Question 1

Economic growth is best defined as the:

Accepted Answer

A)  increase in consumption level as a percentage of GDP over time. 
B)  percentage increase in real GDP over time. 
C)  percentage increase in nominal GDP over time. 
D)  percentage decrease in the overall price levels over time. 
A)  increase in consumption level as a percentage of GDP over time. 
B)  percentage increase in real GDP over time. 
C)  percentage increase in nominal GDP over time. 
D)  percentage decrease in the overall price levels over time. B

Question 2

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. B

Question 3

The term "inflation" describes the situation where:

Accepted Answer

A)  general price levels are declining. 
B)  stock market prices are increasing. 
C)  all prices are increasing at the same rate. 
D)  the overall price level is increasing. 
A)  general price levels are declining. 
B)  stock market prices are increasing. 
C)  all prices are increasing at the same rate. 
D)  the overall price level is increasing. D

Question 4

-Refer to the above diagrams, one can conclude that if expectations are always fulfilled, Fancy Auto Company:

Accepted Answer

A)  will never have to adjust the optimal output and employment levels accordingly. 
B)  has to adjust the employment level but not the optimal output. 
C)  has to adjust the optimal output level but not the employment. 
D)  has to adjust both optimal output level and employment accordingly. 
A)  will never have to adjust the optimal output and employment levels accordingly. 
B)  has to adjust the employment level but not the optimal output. 
C)  has to adjust the optimal output level but not the employment. 
D)  has to adjust both optimal output level and employment accordingly.

Question 5

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 6

The inequality of saving and planned investment:

Accepted Answer

A)  is attributable to a low level of consumption. 
B)  may be of considerable significance because of the subsequent changes in income, employment, and the price level. 
C)  is of no consequence because a compensating inequality of tax collections and government spending will always occur. 
D)  is of no consequence because saving and actual investment will always be equal. 
A)  is attributable to a low level of consumption. 
B)  may be of considerable significance because of the subsequent changes in income, employment, and the price level. 
C)  is of no consequence because a compensating inequality of tax collections and government spending will always occur. 
D)  is of no consequence because saving and actual investment will always be equal.

Question 7

-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 8

Real GDP and nominal GDP differ because real GDP:

Accepted Answer

A)  is adjusted for changes in the nation's distribution of income. 
B)  includes the economic effects of international trade. 
C)  is equal to the nominal GDP minus the total tax payments. 
D)  has been adjusted for changes in the price level. 
A)  is adjusted for changes in the nation's distribution of income. 
B)  includes the economic effects of international trade. 
C)  is equal to the nominal GDP minus the total tax payments. 
D)  has been adjusted for changes in the price level.

Question 9

To understand how the economy works, economists could look at various data including:

Accepted Answer

A)  the number of new residential building permits. 
B)  the amount of new orders for capital goods. 
C)  the number of manufacturers' new orders for consumer goods. 
D)  all of the above. 
A)  the number of new residential building permits. 
B)  the amount of new orders for capital goods. 
C)  the number of manufacturers' new orders for consumer goods. 
D)  all of the above.

Question 10

Gross Domestic Product (GDP) measures the value of final goods and services produced by a nation during a given period of time.

Accepted Answer

A) True 
 B)False

Question 11

In 2008-2009, the Canadian economy experienced:

Accepted Answer

A)  a depression. 
B)  the Great Recession. 
C)  a decrease in the unemployment rate compared to 2007. 
D)  an increase in jobs. 
A)  a depression. 
B)  the Great Recession. 
C)  a decrease in the unemployment rate compared to 2007. 
D)  an increase in jobs.

Question 12

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 13

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 14

Before the start of the Industrial Revolution in the late 1700s, living standards around the world were quite different.

