Question 1

The group that tends to be most hurt by unexpected inflation is

Accepted Answer

A) banks. 
B) individuals with unindexed pensions. 
C) employers. 
D) fixed-income earners. 
E) both B and D are correct. 
A) banks. 
B) individuals with unindexed pensions. 
C) employers. 
D) fixed-income earners. 
E) both B and D are correct.

Question 2

Suppose that a country's population is 30 million and it has a labour force of 15 million people.If 14.5 million people are employed,the country's unemployment rate is

Accepted Answer

A) 2.5%. 
B) 3.3%. 
C) 4.5%. 
D) 6.7%. 
E) 9.0%. 
A) 2.5%. 
B) 3.3%. 
C) 4.5%. 
D) 6.7%. 
E) 9.0%.

Question 3

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 2012?

Accepted Answer

A) $420 billion 
B) $418 billion 
C) -$2 billion 
D) -$20 billion 
E) $2 billion 
A) $420 billion 
B) $418 billion 
C) -$2 billion 
D) -$20 billion 
E) $2 billion

Question 4

Suppose that a country's population is 30 million and it has a labour force of 15 million people.Assuming it has 1.35 million people unemployed,the country's unemployment rate is

Accepted Answer

A) 2.5%. 
B) 3.3%. 
C) 4.5%. 
D) 6.7%. 
E) 9.0%. 
A) 2.5%. 
B) 3.3%. 
C) 4.5%. 
D) 6.7%. 
E) 9.0%.

Question 5

Which of the following is the best example of frictional unemployment?

Accepted Answer

A) A worker is laid off because his firm has to reduce production due to reduced demand. 
B) A worker quits her current job to search for a better one. 
C) An ironworker cannot find a job in Ottawa because all job vacancies are in Alberta. 
D) Bank tellers are unable to find jobs due to technological advances in the banking system. 
E) Inflationary pressures have led to higher wages for all jobs. 
A) A worker is laid off because his firm has to reduce production due to reduced demand. 
B) A worker quits her current job to search for a better one. 
C) An ironworker cannot find a job in Ottawa because all job vacancies are in Alberta. 
D) Bank tellers are unable to find jobs due to technological advances in the banking system. 
E) Inflationary pressures have led to higher wages for all jobs.

Question 6

If a country is experiencing inflation,the change in the nominal national product will

Accepted Answer

A) equal the change in the real national product. 
B) overstate the inflation rate. 
C) overstate the change in the real value of production. 
D) understate the value of national income. 
E) be negative and will be falling faster than the rate of inflation. 
A) equal the change in the real national product. 
B) overstate the inflation rate. 
C) overstate the change in the real value of production. 
D) understate the value of national income. 
E) be negative and will be falling faster than the rate of inflation.

Question 7

Macroeconomics is mainly concerned with the study of

Accepted Answer

A) individual households and how they deal with problems like inflation and unemployment. 
B) large economic units such as General Motors or Molson Breweries. 
C) fluctuations and trends in disaggregated data. 
D) fluctuations and trends in aggregated data. 
E) governments and their intervention in individual markets. 
A) individual households and how they deal with problems like inflation and unemployment. 
B) large economic units such as General Motors or Molson Breweries. 
C) fluctuations and trends in disaggregated data. 
D) fluctuations and trends in aggregated data. 
E) governments and their intervention in individual markets.

Question 8

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

Question 9

Suppose the city of Calgary has a population of 1 million,a labour force of 575 000,and employment equal to 545 000.We can conclude that for legal and various other reasons ________ people are excluded from the labour force.

Accepted Answer

A) 30 000 
B) 420 000 
C) 425 000 
D) 445 000 
E) 450 000 
A) 30 000 
B) 420 000 
C) 425 000 
D) 445 000 
E) 450 000

Question 10

Consider the situations of a lender of money and a borrower of money.Which of the following situations is least burdensome for the borrower?

