Question 1

The opportunity cost of going to college or university for four years is

Accepted Answer

A) zero. 
B) equal to the wage rate a person will earn after graduation. 
C) the cost of tuition and books and four years of lost wages from employment. 
D) the cost of tuition, residence fees and books. 
E) the least valued alternative one forfeits to attend. 
A) zero. 
B) equal to the wage rate a person will earn after graduation. 
C) the cost of tuition and books and four years of lost wages from employment. 
D) the cost of tuition, residence fees and books. 
E) the least valued alternative one forfeits to attend.

Question 2

The circular flow of income illustrates

Accepted Answer

A) the flows of expenditures and income in a household. 
B) that there is no relationship between goods markets and factor markets. 
C) that firms own the factors of production. 
D) the interaction of households and firms through the factors and goods markets. 
E) that the flow of payments moves in the same direction as the flow of goods. 
A) the flows of expenditures and income in a household. 
B) that there is no relationship between goods markets and factor markets. 
C) that firms own the factors of production. 
D) the interaction of households and firms through the factors and goods markets. 
E) that the flow of payments moves in the same direction as the flow of goods.

Question 3

Specialization of labour means that

Accepted Answer

A) job security is ensured. 
B) each worker is self- sufficient. 
C) different individuals perform different tasks in the production process of any given product. 
D) different individuals produce different products. 
E) a barter economy is not necessary. 
A) job security is ensured. 
B) each worker is self- sufficient. 
C) different individuals perform different tasks in the production process of any given product. 
D) different individuals produce different products. 
E) a barter economy is not necessary.

Question 4

With regard to various economic systems, most economists agree that

Accepted Answer

A) most production and consumption decisions are more efficiently coordinated by markets than through central planning. 
B) the mix of market and command principles that exists in Canada is the best. 
C) command economies have been very successful in distributing income in socially just ways. 
D) the optimal mix of market and command systems remains constant over time. 
E) government intervention in the economy is only justified in time of war. 
A) most production and consumption decisions are more efficiently coordinated by markets than through central planning. 
B) the mix of market and command principles that exists in Canada is the best. 
C) command economies have been very successful in distributing income in socially just ways. 
D) the optimal mix of market and command systems remains constant over time. 
E) government intervention in the economy is only justified in time of war.

Question 5

Specialization and trade

Accepted Answer

A) developed only where government and political institutions were stable. 
B) arose as humans changed from nomadic and self- sufficient food gatherers to settled food producers. 
C) *- exist only in capitalist economies. 
D) occur only in the private sector. 
E) developed only in the twentieth century. 
A) developed only where government and political institutions were stable. 
B) arose as humans changed from nomadic and self- sufficient food gatherers to settled food producers. 
C) *- exist only in capitalist economies. 
D) occur only in the private sector. 
E) developed only in the twentieth century.

Question 6

In traditional economies, economic behaviour is

Accepted Answer

A) based primarily on custom and habit. 
B) largely determined by a central authority. 
C) random and unpredictable. 
D) directed only by self interest. 
E) affected by elements of tradition, government command, and market incentives. 
A) based primarily on custom and habit. 
B) largely determined by a central authority. 
C) random and unpredictable. 
D) directed only by self interest. 
E) affected by elements of tradition, government command, and market incentives.

Question 7

Economics can best be described as

Accepted Answer

A) the application of sophisticated mathematical models to address social problems. 
B) the study of how to reduce inflation and unemployment. 
C) the study of the use of scarce resources to satisfy unlimited human wants. 
D) the study of how a society ought to allocate its resources. 
E) a normative science. 
A) the application of sophisticated mathematical models to address social problems. 
B) the study of how to reduce inflation and unemployment. 
C) the study of the use of scarce resources to satisfy unlimited human wants. 
D) the study of how a society ought to allocate its resources. 
E) a normative science.

Question 8

In the circular flow of income, the allocation of resources is largely decided by

Accepted Answer

A) central authorities and firms only. 
B) individuals only. 
C) central authorities only. 
D) firms and households acting independently. 
E) political parties and firms only. 
A) central authorities and firms only. 
B) individuals only. 
C) central authorities only. 
D) firms and households acting independently. 
E) political parties and firms only.

