Question 1

If one Canadian dollar can be exchanged for 0.5 euros, we say that the Canadian- euro exchange rate is

Accepted Answer

A) 2.0. 
B) 5.0. 
C) 1.0. 
D) 0.5. 
E) 20. 
A) 2.0. 
B) 5.0. 
C) 1.0. 
D) 0.5. 
E) 20.

Question 2

Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million. Which of the following is the best measure of labour productivity in this economy?

Accepted Answer

A) real GDP per employed worker = $20 
B) real GDP per hour worked = $200 
C) real GDP per hour worked = $20 
D) real GDP per employed worker = $200 
E) indeterminable from the information provided. 
A) real GDP per employed worker = $20 
B) real GDP per hour worked = $200 
C) real GDP per hour worked = $20 
D) real GDP per employed worker = $200 
E) indeterminable from the information provided.

Question 3

Suppose a small city has a population of 100 000 and a labour force of 60 000. Employment is 55 000 and 5,000 workers are unemployed. How many people are not in the labour force?

Accepted Answer

A) 0 
B) 30 000 
C) 5000 
D) 40 000 
E) 35 000 
A) 0 
B) 30 000 
C) 5000 
D) 40 000 
E) 35 000

Question 4

If 27 million people are employed and 3 million people are unemployed, what is the unemployment rate?

Accepted Answer

A) 89% 
B) 90% 
C) 11% 
D) 10% 
E) indeterminable from the information provided. 
A) 89% 
B) 90% 
C) 11% 
D) 10% 
E) indeterminable from the information provided.

Question 5

Suppose that at the end of a given year there has been unanticipated inflation of 4 percent. Who is better off at the end of the year?

Accepted Answer

A) a consumer who lent money at the end of the year 
B) a bank that lent money at the end of the year 
C) a bank that lent money at the beginning of the year 
D) a consumer who borrowed money at the end of the year 
E) a consumer who borrowed money at the beginning of the year 
A) a consumer who lent money at the end of the year 
B) a bank that lent money at the end of the year 
C) a bank that lent money at the beginning of the year 
D) a consumer who borrowed money at the end of the year 
E) a consumer who borrowed money at the beginning of the year

Question 6

Suppose Honest Rob's Used Cars buys a used car for $2000 and resells it for $3000. The result of Honest Rob's transactions is to

Accepted Answer

A) decrease the value of national income by $3000. 
B) decrease the value of national income by $1000. 
C) increase the value of national income by $3000. 
D) increase the value of national income by $1000. 
E) leave the value of national income unchanged. 
A) decrease the value of national income by $3000. 
B) decrease the value of national income by $1000. 
C) increase the value of national income by $3000. 
D) increase the value of national income by $1000. 
E) leave the value of national income unchanged.

Question 7

Over the last 50 years in Canada,

Accepted Answer

A) the number of unemployed persons has been a much larger fraction of the labour force than it was during the first half of the 20th century. 
B) both the labour force and employment have remained roughly constant. 
C) the labour force has grown much more rapidly than employment. 
D) the main trend of the economy has been to have employment grow more rapidly than the growth in output. 
E) the main trend of the economy has been one of growth in employment that roughly matches the growth in the labour force. 
A) the number of unemployed persons has been a much larger fraction of the labour force than it was during the first half of the 20th century. 
B) both the labour force and employment have remained roughly constant. 
C) the labour force has grown much more rapidly than employment. 
D) the main trend of the economy has been to have employment grow more rapidly than the growth in output. 
E) the main trend of the economy has been one of growth in employment that roughly matches the growth in the labour force.

Question 8

If a country's labour force is 15 million people, and 1.35 million of those are unemployed, the country's unemployment rate is

Accepted Answer

A) 2.5 percent. 
B) 3.3 percent. 
C) 4.5 percent. 
D) 6.7 percent. 
E) 9.0 percent. 
A) 2.5 percent. 
B) 3.3 percent. 
C) 4.5 percent. 
D) 6.7 percent. 
E) 9.0 percent.

