curve and the AD0 curve. If the aggregate
demand curve is correctly expected to shift to AD1, new equilibrium real GDP is
________ and the new equilibrium price level is ________.
A) $380 billion; 125
B) $500 billion; 150
C) $500 billion; 100
D) $620 billion; 125
E) $500 billion; 125
Pollution occurs when lumber is produced. If the lumber market is unregulated, there
would be
A) overproduction of lumber compared to the efficient amount.
B) underproduction of lumber compared to the efficient amount.
C) sometimes overproduction and sometimes underproduction of lumber compared to
the efficient amount.
D) an external benefit from producing lumber.
E) no deadweight loss from production.
Suppose there is an increase in exports. Assuming the price level is held constant,
which one of the following best describes the sequence of changes in the economy?
A) Autonomous expenditure increases, induced expenditure increases, real GDP
increases, and the price level rises.
B) Induced expenditure increases, autonomous expenditure increases, real GDP
increases, and consumption increases.
C) Induced expenditure increases, real GDP increases, autonomous expenditure
increases, and the price level increases, lowering autonomous expenditure and real GDP
increases by a smaller amount.
D) Induced expenditure increases, real GDP increases, autonomous expenditure
increases, real GDP increases more, autonomous expenditure increases again, etc.
E) Autonomous expenditure increases, real GDP increases, induced expenditure
increases, real GDP increases more, induced expenditure increases again, and the
process continues until equilibrium expenditure is reached.
Social interest theory predicts that the political process will seek to minimize
A) producer surplus.
B) consumer surplus.
C) total surplus.
D) deadweight loss.
E) average total cost.
Consider Devon’s total utility from snorkeling and windsurfing in Table 8.2.1. Suppose
that Devon’s total income rises from $35 to $55, ceteris paribus. Given that Devon
changes his choice of windsurfing and snorkeling, what is his income elasticity for
windsurfing?
A) zero
B) 28.6
C) 44.4
D) 0.64
E) 1.55
In Figure 19.1.3, the poorest 20 percent of all families receive what share of income?
A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent
E) 50 percent
Refer to Table 12.1.1 which gives the demand schedule for a perfectly competitive firm.
If the firm sells 6 units of output, marginal revenue is
A) $15.
B) $30.
C) $75.
D) $90.
E) $105.
A firm in a monopolistically competitive market
A) faces an upward-sloping demand curve.
B) faces a downward-sloping demand curve.
C) does not practice product differentiation.
D) faces a horizontal demand curve.
E) has few competitors.
Which of the following influences household saving?
I. The real interest rate
II. Disposable income
III. Expected future income
A) I only
B) I and II only
C) I and III only
D) I, II, and III only
E) II and III only
An idea of fairness that emphasizes equality of opportunity is
A) fair results.
B) fair rules.
C) fair incomes.
D) utilitarianism.
E) modified utilitarianism.
Which of the following items would be included in a current measure of GDP?
A) your labour in fixing a leaky pipe under your sink
B) the value of safety on the streets of your community
C) a professional gardener who regularly cuts your lawn
D) the illegal sale of a bag of marijuana
E) your purchase of a used car