Question 1

A scatter diagram

Accepted Answer

A)  is a graph of a theoretical relationship between two variables. 
B)  relates cross-sectional data only. 
C)  relates time series data only. 
D)  plots a series of observations, showing the relationship between two variables. 
E)  shows the dependence of one variable on another. 
A)  is a graph of a theoretical relationship between two variables. 
B)  relates cross-sectional data only. 
C)  relates time series data only. 
D)  plots a series of observations, showing the relationship between two variables. 
E)  shows the dependence of one variable on another.

Question 2

The table below shows hypothetical data for the volume of gold and nickel output across several years.   TABLE 2-6
-Refer to Table 2-6. What is the index number for gold output in Year 2?

Accepted Answer

A)  97.7% 
B)  0.977 
C)  -3.4% 
D)  97.7 
E)  -34% 
A)  97.7% 
B)  0.977 
C)  -3.4% 
D)  97.7 
E)  -34%

Question 3

FIGURE 2-3
-Refer to Figure 2-3. At X2 on curve A, the

Accepted Answer

A)  maximum occurs at Y1. 
B)  minimum occurs at Y4. 
C)  slope of the curve is zero. 
D)  slope is increasing. 
E)  slope is decreasing. 
A)  maximum occurs at Y1. 
B)  minimum occurs at Y4. 
C)  slope of the curve is zero. 
D)  slope is increasing. 
E)  slope is decreasing.

Question 4

FIGURE 2-4
-Refer to Figure 2-4. The slope of the non-linear function changes as we move along the curve. The slope is

Accepted Answer

A)  positive and increasing, indicating an increasing marginal response. 
B)  negative and decreasing, indicating a diminishing marginal response. 
C)  positive and decreasing, indicating a diminishing marginal response. 
D)  negative and increasing, indicating an increasing marginal response. 
E)  constant at all points, indicating a constant marginal response. 
A)  positive and increasing, indicating an increasing marginal response. 
B)  negative and decreasing, indicating a diminishing marginal response. 
C)  positive and decreasing, indicating a diminishing marginal response. 
D)  negative and increasing, indicating an increasing marginal response. 
E)  constant at all points, indicating a constant marginal response.

Question 5

Suppose an economist tells you that, on average, people in Canada have too much personal debt. This is an
Example of an)

Accepted Answer

A)  autonomous 
B)  positive 
C)  normative 
D)  independent 
E)  induced 
A)  autonomous 
B)  positive 
C)  normative 
D)  independent 
E)  induced

Question 6

The slope of a straight line is necessarily

Accepted Answer

A)  zero. 
B)  constant. 
C)  positive. 
D)  negative. 
E)  increasing as one moves up the line. 
A)  zero. 
B)  constant. 
C)  positive. 
D)  negative. 
E)  increasing as one moves up the line.

Question 7

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 600 units per month are being produced?

Accepted Answer

A)  -2 
B)  4 
C)  -4 
D)  1 
E)  -1 
A)  -2 
B)  4 
C)  -4 
D)  1 
E)  -1

Question 8

In a co-ordinate graph, with Y on the vertical axis and X on the horizontal axis, the variable X is positive and the variable Y is negative in the quadrant.

Accepted Answer

A)  top, right 
B)  top, left 
C)  bottom, left 
D)  bottom, right 
A)  top, right 
B)  top, left 
C)  bottom, left 
D)  bottom, right

Question 9

Consider the functional relationship between two variables, X and Y. If Y is an increasing function of X, then

Accepted Answer

A)  Y increases when X increases. 
B)  Y increases when X decreases. 
C)  X decreases when Y increases. 
D)  Y decreases when X increases. 
E)  X remains constant as Y increases. 
A)  Y increases when X increases. 
B)  Y increases when X decreases. 
C)  X decreases when Y increases. 
D)  Y decreases when X increases. 
E)  X remains constant as Y increases.

Question 10

Suppose that a particular theory predicts that on Monday, Wednesday, and Friday the stock market will rise and that on Tuesday and Thursday the stock market will fall. If an economist tests this theory and finds that over a six-month period the theory predicts accurately, the economist would likely say that the theory

Accepted Answer

A)  has been proven correct. 
B)  is reliable. 
C)  is not in conflict with the evidence. 
D)  shouldnʹt be taken seriously. 
E)  is not useful because stock markets involve irrational human behaviour. 
A)  has been proven correct. 
B)  is reliable. 
C)  is not in conflict with the evidence. 
D)  shouldnʹt be taken seriously. 
E)  is not useful because stock markets involve irrational human behaviour.

Question 11

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 2012 is

Accepted Answer

A)  0.25. 
B)  2.5. 
C)  25.0. 
D)  0.45. 
E)  45.45. 
A)  0.25. 
B)  2.5. 
C)  25.0. 
D)  0.45. 
E)  45.45.

Question 12

Which is the best description of a normative statement? A normative statement

Accepted Answer

A)  can be derived logically from facts. 
B)  concerns what is provable. 
C)  is a statement that is empirically testable. 
D)  is one that involves a value judgment. 
E)  has no place in the study and practice of economics. 
A)  can be derived logically from facts. 
B)  concerns what is provable. 
C)  is a statement that is empirically testable. 
D)  is one that involves a value judgment. 
E)  has no place in the study and practice of economics.

