Question 1

An upward trend in real national income over an extended period of time is called

Accepted Answer

A) economic growth. 
B) potential national income. 
C) constant- dollar national income. 
D) aggregate output. 
E) an inflationary boom. 
A) economic growth. 
B) potential national income. 
C) constant- dollar national income. 
D) aggregate output. 
E) an inflationary boom. A

Question 2

Cyclical unemployment is associated with

Accepted Answer

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

Question 3

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

Accepted Answer

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

Question 4

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

Accepted Answer

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

Question 5

people entering the labour force typically take some time to find a job.

Accepted Answer

A) 2 and 3 
B) 1 only 
C) 2 only 
D) 3 only 
E) 1 and 2 
A) 2 and 3 
B) 1 only 
C) 2 only 
D) 3 only 
E) 1 and 2

Question 6

When macroeconomists use the term "recession" they usually define it as a fall in real GDP that lasts for at least

Accepted Answer

A) three quarters. 
B) two quarters. 
C) two years. 
D) one quarter. 
E) one year. 
A) three quarters. 
B) two quarters. 
C) two years. 
D) one quarter. 
E) one year.

Question 7

Consider the situations of a lender of money and a borrower of money. Which of the following situations is least burdensome for the borrower?

Accepted Answer

A) nominal interest rate of 8% and an inflation rate of 2% 
B) nominal interest rate of 10% and an inflation rate of 1% 
C) nominal interest rate of 15% and an inflation rate of 8% 
D) nominal interest rate of 4% and an inflation rate of 4% 
E) nominal interest rate of 29% and an inflation rate of 21% 
A) nominal interest rate of 8% and an inflation rate of 2% 
B) nominal interest rate of 10% and an inflation rate of 1% 
C) nominal interest rate of 15% and an inflation rate of 8% 
D) nominal interest rate of 4% and an inflation rate of 4% 
E) nominal interest rate of 29% and an inflation rate of 21%

Question 8

Probably the most commonly used measure of national income is

Accepted Answer

A) gross national product. 
B) dollar value of potential output. 
C) current dollar national income. 
D) gross domestic product. 
E) constant dollar national income. 
A) gross national product. 
B) dollar value of potential output. 
C) current dollar national income. 
D) gross domestic product. 
E) constant dollar national income.

Question 9

On a graph showing real national income on the vertical axis and time on the horizontal axis, the fluctuations of real national income around the trend- line would indicate the

Accepted Answer

A) distribution of income. 
B) inflation rate. 
C) business cycle. 
D) unemployment rate. 
E) path of potential output. 
A) distribution of income. 
B) inflation rate. 
C) business cycle. 
D) unemployment rate. 
E) path of potential output.

Question 10

Macroeconomics is mainly concerned with the study of

Accepted Answer

A) large economic units such as General Motors or Molson Breweries. 
B) governments and their intervention in individual markets. 
C) individual households and how they deal with problems like inflation and unemployment. 
D) fluctuations and trends in aggregated data. 
E) fluctuations and trends in disaggregated data. 
A) large economic units such as General Motors or Molson Breweries. 
B) governments and their intervention in individual markets. 
C) individual households and how they deal with problems like inflation and unemployment. 
D) fluctuations and trends in aggregated data. 
E) fluctuations and trends in disaggregated data.

Question 11

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

Accepted Answer

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

Question 12

On a graph showing real national income on the vertical axis and time on the horizontal axis, the trend- line would probably be a good approximation of the

Accepted Answer

A) unemployment rate. 
B) business cycle. 
C) distribution of income. 
D) inflation rate. 
E) path of potential output. 
A) unemployment rate. 
B) business cycle. 
C) distribution of income. 
D) inflation rate. 
E) path of potential output.

Question 13

In macroeconomics, the "output gap" is the difference between

Accepted Answer

A) output in the current year and output in the base year. 
B) potential real national income and actual real national income. 
C) output and employment. 
D) real GNP and real GDP. 
E) real and nominal national income. 
A) output in the current year and output in the base year. 
B) potential real national income and actual real national income. 
C) output and employment. 
D) real GNP and real GDP. 
E) real and nominal national income.

Question 14

Real GDP measures

Accepted Answer

A) the annual growth rate of real national income. 
B) the constant- dollar value of the potential output of the nation's economy over the period of one year. 
C) the fluctuations of national income around its long- term trend. 
D) the quantity of total output produced by the nation's economy over the period of one year. 
E) the long- term trend in total output produced by the nation's economy. 
A) the annual growth rate of real national income. 
B) the constant- dollar value of the potential output of the nation's economy over the period of one year. 
C) the fluctuations of national income around its long- term trend. 
D) the quantity of total output produced by the nation's economy over the period of one year. 
E) the long- term trend in total output produced by the nation's economy.

Question 15

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 percent. 
B) 5.2 percent. 
C) 5.5 percent. 
D) 54..5 percent. 
E) 57.5 percent. 
A) 3.0 percent. 
B) 5.2 percent. 
C) 5.5 percent. 
D) 54..5 percent. 
E) 57.5 percent.

