Question 1

The real interest rate must be

Accepted Answer

A)  high if the nominal interest rate is high. 
B)  high if the inflation rate is greater than the nominal interest rate. 
C)  low if the nominal interest rate is high. 
D)  positive if the nominal rate of interest is greater than the rate of inflation. 
E)  negative if the nominal rate of interest is greater than the rate of inflation. 
A)  high if the nominal interest rate is high. 
B)  high if the inflation rate is greater than the nominal interest rate. 
C)  low if the nominal interest rate is high. 
D)  positive if the nominal rate of interest is greater than the rate of inflation. 
E)  negative if the nominal rate of interest is greater than the rate of inflation.

Question 2

If a countryʹs labour force is 15 million people, and 1 million of those are unemployed, the countryʹs unemployment rate is

Accepted Answer

A)  2.5%. 
B)  3.3%. 
C)  4.5%. 
D)  6.7%. 
E)  7.1%. 
A)  2.5%. 
B)  3.3%. 
C)  4.5%. 
D)  6.7%. 
E)  7.1%.

Question 3

Economic booms can cause problems as well as create benefits because they are often accompanied by

Accepted Answer

A)  deflationary pressures. 
B)  excessive labour-force participation. 
C)  inflationary pressures. 
D)  pressure on the government budget deficit to rise. 
E)  rising real interest rates. 
A)  deflationary pressures. 
B)  excessive labour-force participation. 
C)  inflationary pressures. 
D)  pressure on the government budget deficit to rise. 
E)  rising real interest rates.

Question 4

Since 1960, in Canada the price level has , while the rate of inflation has .

Accepted Answer

A)  fluctuated widely; been relatively stable 
B)  fluctuated widely; also fluctuated widely 
C)  been rising steadily; been quite volatile 
D)  been rising steadily; been relatively stable 
E)  been quite volatile; been rising steadily 
A)  fluctuated widely; been relatively stable 
B)  fluctuated widely; also fluctuated widely 
C)  been rising steadily; been quite volatile 
D)  been rising steadily; been relatively stable 
E)  been quite volatile; been rising steadily

Question 5

If the cyclical unemployment rate is negative, then the

Accepted Answer

A)  economy is operating beyond full employment. 
B)  economy is operating at less than full employment. 
C)  frictional unemployment rate is negative. 
D)  frictional unemployment rate is greater than the structural unemployment rate. 
E)  real-wage unemployment rate is negative. 
A)  economy is operating beyond full employment. 
B)  economy is operating at less than full employment. 
C)  frictional unemployment rate is negative. 
D)  frictional unemployment rate is greater than the structural unemployment rate. 
E)  real-wage unemployment rate is negative.

Question 6

To compare the economyʹs aggregate output in two different time periods, economists compare the

Accepted Answer

A)  nominal national income for the two periods. 
B)  potential national incomes for the two periods. 
C)  real national income for the two periods. 
D)  unemployment rates for the two periods. 
E)  inflation rates for the two periods. 
A)  nominal national income for the two periods. 
B)  potential national incomes for the two periods. 
C)  real national income for the two periods. 
D)  unemployment rates for the two periods. 
E)  inflation rates for the two periods.

Question 7

Cyclical unemployment is associated with which of the following?

Accepted Answer

A)  changes to the economyʹs industrial structure resulting from growth in some industries and decline in others 
B)  an output level different from the economyʹs potential output 
C)  differences between the characteristics of the supply of labour and the demand for labour 
D)  people entering the labour force typically take some time to find a job 
E)  people quitting their present jobs to look for other jobs 
A)  changes to the economyʹs industrial structure resulting from growth in some industries and decline in others 
B)  an output level different from the economyʹs potential output 
C)  differences between the characteristics of the supply of labour and the demand for labour 
D)  people entering the labour force typically take some time to find a job 
E)  people quitting their present jobs to look for other jobs

Question 8

Which of the following groups would benefit most in real terms from a period of high and unanticipated inflation, as was experienced in Canada in the early 1970s?

Accepted Answer

A)  mortgage companies and banks who issued fixed -rate mortgages to clients 
B)  banks with outstanding loans to their customers 
C)  seniors whose income is largely interest earnings on past savings 
D)  firms that maintain large cash balances for the operation of their business 
E)  homeowners who had long-term fixed-rate mortgages 
A)  mortgage companies and banks who issued fixed -rate mortgages to clients 
B)  banks with outstanding loans to their customers 
C)  seniors whose income is largely interest earnings on past savings 
D)  firms that maintain large cash balances for the operation of their business 
E)  homeowners who had long-term fixed-rate mortgages

Question 9

What is the approximate measure 2014 data) of Canadaʹs productivity in terms of real GDP per hour worked expressed in 2007 dollars)?