Question 9

Scarcity is likely to be

Accepted Answer

A) a problem that will always exist. 
B) a problem that will be solved by the proper use of available resources. 
C) eliminated with a better understanding of economics. 
D) a result of the work ethic. 
E) unique to the twentieth century. 
A) a problem that will always exist. 
B) a problem that will be solved by the proper use of available resources. 
C) eliminated with a better understanding of economics. 
D) a result of the work ethic. 
E) unique to the twentieth century.

Question 10

It has been observed that university enrollment in Canada is higher during periods of high unemployment. A possible explanation for this is that

Accepted Answer

A) when prospects for getting a job are poor, the opportunity cost of getting a job is lower. 
B) during periods of high unemployment, tuition fees are reduced. 
C) when prospects for getting a job are poor, the opportunity cost of going to university is lower. 
D) during periods of high unemployment, the opportunity cost is no longer relevant. 
E) when prospects for getting a job are poor, the opportunity cost of doing nothing is higher. 
A) when prospects for getting a job are poor, the opportunity cost of getting a job is lower. 
B) during periods of high unemployment, tuition fees are reduced. 
C) when prospects for getting a job are poor, the opportunity cost of going to university is lower. 
D) during periods of high unemployment, the opportunity cost is no longer relevant. 
E) when prospects for getting a job are poor, the opportunity cost of doing nothing is higher.

Question 11

In practice, the term "centrally planned economy" refers to an economy in which

Accepted Answer

A) the military is in control of the government. 
B) economic decisions are made in the geographic centre of the country. 
C) all commodities are rationed. 
D) the government makes all production and consumption decisions. 
E) the mix of market and command principles is heavily weighted towards the latter. 
A) the military is in control of the government. 
B) economic decisions are made in the geographic centre of the country. 
C) all commodities are rationed. 
D) the government makes all production and consumption decisions. 
E) the mix of market and command principles is heavily weighted towards the latter.

Question 12

The concept of scarcity in economics usually refers to a condition

Accepted Answer

A) where society is not employing all of its available resources in an efficient manner. 
B) that afflicts only poor countries. 
C) where people's wants can never be satisfied by the available resources. 
D) where production is efficient, but distribution is inefficient. 
E) where too many frivolous goods and services are produced at the expense of socially desirable goods and services. 
A) where society is not employing all of its available resources in an efficient manner. 
B) that afflicts only poor countries. 
C) where people's wants can never be satisfied by the available resources. 
D) where production is efficient, but distribution is inefficient. 
E) where too many frivolous goods and services are produced at the expense of socially desirable goods and services.

Question 13

The barter system of exchange is inefficient because

Accepted Answer

A) exchange partners need to know each other. 
B) markets do not exist. 
C) "fair" values cannot be defined without the use of money. 
D) bargaining power is unequal between rich and poor. 
E) the double coincidence of wants may not exist. 
A) exchange partners need to know each other. 
B) markets do not exist. 
C) "fair" values cannot be defined without the use of money. 
D) bargaining power is unequal between rich and poor. 
E) the double coincidence of wants may not exist.

Question 14

Which of the following statements best describes the underlying feature in most economic problems?

Accepted Answer

A) Governments should never interfere in the workings of a market economy. 
B) People have unlimited wants in the face of limited resources. 
C) People have limited wants in the face of limited resources. 
D) There are unlimited resources. 
E) Our country is rich; we just don't realize it. 
A) Governments should never interfere in the workings of a market economy. 
B) People have unlimited wants in the face of limited resources. 
C) People have limited wants in the face of limited resources. 
D) There are unlimited resources. 
E) Our country is rich; we just don't realize it.

Question 15

In a pure market economy, the role of government is limited to provision of : i)a basic legal and institutional structure.
Ii)intervention in the allocation of resources in some areas of the economy.
Iii)redistribution of income.
Iv)stabilization of economic conditions generally. Which of the above points is true?

Accepted Answer

A) Only i). 
B) Only i)and ii). 
C) Only i)and iv). 
D) Only i), ii), and iv). 
E) All of the points are provided by government in a pure market economy. 
A) Only i). 
B) Only i)and ii). 
C) Only i)and iv). 
D) Only i), ii), and iv). 
E) All of the points are provided by government in a pure market economy.

