When the Bank of Canada lowers the overnight loans rate, the Canadian dollar
________ on the foreign exchange market and ________.
A) falls; aggregate demand decreases
B) rises; aggregate demand decreases
C) falls; the increase in imports is greater than the increase in exports
D) falls; aggregate demand increases
E) rises; U.S. aggregate demand decreases
Which of the following factors influence the demand for Canadian dollars?
A) The exchange rate and the world demand for Canadian exports.
B) Interest rates in Canada and other countries, and the expected future exchange rate.
C) The world demand for Canadian exports and Canadian demand for imports.
D) Both A and B are correct.
E) Both B and C are correct.
Refer to Fact 15.1.1. If Monster and Red Bull successfully formed a cartel, the priced
charged for energy drinks would ________ and economic profit would ________.
A) rise; increase
B) rise; decrease
C) fall; increase
D) fall; decrease
E) remain unchanged; remain unchanged
Real GDP is $2,560 billion, the GDP deflator is 125 (a price level of 1.25), and the
velocity of circulation is 5. The quantity of money is
A) $2,048 billion.
B) $625 billion.
C) $20.48 billion.
D) $400 billion.
E) $640 billion.
Refer to Table 12.2.1, which gives the total revenue schedule and total cost schedule of
a perfectly competitive firm. Economic profit is maximized when the firm produces
________ units of output.
A) zero
B) 7
C) 3
D) 6
E) 5
A behavioural economist will explain Tom’s donation to charity by saying that Tom is
displaying
A) the endowment effect.
B) bounded rationality.
C) bounded self-interest.
D) bounded willpower.
E) the neuro effect.
If both demand and supply increase, then the equilibrium price
A) and equilibrium quantity increases.
B) falls but the equilibrium quantity increases.
C) could either rise or fall, but the equilibrium quantity increases.
D) rises, and the equilibrium quantity could either increase or decrease.
E) falls, and the equilibrium quantity could either increase or decrease.
Refer to Table 6.3.1. Suppose a sales tax of $2 a unit is imposed on the good described
in the table. The buyers’ share of the tax is
A) $2.00.
B) $1.50.
C) $1.00.
D) zero.
E) $2.50.
Which theory of economic growth argues that growth does not automatically slow
down?
A) classical growth theory
B) neoclassical growth theory
C) new growth theory
D) all of the theories
E) none of the theories
Which of the following is not correct?
A) Investment is the purchase of new plant, equipment, and buildings and the additions
to inventories.
B) Net investment equals gross investment minus depreciation.
C) Depreciation decreases the value of a firm’s capital.
D) Gross investment is the amount by which the value of capital increases.
E) Gross investment is the total amount spent buying new capital and replacing
depreciated capital.
If income decreases, the budget line
A) becomes steeper.
B) becomes flatter.
C) shifts leftward and parallel to the original budget line.
D) shifts rightward and parallel to the original budget line.
E) shifts parallel either leftward or rightward depending on whether the goods measured
on the axes are normal or inferior.
Intellectual property ________.
A) includes land and buildings
B) includes stocks and bonds and money in the bank
C) is the intangible product of creative effort
D) is protected by copyrights and patents
E) Both C and D are correct.
Refer to Figure 31.3.1. With the tariff, Canada imports ________ million shirts per year.
A) 24
B) 8
C) 32
D) 16
E) 40
A Nash equilibrium occurs when
A) there is a clear strategy for each player independent of the other player’s actions.
B) each player takes the best possible action given the other player’s action.
C) each player complies with the collusive agreement.
D) you cooperate until the other player cheats, and then you cheat forever.
E) jail time is minimized.
A fall in the price of X from $6 to $4 results in an increase in the quantity of Y
demanded (at the current price of Y) from 900 to 1,100 units. What is the cross elasticity
of demand between X and Y?
A) 0.5
B) -0.5
C) 2
D) -2
E) Either A or B, depending on whether X and Y are substitutes or complements.
Use the figure below to answer the following questions.
Figure 17.2.1
Refer to Figure 17.2.1. Curve MBA is Andrew’s marginal benefit curve for a private
good and curve MBB is Betty’s marginal benefit curve for the same private good. If
Andrew and Betty are the only two consumers in the economy, which point would be
on the economy’s marginal social benefit curve?
A) price of $20, quantity of 3 units
B) price of $20, quantity of 4 units
C) price of $10, quantity of 4 units
D) price of $30, quantity of 0 units
E) price of $60, quantity of 1 units
Firms in monopolistic competition constantly develop new products in an effort to
A) increase the demand for their product.
