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Questions in this quiz (69)
1All of the following are macroeconomic goals EXCEPT?
- AEquitable distribution of income.
- BFull employment.
- CManageable government debt and deficit.
- DEconomic growth.
- EZero inflation.
2In 2021, which of the following was true?
- AThe highest quintile of Canadian families received 60% of disposable national income.
- BThe second, third and fourth quintiles of Canadian families received almost equal shares of disposable income.
- CThe second highest quintile of Canadian families received 40% of disposable income.
- DThe lowest quintile of Canadian families received just over 7% of disposable income.
3The statement, "water freezes at 40 degrees Celsius", can be defined as:
- AA positive statement.
- BBoth a positive and a normative statement.
- CNeither a normative nor a positive statement.
- DA normative statement.
- EA correct statement.
4Over the last fifty years:
- ACanada's imports have generally exceeded its exports.
- BCanada's exports have sometimes exceeded its imports and sometimes its imports have exceeded its exports
- CCanada's balance of trade has been persistently negative.
- DCanada's exports have generally exceeded its imports.
5Using Canada as your home country, all of the following are examples of an import EXCEPT:
- AA Canadian paying for technical support from a company in Germany.
- BA tourist from Japan visiting Canada.
- CA Pharmacy in Halifax buying vaccines made in Sweden
- DThe Canadian government buying American made Jet fighters.
6In the last twenty years the Canadian government has:
- Arun both budget deficits and surpluses.
- Bpersistently run budget surpluses.
- Cbalanced its budget in each year.
- Dpersistently run budget deficits.
7Which of the following statements describes the law of increasing costs?
- AThe total cost of production rises as output goes up.
- BThe prices of consumer goods always rise and never fall.
- CAs the economy's production level of any particular item decreases, its opportunity cost rises.
- DIf someone waits to make a purchase, they will pay a higher price.
- EAs the economy's production level of any particular item increases, its opportunity cost rises.
8All of the following, except one, are tools used by governments to help achieve their economic goals? Which is the exception?
- AFiduciary policy.
- BMonetary policy.
- CFiscal policy.
- DDirect controls.
9Using Canada as your home country, all of the following are examples of an import EXCEPT:
- AA Canadian buying beer manufactured in Mexico.
- BA business in Thunder Bay purchasing a computer made in China.
- CA resident of Saskatoon purchasing Cheese made in France.
- DSomeone from New York buying a Canadian made Jacket.
10Which of the following is true about economics?
- AIt is more complex than reality.
- BIt ignores reality in developing models.
- CIt is a pure science.
- DIt deals in generalities.
11Three bushels of wheat are sold to a mill for $10 each. The mill then sells 6 sacks of flour to the baker for $15 each. The baker bakes 40 loaves of bread and sells them from his shop for $3 each. How much did the GDP increased by?
- A$120
- B$240
- C$210
- D$30
- E$90
12Which of the following is an example of an investment?
- APurchase of a share of Facebook.
- BThe purchase of government bonds by an investment dealer.
- CThe construction of a new building for a bank.
- DThe government constructing a high speed rail line.
13Which of the following statements supports the argument that larger real GDP per capita figures means a better life for the population?
- AIn the measurement of GDP, no distinction is made as to the type of goods produced.
- BWork such as housecleaning, which used to be entirely a non-market activity, is becoming more and more a market activity.
- CGreater economic growth leads to more spending on protecting the environment.
- DHigher production has negative side-effects, such as more pollution.
14How does government spending on goods and services differ from government transfer payments?
- AThe former represents payments for purchases of goods and services but the latter does not.
- BThe former is done by the federal government and the latter by provincial governments.
- CThey are the same thing and therefore there is no difference.
- DThe former does not include investment spending but the latter does.
15Which market is involved if you buy milk from a 711?
- AThe product market.
- BA farmer's market.
- CThe factor market.
- DThe raw material market.
16In order to calculate net domestic income at basic prices, which of the following adjustments must be made to gross domestic income at market prices?
- ABoth depreciation and taxes on products (net of subsidies) are added
- BTaxes on products (net of subsidies) is added and depreciation is deducted
- CBoth depreciation and taxes on products (net of subsidies) are deducted
- DTaxes on products (net of subsidies) is deducted and depreciation is added
17All of the following, except one, adjustments to national income are necessary to obtain personal income. Which is the exception?
- ASubtract Taxes on products.
- BSubtract corporate-profit taxes.
- CSubtract other income not paid out.
- DSubtract undistributed profits.
- EAdd government transfer payments.
18How could reported GDP remain constant when production has risen?
- AIf the increase in production was in the form of a non-market activity.
- BIf underground production fell.