Accepted Answer

A) nominal interest rate of 15% and an inflation rate of 8% 
B) nominal interest rate of 10% and an inflation rate of 1% 
C) nominal interest rate of 8% and an inflation rate of 2% 
D) nominal interest rate of 4% and an inflation rate of 4% 
E) nominal interest rate of 29% and an inflation rate of 21% 
A) nominal interest rate of 15% and an inflation rate of 8% 
B) nominal interest rate of 10% and an inflation rate of 1% 
C) nominal interest rate of 8% and an inflation rate of 2% 
D) nominal interest rate of 4% and an inflation rate of 4% 
E) nominal interest rate of 29% and an inflation rate of 21%

Question 11

If 27 million people are employed and 3 million people are unemployed,what is the unemployment rate?

Accepted Answer

A) 11% 
B) 89% 
C) 10% 
D) 90% 
E) Not able to determine from the information provided 
A) 11% 
B) 89% 
C) 10% 
D) 90% 
E) Not able to determine from the information provided

Question 12

Economists expect some unemployment to exist even at times of "full employment" for,among others,the following reasons:
1)actual GDP is rarely equal to potential GDP;
2)as the economy changes,the structure of the existing labour force is not the same as the structure of labour demand;
3)people entering the labour force typically take some time to find a job.

Accepted Answer

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

Question 13

Consider the situations of a lender and a borrower of money.Which of the following situations is most advantageous to the lender?

Accepted Answer

A) inflation rate of 0% nominal interest rate of 2% 
B) inflation rate of 2% nominal interest rate of 7.5% 
C) inflation rate of -1% nominal interest rate of 3% 
D) inflation rate of 2% nominal interest rate of 4% 
E) inflation rate of 3% nominal interest rate of 7.5% 
A) inflation rate of 0% nominal interest rate of 2% 
B) inflation rate of 2% nominal interest rate of 7.5% 
C) inflation rate of -1% nominal interest rate of 3% 
D) inflation rate of 2% nominal interest rate of 4% 
E) inflation rate of 3% nominal interest rate of 7.5%

Question 14

Which of the following groups would benefit most in real terms from a period of high and unanticipated inflation,as was experienced in Canada in the early 1970s?

Accepted Answer

A) mortgage companies and banks who issued fixed-rate mortgages to clients 
B) banks with outstanding loans to their customers 
C) seniors whose income is largely interest earnings on past savings 
D) firms that maintain large cash balances for the operation of their business 
E) homeowners who had long-term fixed-rate mortgages 
A) mortgage companies and banks who issued fixed-rate mortgages to clients 
B) banks with outstanding loans to their customers 
C) seniors whose income is largely interest earnings on past savings 
D) firms that maintain large cash balances for the operation of their business 
E) homeowners who had long-term fixed-rate mortgages

Question 15

Why is real income for an average Canadian today so much higher than it was for an average Canadian 100 years ago?

Accepted Answer

A) Because of the increase in the labour force due to rising population,immigration and the increase in female labour-force participation. 
B) Primarily because productivity per worker is so much higher today than in the past. 
C) Because inflation has been maintained at relatively low levels throughout that time. 
D) Because free-trade agreements have vastly increased real incomes. 
E) Because the life span of the average worker has increased from about 55 years to about 80 years over that time period. 
A) Because of the increase in the labour force due to rising population,immigration and the increase in female labour-force participation. 
B) Primarily because productivity per worker is so much higher today than in the past. 
C) Because inflation has been maintained at relatively low levels throughout that time. 
D) Because free-trade agreements have vastly increased real incomes. 
E) Because the life span of the average worker has increased from about 55 years to about 80 years over that time period.

Question 16

If a country's labour force is 15 million people,and 1.35 million of those are unemployed,the country's unemployment rate is

Accepted Answer

A) 2.5%. 
B) 3.3%. 
C) 4.5%. 
D) 6.7%. 
E) 9.0%. 
A) 2.5%. 
B) 3.3%. 
C) 4.5%. 
D) 6.7%. 
E) 9.0%.

Question 17

Which of the following is the best example of cyclical unemployment?

