Question 1

On a coordinate graph with y on the vertical axis and x on the horizontal axis, what is the X intercept of the function X = 60 + 3Y?

Accepted Answer

A)  -20 
B)  20 
C)  -60 
D)  60 
E)  0 
A)  -20 
B)  20 
C)  -60 
D)  60 
E)  0

Question 2

Most economists believe that economic analysis be made completely free of judgement, in part because it is to absolutely refute a theory on the basis of factual evidence.

Accepted Answer

A)  can; possible 
B)  can; impossible 
C)  cannot; possible 
D)  cannot; impossible 
E)  will; necessary 
A)  can; possible 
B)  can; impossible 
C)  cannot; possible 
D)  cannot; impossible 
E)  will; necessary

Question 3

The table below shows the approximate value of Canadaʹs crude oil and natural gas exports over a 5 -year period. The amounts shown are billions of dollars.   TABLE 2-7
-Refer to Table 2-7. Assume that 2009 is the base year, with an index number = 100. What is the index number for the value of natural gas exports in 2012?

Accepted Answer

A)  0.59 
B)  59.4% 
C)  5.3 
D)  59.4 
E)  -5.3 
A)  0.59 
B)  59.4% 
C)  5.3 
D)  59.4 
E)  -5.3

Question 4

A hypothesis or a prediction) is a statement about

Accepted Answer

A)  how assumptions affect theories. 
B)  those things which we believe to be true, but cannot prove. 
C)  what will happen in the future. 
D)  the relationship between facts explained by the hypothesis. 
E)  how two or more variables are related to each other. 
A)  how assumptions affect theories. 
B)  those things which we believe to be true, but cannot prove. 
C)  what will happen in the future. 
D)  the relationship between facts explained by the hypothesis. 
E)  how two or more variables are related to each other.

Question 5

The statement that introducing a policy of legislated rent controls will lead to a housing shortage is an example of an)

Accepted Answer

A)  assumption. 
B)  prediction. 
C)  theory. 
D)  normative statement. 
E)  model. 
A)  assumption. 
B)  prediction. 
C)  theory. 
D)  normative statement. 
E)  model.

Question 6

If a theoryʹs prediction is tested and is in conflict with the evidence,

Accepted Answer

A)  the original data and assumptions should be discarded. 
B)  it is rejected with certainty, because it is not possible to reject a hypothesis that is actually true. 
C)  the statistical tolerance of risk for accepting a false hypothesis should be increased. 
D)  inquiry into the matter should cease. 
E)  a new hypothesis is usually suggested and tested. 
A)  the original data and assumptions should be discarded. 
B)  it is rejected with certainty, because it is not possible to reject a hypothesis that is actually true. 
C)  the statistical tolerance of risk for accepting a false hypothesis should be increased. 
D)  inquiry into the matter should cease. 
E)  a new hypothesis is usually suggested and tested.

Question 7

Which of the following is a normative statement?

Accepted Answer

A)  The higher is the level of taxes, the lower is consumption spending. 
B)  The higher is the level of taxes, the higher are wage demands. 
C)  A reduction in export taxes on petroleum would result in higher wages. 
D)  Tuition fees should be waived for low-income students. 
E)  A free-trade agreement between two countries will result in an increase in trade. 
A)  The higher is the level of taxes, the lower is consumption spending. 
B)  The higher is the level of taxes, the higher are wage demands. 
C)  A reduction in export taxes on petroleum would result in higher wages. 
D)  Tuition fees should be waived for low-income students. 
E)  A free-trade agreement between two countries will result in an increase in trade.

Question 8

Figure 2-5 shows monthly average per unit) production costs for producing Good X.
   FIGURE 2-5
-Refer to Figure 2-5. What is the slope of this non-linear function when 200 units per month are being produced?

Accepted Answer

A)  4 
B)  -4 
C)  0.25 
D)  -5.2 
E)  -0.25 
A)  4 
B)  -4 
C)  0.25 
D)  -5.2 
E)  -0.25

Question 9

The table below shows hypothetical per-minute cell phone charges for ʺpay-and-talkʺ service over several years.   TABLE 2-2
-Refer to Table 2-2. Assume that 2008 is used as the base year, with the index number = 100. Which of the following series is the correct set of index numbers for the per-minute cell phone charges from 2008 to 2012?

