Question 1

The higher is the current level of saving:

Accepted Answer

A) the higher is the current level of investment and higher the future level of consumption. 
B) the lower is the current level of investment and lower the future level of consumption. 
C) the higher is the current level of investment and lower the future level of consumption. 
D) the lower is the current level of investment and higher the future level of consumption. 
A) the higher is the current level of investment and higher the future level of consumption. 
B) the lower is the current level of investment and lower the future level of consumption. 
C) the higher is the current level of investment and lower the future level of consumption. 
D) the lower is the current level of investment and higher the future level of consumption.

Question 2

Which would be considered an investment according to economists?

Accepted Answer

A) the buying of shares of Fidelity mutual funds 
B) the purchase of a new machinery by McCain Food 
C) the selling of Boeing stock by a businessman 
D) the selling of GE corporate bonds 
A) the buying of shares of Fidelity mutual funds 
B) the purchase of a new machinery by McCain Food 
C) the selling of Boeing stock by a businessman 
D) the selling of GE corporate bonds

Question 3

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 4

The financial institutions play an important role in transferring the savings of the individuals to the investments by businesses.Which of the following correctly states this transfer?

Accepted Answer

A) banks collect the savings and invest it in the stock market. 
B) banks collect the savings, rewarding the savings by interest and dividend payments and, lend the funds to businesses who in turn buy equipment, factories and capital goods. 
C) banks collect the savings and lend the funds to the government who in turn redistribute it through different kinds of subsidies. 
D) financial institutions do not have a major role in this process. 
A) banks collect the savings and invest it in the stock market. 
B) banks collect the savings, rewarding the savings by interest and dividend payments and, lend the funds to businesses who in turn buy equipment, factories and capital goods. 
C) banks collect the savings and lend the funds to the government who in turn redistribute it through different kinds of subsidies. 
D) financial institutions do not have a major role in this process.

Question 5

If prices are flexible, no matter what demand turns out to be, firms can continue selling their optimal output.

Accepted Answer

A) True 
 B)False

Question 6

If the economy's output and income double in 35 years, we can:

Accepted Answer

A) not say anything about the average annual rate of growth. 
B) conclude that its average annual rate of growth is about 5.5 percent. 
C) conclude that its average annual rate of growth is about 2 percent. 
D) conclude that its average annual rate of growth is about 4 percent. 
A) not say anything about the average annual rate of growth. 
B) conclude that its average annual rate of growth is about 5.5 percent. 
C) conclude that its average annual rate of growth is about 2 percent. 
D) conclude that its average annual rate of growth is about 4 percent.

Question 7

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 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 of the following countries had the highest GDP per capita in 2016?

Accepted Answer

A) China 
B) France 
C) Russia 
D) Japan 
A) China 
B) France 
C) Russia 
D) Japan

Question 10

The decisions about savings and investments are complicated because:

Accepted Answer

A) it involves uncertainty about the future. 
B) higher savings means higher levels of consumption for individuals. 
C) the investment decisions are independent from the decisions about savings. 
D) savings are taken by businesses while investments are done by households. 
A) it involves uncertainty about the future. 
B) higher savings means higher levels of consumption for individuals. 
C) the investment decisions are independent from the decisions about savings. 
D) savings are taken by businesses while investments are done by households.

Question 11

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 12

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 13

The concept of "real GDP" refers to:

Accepted Answer

A) the value of nominal GDP after adjustments have been made for changes in the price level. 
B) the value of nominal GDP minus the environmental pollution and changes in the distribution of income. 
C) the value of the current total output plus the value of intermediate goods. 
D) GDP data which reflect changes in both physical output and environmental damage. 
A) the value of nominal GDP after adjustments have been made for changes in the price level. 
B) the value of nominal GDP minus the environmental pollution and changes in the distribution of income. 
C) the value of the current total output plus the value of intermediate goods. 
D) GDP data which reflect changes in both physical output and environmental damage.

Question 14

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 15

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

Accepted Answer

A) Coin-operated laundry machines 
B) Newspapers 
C) Taxi fares 
D) Haircuts 
A) Coin-operated laundry machines 
B) Newspapers 
C) Taxi fares 
D) Haircuts

Question 16

Refer to the above diagram (b), assume that DL represents low demand for the Turbo-car, DM represents the medium level of demand and, DH represents the high level of demand for Turbo-car and, Fancy Auto's optimal output level is 900 cars per week.If the Fancy Auto Company has a fixed price policy of $37,000 per vehicle:

Accepted Answer

A) the quantity demanded will be 900 cars per week if the demand is DL. 
B) the quantity demanded will be 700 cars per week if the demand is DL. 
C) the quantity demanded will be 1150 cars per week if the demand is DL. 
D) the quantity demanded will be 1150 cars per week if the demand is DM. 
A) the quantity demanded will be 900 cars per week if the demand is DL. 
B) the quantity demanded will be 700 cars per week if the demand is DL. 
C) the quantity demanded will be 1150 cars per week if the demand is DL. 
D) the quantity demanded will be 1150 cars per week if the demand is DM.

