Question 1

How is Canada's unemployment rate determined?

Accepted Answer

A) The rate is determined by Canada Census data. 
B) The rate is determined by a survey of Canadian employers. 
C) The federal government department HRSDC (Human Resources and Skills Development Canada)conducts a monthly survey of the labour force. 
D) Statistics Canada conducts a Labour Force Survey each month. 
E) An estimate is produced by HRSDC based on the previous month's unemployment rate adjusted by the current month's job losses and job gains. 
A) The rate is determined by Canada Census data. 
B) The rate is determined by a survey of Canadian employers. 
C) The federal government department HRSDC (Human Resources and Skills Development Canada)conducts a monthly survey of the labour force. 
D) Statistics Canada conducts a Labour Force Survey each month. 
E) An estimate is produced by HRSDC based on the previous month's unemployment rate adjusted by the current month's job losses and job gains.

Question 2

Which of the following is an equivalent term for "full-employment output"?

Accepted Answer

A) actual output 
B) long-run output 
C) gross national product (GNP) 
D) gross domestic product (GDP) 
E) potential output 
A) actual output 
B) long-run output 
C) gross national product (GNP) 
D) gross domestic product (GDP) 
E) potential output

Question 3

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

Accepted Answer

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

Question 4

During the 1970s,Canada experienced an unusual pattern of interest rates.During this period

Accepted Answer

A) the nominal interest rate was less than the real interest rate. 
B) the inflation rate was negative,implying a real interest rate that was higher than the nominal interest rate. 
C) the inflation rate exceeded the nominal interest rate,implying a negative real interest rate. 
D) the inflation rate was negative,implying a nominal interest rate higher than the real interest rate. 
E) the nominal and real interest rates were equal to each other. 
A) the nominal interest rate was less than the real interest rate. 
B) the inflation rate was negative,implying a real interest rate that was higher than the nominal interest rate. 
C) the inflation rate exceeded the nominal interest rate,implying a negative real interest rate. 
D) the inflation rate was negative,implying a nominal interest rate higher than the real interest rate. 
E) the nominal and real interest rates were equal to each other.

Question 5

An equivalent term for "real national income" is

Accepted Answer

A) nominal national income. 
B) current-dollar national income. 
C) constant-dollar national income. 
D) actual national income. 
E) potential national income. 
A) nominal national income. 
B) current-dollar national income. 
C) constant-dollar national income. 
D) actual national income. 
E) potential national income.

Question 6

The table below provides macroeconomic data for a hypothetical economy.Dollar amounts are all in constant-dollar terms.
   TABLE 19-1
-Refer to Table 19-1.In which years was this economy experiencing an inflationary gap?

Accepted Answer

A) 2012,2013 
B) 2009,2010 
C) 2013,2014 
D) 2011,2015 
E) 2009,2010,2014 
A) 2012,2013 
B) 2009,2010 
C) 2013,2014 
D) 2011,2015 
E) 2009,2010,2014

Question 7

The table below provides macroeconomic data for a hypothetical economy.Dollar amounts are all in constant-dollar terms.
   TABLE 19-1
-Refer to Table 19-1.What is the output gap in 2010?

Accepted Answer

A) $408 billion 
B) $411 billion 
C) $7.1 billion 
D) $3 billion 
E) -$3 billion 
A) $408 billion 
B) $411 billion 
C) $7.1 billion 
D) $3 billion 
E) -$3 billion

Question 8

Cyclical unemployment is associated with which of the following?

Accepted Answer

A) changes to the economy's industrial structure resulting from growth in some industries and decline in others 
B) an output level different from the economy's potential output 
C) differences between the characteristics of the supply of labour and the demand for labour 
D) people entering the labour force typically take some time to find a job 
E) people quitting their present jobs to look for other jobs 
A) changes to the economy's industrial structure resulting from growth in some industries and decline in others 
B) an output level different from the economy's potential output 
C) differences between the characteristics of the supply of labour and the demand for labour 
D) people entering the labour force typically take some time to find a job 
E) people quitting their present jobs to look for other jobs

Question 9

Since 1960 in Canada,the rate of inflation has ranged (approximately)between

Accepted Answer

A) 0 and 12%. 
B) -5 and 5%. 
C) 2 and 4%. 
D) 2 and 20%. 
E) 1 and 24%. 
A) 0 and 12%. 
B) -5 and 5%. 
C) 2 and 4%. 
D) 2 and 20%. 
E) 1 and 24%.

Question 10

The price level is measured in some time period with an index number,such as the number 118.6.How is such a number of use to us?

Accepted Answer

A) It allows us to compare it to the value of the same index number from another time period to determine the rate of change of the price level. 
B) The index number tells us the rate of inflation. 
C) It tells us the dollar value for the average basket of goods and services bought by the typical Canadian household. 
D) It tells us the real value for the average basket of goods and services bought by the typical Canadian household. 
E) It tells us the percentage change in the price level from the previous time period. 
A) It allows us to compare it to the value of the same index number from another time period to determine the rate of change of the price level. 
B) The index number tells us the rate of inflation. 
C) It tells us the dollar value for the average basket of goods and services bought by the typical Canadian household. 
D) It tells us the real value for the average basket of goods and services bought by the typical Canadian household. 
E) It tells us the percentage change in the price level from the previous time period.

