Business Economics
Mock Exam
Course Introduction
Business Economics explores the application of economic principles and methodologies to the decision-making processes of firms and organizations. The course analyzes how businesses operate within varied market structures, examining factors such as supply and demand, production costs, market competition, pricing strategies, and government regulation. Students will develop analytical tools to assess business problems, predict market trends, and evaluate the economic environment affecting business strategies. Through case studies and real-world examples, the course bridges economic theory with practical management decisions crucial for effective business planning and policy-making.
Recommended Textbook
Macroeconomics Canada in the Global Environment 8th Edition by Michael Parkin
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15 Chapters
1897 Verified Questions
1897 Flashcards
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Page 2
Chapter : 1 What Is Economics
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198 Verified Questions
198 Flashcards
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Sample Questions
Q1) A normative statement is
A)about what should be.
B)about what is.
C)always true.
D)always false.
E)capable of evaluation, as true or false, by observation and measurement.
Answer: A
Q2) Which of the following sayings best describes opportunity cost?
A)"Make hay while the sun shines."
B)"Love of money is the root of all evil."
C)"Boldly go where no one has gone before."
D)"There's no such thing as a free lunch."
E)"Baseball has been very good to me."
Answer: D
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3
Chapter 2: The Economic Problem
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143 Flashcards
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Sample Questions
Q1) On a graph of a production possibilities frontier,opportunity cost is represented by A)a point on the horizontal axis.
B)a point on the vertical axis.
C)a ray through the origin.
D)the slope of the production possibilities frontier.
E)the x-axis intercept.
Answer: D
Q2) Markets I. enable buyers and sellers to get information II. are defined by economists as geographical locations where trade occurs. III. have evolved because they facilitate trade. Which of the above statements are correct?
A)I only
B)III only
C)I and III only
D)II and III only
E)I, II and III
Answer: C
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Chapter 3: Demand and Supply
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178 Flashcards
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Sample Questions
Q1) At price P3 in Figure 3.4.1,
A)this market is in equilibrium.
B)there is a shortage in the amount of Q5 - Q1.
C)there is a tendency for the price to rise.
D)equilibrium quantity is Q5.
E)there is a surplus in the amount of Q5 - Q1.
Answer: E
Q2) Refer to Table 3.4.1.A surplus occurs if
A)the price is $2 a unit.
B)the price is $3 a unit.
C)the price is above $4 a unit.
D)the price is $1 a unit.
E)the price is $4 a unit.
Answer: C
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Chapter 20: Measuring Gdp and Economic Growth
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127 Verified Questions
127 Flashcards
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Sample Questions
Q1) An art collector recently sold a piece of pottery for $300.He had purchased it for $200 two years earlier.How will the most recent sale affect GDP?
A)GDP will increase by $100.
B)GDP will not change.
C)GDP will increase by $300.
D)GDP will increase by $200.
E)GDP 2 years ago must be adjusted downwards by $200, and current GDP will rise by $300.
Q2) Refer to Fact 20.1.1.Peter's capital at the end of 2012 is
A)$7,000.
B)$9,600.
C)$4,400.
D)$7,600.
E)$4,000.
Q3) Which of the following relationships is correct?
A)Gross Investment = Net Investment + Depreciation
B)Consumption expenditure = Net Investment - Depreciation
C)Net Investment = Gross Investment + Depreciation
D)Depreciation = Gross Investment - Consumption expenditure
E)Saving = Gross Investment - Taxes
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Chapter 21: Monitoring Jobs and Inflation
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) If the CPI in 2008 was 100 and the CPI in 2006 was 115,then the inflation rate in 2006 is
A)1.5 percent.
B)100 percent.
C)11.5 percent.
D)115 percent.
E)none of the above.
Q2) Suppose the country of Tiny Town experiences frictional unemployment.This frictional unemployment would
A)signal that the country is in a recession.
B)be considered a natural occurrence in a growing economy.
C)signal the number of discouraged workers is growing.
D)increase structural unemployment.
E)decrease the output gap.
Q3) At full employment,there is no
A)natural unemployment.
B)unemployment.
C)cyclical unemployment.
D)structural unemployment.
E)frictional unemployment.
