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1 | |
Economic growth is generally defined as... |
| | A) | An increase in a country's CPI over time |
| | B) | An increase in a country's nominal GDP over time |
| | C) | An increase in a country's real GDP over time. |
| | D) | None of the above |
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2 | |
If Canada's real GDP increased from $695.2 billion in 1991 to $815 billion in 1997, its rate of economic growth would be measured as... |
| | A) | 10% |
| | B) | 14.5% |
| | C) | 15.6% |
| | D) | 17.2% |
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3 | |
Suppose that the Canadian economy is currently experiencing economic growth of 3% per year. How long will it take Canada's Real GDP to double at this growth rate? |
| | A) | 15.5 years |
| | B) | 23.33 years |
| | C) | 30 years |
| | D) | 38.2 years |
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4 | |
Real GDP per capita is used by economists as a measure of... |
| | A) | Inflation |
| | B) | Unemployment |
| | C) | Productivity |
| | D) | None of the above |
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5 | |
Real GDP figures tend to ______ the growth of economic well-being, since they do not account for improvements in products and services over time |
| | A) | Understate |
| | B) | Overstate |
| | C) | Correctly state |
| | D) | None of the above |
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6 | |
A decline in Real GDP for six or more consecutive months is called... |
| | A) | A trough |
| | B) | A recession |
| | C) | An expansion |
| | D) | A recovery |
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7 | |
Suppose that an economy has the following Real GDP figures for a given 1-year period:
| Month | RGDP | | Jan | $10000 | | Feb | 15000 | | Mar | 28000 | | Apr | 26000 | | May | 23400 | | Jun | 21000 | | Jul | 18500 | | Aug | 16200 | | Sep | 16000 | | Oct | 18800 | | Nov | 24700 | | Dec | 23600 |
During what month does the "trough" occur? |
| | A) | March |
| | B) | June |
| | C) | September |
| | D) | November |
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8 | |
Which of the following explanations of business cycles have been forwarded by economists? |
| | A) | Changes in productivity |
| | B) | Changes in the money supply |
| | C) | Changes in the level of total spending |
| | D) | All of the above |
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9 | |
Which of the following firms would be least affected by a recession? |
| | A) | A brand-name appliance store |
| | B) | A large car manufacturer |
| | C) | A real estate company |
| | D) | A grocery store |
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10 | |
If an economy is at its Natural Rate of Unemployment |
| | A) | Only Cyclical Unemployment would be present |
| | B) | There would be no frictional unemployment |
| | C) | Only frictional and structural unemployment would be present |
| | D) | None of the above |
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11 | |
A given country has a labour force of 20 million people, with 18.5 million people employed. What is this country's unemployment rate? |
| | A) | 10% |
| | B) | 8.5% |
| | C) | 7.5% |
| | D) | 6% |
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12 | |
The fact that discouraged workers exist in the Canadian economy implies that Statistics Canada's measurement of unemployment... |
| | A) | Understates the true Canadian unemployment rate |
| | B) | Overstates the true Canadian unemployment rate |
| | C) | Correctly measures the true Canadian unemployment rate |
| | D) | None of the above |
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13 | |
If Bell Canada fires some of its operators and replaces them with computer technology, the operators would be considered... |
| | A) | Frictionally unemployed |
| | B) | Structurally unemployed |
| | C) | Cyclically unemployed |
| | D) | None of the above |
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14 | |
Which of the following statements is true of an economy at its "natural rate of unemployment", or full employment level? |
| | A) | There is no unemployment when the economy is at full employment, since everyone who wants work will be able to find it. |
| | B) | The economy will be producing at its potential, so all resources will be fully employed. |
| | C) | The economy will have no cyclical unemployment. It will only experience frictional and structural unemployment. |
| | D) | Choices 2 and 3 are correct |
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15 | |
In 1995, country X had an actual unemployment rate of 8%. The natural unemployment rate that year was calculated at 6%. If country X had a potential GDP of $250 billion in 1995, then it sacrificed _________ worth of real output by not being at its potential GDP (according to Okun's Law) |
| | A) | $10 billion |
| | B) | $15 billion |
| | C) | $20 billion |
| | D) | $5 billion |
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16 | |
The "GDP gap" shows... |
| | A) | The amount by which actual GDP exceeds potential GDP |
| | B) | The amount by which actual GDP falls short of potential GDP |
| | C) | The level of GDP at which inflation is high |
| | D) | The rare case where the actual unemployment rate is less than the natural unemployment rate. |
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17 | |
If actual GDP is less than potential GDP, then... |
| | A) | The actual unemployment rate exceeds the natural unemployment rate. |
| | B) | The actual unemployment rate is less than the natural unemployment rate. |
| | C) | The GDP gap will be negative. |
| | D) | There will be no cyclical unemployment present. |
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18 | |
Which of the following is not true of inflation, in general? |
| | A) | It refers to a general increase in the price level |
| | B) | During periods of rapid inflation, prices of all goods are increasing |
| | C) | The annual inflation rate can be measured by finding the year-over-year percentage change in the CPI. |
| | D) | None of the above. |
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19 | |
Suppose consumers expect prices of condominiums in Toronto to rise in the near future. As a result, they increase their purchases of condos now to avoid the future price increases. The type of inflation that will result from this action is... |
| | A) | Hyperinflation |
| | B) | Cost-push inflation |
| | C) | Demand-pull inflation |
| | D) | Constant inflation |
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20 | |
Which of the following best describes the process by which cost-push inflation is generated? |
| | A) | Increased demand for a good leads to a higher price for that good, and pushes costs up. |
| | B) | An increase in the per-unit cost of raw materials used in the production of a good reduces profits earned from selling the good. This reduces the output of the good a firm will be willing to supply at the existing price level. As the supply curve shifts leftward, the price of the good will rise. |
| | C) | Decreased demand for a good will cause the price of the good to fall. This will cause the supply of the good to fall, and the price to rise. |
| | D) | An increase in the per-unit cost of a good raises profits, and this increases the amount of output a firm will supply at the existing price level. This leads to a higher price. |
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21 | |
Kristin receives a 3% wage increase in the year 2000. During 2000, her real wage (income) falls by 1%. The percentage change in the price level during 2000 was... |
| | A) | 2% |
| | B) | 3% |
| | C) | 4% |
| | D) | 5% |
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22 | |
Which of the following is true of an unanticipated inflation? |
| | A) | Savers tend to be harmed by such inflation |
| | B) | Borrowers tend to benefit from such inflation |
| | C) | Creditors tend to be harmed by such inflation |
| | D) | All of the above |
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23 | |
On Jan.1, 2000, Rebecca has invests in a $1000 bond that will mature in one year. She expects to earn interest of $50 by Jan. 1, 2002. Further, suppose the average price level rises by 3% over the year of investment. What is Rebecca's real interest rate on her investment? |
| | A) | 3% |
| | B) | 4% |
| | C) | 5% |
| | D) | 2% |
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24 | |
Thinking of inflation and the economy's level of real output... |
| | A) | Demand-pull inflation may reduce output because it "diverts time and effort away from production toward activities which involve protection against the inflation." |
| | B) | Mild demand-pull inflation, in combination with strong spending, may create an economy with output that is near full employment. |
| | C) | Cost-push inflation generally results in less output and higher unemployment. |
| | D) | All of the above |
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25 | |
Which of the following is an effect of an unanticipated deflation? |
| | A) | It will reduce real income |
| | B) | It will have a positive effect on borrowers (debtors) |
| | C) | It will increase the real interest rate |
| | D) | It will have a negative effect on lenders |
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2002 McGraw-Hill Higher Education