Accepted Answer

A) A worker is laid off because his firm had to reduce production due to reduced demand. 
B) A worker quits her current job to search for a better one. 
C) An ironworker cannot find a job in Ottawa because all job vacancies are in Alberta. 
D) Bank tellers are unable to find jobs due to technological advances in the banking system. 
E) Inflationary pressures have led to higher wages for all jobs. 
A) A worker is laid off because his firm had to reduce production due to reduced demand. 
B) A worker quits her current job to search for a better one. 
C) An ironworker cannot find a job in Ottawa because all job vacancies are in Alberta. 
D) Bank tellers are unable to find jobs due to technological advances in the banking system. 
E) Inflationary pressures have led to higher wages for all jobs.

Question 18

Consider a small economy with 3 individuals where each individual produces and sells $1000 worth of final goods and services.The national income for this economy is

Accepted Answer

A) $3000. 
B) less than $3000 if some of the income is saved. 
C) more than $3000 if some of the income is invested. 
D) less than $3000 if there are taxes in this economy. 
E) more than $3000 if the individuals are earning profits. 
A) $3000. 
B) less than $3000 if some of the income is saved. 
C) more than $3000 if some of the income is invested. 
D) less than $3000 if there are taxes in this economy. 
E) more than $3000 if the individuals are earning profits.

Question 19

To compare the economy's aggregate output in two different time periods,economists compare the

Accepted Answer

A) nominal national income for the two periods. 
B) potential national incomes for the two periods. 
C) real national income for the two periods. 
D) unemployment rates for the two periods. 
E) inflation rates for the two periods. 
A) nominal national income for the two periods. 
B) potential national incomes for the two periods. 
C) real national income for the two periods. 
D) unemployment rates for the two periods. 
E) inflation rates for the two periods.

Question 20

Women entered the labour force in large numbers in the 20th century and increased the economy's GDP.This change

Accepted Answer

A) created inflationary gaps. 
B) created recessionary gaps. 
C) raised potential output. 
D) was only possible in an economy operating above normal rates of utilization. 
E) was only possible in an economy operating below normal rates of utilization. 
A) created inflationary gaps. 
B) created recessionary gaps. 
C) raised potential output. 
D) was only possible in an economy operating above normal rates of utilization. 
E) was only possible in an economy operating below normal rates of utilization.

Exam 19: What Macroeconomics Is All About

The group that tends to be most hurt by unexpected inflation is

Suppose that a country's population is 30 million and it has a labour force of 15 million people.If 14.5 million people are employed,the country's unemployment rate 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 What is the output gap in 2012?

Suppose that a country's population is 30 million and it has a labour force of 15 million people.Assuming it has 1.35 million people unemployed,the country's unemployment rate is

Which of the following is the best example of frictional unemployment?

If a country is experiencing inflation,the change in the nominal national product will

Macroeconomics is mainly concerned with the study of

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

Suppose the city of Calgary has a population of 1 million,a labour force of 575 000,and employment equal to 545 000.We can conclude that for legal and various other reasons ________ people are excluded from the labour force.

Consider the situations of a lender of money and a borrower of money.Which of the following situations is least burdensome for the borrower?

If 27 million people are employed and 3 million people are unemployed,what is the unemployment rate?

Consider the situations of a lender and a borrower of money.Which of the following situations is most advantageous to the lender?

Which of the following groups would benefit most in real terms from a period of high and unanticipated inflation,as was experienced in Canada in the early 1970s?

Why is real income for an average Canadian today so much higher than it was for an average Canadian 100 years ago?

If a country's labour force is 15 million people,and 1.35 million of those are unemployed,the country's unemployment rate is

Which of the following is the best example of cyclical unemployment?

Consider a small economy with 3 individuals where each individual produces and sells $1000 worth of final goods and services.The national income for this economy is

To compare the economy's aggregate output in two different time periods,economists compare the

Women entered the labour force in large numbers in the 20th century and increased the economy's GDP.This change

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

Women entered the labour force in large numbers in the 20^th century and increased the economy's GDP.This change