Question 1

Suppose Appliance Mart buys a used refrigerator for $100, repairs it, and resells it for $250. The result of this transaction is to

Accepted Answer

A) increase the value of national product by $150. 
B) decrease the value of national product by $100. 
C) increase the value of national product by $250. 
D) leave the value of national product unchanged. 
E) insufficient information to know. 
A) increase the value of national product by $150. 
B) decrease the value of national product by $100. 
C) increase the value of national product by $250. 
D) leave the value of national product unchanged. 
E) insufficient information to know.

Question 2

If nominal national income increased by 10 percent over a certain period of time while real national income increased by 20 percent, then

Accepted Answer

A) the price level has declined by about 10 percent. 
B) the price level has increased by approximately 10 percent. 
C) inflation has occurred during this time period. 
D) everybody in the economy became worse off. 
E) the labour force increased by 10 percent. 
A) the price level has declined by about 10 percent. 
B) the price level has increased by approximately 10 percent. 
C) inflation has occurred during this time period. 
D) everybody in the economy became worse off. 
E) the labour force increased by 10 percent.

Question 3

If the Consumer Price Index changes from 120 in year one to 144 in year two, the rate of inflation in the intervening year is

Accepted Answer

A) 10 percent. 
B) 12.5 percent. 
C) 20 percent. 
D) 25 percent. 
E) 30 percent. 
A) 10 percent. 
B) 12.5 percent. 
C) 20 percent. 
D) 25 percent. 
E) 30 percent.

Question 4

In general, productivity is a measure of

Accepted Answer

A) potential output. 
B) the total amount of output that the economy is capable of producing. 
C) the economy's ability to increase real GDP per capita. 
D) real GDP as a function of total employment. 
E) the amount of output that the economy produces per unit of input. 
A) potential output. 
B) the total amount of output that the economy is capable of producing. 
C) the economy's ability to increase real GDP per capita. 
D) real GDP as a function of total employment. 
E) the amount of output that the economy produces per unit of input.

Question 5

The real rate of interest is equal to the nominal interest rate

Accepted Answer

A) divided by the price level. 
B) minus the rate of inflation. 
C) plus the price level. 
D) plus the risk ratio. 
E) multiplied by the rate of inflation. 
A) divided by the price level. 
B) minus the rate of inflation. 
C) plus the price level. 
D) plus the risk ratio. 
E) multiplied by the rate of inflation.

Question 6

An example of a topic outside the scope of macroeconomics is

Accepted Answer

A) the level of productivity, as compared with that in the United States. 
B) the aggregate growth rate of the economy. 
C) changes in the unemployment rate. 
D) changes in the price of a particular good in a specific market. 
E) the overall level of unemployment. 
A) the level of productivity, as compared with that in the United States. 
B) the aggregate growth rate of the economy. 
C) changes in the unemployment rate. 
D) changes in the price of a particular good in a specific market. 
E) the overall level of unemployment.

Question 7

The output gap is the

Accepted Answer

A) difference between nominal and real output. 
B) percentage change in real GDP. 
C) difference between Y and Y*. 
D) dead- weight loss of inflation. 
E) measure of output that could have been produced if the economy were fully employed. 
A) difference between nominal and real output. 
B) percentage change in real GDP. 
C) difference between Y and Y*. 
D) dead- weight loss of inflation. 
E) measure of output that could have been produced if the economy were fully employed.

Question 8

If a country's labour force is 15 million people, and 1 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

Consider a small economy with 3 individuals. Individual A produces 100 chickens that sell for $8 each. Individual B produces 50 bags of corn that sell for $10 each. Individual C produces 40 bushels of apples that sell for $20 each. National product in this economy is

Accepted Answer

A) $2100. 
B) $2470 
C) 100 chickens plus 50 bags of corn plus 40 bushels of apples. 
D) 190 units of goods produced. 
E) not determinable from the information provided. 
A) $2100. 
B) $2470 
C) 100 chickens plus 50 bags of corn plus 40 bushels of apples. 
D) 190 units of goods produced. 
E) not determinable from the information provided.