- CIf the price level rises.
- DIf inventories fall.
19Generally speaking, what is the smallest component of aggregate spending?
- ANet exports.
- BInvestment.
- CConsumption.
- DWages, interest, rents and profits.
- EGovernment purchases of goods and services.
20Under what condition could the number of people employed and the number of people unemployed both increase?
- AIf the total number of discouraged workers increased.
- BIf the economy entered a severe recession.
- CIf the total population decreased.
- DIf the number of people in the labour force grew slower than the increase in the number of people employed.
- EIf the number of people in the labour force increased more than the number of people employed.
21Truscan's nominal GDP rose by 7% between 2023 and 2024. If its inflation rate was 2%, by how much did its real GDP increase?
- A14%
- B1.4%
- C5%
- D9%
22What occurs at the economy's natural rate of unemployment?
- APotential GDP is above actual GDP.
- BOnly structural unemployment exists.
- CThe economy achieves its output potential.
- DOnly frictional unemployment exists.
- EFrictional and structural unemployment are zero.
23Which of the following is required to construct a consumer price index?
- AThe calculation of changes in the level of consumption spending.
- BThe determination of the inflation rate.
- CThe creation of a representative basket of goods and services.
- DThe choice of a base year in which prices are defined as 100.
24What is the cause of cyclical unemployment?
- AThe declining importance of goods production and the growing importance of service production in our economy.
- BThe normal dynamics of a free market economy.
- CThe recessionary phase of the business cycle.
- DTechnological change.
- EThe changing nature of demand from one product to another.
25Suppose there are 2 million unemployed workers seeking jobs. After a period of time, two hundred thousand of them become discouraged over their job prospects and stop looking for work. What will the effect of this on the unemployment rate?
- AIt will be unchanged.
- BThe question cannot be answered from this information.
- CIt will increase.
- DIt will fall.
- EIt will increase in the short run but would eventually decline.
26What would be the effect of 100,000 unemployed people becoming discouraged workers?
- AThe unemployment rate would remain unchanged, and the size of the labour force would decline.
- BBoth the unemployment rate and the size of the labour force would rise.
- CThe unemployment rate would decline, and the size of the labour force would remain unchanged.
- DBoth the unemployment rate and the size of the labour force would decline.
27Which of the following would be considered cyclically unemployed?
- AA recent commerce graduate seeking the first job
- BA steelworker who was laid off a year ago and now has given up looking for a job.
- CA pulp-mill worker is laid off because the mill's inventories are at an all-time high.
- DA person who has received a small inheritance and is traveling for 6 months before returning to school.
28Suppose the unemployment rate rises in an economy that is starting to recover from a recession. Which of the following best explains the rising unemployment rate?
- ASome unemployed workers are giving up looking for employment.
- BSome part-time workers are now working full-time.
- CSome full-time employees are now working part-time.
- DSome discouraged workers are starting to look for employment.
29Which of the following people would be regarded as employed according to the Statistics Canada definition?
- AA homemaker who does 5 hours of volunteer work each week at the local library.
- BA homemaker who works 14 hours a day taking care of the home and family.
- CA homemaker who works for 5 hours a week at the minimum wage for the local convenience store.
- DA steelworker, laid off a year ago, who has given up looking for a job.
30What does the LAS curve reflect?
- AThe effect of a change in the price level.
- BLess than capacity output.
- CA constant real wage level.
- DVarious levels of employment.
31The aggregate demand curve is downward sloping due to all of these factors EXCEPT:
- AReal balances effect.
- BBecause people prefer to buy more expensive goods.
- CBecause a lower price means higher real wealth and therefore people will purchase more.
- DForeign trade effect.
32Why are the interest-rate, foreign-trade and real balances effects important?
- AThey help explain shifts in the aggregate supply curve.
- BThey help explain why demand-management policies are ineffective in fighting stagflation.
- CThey help explain the shape of the aggregate supply curve.
- DThey help explain the shape of the aggregate demand curve.
- EThey help explain shifts in the aggregate demand curve.
33Which of the following will cause an increase in aggregate supply?
- AAn increase in factor prices.
- BAn increase in exchange rates.
- CAn increase in government spending.
- DAn increase in the labour force participation rate.
34Which of the following statements about the AS curve is true?
- AIt is usually a straight line.
- BThe AS curve will shift when the price level increases.
- CThe curve becomes steeper as it approaches Potential GDP.
- DIt is a function of aggregate demand.
- EReal wages are constant along an AS curve.
35What is the domestic effect of an increase in the incomes of a country's major international trading partners?
Multiple Choice- AThe aggregate demand curve will shift to the left.