Question 17

If the unexpected short-run fluctuations in demand begin to look permanent:

Accepted Answer

A) the firms would allow their prices to change accordingly. 
B) the firms would be hesitant to allow their prices to change accordingly. 
C) the firms would not allow their prices to change. 
D) the firms would change the quality of their products but not the prices. 
A) the firms would allow their prices to change accordingly. 
B) the firms would be hesitant to allow their prices to change accordingly. 
C) the firms would not allow their prices to change. 
D) the firms would change the quality of their products but not the prices.

Question 18

Knowing that in the real world, the demand for goods and services could change unexpectedly, firms would attempt to deal with it by:

Accepted Answer

A) producing different levels of goods and services according to the changes in demand. 
B) switching to the production of another product in the short-run. 
C) maintaining an inventory. 
D) closing down the production in the short-run with the hope that the situation would change in the future. 
A) producing different levels of goods and services according to the changes in demand. 
B) switching to the production of another product in the short-run. 
C) maintaining an inventory. 
D) closing down the production in the short-run with the hope that the situation would change in the future.

Question 19

Because prices change too slowly in the short-run and as a result, they do not quickly equalize the quantity demanded and quantity supplied of goods and services, the short-run response of the economy to a demand shock is through:

Accepted Answer

A) changes in output and employment levels rather than through changes in prices. 
B) changes in prices rather than through changes in employment. 
C) changes in employment but not in output. 
D) changes in output but not in the employment. 
A) changes in output and employment levels rather than through changes in prices. 
B) changes in prices rather than through changes in employment. 
C) changes in employment but not in output. 
D) changes in output but not in the employment.

Question 20

Which of the following is not an economic investment?

Accepted Answer

A) the purchase of machinery by ABC Manufacturing Company 
B) the purchase of 50 shares of Aliant by a retired business executive 
C) construction of a housing project for the homeless 
D) the increase in the inventory on a grocer's shelf 
A) the purchase of machinery by ABC Manufacturing Company 
B) the purchase of 50 shares of Aliant by a retired business executive 
C) construction of a housing project for the homeless 
D) the increase in the inventory on a grocer's shelf

Exam 6: Part B: An Introduction to Macroeconomics

The higher is the current level of saving:

Which would be considered an investment according to economists?

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

The financial institutions play an important role in transferring the savings of the individuals to the investments by businesses.Which of the following correctly states this transfer?

If prices are flexible, no matter what demand turns out to be, firms can continue selling their optimal output.

If the economy's output and income double in 35 years, we can:

Which would be considered an investment according to economists?

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

Which of the following countries had the highest GDP per capita in 2016?

The decisions about savings and investments are complicated because:

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

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

The concept of "real GDP" refers to:

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

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

If the unexpected short-run fluctuations in demand begin to look permanent:

Knowing that in the real world, the demand for goods and services could change unexpectedly, firms would attempt to deal with it by:

Because prices change too slowly in the short-run and as a result, they do not quickly equalize the quantity demanded and quantity supplied of goods and services, the short-run response of the economy to a demand shock is through:

Which of the following is not an economic investment?

Part A: Limits, Alternatives, and Choices

Part B: Limits, Alternatives, and Choices

Part A: The Market System and the Circular Flow

Part B: The Market System and the Circular Flow

Part A: Demand, Supply, and Market Equilibrium

Part B: Demand, Supply, and Market Equilibrium

Part A: Market Failures: Public Goods and Externalities

Part B: Market Failures: Public Goods and Externalities

Part A: Governments Role and Government Failure

Part B: Governments Role and Government Failure

Part A: An Introduction to Macroeconomics

Part A: Measuring the Economys Output

Part B: Measuring the Economys Output

Part A: Economic Growth

Part B: Economic Growth

Part A: Business Cycles, Unemployment, and Inflation

Part B: Business Cycles, Unemployment, and Inflation

Part A: Basic Macroeconomic Relationships

Part B: Basic Macroeconomic Relationships

Part A: The Aggregate Expenditures Model

Part B: The Aggregate Expenditures Model

Part A: Aggregate Demand and Aggregate Supply

Part B: Aggregate Demand and Aggregate Supply

Part A: Fiscal Policy, Deficits, Surpluses, and Debt

Part B: Fiscal Policy, Deficits, Surpluses, and Debt

Part A: Money, Banking, and Money Creation

Part B: Money, Banking, and Money Creation

Part A: Interest Rates and Monetary Policy

Part B: Interest Rates and Monetary Policy

Part A: Long-Run Macroeconomic Adjustments

Part B: Long-Run Macroeconomic Adjustments

Part A: International Trade

Part B: International Trade

Part C: Financial Economics

Part A: The Balance of Payments and Exchange Rates

Part B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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