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Page 7
Chapter 22: Economic Growth
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90 Flashcards
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Sample Questions
Q1) Refer to Figure 22.3.2.The equilibrium real wage rate is
A)$10 an hour.
B)$15 an hour.
C)$20 an hour.
D)any wage rate above $15 an hour.
E)any wage rate below $15 an hour.
Q2) Refer to Table 22.3.1.The tables show the labour market and the production function schedule for the country of Pickett.An increase in population changes the quantity of labour supplied by 20 billion hours at each real wage rate.Potential GDP ________.
A)does not change.
B)decreases to $3 trillion.
C)increases to $50 trillion.
D)increases to $18 trillion.
E)increases to $20 trillion.
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Chapter 23: Finance,saving,and Investment
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142 Flashcards
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Sample Questions
Q1) Households will choose to save more if
A)expected future income decreases.
B)current disposable income increases.
C)current disposable income decreases.
D)both A and B are correct.
E)both A and C are correct.
Q2) If disposable income increases,people ________ saving,the supply of loanable funds will ________ and the real interest rate will ________.
A)increase; decrease; rise
B)decrease; decrease; rise
C)increase; increase; fall
D)decrease; increase; fall
E)increase; increase; rise or fall depending on the shift of the demand curve for loanable funds
Q3) In the market for loanable funds,a larger government surplus leads to
A)a higher real interest rate, and increased investment.
B)a higher real interest rate, and decreased investment.
C)a lower real interest rate, and increased investment.
D)a lower real interest rate, and decreased investment.
E)no effect on the real interest rate or investment.
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Chapter 24: Money,the Price Level,and Inflation
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115 Flashcards
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Sample Questions
Q1) Suppose that the banking system has excess reserves of $10 million,the desired reserve ratio is 10 percent and the currency drain ratio is 40 percent. By how much will the quantity of money increase?
A)$12.5 million
B)$28 million
C)$50 million
D)$40 million
E)$22 million
Q2) If Wolfgang transfers $1,000 out of his non-chequable deposit account and places it in his chequable deposit account,
A)M1 and M2 fall.
B)M1 falls and M2 rises.
C)M1 falls and M3 rises.
D)M1 falls and M2 remains the same.
E)M1 rises and M2 remains the same.
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Chapter 25: The Exchange Rate and the Balance of Payments
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Sample Questions
Q1) Suppose that the following situation exists in the foreign exchange market: 1 Canadian dollar buys 7.2 Chinese yuan and 1 Canadian dollar buys 5.77 South African rand.How many yuan will one rand buy?
A)0.80 yuan
B)1.25 yuan
C)7.20 yuan
D)5.77 yuan
E)1.43 yuan
Q2) Suppose the price of a burger is $4.50 Canadian in Toronto,and the exchange rate is 103 U.S.cents per Canadian dollar.Then
A)the price of a burger is $4.50 U.S. in New York if purchasing power parity holds.
B)the price of a burger is $4.64 U.S. in New York if interest rate parity holds.
C)the price of a burger is $4.64 U.S. in New York if purchasing power parity holds.
D)the Canadian dollar is expected to appreciate according to purchasing power parity.
E)the Canadian dollar is expected to depreciate according to purchasing power parity.
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Chapter 26: Aggregate Supply and Aggregate Demand
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124 Flashcards
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Sample Questions
Q1) The economy cannot remain indefinitely with real GDP greater than potential GDP because the money wage rate will
A)decrease, shifting the LAS curve rightward.
B)decrease, shifting the SAS curve rightward.
C)increase, shifting the LAS curve leftward.
D)increase, shifting the SAS curve leftward.
E)increase, shifting the SAS curve rightward.
Q2) Everything else remaining the same,an increase in the quantity of money
A)shifts the aggregate demand curve rightward.
B)shifts the aggregate demand curve leftward.
C)shifts the aggregate supply curve leftward.
D)shifts the aggregate supply curve rightward.
E)creates a movement down along the aggregate demand curve.
Q3) Everything else remaining the same,an increase in the expected inflation rate
A)shifts the aggregate demand curve rightward.
B)shifts the aggregate demand curve leftward.
C)shifts the short-run aggregate supply curve leftward.
D)shifts the long-run aggregate supply curve rightward.
E)creates a movement up along the aggregate demand curve.
