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1 | |
According to the economic perspective, |
| | A) | Human material wants are limited, while resources used to satisfy them are limited |
| | B) | Human material wants are unlimited, while resources used to satisfy them are also unlimited |
| | C) | Human material wants are unlimited, while resources used to satisfy them are limited |
| | D) | Human material wants are limited, while the resources used to satisfy them are unlimited. |
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2 | |
If Dina decides to study for an economics exam Tuesday evening rather than attend a movie with Mark, |
| | A) | The marginal benefit of studying for the test is greater than the marginal benefit of attending the movie |
| | B) | The marginal benefit of studying for the test is equal to the marginal cost of studying for the test |
| | C) | The marginal cost of studying for the test is greater than the marginal benefit of studying for the test |
| | D) | The marginal benefit of studying for the test is greater than the marginal cost of studying for the test |
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3 | |
Which of the following has nothing to do with the assumption of rational behaviour in economics? |
| | A) | Retail consumers seek to maximize their own satisfaction, or "utility" |
| | B) | Rational consumers are selfish because they only care about their own interests |
| | C) | Pursuing rational behaviour involves making different choices under different circumstances. |
| | D) | Rational decisions may change as costs and benefits change. |
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4 | |
Suppose an economist wants to determine the effect of a change in price on the number of sports cars purchased in Canada. He knows that other factors, such as incomes, preferences, and the price of family cars will affect the number of sports cars purchased. According to the ceteris paribus assumption, |
| | A) | The economist assumes only the price of sports cars changes |
| | B) | The economist assumes only consumer incomes change |
| | C) | The economist assumes only consumer preferences change. |
| | D) | The economist assumes that all variables affecting the number of sports cars purchased will change at the same time. |
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5 | |
What is the first step in the "Scientific Method"? |
| | A) | Form the hypothesis |
| | B) | Test the hypothesis |
| | C) | Observe real world data (facts) |
| | D) | Accept or reject the hypothesis |
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6 | |
Which of the following is a macroeconomic issue? |
| | A) | A study which deals with how a single firm earns its profits |
| | B) | A study which tries to find causes for Canada's increasing unemployment rate |
| | C) | A study of price determination in the luxury car market |
| | D) | A market research survey that tries to determine how an individual household spends its money. |
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7 | |
Although a cut in income taxes provides households with more income to purchase goods and services, it also means the government has less tax revenue to spend on essential services like health and education. This statement illustrates which of the following concepts? |
| | A) | Scarcity |
| | B) | Trade-offs |
| | C) | Opportunity costs |
| | D) | All of the above |
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8 | |
Which of the following are topics that would be studied in a microeconomics course? |
| | A) | A study of factors affecting Canada's unemployment rate |
| | B) | A study of how prices change in a given year across Canada |
| | C) | A market research survey that asks individuals how much of their income they spend on fast food in a given month. |
| | D) | A study of how the Canadian dollar affects Canadian exports and imports |
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9 | |
Which of the following statements is positive in nature? |
| | A) | Every business student should have to take economics |
| | B) | Because it makes use of so many graphs, economics can be a difficult subject for those who have trouble with math |
| | C) | Economics is an interesting course |
| | D) | Economics is too theoretical to have any practical use. |
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10 | |
Which of the following statements is normative in nature? |
| | A) | That economics mid-term was tough! |
| | B) | Our economics professor put too many short answer questions on the mid-term, and not enough multiple choice questions |
| | C) | Both of these statements are normative in nature |
| | D) | Neither of these statements is normative in nature |
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11 | |
The greater the number of fish caught by a single fisherman on a given lake, the higher his income. So, as more fishermen fish on a given lake, each of their incomes will rise as well. This statement represents... |
| | A) | The Fallacy of Composition |
| | B) | The Post Hoc Fallacy |