Question 11

Suppose the Bank of Montreal wants a 4% real rate of return on all its loans,and anticipates an annual inflation rate of 6%.It should therefore lend its money at a nominal interest rate of

Accepted Answer

A) 10%. 
B) 9%. 
C) 5%. 
D) 4%. 
E) 1%. 
A) 10%. 
B) 9%. 
C) 5%. 
D) 4%. 
E) 1%.

Question 12

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

Accepted Answer

A) indexed productivity; per capita output 
B) factor productivity; the total number of factors employed in the economy 
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) labour productivity; the number of units of work effort 
A) indexed productivity; per capita output 
B) factor productivity; the total number of factors employed in the economy 
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) labour productivity; the number of units of work effort

Question 13

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

Question 14

The table below provides macroeconomic data for a hypothetical economy.Dollar amounts are all in constant-dollar terms.
   TABLE 19-1
-Refer to Table 19-1.In which years are the factors of production in this economy said to be "fully employed"?

Accepted Answer

A) 2009,2010,2014 
B) 2011,2015 
C) 2012,2013 
D) all years 
E) none of the years 
A) 2009,2010,2014 
B) 2011,2015 
C) 2012,2013 
D) all years 
E) none of the years

Question 15

As the banking industry becomes more and more automated,tellers find themselves with unneeded skills and some of them become unemployed.At the same time,software engineers are in increasing demand.These unemployed tellers would be classified as

Accepted Answer

A) cyclically unemployed. 
B) frictionally unemployed. 
C) naturally unemployed. 
D) structurally unemployed. 
E) underemployed. 
A) cyclically unemployed. 
B) frictionally unemployed. 
C) naturally unemployed. 
D) structurally unemployed. 
E) underemployed.

Question 16

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

Question 17

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

Accepted Answer

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

Question 18

Suppose that in 2016 Canada's automobile manufacturers produced 2 million cars priced at $20 000 each.And in 2017 they produced 1 million cars priced at $40 000 each.Ceteris paribus,the change in nominal national income is

Accepted Answer

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

Question 19

Suppose a small city has a population of 100 000 and a labour force of 60 000.Employment is 55 000 and 5000 workers are unemployed.How many people are not in the labour force?

Accepted Answer

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

Question 20

The economic problems studied in macroeconomics include:
1)the level of economic activity;
2)competition policy;
3)the rate of unemployment.

Accepted Answer

A) 1 only 
B) 2 only 
C) 3 only 
D) 1 and 2 
E) 1 and 3 
A) 1 only 
B) 2 only 
C) 3 only 
D) 1 and 2 
E) 1 and 3

Exam 19: What Macroeconomics Is All About

How is Canada's unemployment rate determined?

Which of the following is an equivalent term for "full-employment output"?

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

During the 1970s,Canada experienced an unusual pattern of interest rates.During this period

An equivalent term for "real national income" is

The table below provides macroeconomic data for a hypothetical economy.Dollar amounts are all in constant-dollar terms. TABLE 19-1 -Refer to Table 19-1.In which years was this economy experiencing an inflationary gap?

The table below provides macroeconomic data for a hypothetical economy.Dollar amounts are all in constant-dollar terms. TABLE 19-1 -Refer to Table 19-1.What is the output gap in 2010?

Cyclical unemployment is associated with which of the following?

Since 1960 in Canada,the rate of inflation has ranged (approximately)between

The price level is measured in some time period with an index number,such as the number 118.6.How is such a number of use to us?

Suppose the Bank of Montreal wants a 4% real rate of return on all its loans,and anticipates an annual inflation rate of 6%.It should therefore lend its money at a nominal interest rate of

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

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

The table below provides macroeconomic data for a hypothetical economy.Dollar amounts are all in constant-dollar terms. TABLE 19-1 -Refer to Table 19-1.In which years are the factors of production in this economy said to be "fully employed"?

As the banking industry becomes more and more automated,tellers find themselves with unneeded skills and some of them become unemployed.At the same time,software engineers are in increasing demand.These unemployed tellers would be classified as

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

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

Suppose that in 2016 Canada's automobile manufacturers produced 2 million cars priced at $20 000 each.And in 2017 they produced 1 million cars priced at $40 000 each.Ceteris paribus,the change in nominal national income is

Suppose a small city has a population of 100 000 and a labour force of 60 000.Employment is 55 000 and 5000 workers are unemployed.How many people are not in the labour force?

The economic problems studied in macroeconomics include: 1)the level of economic activity; 2)competition policy; 3)the rate of unemployment.

Economic Issues and Concepts

Economic Theories,Data,and Graphs

Demand, Supply, and Price

Elasticity

Price Controls and Market Efficiency

Consumer Behaviour

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly, cartels, and Price Discrimination

Imperfect Competition and Strategic Behaviour

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets and Income Inequality

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

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

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

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