Question 1

A worker is considered unemployed if that worker has no job, is legally eligible to work,

Accepted Answer

A)  and is actively searching for employment. 
B)  and is not collecting unemployment insurance. 
C)  whether the worker is looking for a job or is not looking for a job. 
D)  but only if they previously held a job. 
E)  but only if they were previously employed for at least three consecutive months. 
A)  and is actively searching for employment. 
B)  and is not collecting unemployment insurance. 
C)  whether the worker is looking for a job or is not looking for a job. 
D)  but only if they previously held a job. 
E)  but only if they were previously employed for at least three consecutive months.

Question 2

In macroeconomics, the term ʺnational incomeʺ refers to

Accepted Answer

A)  all sales of both current production and used goods. 
B)  only those sales of currently produced goods sold to other nations. 
C)  the value of a nationʹs total wealth. 
D)  the value of the income generated by the production of total output. 
E)  total current spending by all households. 
A)  all sales of both current production and used goods. 
B)  only those sales of currently produced goods sold to other nations. 
C)  the value of a nationʹs total wealth. 
D)  the value of the income generated by the production of total output. 
E)  total current spending by all households.

Question 3

Most economists believe that the single largest cause of rising material living standards over long periods of time is

Accepted Answer

A)  productivity growth. 
B)  rising employment. 
C)  growth in the capital stock. 
D)  real GDP growth. 
E)  rising real wages. 
A)  productivity growth. 
B)  rising employment. 
C)  growth in the capital stock. 
D)  real GDP growth. 
E)  rising real wages.

Question 4

The three main reasons that Canadaʹs real GDP has increased steadily for many years are

Accepted Answer

A)  rising employment, increasing levels of education of the labour force and the increase in the participation rate of women in the labour force. 
B)  an increasing stock of physical capital, increasing exports and rising employment. 
C)  the increase in life expectancy, the rise in employment and increasing productivity. 
D)  rising employment, increasing stock of physical capital and increasing productivity. 
E)  increasing productivity of labour, increasing productivity of land and increasing productivity of the capital stock. 
A)  rising employment, increasing levels of education of the labour force and the increase in the participation rate of women in the labour force. 
B)  an increasing stock of physical capital, increasing exports and rising employment. 
C)  the increase in life expectancy, the rise in employment and increasing productivity. 
D)  rising employment, increasing stock of physical capital and increasing productivity. 
E)  increasing productivity of labour, increasing productivity of land and increasing productivity of the capital stock.

Question 5

Which of the following is the best description of the business cycle?

Accepted Answer

A)  the normal cycle of profits and losses by producers in the economy 
B)  the short-run fluctuations of national income around its trend value 
C)  a five-year period designed for national accounting purposes to capture the normal cycle of recession periods and boom periods 
D)  a ten-year period designed for national accounting purposes to capture the normal cycle of recession periods and boom periods 
E)  the fluctuations of one countryʹs national income in comparison to another countryʹs national income 
A)  the normal cycle of profits and losses by producers in the economy 
B)  the short-run fluctuations of national income around its trend value 
C)  a five-year period designed for national accounting purposes to capture the normal cycle of recession periods and boom periods 
D)  a ten-year period designed for national accounting purposes to capture the normal cycle of recession periods and boom periods 
E)  the fluctuations of one countryʹs national income in comparison to another countryʹs national income

Question 6

Consider a small economy with real GDP of $1 billion and the number of workers employed equal to 2500. Which of the following is the best measure of labour productivity in this economy?

Accepted Answer

A)  real GDP per hour worked = $200 
B)  real GDP per employed worker = $200 000 
C)  real GDP per hour worked = $400 
D)  real GDP per employed worker = $400 000 
E)  Not able to determine from the information provided 
A)  real GDP per hour worked = $200 
B)  real GDP per employed worker = $200 000 
C)  real GDP per hour worked = $400 
D)  real GDP per employed worker = $400 000 
E)  Not able to determine from the information provided

Question 7

What is potential or full-employment output?

