Question 1

What is it called when a firm is forced to cope with a situation different than the one they were expecting?

Accepted Answer

A) Risk 
B) Uncertainty 
C) Shock 
D) Upheaval 
A) Risk 
B) Uncertainty 
C) Shock 
D) Upheaval

Question 2

The term "inflation" describes the situation where:

Accepted Answer

A) general price levels are declining. 
B) stock market prices are increasing. 
C) all prices are increasing at the same rate. 
D) the overall price level is increasing. 
A) general price levels are declining. 
B) stock market prices are increasing. 
C) all prices are increasing at the same rate. 
D) the overall price level is increasing.

Question 3

Modern economic growth in a country implies that output per person increases.

Accepted Answer

A) True 
 B)False

Question 4

The official unemployment rate:

Accepted Answer

A) reveals people over 21 years of age who are currently discouraged and are not looking for a job. 
B) is the percentage of the labour force which is unemployed. 
C) is the percentage of the labour force which is working part-time. 
D) is the percentage of the total population which is not working. 
A) reveals people over 21 years of age who are currently discouraged and are not looking for a job. 
B) is the percentage of the labour force which is unemployed. 
C) is the percentage of the labour force which is working part-time. 
D) is the percentage of the total population which is not working.

Question 5

Inflation means:

Accepted Answer

A) an increase in individuals' real income. 
B) that all prices are rising and at the same rate. 
C) an increase in the overall price level. 
D) a decrease in the overall level of prices. 
A) an increase in individuals' real income. 
B) that all prices are rising and at the same rate. 
C) an increase in the overall price level. 
D) a decrease in the overall level of prices.

Question 6

If current prices are used to calculate the value of total output produced by a country during a specific period of time, the result is called:

Accepted Answer

A) real GDP. 
B) nominal GDP. 
C) full employment GDP. 
D) constant dollar GDP. 
A) real GDP. 
B) nominal GDP. 
C) full employment GDP. 
D) constant dollar GDP.

Question 7

In response to some unexpected changes in demand:

Accepted Answer

A) the economy could always adjust its production level if the prices are inflexible. 
B) the economy would always produce less than what was expected if the prices of goods and services are inflexible. 
C) the economy could always produce at its optimal capacity if the prices of goods and services are inflexible. 
D) the economy could always produce at its optimal capacity if the prices of goods and services are fully flexible. 
A) the economy could always adjust its production level if the prices are inflexible. 
B) the economy would always produce less than what was expected if the prices of goods and services are inflexible. 
C) the economy could always produce at its optimal capacity if the prices of goods and services are inflexible. 
D) the economy could always produce at its optimal capacity if the prices of goods and services are fully flexible.

Question 8

Sticky prices imply that some firms are afraid to cut their prices because they are afraid of price wars.

Accepted Answer

A) True 
 B)False

Question 9

Which would be considered an investment according to economists?

Accepted Answer

A) the purchase of government bonds by the nation's central bank 
B) the purchase of a laptop by a university student to prepare her class projects 
C) the construction of a new factory by Intel 
D) the purchase of shares of stock by Manulife, a mutual fund company 
A) the purchase of government bonds by the nation's central bank 
B) the purchase of a laptop by a university student to prepare her class projects 
C) the construction of a new factory by Intel 
D) the purchase of shares of stock by Manulife, a mutual fund company

Question 10

Assuming inflexible prices, if the demand for many goods and services falls across the entire economy and for an extended period of time:

Accepted Answer

A) many firms will face a constant reduction in their inventories. 
B) many firms will face with an inventory pile up and will be forced to cut production. 
C) many firms will face with an inventory pile up and will be forced to hire more workers. 
D) many firms will face a constant reduction in their inventories and will be forced to hire more workers. 
A) many firms will face a constant reduction in their inventories. 
B) many firms will face with an inventory pile up and will be forced to cut production. 
C) many firms will face with an inventory pile up and will be forced to hire more workers. 
D) many firms will face a constant reduction in their inventories and will be forced to hire more workers.

Question 11

In 2008-2009, the Canadian economy experienced:

Accepted Answer

A) a depression. 
B) the Great Recession. 
C) a decrease in the unemployment rate compared to 2007. 
D) an increase in jobs. 
A) a depression. 
B) the Great Recession. 
C) a decrease in the unemployment rate compared to 2007. 
D) an increase in jobs.

Question 12

Commodities such as airline tickets, and gasoline have sticky prices.

Accepted Answer

A) True 
 B)False

Question 13

To study macroeconomics, one needs various models with different assumptions about the flexibility and/or stickiness of price levels.This is because:

Accepted Answer

A) the economy behaves similarly to demand shocks regardless of the length of time. 
B) the price flexibility is a short-run phenomenon while, the price stickiness is a long-run phenomenon. 
C) the economy behaves so differently depending on how much time has passed after a demand shock. 
D) various government policies are useless to eliminate the effects of an unexpected demand shock. 
A) the economy behaves similarly to demand shocks regardless of the length of time. 
B) the price flexibility is a short-run phenomenon while, the price stickiness is a long-run phenomenon. 
C) the economy behaves so differently depending on how much time has passed after a demand shock. 
D) various government policies are useless to eliminate the effects of an unexpected demand shock.

