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1 | |
The difference between inflation and deflation is that: |
| | A) | inflation refers to the case where all prices are rising, while deflation refers to the case where all prices are falling. |
| | B) | inflation refers to the case where all prices are rising, while deflation refers to a general decrease in prices. |
| | C) | inflation refers to a general increase in prices, while deflation refers to the case where all prices are falling. |
| | D) | inflation refers to a general increase in prices, while deflation refers to a general decrease in prices. |
| | E) | inflation refers to a general increase in prices, while deflation refers to the case where the rate of inflation is decreasing. |
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2 | |
Which of the following is not true for the CPI? |
| | A) | It uses a shopping basket of about 600 representative consumer products. |
| | B) | It is measured in terms of a base year, which is used as a point of comparison in subsequent years. |
| | C) | It is employed to compare GDP levels in different years. |
| | D) | It is measured monthly. |
| | E) | It applies to the consumption pattern of a typical Canadian household. |
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3 | |
During a ten-year period, your annual nominal income increases from $60,000 to $90,000 while the CPI rises from 100 to 200. |
| | A) | Your real income has increased by 50%. |
| | B) | Your real income has fallen by 25%. |
| | C) | Your real income has fallen by 50%. |
| | D) | Your real income has stayed the same. |
| | E) | Your real income has risen by 25% |
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4 | |
Which of the following is not a limitation of the consumer price index? |
| | A) | The base year for the CPI is frequently changing. |
| | B) | Certain products improve in quality, making it difficult to compare prices of the same product in different years. |
| | C) | Spending patterns tend to change over time. |
| | D) | Individuals' consumption patterns may not match those of a typical urban household. |
| | E) | The base year for the CPI changes only infrequently. |
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5 | |
The GDP deflator is the following ratio multiplied by 100: |
| | A) | reference-year quantities valued at reference-year prices, divided by reference-year quantities valued at current-year prices. |
| | B) | reference-year quantities valued at current-year prices, divided by reference-year quantities valued at base-year prices. |
| | C) | current-year quantities valued at reference-year prices, divided by current-year quantities valued at current-year prices. |
| | D) | current-year quantities valued at current-year prices, divided by current-year quantities valued at reference-year prices. |
| | E) | current-year quantities valued at reference-year prices, divided by reference-year quantities valued at reference-year prices. |
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6 | |
In year 1, nominal GDP is $500 billion, and in year 2 it is $600 billion. Meanwhile, the value of the GDP deflator has risen from 100 to 120. In this case: |
| | A) | real GDP has risen by 20%. |
| | B) | real GDP has fallen by 20%. |
| | C) | real GDP has stayed the same. |
| | D) | the percentage changes in real GDP and nominal GDP are identical. |
| | E) | real GDP has risen more quickly than nominal GDP. |
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7 | |
Which of the following groups is most hurt by unexpected inflation? |
| | A) | those with fixed incomes |
| | B) | those with partially indexed incomes |
| | C) | those with fully indexed incomes |
| | D) | borrowers |
| | E) | none of the above |
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8 | |
The real interest rate is calculated by: |
| | A) | deducting the nominal interest rate from the inflation rate. |
| | B) | deducting the inflation rate from the nominal interest rate. |
| | C) | adding the inflation rate and the nominal interest rate. |
| | D) | multiplying the nominal interest rate by the inflation rate, expressed as a decimal. |
| | E) | dividing the nominal interest rate by the inflation rate, expressed as a decimal. |
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9 | |
When the actual inflation rate is lower than expected, |
| | A) | borrowers win and lenders lose, because the real interest rate is less than expected. |
| | B) | borrowers win and lenders lose, because the real interest rate is greater than expected. |
| | C) | lenders win and borrowers lose, because the real interest rate is less than expected. |
| | D) | lenders win and borrowers lose, because the real interest rate is greater than expected. |
| | E) | neither lenders nor borrowers are affected. |
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10 | |
Which of the following groups is included in Canada's labour force population? |
| | A) | college and university students |
| | B) | children under the age of 15 |
| | C) | full-time members of the armed forces |
| | D) | people living on first nations reserves |
| | E) | residents of the Northwest, Nunavut, and Yukon Territories |
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11 | |
A country has 1 million employed workers and 250,000 workers who are unemployed and actively seeking work. The official unemployment rate is therefore: |
| | A) | 25%. |
| | B) | 2.5%. |
| | C) | 20%. |
| | D) | 2%. |
| | E) | cannot be determined with the information given. |
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12 | |
The official unemployment rate can overstate the true level of unemployment because of: |
| | A) | the fact that some workers have part-time jobs when they would prefer to be working full time. |
| | B) | the fact that some workers are employed in jobs that do not fully use their skills and knowledge. |
| | C) | the fact that some workers become discouraged and leave the labour force. |
| | D) | the dishonest answers some respondents give in Statistics Canada's labour market survey. |
| | E) | none of the above |
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13 | |
Which type of unemployment persists for the longest period? |
| | A) | frictional unemployment |
| | B) | structural unemployment |
| | C) | cyclical unemployment |
| | D) | seasonal unemployment |
| | E) | secular unemployment |
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14 | |
Canada's natural unemployment rate: |
| | A) | includes both structural and cyclical unemployment. |
| | B) | is now usually estimated to be in the range of 3% to 4%. |
| | C) | is a measure of full employment in the Canadian economy. |
| | D) | was higher during the 1940s and 1950s than it is now. |
| | E) | includes both frictional and cyclical unemployment. |
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15 | |
As outlined by David Foot: |
| | A) | the baby bust generation had a relatively difficult time finding jobs. |
| | B) | back-end boomers (so-called Generation X) faced very few difficulties when they entered the labour force. |
| | C) | the baby-boom echo generation will face many of the same economic conditions as their parents. |
| | D) | those born in the 1980s are having a more difficult time than those born in the 1990s will have as they enter the labour force. |
| | E) | those born in the late 1940s and early 1950s had a difficult time when they entered the labour force. |
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