Accepted Answer

A)  the maximum GDP that an economy actually achieves throughout its entire history 
B)  achieved during periods when all of the labour force is employed 
C)  a goal that can never be achieved by the economy 
D)  the GDP that would be produced if the economyʹs resources were fully employed at a normal intensity of use 
E)  the GDP that could be produced if the economyʹs resources were fully employed at their maximum intensity of use 
A)  the maximum GDP that an economy actually achieves throughout its entire history 
B)  achieved during periods when all of the labour force is employed 
C)  a goal that can never be achieved by the economy 
D)  the GDP that would be produced if the economyʹs resources were fully employed at a normal intensity of use 
E)  the GDP that could be produced if the economyʹs resources were fully employed at their maximum intensity of use

Question 8

Canadaʹs unemployment rate has been as low as in the 1960s and as high as during the recession in the early 1980s.

Accepted Answer

A)  4.6; 14 
B)  2.0; 15 
C)  5.5; 17 
D)  2.4; 10 
E)  3.4; 12 
A)  4.6; 14 
B)  2.0; 15 
C)  5.5; 17 
D)  2.4; 10 
E)  3.4; 12

Question 9

The table below provides macroeconomic data for a hypothetical economy. Dollar amounts are all in constant-dollar terms.   TABLE 19-1
-Refer to Table 19-1. In which years are the factors of production in this economy said to be ʺfully employedʺ?

Accepted Answer

A)  2009, 2010, 2014 
B)  2011, 2015 
C)  2012, 2013 
D)  all years 
E)  none of the years 
A)  2009, 2010, 2014 
B)  2011, 2015 
C)  2012, 2013 
D)  all years 
E)  none of the years

Question 10

Changes in productivity can be analyzed by looking at how GDP per employed worker changes over time or how GDP per hour worked changes over time. Why might one measure be more preferable than the other?

Accepted Answer

A)  GDP per hour worked is preferable because it eliminates the need to adjust for variations in productivity between employed workers. 
B)  GDP per employed worker is more accurate because the data available on the number of employed workers is more accurate than the data available on the number of hours worked. 
C)  GDP per hour worked is more accurate because the average number of hours worked per employed worker has changed over time. 
D)  GDP per employed worker is preferable because the number of employed workers has risen significantly over time. 
E)  Both measures are equally good. 
A)  GDP per hour worked is preferable because it eliminates the need to adjust for variations in productivity between employed workers. 
B)  GDP per employed worker is more accurate because the data available on the number of employed workers is more accurate than the data available on the number of hours worked. 
C)  GDP per hour worked is more accurate because the average number of hours worked per employed worker has changed over time. 
D)  GDP per employed worker is preferable because the number of employed workers has risen significantly over time. 
E)  Both measures are equally good.

Question 11

Consider a small economy with 2500 employed workers who worked a total of 5 million hours at an average wage of $40 per hour. Which of the following is the best measure of labour productivity in this economy?

Accepted Answer

A)  real GDP per hour worked = $40 
B)  real GDP per employed worker = $80 000 
C)  real GDP per hour worked = $80 
D)  real GDP per employed worker = $125 000 
E)  Not able to determine from the information provided 
A)  real GDP per hour worked = $40 
B)  real GDP per employed worker = $80 000 
C)  real GDP per hour worked = $80 
D)  real GDP per employed worker = $125 000 
E)  Not able to determine from the information provided

Question 12

If a country is experiencing inflation, the change in the nominal national product will

Accepted Answer

A)  equal the change in the real national product. 
B)  overstate the inflation rate. 
C)  overstate the change in the real value of production. 
D)  understate the value of national income. 
E)  be negative and will be falling faster than the rate of inflation. 
A)  equal the change in the real national product. 
B)  overstate the inflation rate. 
C)  overstate the change in the real value of production. 
D)  understate the value of national income. 
E)  be negative and will be falling faster than the rate of inflation.

Question 13

Which of the following correctly describes the meaning of the expression Y > Y*?

