Question 1

If one Canadian dollar can be exchanged for 0.5 euros,we say that the Canadian-euro exchange rate is

Accepted Answer

A) 0.5. 
B) 2.0. 
C) 5.0. 
D) 20. 
E) 1.0. 
A) 0.5. 
B) 2.0. 
C) 5.0. 
D) 20. 
E) 1.0.

Question 2

If nominal national income increased by 20% over a certain period of time while real national income increased by 10%,then

Accepted Answer

A) everybody in the economy became worse off. 
B) inflation has decreased during this time period. 
C) the labour force increased by 10%. 
D) the price level has declined by about 10%. 
E) the price level has increased by approximately 10%. 
A) everybody in the economy became worse off. 
B) inflation has decreased during this time period. 
C) the labour force increased by 10%. 
D) the price level has declined by about 10%. 
E) the price level has increased by approximately 10%.

Question 3

In some macroeconomic analyses,it is common to treat the level of productivity as roughly constant.This is a justifiable assumption in

Accepted Answer

A) the long run. 
B) the short run. 
C) both the long run and the short run. 
D) neither the long run nor the short run. 
E) macroeconomics but not microeconomics. 
A) the long run. 
B) the short run. 
C) both the long run and the short run. 
D) neither the long run nor the short run. 
E) macroeconomics but not microeconomics.

Question 4

In macroeconomics,what is the output gap?

Accepted Answer

A) the measure of output that could have been produced if the economy were fully employed 
B) the dead-weight loss of inflation 
C) the difference between nominal and real output 
D) the percentage change in real GDP 
E) the difference between Y and Y* 
A) the measure of output that could have been produced if the economy were fully employed 
B) the dead-weight loss of inflation 
C) the difference between nominal and real output 
D) the percentage change in real GDP 
E) the difference between Y and Y*

Question 5

When macroeconomists use the term "recession" they usually define it as a fall in real GDP that lasts for at least

Accepted Answer

A) one quarter. 
B) two quarters. 
C) three quarters. 
D) one year. 
E) two years. 
A) one quarter. 
B) two quarters. 
C) three quarters. 
D) one year. 
E) two years.

Question 6

If the Consumer Price Index changes from 120 in year one to 122 in year two,the rate of inflation in the intervening year is

Accepted Answer

A) 22%. 
B) 20%. 
C) 2.0%. 
D) 1.67%. 
E) 0%. 
A) 22%. 
B) 20%. 
C) 2.0%. 
D) 1.67%. 
E) 0%.

Question 7

Suppose Honest Rob's Used Cars buys a used car for $2000 and resells it for $3000.The result of Honest Rob's transactions is to

Accepted Answer

A) decrease the value of national income by $3000. 
B) decrease the value of national income by $1000. 
C) leave the value of national income unchanged. 
D) increase the value of national income by $1000. 
E) increase the value of national income by $3000. 
A) decrease the value of national income by $3000. 
B) decrease the value of national income by $1000. 
C) leave the value of national income unchanged. 
D) increase the value of national income by $1000. 
E) increase the value of national income by $3000.

Question 8

On a graph showing real national income on the vertical axis and time on the horizontal axis,the fluctuations of real national income around the trend-line would indicate the

Accepted Answer

A) business cycle. 
B) distribution of income. 
C) inflation rate. 
D) path of potential output. 
E) unemployment rate. 
A) business cycle. 
B) distribution of income. 
C) inflation rate. 
D) path of potential output. 
E) unemployment rate.

Question 9

If the price index is P1 in one year and P2 in the next year,the inflation rate from one year to the next is calculated as

Accepted Answer

A) (P2 - P1)× 100. 
B) (P2/P1)× 100. 
C) (P1/P2)× 100. 
D) [(P2 - P1)/P1] × 100. 
E) [(P1 - P2)/P2] × 100. 
A) (P2 - P1)× 100. 
B) (P2/P1)× 100. 
C) (P1/P2)× 100. 
D) [(P2 - P1)/P1] × 100. 
E) [(P1 - P2)/P2] × 100.

Question 10

Suppose Canada's exchange rate with the U.S.dollar falls from 1.21 to 1.13.This fall indicates a(n)________ of the Canadian dollar,which means it takes ________ Canadian dollars to purchase one U.S.dollar.

Accepted Answer

A) appreciation; more 
B) appreciation; fewer 
C) depreciation; more 
D) depreciation; fewer 
A) appreciation; more 
B) appreciation; fewer 
C) depreciation; more 
D) depreciation; fewer

Question 11

An output gap with Y *

Accepted Answer

A) is desirable because it keeps wage costs low. 
B) represents a loss of output due to unemployed resources. 
C) tends to force prices up. 
D) occurs when there is excess demand. 
E) is known as an inflationary boom. 
A) is desirable because it keeps wage costs low. 
B) represents a loss of output due to unemployed resources. 
C) tends to force prices up. 
D) occurs when there is excess demand. 
E) is known as an inflationary boom.

Question 12

Suppose Canada's exchange rate with the U.S.dollar increases from 1.14 to 1.22.Which of the following is likely to happen?