| | C) | The All Else Equal Assumption |
| | D) | None of the above |
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12 | |
An economist notices that oil stocks fall in price after a long weekend, and concludes, incorrectly, that investors' moods become dampened after a holiday. This is an example of... |
| | A) | The Fallacy of Composition |
| | B) | The All Else Equal Assumption |
| | C) | The Post Hoc Fallacy |
| | D) | None of the above |
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13 | |
A student is considering taking a job out of town. The job pays $15/hour, and the student will have to drive 1.5 hours to reach the job (each way). Which of the following is a possible marginal cost of accepting the job? |
| | A) | The $15/hour wage rate |
| | B) | Gas costs for transportation |
| | C) | Experience received from accepting the job |
| | D) | None of the above |
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14 | |
Which economic goal is being referred to in the following statement: "The Bank of Canada has reduced interest rates to help reduce the unemployment rate"? |
| | A) | Full employment |
| | B) | Economic freedom |
| | C) | Economic efficiency |
| | D) | Equitable distribution of income |
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15 | |
Which of the following is an example of a "Correlation"? |
| | A) | An increase in A causes an increase in B |
| | B) | When income increases, it is noticed that savings also increases |
| | C) | An increase in luxury car sales results from an increase in income |
| | D) | An increase in teenage smokers will cause higher rates of lung cancer in the future |
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16 | |
As the temperature in Toronto rises, ice cream sales in Toronto also rise. This is an example of... |
| | A) | An inverse relationship |
| | B) | A direct relationship |
| | C) | A negative relationship |
| | D) | None of the above |
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17 | |
Which of the following statements illustrates an inverse relationship? |
| | A) | An increase in sales will increase profits, all else equal |
| | B) | A decrease in incomes will decrease the demand for gym memberships |
| | C) | An increase in costs will reduce profits, all else equal. |
| | D) | If investors expect IBM stock to rise greatly in the next few months, they will purchase more of that stock |
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18 | |
An economist is trying to determine how much a typical consumer will save out of his/her income. The graph of this consumer's saving function is linear, and slopes upward. Income (Y) is shown on the x-axis, while savings (S) is shown on the y-axis. Further, points A(10,5) and B(15,6) are on the savings function. Which of the following is the dependent variable? |
| | A) | The savings function |
| | B) | Income (Y) |
| | C) | Savings (S) |
| | D) | None of the above |
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19 | |
Referring to the previous question, what is the slope of the savings function? |
| | A) | 1 |
| | B) | 0.8 |
| | C) | 0.6 |
| | D) | 0.2 |
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20 | |
What is the equation of the savings function? |
| | A) | S=y |
| | B) | S=0.8y |
| | C) | S=0.2y |
| | D) | S=2y |
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21 | |
Which of the following is an example of a trade-off? |
| | A) | The more hours you work, as a student, the less study time you have |
| | B) | Spending more money on textbooks means you have less to take a friend out to a movie |
| | C) | Paul Martin, Canada's finance minister, raises interest rates to lower inflation, but the unemployment rate rises in the process |
| | D) | All of the above |
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22 | |
Canadian Prime Minister Jean Chretien is meeting with his policymakers to decide which method would be best for increasing the value of the Canadian dollar: increasing interest rates or increasing Canadian exports. Which policy step is involved here? |
| | A) | Stating the goal |
| | B) | Determining policy options |
| | C) | Implementing and evaluating the policy that was selected |
| | D) | None of the above |
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23 | |
A new economics student confuses the term "capital". She believes it means business start-up money. However, economists refer to capital as a resource (such as machinery, or tools) used to produce goods and services. Which pitfall is being illustrated here? |
| | A) | Biases |
| | B) | Loaded terminology |
| | C) | Definitions |
| | D) | None of the above |
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24 | |
A student with a higher I.Q., all else equal, will score higher marks in school than a student with a lower I.Q. What are some of the other things that are assumed equal in this case? |
| | A) | Initiative, or effort |
| | B) | Interest |
| | C) | Study habits |
| | D) | All of the above |
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2002 McGraw-Hill Higher Education