Accepted Answer

A)  actual output is more than potential output - a recessionary gap 
B)  potential output is more than actual output - a recessionary gap 
C)  actual output is more than potential output - an inflationary gap 
D)  potential output is more than actual output - an inflationary gap 
A)  actual output is more than potential output - a recessionary gap 
B)  potential output is more than actual output - a recessionary gap 
C)  actual output is more than potential output - an inflationary gap 
D)  potential output is more than actual output - an inflationary gap

Question 14

Workers with experience and skills sometimes lose their jobs and become unemployed due to changing technology or market conditions, even while firms in other industries or regions are looking to hire more workers. This type of unemployment is called

Accepted Answer

A)  cyclical unemployment. 
B)  frictional unemployment. 
C)  historical unemployment. 
D)  natural rate of unemployment. 
E)  structural unemployment. 
A)  cyclical unemployment. 
B)  frictional unemployment. 
C)  historical unemployment. 
D)  natural rate of unemployment. 
E)  structural unemployment.

Question 15

Suppose an employer and its employees enter into a wage contract specifying a wage increase of 2%. But suppose that the price level rises by 3% over the course of the contract. In this case,

Accepted Answer

A)  the employeesʹ purchasing power will rise. 
B)  the employeesʹ purchasing power will fall. 
C)  the employer will experience a greater fall in purchasing power than would have occurred if the price level had held steady. 
D)  both employer and employees will benefit from increased purchasing power. 
E)  both employer and employees will experience a loss of purchasing power. 
A)  the employeesʹ purchasing power will rise. 
B)  the employeesʹ purchasing power will fall. 
C)  the employer will experience a greater fall in purchasing power than would have occurred if the price level had held steady. 
D)  both employer and employees will benefit from increased purchasing power. 
E)  both employer and employees will experience a loss of purchasing power.

Question 16

A change in the Consumer Price Index measures

Accepted Answer

A)  a change in a specific absolute price. 
B)  a change in quantities of commodities sold. 
C)  a change in relative prices. 
D)  a change in a broad average price over some particular time span. 
E)  the change in gross domestic product. 
A)  a change in a specific absolute price. 
B)  a change in quantities of commodities sold. 
C)  a change in relative prices. 
D)  a change in a broad average price over some particular time span. 
E)  the change in gross domestic product.

Exam 19: What Macroeconomics Is All About

A worker is considered unemployed if that worker has no job, is legally eligible to work,

In macroeconomics, the term ʺnational incomeʺ refers to

Most economists believe that the single largest cause of rising material living standards over long periods of time is

The three main reasons that Canadaʹs real GDP has increased steadily for many years are

Which of the following is the best description of the business cycle?

Consider a small economy with real GDP of $1 billion and the number of workers employed equal to 2500. Which of the following is the best measure of labour productivity in this economy?

What is potential or full-employment output?

Canadaʹs unemployment rate has been as low as in the 1960s and as high as during the recession in the early 1980s.

The table below provides macroeconomic data for a hypothetical economy. Dollar amounts are all in constant-dollar terms. TABLE 19-1 -Refer to Table 19-1. In which years are the factors of production in this economy said to be ʺfully employedʺ?

Changes in productivity can be analyzed by looking at how GDP per employed worker changes over time or how GDP per hour worked changes over time. Why might one measure be more preferable than the other?

Consider a small economy with 2500 employed workers who worked a total of 5 million hours at an average wage of $40 per hour. Which of the following is the best measure of labour productivity in this economy?

If a country is experiencing inflation, the change in the nominal national product will

Which of the following correctly describes the meaning of the expression Y > Y*?

Workers with experience and skills sometimes lose their jobs and become unemployed due to changing technology or market conditions, even while firms in other industries or regions are looking to hire more workers. This type of unemployment is called

Suppose an employer and its employees enter into a wage contract specifying a wage increase of 2%. But suppose that the price level rises by 3% over the course of the contract. In this case,

A change in the Consumer Price Index measures

Economic Issues and Concepts

Economic Theories, Data, and Graphs

Demand, Supply, and Price

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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