Question 13

Choose the statement that best characterizes an economic theory. An economic theory

Accepted Answer

A)  is only useful if its underlying assumptions are realistic. 
B)  will be useful as long as it is logically consistent. 
C)  must be judged on its ability to explain and predict real-world phenomena. 
D)  will predict more accurately if it contains a greater number of mathematical equations. 
E)  will be useful only if all human behaviour is rational. 
A)  is only useful if its underlying assumptions are realistic. 
B)  will be useful as long as it is logically consistent. 
C)  must be judged on its ability to explain and predict real-world phenomena. 
D)  will predict more accurately if it contains a greater number of mathematical equations. 
E)  will be useful only if all human behaviour is rational.

Question 14

Suppose we observe that consumption of electricity decreases when the price of electricity rises. We can say that the two variables are related

Accepted Answer

A)  positively. 
B)  linearly. 
C)  negatively. 
D)  non-linearly. 
E)  exogenously. 
A)  positively. 
B)  linearly. 
C)  negatively. 
D)  non-linearly. 
E)  exogenously.

Question 15

An economic theory requires, among other things,

Accepted Answer

A)  a set of definitions of the variables to be considered. 
B)  a controlled laboratory setting in which the theory can be tested. 
C)  that the set of predictions be correct. 
D)  a set of value judgments to interpret the empirical evidence. 
E)  the use of endogenous variables only. 
A)  a set of definitions of the variables to be considered. 
B)  a controlled laboratory setting in which the theory can be tested. 
C)  that the set of predictions be correct. 
D)  a set of value judgments to interpret the empirical evidence. 
E)  the use of endogenous variables only.

Question 16

FIGURE 2-1
-Suppose there is a linear relationship between the ticket price P) to a university basketball game and the number of tickets sold Q). If the ticket price is $20, then 600 tickets are sold; if the ticket price is $8, then $3000 tickets are sold. What is the slope of the function if Q is plotted on the horizontal axis and P is plotted on the vertical axis?

Accepted Answer

A)  -0.005 
B)  -0.05 
C)  0 
D)  0.05 
E)  0.005 
A)  -0.005 
B)  -0.05 
C)  0 
D)  0.05 
E)  0.005

Question 17

The table below shows hypothetical tuition costs at a Canadian university.   TABLE 2-1
-Refer to Table 2-1. The increase in tuition fees from 2012 to 2016 is

Accepted Answer

A)  200. 
B)  100/5000. 
C)  4%. 
D)  0.04%. 
E)  200/5200. 
A)  200. 
B)  100/5000. 
C)  4%. 
D)  0.04%. 
E)  200/5200.

Question 18

When using statistics in economics, the possibility of error

Accepted Answer

A)  cannot be eliminated. 
B)  cannot be controlled. 
C)  cannot be evaluated. 
D)  is not considered to be important. 
E)  can be eliminated with more sophisticated statistical techniques. 
A)  cannot be eliminated. 
B)  cannot be controlled. 
C)  cannot be evaluated. 
D)  is not considered to be important. 
E)  can be eliminated with more sophisticated statistical techniques.

Question 19

Which is an example of a positive statement?

Accepted Answer

A)  There should be one price for gasoline throughout Canada. 
B)  The higher the price for gasoline, the less of it will be consumed. 
C)  Substitutes for fossil fuels should be developed. 
D)  Canada should reduce its imports of consumer goods. 
E)  Corporations in Canada should pay more taxes. 
A)  There should be one price for gasoline throughout Canada. 
B)  The higher the price for gasoline, the less of it will be consumed. 
C)  Substitutes for fossil fuels should be developed. 
D)  Canada should reduce its imports of consumer goods. 
E)  Corporations in Canada should pay more taxes.

Question 20

When an increase in one variable is associated with an increase in a second variable, the two variables are

Accepted Answer

A)  proportionally related. 
B)  inversely proportionally related. 
C)  positively related. 
D)  equivalent. 
E)  negatively related. 
A)  proportionally related. 
B)  inversely proportionally related. 
C)  positively related. 
D)  equivalent. 
E)  negatively related.

Exam 2: Economic Theories, Data, and Graphs

A scatter diagram

The table below shows hypothetical data for the volume of gold and nickel output across several years. TABLE 2-6 -Refer to Table 2-6. What is the index number for gold output in Year 2?

FIGURE 2-3 -Refer to Figure 2-3. At X2 on curve A, the

FIGURE 2-4 -Refer to Figure 2-4. The slope of the non-linear function changes as we move along the curve. The slope is

Suppose an economist tells you that, on average, people in Canada have too much personal debt. This is an Example of an)

The slope of a straight line is necessarily

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 600 units per month are being produced?

In a co-ordinate graph, with Y on the vertical axis and X on the horizontal axis, the variable X is positive and the variable Y is negative in the quadrant.

Consider the functional relationship between two variables, X and Y. If Y is an increasing function of X, then

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 2012 is

Which is the best description of a normative statement? A normative statement

Choose the statement that best characterizes an economic theory. An economic theory

Suppose we observe that consumption of electricity decreases when the price of electricity rises. We can say that the two variables are related

An economic theory requires, among other things,

The table below shows hypothetical tuition costs at a Canadian university. TABLE 2-1 -Refer to Table 2-1. The increase in tuition fees from 2012 to 2016 is

When using statistics in economics, the possibility of error

Which is an example of a positive statement?

When an increase in one variable is associated with an increase in a second variable, the two variables are

Economic Issues and Concepts

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

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

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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