Accepted Answer

A) More Canadians will cross the border to shop in the U.S. 
B) It is less expensive for Canadians to shop online from U.S.retailers. 
C) Fewer Canadians will cross the border to shop in the U.S. 
D) The Canadian dollar value of Canada's imports from the U.S.will fall. 
E) The Canadian dollar value of Canada's exports to the U.S.will fall. 
A) More Canadians will cross the border to shop in the U.S. 
B) It is less expensive for Canadians to shop online from U.S.retailers. 
C) Fewer Canadians will cross the border to shop in the U.S. 
D) The Canadian dollar value of Canada's imports from the U.S.will fall. 
E) The Canadian dollar value of Canada's exports to the U.S.will fall.

Question 13

In the study of short-run fluctuations in national income,potential income (output)is usually assumed to be

Accepted Answer

A) falling at its average growth rate. 
B) moving together with potential output in neighbouring countries. 
C) constant. 
D) equal to actual income. 
E) irrelevant,as the economy is rarely there. 
A) falling at its average growth rate. 
B) moving together with potential output in neighbouring countries. 
C) constant. 
D) equal to actual income. 
E) irrelevant,as the economy is rarely there.

Question 14

A worker is considered unemployed if that worker has no job,is legally eligible to work,

Accepted Answer

A) and is actively searching for employment. 
B) and is not collecting unemployment insurance. 
C) whether the worker is looking for a job or is not looking for a job. 
D) but only if they previously held a job. 
E) but only if they were previously employed for at least three consecutive months. 
A) and is actively searching for employment. 
B) and is not collecting unemployment insurance. 
C) whether the worker is looking for a job or is not looking for a job. 
D) but only if they previously held a job. 
E) but only if they were previously employed for at least three consecutive months.

Question 15

Consider the growth in Canada's labour force and employment.Over the last 50 years,

Accepted Answer

A) the labour force has grown much more rapidly than employment. 
B) both the labour force and employment have remained roughly constant. 
C) the number of unemployed persons has been a much larger fraction of the labour force than it was during the first half of the 20th century. 
D) the main trend of the economy has been one of growth in employment that roughly matches the growth in the labour force. 
E) the main trend of the economy has been to have employment grow more rapidly than the growth in output. 
A) the labour force has grown much more rapidly than employment. 
B) both the labour force and employment have remained roughly constant. 
C) the number of unemployed persons has been a much larger fraction of the labour force than it was during the first half of the 20th century. 
D) the main trend of the economy has been one of growth in employment that roughly matches the growth in the labour force. 
E) the main trend of the economy has been to have employment grow more rapidly than the growth in output.

Question 16

Which of the following is the best description of the business cycle?

Accepted Answer

A) the normal cycle of profits and losses by producers in the economy 
B) the short-run fluctuations of national income around its trend value 
C) a five-year period designed for national accounting purposes to capture the normal cycle of recession periods and boom periods 
D) a ten-year period designed for national accounting purposes to capture the normal cycle of recession periods and boom periods 
E) the fluctuations of one country's national income in comparison to another country's national income 
A) the normal cycle of profits and losses by producers in the economy 
B) the short-run fluctuations of national income around its trend value 
C) a five-year period designed for national accounting purposes to capture the normal cycle of recession periods and boom periods 
D) a ten-year period designed for national accounting purposes to capture the normal cycle of recession periods and boom periods 
E) the fluctuations of one country's national income in comparison to another country's national income

Exam 19: What Macroeconomics Is All About

If one Canadian dollar can be exchanged for 0.5 euros,we say that the Canadian-euro exchange rate is

If nominal national income increased by 20% over a certain period of time while real national income increased by 10%,then

In some macroeconomic analyses,it is common to treat the level of productivity as roughly constant.This is a justifiable assumption in

In macroeconomics,what is the output gap?

When macroeconomists use the term "recession" they usually define it as a fall in real GDP that lasts for at least

If the Consumer Price Index changes from 120 in year one to 122 in year two,the rate of inflation in the intervening year is

Suppose Honest Rob's Used Cars buys a used car for $2000 and resells it for $3000.The result of Honest Rob's transactions is to

On a graph showing real national income on the vertical axis and time on the horizontal axis,the fluctuations of real national income around the trend-line would indicate the

If the price index is P1 in one year and P2 in the next year,the inflation rate from one year to the next is calculated as

Suppose Canada's exchange rate with the U.S.dollar falls from 1.21 to 1.13.This fall indicates a(n)________ of the Canadian dollar,which means it takes ________ Canadian dollars to purchase one U.S.dollar.

An output gap with Y < Y*

Suppose Canada's exchange rate with the U.S.dollar increases from 1.14 to 1.22.Which of the following is likely to happen?

In the study of short-run fluctuations in national income,potential income (output)is usually assumed to be

A worker is considered unemployed if that worker has no job,is legally eligible to work,

Consider the growth in Canada's labour force and employment.Over the last 50 years,

Which of the following is the best description of the business cycle?

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

If the price index is P₁ in one year and P₂ in the next year,the inflation rate from one year to the next is calculated as

Suppose Canada's exchange rate with the U.S.dollar falls from 1.21 to 1.13.This fall indicates a(n) of the Canadian dollar,which means it takes Canadian dollars to purchase one U.S.dollar.

An output gap with Y < Y^*