Accepted Answer

A)  $10 
B)  $92 
C)  $200 
D)  $475 
E)  $45 
A)  $10 
B)  $92 
C)  $200 
D)  $475 
E)  $45

Question 10

In general, productivity is a measure of

Accepted Answer

A)  the economyʹs ability to increase real GDP per capita. 
B)  the amount of output that the economy produces per unit of input. 
C)  real GDP as a function of total employment. 
D)  the total amount of output that the economy is capable of producing. 
E)  potential output. 
A)  the economyʹs ability to increase real GDP per capita. 
B)  the amount of output that the economy produces per unit of input. 
C)  real GDP as a function of total employment. 
D)  the total amount of output that the economy is capable of producing. 
E)  potential output.

Question 11

Consider a small economy with 3 individuals where each individual produces and sells $1000 worth of final goods and services. The national income for this economy is

Accepted Answer

A)  $3000. 
B)  less than $3000 if some of the income is saved. 
C)  more than $3000 if some of the income is invested. 
D)  less than $3000 if there are taxes in this economy. 
E)  more than $3000 if the individuals are earning profits. 
A)  $3000. 
B)  less than $3000 if some of the income is saved. 
C)  more than $3000 if some of the income is invested. 
D)  less than $3000 if there are taxes in this economy. 
E)  more than $3000 if the individuals are earning profits.

Question 12

The price level is measured in some time period with an index number, such as the number 118.6. How is such a number of use to us?

Accepted Answer

A)  It allows us to compare it to the value of the same index number from another time period to determine the rate of change of the price level. 
B)  The index number tells us the rate of inflation. 
C)  It tells us the dollar value for the average basket of goods and services bought by the typical Canadian household. 
D)  It tells us the real value for the average basket of goods and services bought by the typical Canadian household. 
E)  It tells us the percentage change in the price level from the previous time period. 
A)  It allows us to compare it to the value of the same index number from another time period to determine the rate of change of the price level. 
B)  The index number tells us the rate of inflation. 
C)  It tells us the dollar value for the average basket of goods and services bought by the typical Canadian household. 
D)  It tells us the real value for the average basket of goods and services bought by the typical Canadian household. 
E)  It tells us the percentage change in the price level from the previous time period.

Question 13

If the Consumer Price Index changes from 120 in year one to 144 in year two, the rate of inflation in the intervening year is

Accepted Answer

A)  10%. 
B)  12.5%. 
C)  20%. 
D)  25%. 
E)  30%. 
A)  10%. 
B)  12.5%. 
C)  20%. 
D)  25%. 
E)  30%.

Question 14

Which of the following is an accurate statement about real national income?

Accepted Answer

A)  it always equals nominal national income 
B)  it changes by the same amount and in the same direction as does nominal national income 
C)  it changes only when the underlying quantities change 
D)  it refers to national income with no adjustment for changes in prices 
E)  it refers to national wealth but is not an indicator of current production 
A)  it always equals nominal national income 
B)  it changes by the same amount and in the same direction as does nominal national income 
C)  it changes only when the underlying quantities change 
D)  it refers to national income with no adjustment for changes in prices 
E)  it refers to national wealth but is not an indicator of current production

Question 15

Workers with marketable skills sometimes quit a job and become unemployed, with the expectation of soon finding a better job. This type of unemployment is called

Accepted Answer

A)  cyclical unemployment. 
B)  frictional unemployment. 
C)  historical unemployment. 
D)  overly-optimistic unemployment. 
E)  structural unemployment. 
A)  cyclical unemployment. 
B)  frictional unemployment. 
C)  historical unemployment. 
D)  overly-optimistic unemployment. 
E)  structural unemployment.

Question 16

In macroeconomics, if the value of the national product increases, there is

Accepted Answer

A)  an even larger increase in the value of income claims on that output, due to value added. 
B)  a decrease in value of income claims on that output, due to taxation. 
C)  a decrease in the value of income claims on that output, due to importing. 
D)  a decrease in the value of income claims on that output, due to household saving. 
E)  an equal increase in the value of income claims on that output. 
A)  an even larger increase in the value of income claims on that output, due to value added. 
B)  a decrease in value of income claims on that output, due to taxation. 
C)  a decrease in the value of income claims on that output, due to importing. 
D)  a decrease in the value of income claims on that output, due to household saving. 
E)  an equal increase in the value of income claims on that output.