- BThe aggregate supply curve will shift to the left.
- CThe aggregate supply curve will shift to the right.
- DThe aggregate demand curve will shift to the right.
36All of the following will cause a shift in the AS curve EXCEPT:
- AA change in the capital stock.
- BA change in the price level.
- CThe introduction of technological change.
- DA rise in wages.
37Assuming that the price level remains unchanged, what will an increase in money wages do?
- AIt will not affect price or output levels.
- BIt will mean lower profits and production levels.
- CIt will affect the LAS curve.
- DIt will mean higher profits and production levels.
- EIt will mean lower profits and no change in production levels.
38In a closed (no government) economy, the value of MTR = 0.2 and MPS = 0.2
Refer to the above information to answer this question. What is the value of the MLR?- A0.8
- B0.04
- C0.4
- D0.5
39If in an economy, the MTR = 0.2, the MPS = 0.25, and the MPM = 0.15, what is the value of the multiplier?
- A2.5
- B3.33
- C2.22
- D2
- E1.67
40What has evidence from modern economies shown to be true of the MPC?
- AIt is higher among richer members of a society.
- BIt does not depend on the level of income
- CIt is higher among poorer members of a society.
- DIt is on average equal to 0.53.
41If in an economy, the MTR = 0.2, the MPS = 0.25, and the MPM = 0.15, what is the value of the MLR?
- A0.4
- B0.55
- C0.6
- D0.5
- E0.3
42What happens to income earned in Canada?
- AIt is spent on consumption, imports, taxes, and investment.
- BIt is spent on consumption, exports, and taxes and saved.
- CIt is spent on imports, taxes, and government spending.
- DIt is spent on exports, imports, and investment and saved.
- EIt is spent on consumption, imports, and taxes and saved.
43Assume that in a particular economy, MPC = 0.6 and the MPM = 0.2. What is the value of the multiplier?
- A2.
- B1.67
- C5
- D0.6
- E1.82
44Which of the following will cause net exports to increase?
- AAn increase in Canadian prices.
- BAn increase in foreign prices.
- CAn appreciation in the Canadian dollar.
- DA decrease in foreign incomes.
45What is the effect of a decrease in the MTR?
- AThe MLR will increase and the multiplier will increase.
- BThe MLR will increase and the multiplier will decrease.
- CThe MLR will decrease and the multiplier will decrease.
- DThe MLR will remain the same but the multiplier will increase.
- EThe MLR will decrease and the multiplier will increase.
46Which of the following statements about the impact of the introduction of free trade is correct?
- AIt results in lower prices for foreign consumers.
- BIt results in higher prices for domestic producers.
- CIt results in higher prices for foreign producers.
- DIt results in higher prices for domestic consumers.
47Suppose that a country has a comparative advantage in the production of wheat. Which of the following statements is true
- AThe purchasing power parity theory must also be in its favour.
- BSpecialization is wise only if exchange rates are fixed.
- CSpecialization is wise only up to a point because of the law of increasing costs.
- DIt must also have an absolute advantage in the production of wheat.
48What is the meant by the terms of trade?
- AThe ratio of the unit value of imports to the unit value of exports.
- BThe ratio of the average value of imports to the average value of exports.
- CThe ratio of the average volume of exports to the average volume of imports.
- DThe ratio of the average price of exports to the average price of imports.
49Which of the following statements about the impact of the introduction of free trade is correct?
- AIt results in lower prices for foreign consumers.
- BIt results in higher prices for domestic producers.
- CIt results in lower prices for domestic consumers.
- DIt results in lower prices for foreign producers.
50All of the following, except one, are reasons why complete free trade may not be possible. Which is the exception?
- AFree trade usually causes a reduction in international competition.
- BTransportation costs might exceed any cost differences between countries.
- CCost differences between countries disappear as one country tries to totally specialize.
- DDifferences in languages and cultures might restrict the amount of trade.
- EHigher taxes in one country than another might exceed any cost differences.
51What could cause the terms of trade to move in a country's favour?
- AIf the average price of its exports increases.
- BIf the costs of transport and insurance falls.
- CIf the average price of its imports increases.
- DIf the average price of its exports decreases.
52By what method may a government be able to decrease the value of its country's currency?
- ABy selling foreign currencies.
- BBy increasing its rate of interest.
- CBy buying foreign currencies.
- DBy buying its own currency.
53If, in the long run, the purchasing power parity theory held true for two countries, what would we expect of the exchange rate for each of these two countries?
- AThey would be gradually decrease.
- BThey would be unpredictable given the information provided.
- CThey would be proportionate to the relative price levels in the two countries.
- DThey would be at par.
54Which of the following will increase Canada's effective exchange rate?