Question 16

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

Accepted Answer

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

Question 17

The unemployment rate will overstate the true amount of unemployment if:

Accepted Answer

A) Crime, divorce, and social unrest are all positively correlated with unemployment. 
B) The unemployment rate is rising. 
C) The official unemployment figure includes discouraged workers who have stopped actively looking for work. 
D) The actual unemployment rate is greater than the natural rate of unemployment. 
E) The labour force has grown more rapidly than output. 
A) Crime, divorce, and social unrest are all positively correlated with unemployment. 
B) The unemployment rate is rising. 
C) The official unemployment figure includes discouraged workers who have stopped actively looking for work. 
D) The actual unemployment rate is greater than the natural rate of unemployment. 
E) The labour force has grown more rapidly than output.

Question 18

If the price index is P1 in year 1 and P2 in year 3, the average inflation rate per year over this period is calculated as

Accepted Answer

A) [(P2 - P1)/P1] x [100/2] 
B) [(P1 - P2)/P2] x [100/2] 
C) [(P1 - P2)/P2] x 100 
D) [(P2 - P1)/P1] x 100 
E) (P2 - P1)x (100/2) 
A) [(P2 - P1)/P1] x [100/2] 
B) [(P1 - P2)/P2] x [100/2] 
C) [(P1 - P2)/P2] x 100 
D) [(P2 - P1)/P1] x 100 
E) (P2 - P1)x (100/2)

Question 19

Suppose the Bank of Montreal wants a four percent real rate of return on all its loans, and anticipates an annual inflation rate of six percent. It should therefore lend its money at a nominal interest rate of

Accepted Answer

A) ten percent. 
B) nine percent. 
C) five percent. 
D) four percent. 
E) one percent. 
A) ten percent. 
B) nine percent. 
C) five percent. 
D) four percent. 
E) one percent.

Question 20

An output gap with Y *

Accepted Answer

A) is known as an inflationary boom. 
B) tends to force prices up. 
C) occurs when there is excess demand. 
D) results in a loss of output due to unemployed resources. 
E) is desirable because it keeps wage costs low. 
A) is known as an inflationary boom. 
B) tends to force prices up. 
C) occurs when there is excess demand. 
D) results in a loss of output due to unemployed resources. 
E) is desirable because it keeps wage costs low.

An upward trend in real national income over an extended period of time is called

Cyclical unemployment is associated with

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

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

people entering the labour force typically take some time to find a job.

When macroeconomists use the term "recession" they usually define it as a fall in real GDP that lasts for at least

Consider the situations of a lender of money and a borrower of money. Which of the following situations is least burdensome for the borrower?

Probably the most commonly used measure of national income is

On a graph showing real national income on the vertical axis and time on the horizontal axis, the fluctuations of real national income around the trend- line would indicate the

Macroeconomics is mainly concerned with the study of

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

On a graph showing real national income on the vertical axis and time on the horizontal axis, the trend- line would probably be a good approximation of the

In macroeconomics, the "output gap" is the difference between

Real GDP measures

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

The unemployment rate will overstate the true amount of unemployment if:

If the price index is P₁in year 1 and P₂in year 3, the average inflation rate per year over this period is calculated as

Suppose the Bank of Montreal wants a four percent real rate of return on all its loans, and anticipates an annual inflation rate of six percent. It should therefore lend its money at a nominal interest rate of

An output gap with Y < Y^*

Economic Issues and Concepts

Economic Theories, Data, and Graphs

Demand, Supply, and Price

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

The Difference Between Short-Run and Long-Run Macroeconomics

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

Filters

Exam 19: What Macroeconomics Is All About

An upward trend in real national income over an extended period of time is called

Cyclical unemployment is associated with

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

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

people entering the labour force typically take some time to find a job.

When macroeconomists use the term "recession" they usually define it as a fall in real GDP that lasts for at least

Consider the situations of a lender of money and a borrower of money. Which of the following situations is least burdensome for the borrower?

Probably the most commonly used measure of national income is

On a graph showing real national income on the vertical axis and time on the horizontal axis, the fluctuations of real national income around the trend- line would indicate the

Macroeconomics is mainly concerned with the study of

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

On a graph showing real national income on the vertical axis and time on the horizontal axis, the trend- line would probably be a good approximation of the

In macroeconomics, the "output gap" is the difference between

Real GDP measures

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

The unemployment rate will overstate the true amount of unemployment if:

If the price index is P1 in year 1 and P2 in year 3, the average inflation rate per year over this period is calculated as

Suppose the Bank of Montreal wants a four percent real rate of return on all its loans, and anticipates an annual inflation rate of six percent. It should therefore lend its money at a nominal interest rate of

An output gap with Y < Y*

Economic Issues and Concepts

Economic Theories, Data, and Graphs

Demand, Supply, and Price

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

The Difference Between Short-Run and Long-Run Macroeconomics

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

Filters

If the price index is P₁in year 1 and P₂in year 3, the average inflation rate per year over this period is calculated as

An output gap with Y < Y^*