Question 17

It is important for policy makers to recognize that most macroeconomic variables are characterized by

Accepted Answer

A)  long-run trends and short-run fluctuations. 
B)  gradual increases over long periods of time. 
C)  short-run fluctuations that need to be smoothed for a well-functioning economy. 
D)  long-run economic growth. 
E)  the impacts of the business cycle. 
A)  long-run trends and short-run fluctuations. 
B)  gradual increases over long periods of time. 
C)  short-run fluctuations that need to be smoothed for a well-functioning economy. 
D)  long-run economic growth. 
E)  the impacts of the business cycle.

Question 18

Suppose the city of Calgary, Alberta has a population of 1 million, a labour force of 575 000, and employment is equal to 545 000. The unemployment rate in Calgary is approximately

Accepted Answer

A)  3.0%. 
B)  5.2%. 
C)  5.5%. 
D)  54.5%. 
E)  57.5%. 
A)  3.0%. 
B)  5.2%. 
C)  5.5%. 
D)  54.5%. 
E)  57.5%.

Question 19

If 0.75 U.S. dollars can be exchanged for one Canadian dollar, we say that the Canadian -U.S. exchange rate is

Accepted Answer

A)  0.75. 
B)  75. 
C)  1.0. 
D)  1.33. 
E)  1.25. 
A)  0.75. 
B)  75. 
C)  1.0. 
D)  1.33. 
E)  1.25.

Question 20

If constant-dollar national income decreased by $6 billion over a one-year period, then it must be true that

Accepted Answer

A)  output of every product decreased. 
B)  the price level decreased. 
C)  aggregate output decreased. 
D)  aggregate output decreased and the price level increased. 
E)  aggregate output increased and the price level decreased. 
A)  output of every product decreased. 
B)  the price level decreased. 
C)  aggregate output decreased. 
D)  aggregate output decreased and the price level increased. 
E)  aggregate output increased and the price level decreased.

Exam 19: What Macroeconomics Is All About

The real interest rate must be

If a countryʹs labour force is 15 million people, and 1 million of those are unemployed, the countryʹs unemployment rate is

Economic booms can cause problems as well as create benefits because they are often accompanied by

Since 1960, in Canada the price level has , while the rate of inflation has .

If the cyclical unemployment rate is negative, then the

To compare the economyʹs aggregate output in two different time periods, economists compare the

Cyclical unemployment is associated with which of the following?

Which of the following groups would benefit most in real terms from a period of high and unanticipated inflation, as was experienced in Canada in the early 1970s?

What is the approximate measure 2014 data) of Canadaʹs productivity in terms of real GDP per hour worked expressed in 2007 dollars)?

In general, productivity is a measure of

Consider a small economy with 3 individuals where each individual produces and sells $1000 worth of final goods and services. The national income for this economy is

The price level is measured in some time period with an index number, such as the number 118.6. How is such a number of use to us?

If the Consumer Price Index changes from 120 in year one to 144 in year two, the rate of inflation in the intervening year is

Which of the following is an accurate statement about real national income?

Workers with marketable skills sometimes quit a job and become unemployed, with the expectation of soon finding a better job. This type of unemployment is called

In macroeconomics, if the value of the national product increases, there is

It is important for policy makers to recognize that most macroeconomic variables are characterized by

Suppose the city of Calgary, Alberta has a population of 1 million, a labour force of 575 000, and employment is equal to 545 000. The unemployment rate in Calgary is approximately

If 0.75 U.S. dollars can be exchanged for one Canadian dollar, we say that the Canadian -U.S. exchange rate is

If constant-dollar national income decreased by $6 billion over a one-year period, then it must be true that

Economic Issues and Concepts

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Elasticity

Price Controls and Market Efficiency

Consumer Behaviour

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly, Cartels, and Price Discrimination

Imperfect Competition and Strategic Behaviour

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets and Income Inequality

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

The Measurement of National Income

The Simplest Short-Run Macro Model

Adding Government and Trade to the Simple Macro Model

Output and Prices in the Short Run

From the Short Run to the Long Run: the Adjustment of Factor Prices

Long-Run Economic Growth

Money and Banking

Money, Interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Trade Policy

Exchange Rates and the Balance of Payments

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