Question 10

If the Consumer Price Index changes from 120 in year one to 122 in year two, the rate of inflation in the intervening year is

Accepted Answer

A) 20 percent. 
B) 0 percent. 
C) 22 percent. 
D) 2.0 percent. 
E) 1.67 percent. 
A) 20 percent. 
B) 0 percent. 
C) 22 percent. 
D) 2.0 percent. 
E) 1.67 percent.

Question 11

It is important for policy makers to recognize that most macroeconomic variables are characterized by

Accepted Answer

A) short- run fluctuations that need to be smoothed for a well- functioning economy. 
B) long- run economic growth. 
C) gradual increases over long periods of time. 
D) long- run trends and short- run fluctuations. 
E) the impacts of the business cycle. 
A) short- run fluctuations that need to be smoothed for a well- functioning economy. 
B) long- run economic growth. 
C) gradual increases over long periods of time. 
D) long- run trends and short- run fluctuations. 
E) the impacts of the business cycle.

Question 12

A change in a price index measures

Accepted Answer

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

Question 13

Consider an economy in which existing capital is being used at a high degree, shortages in labour and goods markets are developing, and costs are rising. Which of the following terms best describes this stage of the business cycle?

Accepted Answer

A) peak 
B) trough 
C) recession 
D) recovery 
E) slump 
A) peak 
B) trough 
C) recession 
D) recovery 
E) slump

Question 14

Suppose that a country's population is 30 million and it has a labour force of 15 million people. Assuming it has 500 000 people 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 15

In determining the economy's real GDP growth rate between two time periods,

Accepted Answer

A) real national income, which is equal to nominal national income corrected for price- level changes, should be used. 
B) we should ignore prices completely, in order to examine output alone. 
C) potential national income should be used. 
D) nominal national income should be used in comparing levels of output. 
E) only the real national product from the latest time period is relevant. 
A) real national income, which is equal to nominal national income corrected for price- level changes, should be used. 
B) we should ignore prices completely, in order to examine output alone. 
C) potential national income should be used. 
D) nominal national income should be used in comparing levels of output. 
E) only the real national product from the latest time period is relevant.

Question 16

Which of the following statements is logically valid?

Accepted Answer

A) If the real interest rate is less than the nominal interest rate, inflation must be zero. 
B) If the real interest rate is less than the nominal interest rate, inflation must be negative. 
C) If the rate of inflation is less than the nominal interest rate, the real interest rate is positive. 
D) If the nominal interest rate is high, the real interest rate must be high. 
E) If the rate of inflation is high, the nominal rate of interest must be low. 
A) If the real interest rate is less than the nominal interest rate, inflation must be zero. 
B) If the real interest rate is less than the nominal interest rate, inflation must be negative. 
C) If the rate of inflation is less than the nominal interest rate, the real interest rate is positive. 
D) If the nominal interest rate is high, the real interest rate must be high. 
E) If the rate of inflation is high, the nominal rate of interest must be low.

Question 17

The most common measure of productivity is , which can be measured as real GDP divided by .

Accepted Answer

A) labour productivity; the number of units of work effort 
B) indexed productivity; per capita output 
C) capital productivity; the number of units of capital employed in the economy 
D) potential productivity; the total number of factors that would be employed in the economy at full employment. 
E) factor productivity; the total number of factors employed in the economy 
A) labour productivity; the number of units of work effort 
B) indexed productivity; per capita output 
C) capital productivity; the number of units of capital employed in the economy 
D) potential productivity; the total number of factors that would be employed in the economy at full employment. 
E) factor productivity; the total number of factors employed in the economy

Question 18

Suppose the Bank of Montreal wants a five percent real rate of return on all its loans, and anticipates an annual inflation rate of four 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 19

The three main reasons that Canada's real GDP has increased steadily for many years are

Accepted Answer

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

Question 20

A worker currently earning $3000 per month has negotiated a 4% wage increase in anticipation of a 4% inflation rate in the next year. Under what scenario will the worker have a higher purchasing power?

