Question 1

If a country's labour force is 15 million people,and 1 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) 7.1%. 
A) 2.5%. 
B) 3.3%. 
C) 4.5%. 
D) 6.7%. 
E) 7.1%.

Question 2

If the Consumer Price Index changes from 120 in the year 2012 to 126 in the year 2014,the average rate of inflation per year over this two-year period is approximately

Accepted Answer

A) 6%. 
B) 5%. 
C) 3%. 
D) 2.5%. 
E) 1.5%. 
A) 6%. 
B) 5%. 
C) 3%. 
D) 2.5%. 
E) 1.5%.

Question 3

It is important for policy makers to recognize that most macroeconomic variables are characterized by

Accepted Answer

A) long-run trends and short-run fluctuations. 
B) gradual increases over long periods of time. 
C) short-run fluctuations that need to be smoothed for a well-functioning economy. 
D) long-run economic growth. 
E) the impacts of the business cycle. 
A) long-run trends and short-run fluctuations. 
B) gradual increases over long periods of time. 
C) short-run fluctuations that need to be smoothed for a well-functioning economy. 
D) long-run economic growth. 
E) the impacts of the business cycle.

Question 4

What is the approximate measure (2014 data)of Canada's productivity in terms of real GDP per hour worked (expressed in 2007 dollars)?

Accepted Answer

A) $10 
B) $92 
C) $200 
D) $475 
E) $45 
A) $10 
B) $92 
C) $200 
D) $475 
E) $45

Question 5

Suppose the unemployment rate is 8.5% and we know that frictional and structural unemployment together account for 5.5%.The cyclical unemployment rate is then

Accepted Answer

A) 14%. 
B) 8.5%. 
C) 5.5%. 
D) 3.0%. 
E) -3.0%. 
A) 14%. 
B) 8.5%. 
C) 5.5%. 
D) 3.0%. 
E) -3.0%.

Question 6

Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million.Which of the following is the best measure of labour productivity in this economy?

Accepted Answer

A) real GDP per hour worked = $20 
B) real GDP per employed worker = $20 
C) real GDP per hour worked = $200 
D) real GDP per employed worker = $200 
E) Not able to determine from the information provided 
A) real GDP per hour worked = $20 
B) real GDP per employed worker = $20 
C) real GDP per hour worked = $200 
D) real GDP per employed worker = $200 
E) Not able to determine from the information provided

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.In which years was this economy experiencing a recessionary gap?

Accepted Answer

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

Question 8

Consider a small economy with 2500 employed workers who worked a total of 5 million hours at an average wage of $40 per hour.Which of the following is the best measure of labour productivity in this economy?

Accepted Answer

A) real GDP per hour worked = $40 
B) real GDP per employed worker = $80 000 
C) real GDP per hour worked = $80 
D) real GDP per employed worker = $125 000 
E) Not able to determine from the information provided 
A) real GDP per hour worked = $40 
B) real GDP per employed worker = $80 000 
C) real GDP per hour worked = $80 
D) real GDP per employed worker = $125 000 
E) Not able to determine from the information provided

Question 9

Suppose an employer and its employees enter into a wage contract specifying a wage increase of 2%.But suppose that the price level rises by 3% over the course of the contract.In this case,

Accepted Answer

A) the employees' purchasing power will rise. 
B) the employees' purchasing power will fall. 
C) the employer will experience a greater fall in purchasing power than would have occurred if the price level had held steady. 
D) both employer and employees will benefit from increased purchasing power. 
E) both employer and employees will experience a loss of purchasing power. 
A) the employees' purchasing power will rise. 
B) the employees' purchasing power will fall. 
C) the employer will experience a greater fall in purchasing power than would have occurred if the price level had held steady. 
D) both employer and employees will benefit from increased purchasing power. 
E) both employer and employees will experience a loss of purchasing power.