Question 14

In the short run, the prices of goods and services are:

Accepted Answer

A) sticky. 
B) flexible. 
C) higher than those in the long run. 
D) lower than those in the long run. 
A) sticky. 
B) flexible. 
C) higher than those in the long run. 
D) lower than those in the long run.

Question 15

To facilitate the international comparisons of living standards around the world, adjustments are supposed to be made to each country's GDP.These adjustments require:

Accepted Answer

A) calculating each country's GDP in terms of U.S.dollar, dividing it by the general price level and, subtracting the previous year's value of the country's GDP from it. 
B) converting each country's GDP to U.S.dollars, dividing it by the country's population and, to adjust the resulting figure for the purchasing power parity. 
C) each country's GDP should be multiplied by its general price level. 
D) there is no need for any adjustments since, each country's GDP is the representative of its standard of living. 
A) calculating each country's GDP in terms of U.S.dollar, dividing it by the general price level and, subtracting the previous year's value of the country's GDP from it. 
B) converting each country's GDP to U.S.dollars, dividing it by the country's population and, to adjust the resulting figure for the purchasing power parity. 
C) each country's GDP should be multiplied by its general price level. 
D) there is no need for any adjustments since, each country's GDP is the representative of its standard of living.

Question 16

Economists believe that most short-run fluctuations are the result of:

Accepted Answer

A) supply shocks. 
B) demand shocks. 
C) unexpected changes in the availability of imported resources. 
D) negative supply shocks. 
A) supply shocks. 
B) demand shocks. 
C) unexpected changes in the availability of imported resources. 
D) negative supply shocks.

Question 17

During the Great Recession, Canada's unemployment rate rose by:

Accepted Answer

A) 1 percent. 
B) 1.5 percent. 
C) 2.2 percent. 
D) 3.5 percent. 
A) 1 percent. 
B) 1.5 percent. 
C) 2.2 percent. 
D) 3.5 percent.

Question 18

Today, the vast differences in the living standard between rich and poor countries are mainly the result of:

Accepted Answer

A) small differences in per capita GDP levels around the world. 
B) rich countries experiencing modern economic growth while poor countries do not. 
C) small differences in nominal GDP levels around the world. 
D) large differences in population levels around the world. 
A) small differences in per capita GDP levels around the world. 
B) rich countries experiencing modern economic growth while poor countries do not. 
C) small differences in nominal GDP levels around the world. 
D) large differences in population levels around the world.

Question 19

To look at the health of the economy, economists would most probably look at indictors such as:

Accepted Answer

A) real GDP, unemployment rate and, the inflation rate. 
B) level of saving, nominal GDP and, the inflation rate. 
C) nominal GDP, level of investment and, the general price level. 
D) the general price level, employment rate and, level of saving. 
A) real GDP, unemployment rate and, the inflation rate. 
B) level of saving, nominal GDP and, the inflation rate. 
C) nominal GDP, level of investment and, the general price level. 
D) the general price level, employment rate and, level of saving.

Question 20

Which of the following industries is likely to have the most frequent price change?

Accepted Answer

A) Electricity 
B) Magazines 
C) Beer 
D) Milk 
A) Electricity 
B) Magazines 
C) Beer 
D) Milk

Exam 6: B: an Introduction to Macroeconomics

What is it called when a firm is forced to cope with a situation different than the one they were expecting?

The term "inflation" describes the situation where:

Modern economic growth in a country implies that output per person increases.

The official unemployment rate:

Inflation means:

If current prices are used to calculate the value of total output produced by a country during a specific period of time, the result is called:

In response to some unexpected changes in demand:

Sticky prices imply that some firms are afraid to cut their prices because they are afraid of price wars.

Which would be considered an investment according to economists?

Assuming inflexible prices, if the demand for many goods and services falls across the entire economy and for an extended period of time:

In 2008-2009, the Canadian economy experienced:

Commodities such as airline tickets, and gasoline have sticky prices.

To study macroeconomics, one needs various models with different assumptions about the flexibility and/or stickiness of price levels.This is because:

In the short run, the prices of goods and services are:

To facilitate the international comparisons of living standards around the world, adjustments are supposed to be made to each country's GDP.These adjustments require:

Economists believe that most short-run fluctuations are the result of:

During the Great Recession, Canada's unemployment rate rose by:

Today, the vast differences in the living standard between rich and poor countries are mainly the result of:

To look at the health of the economy, economists would most probably look at indictors such as:

Which of the following industries is likely to have the most frequent price change?

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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