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Page 12
Chapter 27: Expenditure Multipliers: the Keynesian Model
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158 Verified Questions
158 Flashcards
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Sample Questions
Q1) As real GDP increases
A)autonomous consumption increases.
B)planned investment increases.
C)exports increase.
D)imports increase.
E)imports decrease.
Q2) Refer to Fact 27.5.1.What is equilibrium real GDP in this economy?
A)36
B)120
C)130
D)360
E)none of the above
Q3) If a household's disposable income increases from $12,000 to $22,000 and at the same time its consumption expenditure increases from $4,000 to $9,000,then
A)the household is dissaving.
B)the slope of the consumption function is 0.6.
C)the slope of the consumption function is 0.5.
D)the marginal propensity to consume over this range is negative.
E)the marginal propensity to save over this range is negative.
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Page 13
Chapter 28: Canadian Inflation,unemployment,and Business Cycle
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101 Flashcards
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Sample Questions
Q1) Refer to Figure 28.1.3.Assume that the figure illustrates an economy initially in equilibrium at the intersection of the SAS0 curve and the AD0 curve.If the aggregate demand curve is expected to remain at AD0 but shifts to AD1,the new equilibrium real GDP is ________ and the new equilibrium price level is ________.
A)$380 billion; 125
B)$500 billion; 150
C)$500 billion; 100
D)$620 billion; 125
E)$500 billion; 125
Q2) Refer to Table 28.2.1.The table gives points on the short-run Phillips curve for the country of Ruritania.If the expected inflation rate is 10 percent,and the inflation rate unexpectedly rises to 12 percent and stays there for some period of time,the expected inflation rate becomes ________ percent and the natural unemployment rate is ________ percent.
A)12; 4
B)10; 4
C)10; 6
D)12; 6
E)12; 5
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Chapter 29: Fiscal Policy
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91 Verified Questions
91 Flashcards
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Sample Questions
Q1) If the economy has a structural deficit of $25 billion and a cyclical deficit of $75,we can conclude that the current budget deficit is ________ billion.
A)$25
B)$50
C)$75
D)$100
E)$125
Q2) All of the following statements are true except
A)total revenues have no strong trends.
B)revenues include corporate income taxes, personal income taxes; indirect taxes and investment income.
C)the main source of fluctuations in revenues is corporate income taxes.
D)indirect taxes decreased during the 1990s due to the introduction of the GST.
E)total revenues increased through the 1960s and 1980s.
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Chapter 30: Monetary Policy
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88 Verified Questions
88 Flashcards
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Sample Questions
Q1) As the sole issuer of Canadian money,the Bank of Canada can set any one of three variables:
A)the monetary base, the exchange rate, and the short-term interest rate.
B)the money base, the interest rate, and the unemployment rate.
C)the rate of inflation, the interest rate, and the unemployment rate.
D)the exchange rate, the interest rate, and the inflation rate.
E)the inflation rate, the unemployment rate, and the real economic growth rate.
Q2) The overnight loans rate is the interest rate
A)banks charge their best loan customers.
B)banks pay on term deposits.
C)the Bank of Canada pays on reserves held by banks.
D)the Bank of Canada charges when it lends reserves to banks.
E)on overnight loans that the big banks make to each other.
Q3) Which of the following does not occur as a result of the Bank of Canada raising the overnight loans rate?
A)the supply of loanable funds decrease
B)the long-term real interest rate rises
C)exports decrease
D)aggregate demand increases
E)imports increase
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Chapter 15: International Trade Policy
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) In developing countries,there is more reliance on ________ as opposed to ________ for government revenue.
A)tariffs; tax collection
B)import quotas; tariffs
C)tax collection; tariffs
D)tariffs; import quotas
E)import quotas; tax collection
Q2) In one year,Brazil exported more than 1.8 billion kilograms of coffee to the rest of the world.We can conclude that
A)Brazil's coffee producers lose from this trade.
B)coffee consumers in the rest of the world lose from this trade.
C)Brazil's coffee consumers lose from this trade.
D)coffee producers in the rest of the world gain from this trade.
E)Brazil's government loses from this trade.
Q3) Tariffs and import quotas both result in
A)lower levels of domestic production.
B)the domestic government gaining revenue.
C)lower levels of imports.
D)higher levels of domestic consumption.
E)an increase in demand.
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