Question 10

In order to determine the economy's real GDP growth rate between two time periods,we should look at

Accepted Answer

A) nominal national income,because it compares actual output in each time period. 
B) real national income in each time period,which is equal to nominal national income corrected for price-level changes. 
C) potential national income,corrected for price-level changes. 
D) real national income in each period,which is equal to nominal national income corrected for quantity changes. 
E) only the real national product from the latest time period. 
A) nominal national income,because it compares actual output in each time period. 
B) real national income in each time period,which is equal to nominal national income corrected for price-level changes. 
C) potential national income,corrected for price-level changes. 
D) real national income in each period,which is equal to nominal national income corrected for quantity changes. 
E) only the real national product from the latest time period.

Question 11

Which of the following is an accurate statement about real national income?

Accepted Answer

A) it always equals nominal national income 
B) it changes by the same amount and in the same direction as does nominal national income 
C) it changes only when the underlying quantities change 
D) it refers to national income with no adjustment for changes in prices 
E) it refers to national wealth but is not an indicator of current production 
A) it always equals nominal national income 
B) it changes by the same amount and in the same direction as does nominal national income 
C) it changes only when the underlying quantities change 
D) it refers to national income with no adjustment for changes in prices 
E) it refers to national wealth but is not an indicator of current production

Question 12

What is potential or full-employment output?

Accepted Answer

A) the maximum GDP that an economy actually achieves throughout its entire history 
B) achieved during periods when all of the labour force is employed 
C) a goal that can never be achieved by the economy 
D) the GDP that would be produced if the economy's resources were fully employed at a normal intensity of use 
E) the GDP that could be produced if the economy's resources were fully employed at their maximum intensity of use 
A) the maximum GDP that an economy actually achieves throughout its entire history 
B) achieved during periods when all of the labour force is employed 
C) a goal that can never be achieved by the economy 
D) the GDP that would be produced if the economy's resources were fully employed at a normal intensity of use 
E) the GDP that could be produced if the economy's resources were fully employed at their maximum intensity of use

Question 13

Suppose the city of Calgary,Alberta has a population of 1 million,a labour force of 575 000,and employment is equal to 545 000.The unemployment rate in Calgary is approximately

Accepted Answer

A) 3.0%. 
B) 5.2%. 
C) 5.5%. 
D) 54.5%. 
E) 57.5%. 
A) 3.0%. 
B) 5.2%. 
C) 5.5%. 
D) 54.5%. 
E) 57.5%.

Question 14

The unemployment rate will understate the true amount of unemployment if

Accepted Answer

A) the unemployment rate is rising. 
B) crime,divorce,and social unrest are all positively correlated with unemployment. 
C) the official unemployment figure excludes discouraged workers who have stopped actively looking for work. 
D) the labour force has grown more rapidly than output. 
E) the actual unemployment rate is greater than the natural rate of unemployment. 
A) the unemployment rate is rising. 
B) crime,divorce,and social unrest are all positively correlated with unemployment. 
C) the official unemployment figure excludes discouraged workers who have stopped actively looking for work. 
D) the labour force has grown more rapidly than output. 
E) the actual unemployment rate is greater than the natural rate of unemployment.

Question 15

Suppose that at the end of a given year there has been unanticipated inflation of 4%.Who is better off at the end of the year?

Accepted Answer

A) a bank that lent money at the beginning of the year 
B) a bank that lent money at the end of the year 
C) a consumer who borrowed money at the beginning of the year 
D) a consumer who borrowed money at the end of the year 
E) a consumer who lent money at the end of the year 
A) a bank that lent money at the beginning of the year 
B) a bank that lent money at the end of the year 
C) a consumer who borrowed money at the beginning of the year 
D) a consumer who borrowed money at the end of the year 
E) a consumer who lent money at the end of the year

Question 16

If the cyclical unemployment rate is negative,then the

Accepted Answer

A) economy is operating beyond full employment. 
B) economy is operating at less than full employment. 
C) frictional unemployment rate is negative. 
D) frictional unemployment rate is greater than the structural unemployment rate. 
E) real-wage unemployment rate is negative. 
A) economy is operating beyond full employment. 
B) economy is operating at less than full employment. 
C) frictional unemployment rate is negative. 
D) frictional unemployment rate is greater than the structural unemployment rate. 
E) real-wage unemployment rate is negative.

Question 17

Which of the following statements is logically valid?