Accepted Answer

A)  0.55; 0.50; 0.40; 0.35; 0.25 
B)  100; 91; 73; 64; 45 
C)  55; 50; 40; 35; 25 
D)  1.0; 0.91; 0.73; 0.64; 0.45 
E)  100%; 91%; 73%; 64%; 45% 
A)  0.55; 0.50; 0.40; 0.35; 0.25 
B)  100; 91; 73; 64; 45 
C)  55; 50; 40; 35; 25 
D)  1.0; 0.91; 0.73; 0.64; 0.45 
E)  100%; 91%; 73%; 64%; 45%

Question 10

FIGURE 2-4
-Refer to Figure 2-4. This non-linear function shows that over the range shown,

Accepted Answer

A)  as more fertilizer is applied, the marginal response in yield is increasing 
B)  as more fertilizer is applied, the marginal change in yield is diminishing. 
C)  as the yield per acre increases, the amount of fertilizer required per acre is diminishing. 
D)  as the yield per acre increases, the amount of fertilizer required per acre is increasing. 
E)  as more fertilizer is applied, the total yield per acre is diminishing. 
A)  as more fertilizer is applied, the marginal response in yield is increasing 
B)  as more fertilizer is applied, the marginal change in yield is diminishing. 
C)  as the yield per acre increases, the amount of fertilizer required per acre is diminishing. 
D)  as the yield per acre increases, the amount of fertilizer required per acre is increasing. 
E)  as more fertilizer is applied, the total yield per acre is diminishing.

Question 11

According to the Bank of Canadaʹs website, Canadaʹs Consumer Price Index CPI) in August 2012 was 121.8, August 2013 was 123.1, August 2014 was 125.7 and August 2015 was 127.3. Given this set of index numbers, what is the percentage change in the average level of prices between August 2012 and August 2015?

Accepted Answer

A)  127.3% 
B)  121.8% 
C)  5.5% 
D)  4.5% 
E)  27.3% 
A)  127.3% 
B)  121.8% 
C)  5.5% 
D)  4.5% 
E)  27.3%

Question 12

Positively related variables change such that as the value of one variable

Accepted Answer

A)  decreases, the value of the other variable increases. 
B)  decreases, the value of the other variable decreases. 
C)  decreases, the value of the other variable remains the same. 
D)  increases, the value of the other variable decreases. 
E)  increases, the value of the other variable remains the same. 
A)  decreases, the value of the other variable increases. 
B)  decreases, the value of the other variable decreases. 
C)  decreases, the value of the other variable remains the same. 
D)  increases, the value of the other variable decreases. 
E)  increases, the value of the other variable remains the same.

Question 13

The table below shows the approximate value of Canadaʹs crude oil and natural gas exports over a 5 -year period. The amounts shown are billions of dollars.   TABLE 2-7
-Refer to Table 2-7. Assume that 2009 is the base year, with an index number = 100. What is the percentage change in the value of exports of natural gas from 2012 to 2013?

Accepted Answer

A)  11.2% 
B)  11.2 
C)  -18.7 
D)  18.7% 
E)  -18.7% 
A)  11.2% 
B)  11.2 
C)  -18.7 
D)  18.7% 
E)  -18.7%

Question 14

If the graph of a function is a horizontal line, the slope of this line is

Accepted Answer

A)  undefined. 
B)  0. 
C)  1. 
D)  infinity. 
E)  -1. 
A)  undefined. 
B)  0. 
C)  1. 
D)  infinity. 
E)  -1.

Question 15

The table below shows hypothetical per-minute cell phone charges for ʺpay-and-talkʺ service over several years.   TABLE 2-2
-Refer to Table 2-2. Assume that 2008 is used as the base year, with the index number = 100. What is the percentage change in the per-minute charge from 2011 to 2012?

Accepted Answer

A)  -28.6% 
B)  -10.0% 
C)  -71.4% 
D)  -25.0% 
E)  -35.0% 
A)  -28.6% 
B)  -10.0% 
C)  -71.4% 
D)  -25.0% 
E)  -35.0%

Question 16

On a coordinate graph with y on the vertical axis and x on the horizontal axis, consider the line which is the graph of the function Y = 60 - 4X. The slope of this line is

Accepted Answer

A)  4. 
B)  60. 
C)  -2.5. 
D)  -4.0. 
E)  -40. 
A)  4. 
B)  60. 
C)  -2.5. 
D)  -4.0. 
E)  -40.