Accepted Answer

A) if next year's inflation rate is 5% 
B) if next year's inflation rate is 3% 
C) if next year's inflation rate is 4% 
D) if next year some prices increase by only 5% 
E) if next year some prices increase by only 4% 
A) if next year's inflation rate is 5% 
B) if next year's inflation rate is 3% 
C) if next year's inflation rate is 4% 
D) if next year some prices increase by only 5% 
E) if next year some prices increase by only 4%

Suppose Appliance Mart buys a used refrigerator for $100, repairs it, and resells it for $250. The result of this transaction is to

If nominal national income increased by 10 percent over a certain period of time while real national income increased by 20 percent, then

If the Consumer Price Index changes from 120 in year one to 144 in year two, the rate of inflation in the intervening year is

In general, productivity is a measure of

The real rate of interest is equal to the nominal interest rate

An example of a topic outside the scope of macroeconomics is

The output gap is the

If a country's labour force is 15 million people, and 1 million of those are unemployed, the country's unemployment rate is

Consider a small economy with 3 individuals. Individual A produces 100 chickens that sell for $8 each. Individual B produces 50 bags of corn that sell for $10 each. Individual C produces 40 bushels of apples that sell for $20 each. National product in this economy is

If the Consumer Price Index changes from 120 in year one to 122 in year two, the rate of inflation in the intervening year is

It is important for policy makers to recognize that most macroeconomic variables are characterized by

A change in a price index measures

Consider an economy in which existing capital is being used at a high degree, shortages in labour and goods markets are developing, and costs are rising. Which of the following terms best describes this stage of the business cycle?

Suppose that a country's population is 30 million and it has a labour force of 15 million people. Assuming it has 500 000 people unemployed, the country's unemployment rate is

In determining the economy's real GDP growth rate between two time periods,

Which of the following statements is logically valid?

The most common measure of productivity is , which can be measured as real GDP divided by .

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

The three main reasons that Canada's real GDP has increased steadily for many years are

A worker currently earning $3000 per month has negotiated a 4% wage increase in anticipation of a 4% inflation rate in the next year. Under what scenario will the worker have a higher purchasing power?

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

Suppose Appliance Mart buys a used refrigerator for $100, repairs it, and resells it for $250. The result of this transaction is to

If nominal national income increased by 10 percent over a certain period of time while real national income increased by 20 percent, then

If the Consumer Price Index changes from 120 in year one to 144 in year two, the rate of inflation in the intervening year is

In general, productivity is a measure of

The real rate of interest is equal to the nominal interest rate

An example of a topic outside the scope of macroeconomics is

The output gap is the

If a country's labour force is 15 million people, and 1 million of those are unemployed, the country's unemployment rate is

Consider a small economy with 3 individuals. Individual A produces 100 chickens that sell for $8 each. Individual B produces 50 bags of corn that sell for $10 each. Individual C produces 40 bushels of apples that sell for $20 each. National product in this economy is

If the Consumer Price Index changes from 120 in year one to 122 in year two, the rate of inflation in the intervening year is

It is important for policy makers to recognize that most macroeconomic variables are characterized by

A change in a price index measures

Consider an economy in which existing capital is being used at a high degree, shortages in labour and goods markets are developing, and costs are rising. Which of the following terms best describes this stage of the business cycle?

Suppose that a country's population is 30 million and it has a labour force of 15 million people. Assuming it has 500 000 people unemployed, the country's unemployment rate is

In determining the economy's real GDP growth rate between two time periods,

Which of the following statements is logically valid?

The most common measure of productivity is , which can be measured as real GDP divided by .

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

The three main reasons that Canada's real GDP has increased steadily for many years are

A worker currently earning $3000 per month has negotiated a 4% wage increase in anticipation of a 4% inflation rate in the next year. Under what scenario will the worker have a higher purchasing power?

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