Accepted Answer

A) If the rate of inflation is high,the nominal rate of interest must be low. 
B) If the rate of inflation is less than the nominal interest rate,the real interest rate is positive. 
C) If the real interest rate is less than the nominal interest rate,inflation must be zero. 
D) If the real interest rate is less than the nominal interest rate,inflation must be negative. 
E) If the nominal interest rate is high,the real interest rate must be high. 
A) If the rate of inflation is high,the nominal rate of interest must be low. 
B) If the rate of inflation is less than the nominal interest rate,the real interest rate is positive. 
C) If the real interest rate is less than the nominal interest rate,inflation must be zero. 
D) If the real interest rate is less than the nominal interest rate,inflation must be negative. 
E) If the nominal interest rate is high,the real interest rate must be high.

Question 18

If the Canadian dollar exchange rate increases,the

Accepted Answer

A) Canadian dollar depreciates relative to foreign currencies. 
B) internal value of the dollar falls. 
C) Canadian dollar appreciates relative to foreign currencies. 
D) internal value of the dollar rises. 
E) external value remains unaffected. 
A) Canadian dollar depreciates relative to foreign currencies. 
B) internal value of the dollar falls. 
C) Canadian dollar appreciates relative to foreign currencies. 
D) internal value of the dollar rises. 
E) external value remains unaffected.

Question 19

Assume that Sarah agrees to lend $100 to Sam for one year.Sam agrees to pay Sarah $110 at the end of the year.If inflation over that one year is 7%,what real rate of interest does Sarah earn on her $100?

Accepted Answer

A) 10% 
B) 7% 
C) 3% 
D) 13% 
E) 17% 
A) 10% 
B) 7% 
C) 3% 
D) 13% 
E) 17%

Question 20

Which of the following correctly describes the meaning of the expression Y > Y*?

Accepted Answer

A) actual output is more than potential output - a recessionary gap 
B) potential output is more than actual output - a recessionary gap 
C) actual output is more than potential output - an inflationary gap 
D) potential output is more than actual output - an inflationary gap 
A) actual output is more than potential output - a recessionary gap 
B) potential output is more than actual output - a recessionary gap 
C) actual output is more than potential output - an inflationary gap 
D) potential output is more than actual output - an inflationary gap

Exam 19: What Macroeconomics Is All About

If a country's labour force is 15 million people,and 1 million of those are unemployed,the country's unemployment rate is

If the Consumer Price Index changes from 120 in the year 2012 to 126 in the year 2014,the average rate of inflation per year over this two-year period is approximately

It is important for policy makers to recognize that most macroeconomic variables are characterized by

What is the approximate measure (2014 data)of Canada's productivity in terms of real GDP per hour worked (expressed in 2007 dollars)?

Suppose the unemployment rate is 8.5% and we know that frictional and structural unemployment together account for 5.5%.The cyclical unemployment rate is then

Consider a small economy with real GDP of $1 billion and the total number of hours worked equal to 5 million.Which of the following is the best measure of labour productivity in this economy?

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 a recessionary gap?

Consider a small economy with 2500 employed workers who worked a total of 5 million hours at an average wage of $40 per hour.Which of the following is the best measure of labour productivity in this economy?

Suppose an employer and its employees enter into a wage contract specifying a wage increase of 2%.But suppose that the price level rises by 3% over the course of the contract.In this case,

In order to determine the economy's real GDP growth rate between two time periods,we should look at

Which of the following is an accurate statement about real national income?

What is potential or full-employment output?

Suppose the city of Calgary,Alberta has a population of 1 million,a labour force of 575 000,and employment is equal to 545 000.The unemployment rate in Calgary is approximately

The unemployment rate will understate the true amount of unemployment if

Suppose that at the end of a given year there has been unanticipated inflation of 4%.Who is better off at the end of the year?

If the cyclical unemployment rate is negative,then the

Which of the following statements is logically valid?

If the Canadian dollar exchange rate increases,the

Assume that Sarah agrees to lend $100 to Sam for one year.Sam agrees to pay Sarah $110 at the end of the year.If inflation over that one year is 7%,what real rate of interest does Sarah earn on her $100?

Which of the following correctly describes the meaning of the expression Y > Y*?

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

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