Accepted Answer

A) True 
 B)False

Question 15

-The above diagram (a) represents the demand for and supply of a brand of automobile (Turbo-car) for a car manufacturing company named Fancy Auto. 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 prices are flexible, Fancy Auto:

Accepted Answer

A)  can continue to sell its optimal output regardless of the demand level. 
B)  can continue producing its optimal output level only if demand is at DL level. 
C)  can continue producing its optimal output level only if demand is at DM level. 
D)  can continue producing its optimal output level only if demand is at DH level. 
A)  can continue to sell its optimal output regardless of the demand level. 
B)  can continue producing its optimal output level only if demand is at DL level. 
C)  can continue producing its optimal output level only if demand is at DM level. 
D)  can continue producing its optimal output level only if demand is at DH level.

Question 16

Inflation means:

Accepted Answer

A)  an increase in individuals' real income. 
B)  that all prices are rising and at the same rate. 
C)  an increase in the overall price level. 
D)  a decrease in the overall level of prices. 
A)  an increase in individuals' real income. 
B)  that all prices are rising and at the same rate. 
C)  an increase in the overall price level. 
D)  a decrease in the overall level of prices.

Question 17

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 18

To keep track of long-run growth and short-run fluctuations, economists will look at statistics such as:

Accepted Answer

A)  interest rate and, stock market prices. 
B)  stock market prices only. 
C)  inflation, expected rate of returns on investments. 
D)  real and nominal GDP, unemployment and inflation rates. 
A)  interest rate and, stock market prices. 
B)  stock market prices only. 
C)  inflation, expected rate of returns on investments. 
D)  real and nominal GDP, unemployment and inflation rates.

Question 19

Modern economic growth refers to:

Accepted Answer

A)  an increase in the general price level. 
B)  an increase in output per person. 
C)  an increase in the output. 
D)  an increase in percentage of the population which participates in the labour force. 
A)  an increase in the general price level. 
B)  an increase in output per person. 
C)  an increase in the output. 
D)  an increase in percentage of the population which participates in the labour force.

Question 20

________ shocks are unexpected changes in the demand for goods and services While, _________ shocks are unexpected changes in the supply of goods and services.

Accepted Answer

A)  supply; demand. 
B)  investment; savings. 
C)  internal; external. 
D)  demand; supply. 
A)  supply; demand. 
B)  investment; savings. 
C)  internal; external. 
D)  demand; supply.

Economic growth is best defined as the:

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?

The term "inflation" describes the situation where:

-Refer to the above diagrams, one can conclude that if expectations are always fulfilled, Fancy Auto Company:

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

The inequality of saving and planned investment:

Real GDP and nominal GDP differ because real GDP:

To understand how the economy works, economists could look at various data including:

Gross Domestic Product (GDP) measures the value of final goods and services produced by a nation during a given period of time.

In 2008-2009, the Canadian economy experienced:

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

The decisions about savings and investments are complicated because:

Before the start of the Industrial Revolution in the late 1700s, living standards around the world were quite different.

Inflation means:

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

To keep track of long-run growth and short-run fluctuations, economists will look at statistics such as:

Modern economic growth refers to:

shocks are unexpected changes in the demand for goods and services While, _ shocks are unexpected changes in the supply of goods and services.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Financial Economics

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 4: Introduction to Macroeconomics

Economic growth is best defined as the:

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?

The term "inflation" describes the situation where:

-Refer to the above diagrams, one can conclude that if expectations are always fulfilled, Fancy Auto Company:

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

The inequality of saving and planned investment:

Real GDP and nominal GDP differ because real GDP:

To understand how the economy works, economists could look at various data including:

Gross Domestic Product (GDP) measures the value of final goods and services produced by a nation during a given period of time.

In 2008-2009, the Canadian economy experienced:

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

The decisions about savings and investments are complicated because:

Before the start of the Industrial Revolution in the late 1700s, living standards around the world were quite different.

Inflation means:

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

To keep track of long-run growth and short-run fluctuations, economists will look at statistics such as:

Modern economic growth refers to:

________ shocks are unexpected changes in the demand for goods and services While, _________ shocks are unexpected changes in the supply of goods and services.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Financial Economics

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

shocks are unexpected changes in the demand for goods and services While, _ shocks are unexpected changes in the supply of goods and services.