B) make the demand for their product unit elastic.
C) increase the marginal cost of their product.
D) decrease average total cost.
E) decrease average fixed cost.
For which one of the following will demand be the most price inelastic?
A) milk
B) Happy Cow brand milk
C) Happy Cow brand milk in Regina
D) Happy Cow brand milk at Ralph’s Grocery Store in Regina
E) All of the above will exhibit the same price elasticity of demand.
A firm’s opportunity cost includes
A) the cost of using resources bought in the market and owned by the firm only.
B) the cost of using resources bought in the market, owned by the firm, and supplied by
the firm’s owner.
C) only costs that are paid in cash or by cheque.
D) the cost of using resources supplied by the firm’s owner only.
E) economic profit.
A group of business people are having coffee. Which of the following quotations
describes transactions costs?
A) “The new production process we’ve installed uses less capital and labour than the old
one.”
B) “The new assembly line has higher capital costs, but the fall in workers’ hours has
lowered overall costs.”
C) “The costs of per-unit production have fallen dramatically as we have increased the
length of the production runs.”
D) “Despite the higher costs of negotiating the contracts, hiring the cleaning firm is
much cheaper than using our own staff.”
E) “The computer servicing people we have hired work very well as an integrated
problem-solving group.”
Figure 17.3.2 shows the marginal private cost curve, marginal social cost curve, and
marginal social benefit curve for raising goats on a common pasture. The efficient
quantity is
A) 0 goats.
B) 40 goats.
C) 50 goats.
D) 55 goats.
E) 35 goats.
Sam buys gasoline and coffee each week. To draw his budget line for gasoline and
coffee, Sam needs to know
A) how much income he has to spend on gasoline and coffee, the price of a litre of
gasoline, and the price of a cup of coffee.
B) only the price of a litre of gasoline and the price of a cup of coffee.
C) only how much coffee he wants to drink and how much gasoline he needs.
D) only how much income he has to spend on coffee and gasoline.
E) what he needs moregasoline or coffee.
When a deadweight loss occurs in a market, we can be certain that
A) taxes have been imposed in the market.
B) the market is a monopoly.
C) there is underproduction in the market.
D) the entire economy experiences a loss.
E) both A and C.
Consider the production possibilities frontier in Figure 2.1.2. Which of the following
statements is false?
A) Resources are not equally useful in all activities.
B) Points inside the production possibilities frontier indicate unused or misallocated
resources.
C) Starting at point A, an increase in the production of Y will shift the production
possibilities frontier outward.
D) The opportunity cost of producing Y increases as production of Y increases.
E) The opportunity cost of producing X increases as production of X increases.
As the wage rate rises, a household will have a backward-bending supply of labour
curve if
A) the income effect reinforces the substitution effect.
B) the wage rate rises above the reservation wage.
C) the substitution effect dominates the income effect.
D) the income effect dominates the substitution effect.
E) leisure is an inferior good.
If the exchange rate is 97 U.S. cents per Canadian dollar, then
A) the Canadian dollar is cheaper than the U.S. dollar.
B) the U.S. dollar is more expensive than the Canadian dollar.
C) the Canadian dollar will appreciate.
D) one U.S. dollar will buy 1.03 Canadian dollars.
E) one U.S. dollar will buy 0.97 Canadian dollars.
Monika will choose to eat a seventh pizza slice if
A) the marginal benefit from the seventh slice is greater than its marginal cost.
B) the marginal benefit from the seventh slice is less than its marginal cost.
C) the total benefit from all seven slices is greater than their total cost.
D) the total benefit from all seven slices is less than their total cost.
E) she has enough money to pay for it.
Which of the following lead to an inefficient outcome?
I. Decreasing marginal social benefit
II. Taxes
III. High transactions cost
A) I only
B) II only
C) I and III
D) II and III
E) I, II and III
When a firm implements offshore outsourcing, consumers in Canada ________,
workers in Canada in the industry that is being outsourced ________ and workers in the
foreign country in the industry that is being outsourced ________.
A) gain; lose; lose
B) lose; lose; gain
C) lose; gain; lose
D) gain; lose; gain
E) gain; gain; gain
Consider the natural monopoly depicted in Figure 13.3.4. What area in the graph
represents the deadweight loss arising from an unregulated monopoly?
A) ABD
B) DGF
C) DEF
D) ACF
E) CBDE