- ADepreciation of the Canadian dollar.
- BDepreciation of the American dollar.
- CAppreciation of the American dollar.
- DAppreciation of the Mexican peso.
55If a French importer can buy 8 Swiss francs for 10 euros, then what is the rate of exchange?
- A1 euro = 1.2 Swiss francs.
- B1 Swiss franc = 1.20 French francs.
- C1 euro = 1.25 Swiss francs.
- D1 euro = 0.8 Swiss francs.
56What is the effect of a counter-cyclical fiscal policy?
- AIt intensifies changes in GDP caused by the business cycle.
- BIt dampens changes in GDP caused by the business cycle.
- CIt has no effect on changes in GDP caused by the business cycle.
- DIt allows the government to balance its budget.
57What will be the effect on the multiplier of a decrease in autonomous taxes?
- AIt will increase.
- BIt will decrease.
- CThere will be no effect on the multiplier.
- DCannot be determined without more information.
58Which of the following statements about counter-cyclical fiscal policy is correct?
- AIt is appropriate in situations of an inflationary gap but not when a recessionary gap exists.
- BIt is appropriate in situations of a recessionary gap but not when an inflationary gap exists.
- CIt is the use of spending or taxation policies by the government to push the economy in a direction opposite to the way it was moving.
- DIt involves only higher government spending.
- EIt involves only higher taxes.
59Which of the following is not a likely outcome of counter-cyclical fiscal policy?
- AIt will likely raise the exchange rate if used to eliminate an inflationary gap.
- BIt will likely reduce unemployment if used to eliminate an inflationary gap.
- CIt can always be directed at a specific region of the country.
- DIt will reduce aggregate demand if used to eliminate an inflationary gap.
- EIt will increase interest rates if used to eliminate an inflationary gap.
60Which of the following is not part of a cyclically-balanced-budget fiscal policy?
- ABudget deficits during expansionary phases.
- BA balanced budget over the life of the business cycle.
- CBudget deficits in periods of a recessionary gap.
- DBudget surpluses in periods of an inflationary gap.
61If the cost of living index goes down, the purchasing power of the dollar will:
- AIt can increase or decrease.
- BRemain unchanged.
- CDecrease.
- DIncrease.
62What happens when a bank has a cheque cleared against it?
- AThe excess reserves of the banking system will fall.
- BThe bank's balance sheet does not change.
- CThe amount of its reserves will fall.
- DThe total supply of money will fall.
- EThe amount of outstanding loans will fall.
63Historically, why were goldsmiths able to create money?
- ABecause consumers and merchants preferred to use gold rather than currency for transactions.
- BBecause they always kept 100 percent reserves.
- CBecause only a few of their customers would redeem their notes for gold at any one time.
- DBecause they held the right to print money.
64Why is the equation MV = PQ an identity and not just an equation?
- ABecause M × V equals real GDP and P × Q equals nominal GDP.
- BBecause M × V equals nominal GDP and P × Q equals real GDP.
- CBecause both M × V and P × Q equal real GDP.
- DBecause both M × V and P × Q equal nominal GDP.
- EBecause the monetarists assume it to be so.
65What does the monetary transmission process involve?
- AMoney demand, the exchange rate, investment and GDP.
- BMoney supply, the interest rate, investment and GDP.
- CThe interest rate, GDP and the asset demand for money.
- DOnly the level of investment and GDP.
66Which of the following is true?
- AThe equilibrium interest rate varies inversely with money supply.
- BThe money supply varies inversely with the price level.
- CThe equilibrium interest rate varies directly with money supply.
- DThe money supply varies directly with the price level.
67If the money supply exceeds the quantity of money demanded, what will interest rate do?
- AFall, causing people to hold more money.
- BRise, causing people to hold more money.
- CFall, causing people to hold less money.
- DRise, causing people to hold less money.
68When would an expansion in the money supply be inflationary?
- AIf the velocity of money is constant and the economy is below full-employment GDP.
- BIf the velocity of money falls and the economy is below full-employment GDP.
- CIf the velocity of money is constant and the economy is at full employment GDP.
- DIf the velocity of money falls and the economy is at full employment GDP.
69All of the following, except one, is correct. Which one is the exception?
- AMonetarists believe that an increase in the money supply will decrease interest rates a lot and that this will increase investment spending a lot.
- BKeynesians believe that an increase in the money supply will decrease interest rates a lot and that this will increase investment spending a lot.
- CKeynesians believe that elasticity of money demand curve is flat.
- DMonetarists believe that the elasticity of the money demand curve is steep.
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- Quiz on Untitled, created by Unknown Master on 12/12/2025.
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