Question 9

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

Question 10

Women entered the labour force in large numbers in the 20th century and increased the economy's GDP. This change

Accepted Answer

A) raised potential output. 
B) was only possible in an economy operating above normal rates of utilization. 
C) created inflationary gaps. 
D) created recessionary gaps. 
E) was only possible in an economy operating below normal rates of utilization. 
A) raised potential output. 
B) was only possible in an economy operating above normal rates of utilization. 
C) created inflationary gaps. 
D) created recessionary gaps. 
E) was only possible in an economy operating below normal rates of utilization.

Question 11

Real national income

Accepted Answer

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

Question 12

Economic theory argues that there will be fewer real effects from inflation as long as the

Accepted Answer

A) whole private sector is unaware that it is happening. 
B) anticipated rate of inflation is more than the actual rate of inflation. 
C) actual rate of inflation is less than 5 percent. 
D) inflation is fully anticipated and no one changes their behaviour. 
E) anticipated rate of inflation is less than the actual rate of inflation. 
A) whole private sector is unaware that it is happening. 
B) anticipated rate of inflation is more than the actual rate of inflation. 
C) actual rate of inflation is less than 5 percent. 
D) inflation is fully anticipated and no one changes their behaviour. 
E) anticipated rate of inflation is less than the actual rate of inflation.

Question 13

Suppose Canada's exchange rate with the U.S. dollar falls from 1.21 to 1.13. This fall indicates a(n) of the Canadian dollar, which means it takes Canadian dollars to purchase one
U.S. dollar.

Accepted Answer

A) appreciation; fewer 
B) depreciation; more 
C) depreciation; fewer 
D) appreciation; more 
A) appreciation; fewer 
B) depreciation; more 
C) depreciation; fewer 
D) appreciation; more

Question 14

Suppose Canada's exchange rate with the euro rises from 1.2 to 1.4. This rise indicates a(n) of the Canadian dollar, which means it takes Canadian dollars to purchase one euro.

Accepted Answer

A) appreciation; more 
B) depreciation; fewer 
C) depreciation; more 
D) appreciation; fewer 
A) appreciation; more 
B) depreciation; fewer 
C) depreciation; more 
D) appreciation; fewer

Question 15

Suppose that in 2010 Canada's automobile manufacturers produced 2 million cars priced at $20 000 each. And in 2011 they produced 1 million cars priced at $40 000 each. Ceteris paribus, the change in nominal national income is

Accepted Answer

A) an increase because the price of each car increased. 
B) a decrease because fewer cars were produced. 
C) insufficient information to know. 
D) no change in nominal national income. 
E) an increase because of inflation. 
A) an increase because the price of each car increased. 
B) a decrease because fewer cars were produced. 
C) insufficient information to know. 
D) no change in nominal national income. 
E) an increase because of inflation.

Question 16

The group that tends to be most hurt by unexpected inflation is

Accepted Answer

A) banks. 
B) individuals with unindexed pensions. 
C) employers. 
D) fixed- income earners. 
E) both B and D are correct. 
A) banks. 
B) individuals with unindexed pensions. 
C) employers. 
D) fixed- income earners. 
E) both B and D are correct.

Question 17

A nation's real national income in a given year measures the

Accepted Answer

A) value of output produced by the economy, measured in constant dollars. 
B) level of national income that is subject to taxation by the federal government. 
C) opportunity cost of the economy's national output. 
D) market value of national output produced by the economy. 
E) dollar income earned by the nation's producing sector. 
A) value of output produced by the economy, measured in constant dollars. 
B) level of national income that is subject to taxation by the federal government. 
C) opportunity cost of the economy's national output. 
D) market value of national output produced by the economy. 
E) dollar income earned by the nation's producing sector.

Question 18

Inflation, the rate of change of average prices in the economy, generally

Accepted Answer

A) increases the purchasing power of money. 
B) reduces the real value of existing nominal debt. 
C) increases the real value of fixed money incomes. 
D) has no real effects if it is unanticipated. 
E) benefits creditors if it is unanticipated. 
A) increases the purchasing power of money. 
B) reduces the real value of existing nominal debt. 
C) increases the real value of fixed money incomes. 
D) has no real effects if it is unanticipated. 
E) benefits creditors if it is unanticipated.