Question 17

FIGURE 2-3
-Refer to Figure 2-3. The slope of curve B is

Accepted Answer

A)  zero at X2. 
B)  always negative but variable. 
C)  always positive but variable. 
D)  undefined at X2. 
E)  positive from Y1 to Y2 and negative between Y2 and Y3. 
A)  zero at X2. 
B)  always negative but variable. 
C)  always positive but variable. 
D)  undefined at X2. 
E)  positive from Y1 to Y2 and negative between Y2 and Y3.

Question 18

In order to test a theory, one must

Accepted Answer

A)  develop a better explanation than the one presented. 
B)  present a series of normative statements and positive statements. 
C)  use assumptions that most closely reflect reality. 
D)  develop normative statements from the law of large numbers. 
E)  confront the predictions of the theory with evidence. 
A)  develop a better explanation than the one presented. 
B)  present a series of normative statements and positive statements. 
C)  use assumptions that most closely reflect reality. 
D)  develop normative statements from the law of large numbers. 
E)  confront the predictions of the theory with evidence.

Question 19

The table below shows hypothetical per-minute cell phone charges for ʺpay-and-talkʺ service over several years.   TABLE 2-2
-Refer to Table 2-2. Assume that 2008 is used as the base year, with the index number = 100. The value of the index number in 2010 is

Accepted Answer

A)  100. 
B)  0.72. 
C)  72.73. 
D)  1.375. 
E)  137.5. 
A)  100. 
B)  0.72. 
C)  72.73. 
D)  1.375. 
E)  137.5.

Question 20

Suppose economists at the Department of Finance in Ottawa employ an economic model that predicts the effects of an increase in the GST. After implementation of the change, researchers find that the empirical data is in conflict with the theory. They are likely to

Accepted Answer

A)  modify the prediction in light of the new evidence. 
B)  ignore the empirical evidence and continue using the model. 
C)  modify the theory in light of this newly acquired empirical knowledge. 
D)  reject the empirical data as faulty because it did not support the theory. 
E)  modify the data to suit the definitions and assumptions. 
A)  modify the prediction in light of the new evidence. 
B)  ignore the empirical evidence and continue using the model. 
C)  modify the theory in light of this newly acquired empirical knowledge. 
D)  reject the empirical data as faulty because it did not support the theory. 
E)  modify the data to suit the definitions and assumptions.

Exam 2: Economic Theories, Data, and Graphs

On a coordinate graph with y on the vertical axis and x on the horizontal axis, what is the X intercept of the function X = 60 + 3Y?

Most economists believe that economic analysis be made completely free of judgement, in part because it is to absolutely refute a theory on the basis of factual evidence.

A hypothesis or a prediction) is a statement about

The statement that introducing a policy of legislated rent controls will lead to a housing shortage is an example of an)

If a theoryʹs prediction is tested and is in conflict with the evidence,

Which of the following is a normative statement?

Figure 2-5 shows monthly average per unit) production costs for producing Good X. FIGURE 2-5 -Refer to Figure 2-5. What is the slope of this non-linear function when 200 units per month are being produced?

FIGURE 2-4 -Refer to Figure 2-4. This non-linear function shows that over the range shown,

Positively related variables change such that as the value of one variable

If the graph of a function is a horizontal line, the slope of this line is

The table below shows hypothetical per-minute cell phone charges for ʺpay-and-talkʺ service over several years. TABLE 2-2 -Refer to Table 2-2. Assume that 2008 is used as the base year, with the index number = 100. What is the percentage change in the per-minute charge from 2011 to 2012?

On a coordinate graph with y on the vertical axis and x on the horizontal axis, consider the line which is the graph of the function Y = 60 - 4X. The slope of this line is

FIGURE 2-3 -Refer to Figure 2-3. The slope of curve B is

In order to test a theory, one must

The table below shows hypothetical per-minute cell phone charges for ʺpay-and-talkʺ service over several years. TABLE 2-2 -Refer to Table 2-2. Assume that 2008 is used as the base year, with the index number = 100. The value of the index number in 2010 is

Suppose economists at the Department of Finance in Ottawa employ an economic model that predicts the effects of an increase in the GST. After implementation of the change, researchers find that the empirical data is in conflict with the theory. They are likely to

Economic Issues and Concepts

Demand, Supply, and Price

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Price Controls and Market Efficiency

Consumer Behaviour

Producers in the Short Run

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Competitive Markets

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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

What Macroeconomics Is All About

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

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Unemployment Fluctuations and the Nairu

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