Question 16

In command economies, economic behaviour is

Accepted Answer

A) largely affected by elements of tradition and market incentives. 
B) largely determined by a central authority. 
C) random and unpredictable. 
D) based primarily on custom and habit. 
E) directed by individual self interest. 
A) largely affected by elements of tradition and market incentives. 
B) largely determined by a central authority. 
C) random and unpredictable. 
D) based primarily on custom and habit. 
E) directed by individual self interest.

Question 17

Karl Marx argued that

Accepted Answer

A) centrally planned economies could provide a more equitable distribution of total output than capitalist economies. 
B) benevolence, not self- interest, produced an effective economic order. 
C) technological change was not important in improving living standards. 
D) the unfettered market system driven by self- interest leads to the best social outcome. 
E) a free- market system would produce a low level of total output. 
A) centrally planned economies could provide a more equitable distribution of total output than capitalist economies. 
B) benevolence, not self- interest, produced an effective economic order. 
C) technological change was not important in improving living standards. 
D) the unfettered market system driven by self- interest leads to the best social outcome. 
E) a free- market system would produce a low level of total output.

Question 18

Suppose Andrea has a job that pays her $25 000 per year (after taxes). She is considering quitting her job and going to university full time for four years. Tuition fees and books will cost $12 000 per year. Living expenses will cost $10 000 per year. What is the opportunity cost of Andrea's four- year university degree?

Accepted Answer

A) $88 000 
B) $100 000 
C) $120 000 
D) $148 000 
E) $188 000 
A) $88 000 
B) $100 000 
C) $120 000 
D) $148 000 
E) $188 000

Question 19

A barter system of exchange

Accepted Answer

A) requires the use of money. 
B) is the most efficient form of exchange. 
C) involves the trading of goods directly for other goods 
D) does not involve the double coincidence of wants. 
E) developed late in history. 
A) requires the use of money. 
B) is the most efficient form of exchange. 
C) involves the trading of goods directly for other goods 
D) does not involve the double coincidence of wants. 
E) developed late in history.

Question 20

Suppose that one unit of labour can produce either 5 units of wool or 2 pineapples. What is the opportunity cost of producing 1 pineapple?

Accepted Answer

A) 2/5 unit of wool 
B) 5 units of wool 
C) 5/2 units of wool 
D) zero 
E) 2 units of wool 
A) 2/5 unit of wool 
B) 5 units of wool 
C) 5/2 units of wool 
D) zero 
E) 2 units of wool

The opportunity cost of going to college or university for four years is

The circular flow of income illustrates

Specialization of labour means that

With regard to various economic systems, most economists agree that

Specialization and trade

In traditional economies, economic behaviour is

Economics can best be described as

In the circular flow of income, the allocation of resources is largely decided by

Scarcity is likely to be

It has been observed that university enrollment in Canada is higher during periods of high unemployment. A possible explanation for this is that

In practice, the term "centrally planned economy" refers to an economy in which

The concept of scarcity in economics usually refers to a condition

The barter system of exchange is inefficient because

Which of the following statements best describes the underlying feature in most economic problems?

In command economies, economic behaviour is

Karl Marx argued that

A barter system of exchange

Suppose that one unit of labour can produce either 5 units of wool or 2 pineapples. What is the opportunity cost of producing 1 pineapple?

Economic Theories, Data, and Graphs

Demand, Supply, and Price

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

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 1: Economic Issues and Concepts

The opportunity cost of going to college or university for four years is

The circular flow of income illustrates

Specialization of labour means that

With regard to various economic systems, most economists agree that

Specialization and trade

In traditional economies, economic behaviour is

Economics can best be described as

In the circular flow of income, the allocation of resources is largely decided by

Scarcity is likely to be

It has been observed that university enrollment in Canada is higher during periods of high unemployment. A possible explanation for this is that

In practice, the term "centrally planned economy" refers to an economy in which

The concept of scarcity in economics usually refers to a condition

The barter system of exchange is inefficient because

Which of the following statements best describes the underlying feature in most economic problems?

In command economies, economic behaviour is

Karl Marx argued that

A barter system of exchange

Suppose that one unit of labour can produce either 5 units of wool or 2 pineapples. What is the opportunity cost of producing 1 pineapple?

Economic Theories, Data, and Graphs

Demand, Supply, and Price

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

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