Question 19

Potential or full- employment output is

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) the GDP that would be produced if the economy's resources were fully employed at a normal intensity of use. 
D) the GDP that could be produced if the economy's resources were fully employed at their maximum intensity of use. 
E) a goal that can never be achieved by the economy. 
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) the GDP that would be produced if the economy's resources were fully employed at a normal intensity of use. 
D) the GDP that could be produced if the economy's resources were fully employed at their maximum intensity of use. 
E) a goal that can never be achieved by the economy.

Question 20

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

Accepted Answer

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

If one Canadian dollar can be exchanged for 0.5 euros, we say that the Canadian- euro exchange rate is

Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million. Which of the following is the best measure of labour productivity in this economy?

Suppose a small city has a population of 100 000 and a labour force of 60 000. Employment is 55 000 and 5,000 workers are unemployed. How many people are not in the labour force?

If 27 million people are employed and 3 million people are unemployed, what is the unemployment rate?

Suppose that at the end of a given year there has been unanticipated inflation of 4 percent. Who is better off at the end of the year?

Suppose Honest Rob's Used Cars buys a used car for $2000 and resells it for $3000. The result of Honest Rob's transactions is to

Over the last 50 years in Canada,

If a country's labour force is 15 million people, and 1.35 million of those are unemployed, the country's unemployment rate is

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

Women entered the labour force in large numbers in the 20^thcentury and increased the economy's GDP. This change

Real national income

Economic theory argues that there will be fewer real effects from inflation as long as the

Suppose Canada's exchange rate with the U.S. dollar falls from 1.21 to 1.13. This fall indicates a(n) of the Canadian dollar, which means it takes Canadian dollars to purchase one U.S. dollar.

Suppose Canada's exchange rate with the euro rises from 1.2 to 1.4. This rise indicates a(n) of the Canadian dollar, which means it takes Canadian dollars to purchase one euro.

Suppose that in 2010 Canada's automobile manufacturers produced 2 million cars priced at $20 000 each. And in 2011 they produced 1 million cars priced at $40 000 each. Ceteris paribus, the change in nominal national income is

The group that tends to be most hurt by unexpected inflation is

A nation's real national income in a given year measures the

Inflation, the rate of change of average prices in the economy, generally

Potential or full- employment output is

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

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

If one Canadian dollar can be exchanged for 0.5 euros, we say that the Canadian- euro exchange rate is

Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million. Which of the following is the best measure of labour productivity in this economy?

Suppose a small city has a population of 100 000 and a labour force of 60 000. Employment is 55 000 and 5,000 workers are unemployed. How many people are not in the labour force?

If 27 million people are employed and 3 million people are unemployed, what is the unemployment rate?

Suppose that at the end of a given year there has been unanticipated inflation of 4 percent. Who is better off at the end of the year?

Suppose Honest Rob's Used Cars buys a used car for $2000 and resells it for $3000. The result of Honest Rob's transactions is to

Over the last 50 years in Canada,

If a country's labour force is 15 million people, and 1.35 million of those are unemployed, the country's unemployment rate is

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

Women entered the labour force in large numbers in the 20th century and increased the economy's GDP. This change

Real national income

Economic theory argues that there will be fewer real effects from inflation as long as the

Suppose Canada's exchange rate with the U.S. dollar falls from 1.21 to 1.13. This fall indicates a(n) of the Canadian dollar, which means it takes Canadian dollars to purchase one U.S. dollar.

Suppose Canada's exchange rate with the euro rises from 1.2 to 1.4. This rise indicates a(n) of the Canadian dollar, which means it takes Canadian dollars to purchase one euro.

Suppose that in 2010 Canada's automobile manufacturers produced 2 million cars priced at $20 000 each. And in 2011 they produced 1 million cars priced at $40 000 each. Ceteris paribus, the change in nominal national income is

The group that tends to be most hurt by unexpected inflation is

A nation's real national income in a given year measures the

Inflation, the rate of change of average prices in the economy, generally

Potential or full- employment output is

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

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

Women entered the labour force in large numbers in the 20^thcentury and increased the economy's GDP. This change