Business Economics
Test Bank
Course Introduction
Business Economics examines the application of economic theories and principles to real-world business practices and decision-making. This course covers topics such as demand and supply analysis, market structures, pricing strategies, production and cost analysis, and the impact of government policies on business operations. By exploring both microeconomic and macroeconomic factors, students develop the analytical tools necessary to understand consumer behavior, forecast market trends, optimize resource allocation, and assess the economic environment in which firms operate. The course prepares students to make informed managerial decisions aimed at achieving business objectives in a dynamic and competitive marketplace.
Recommended Textbook
Principles of Macroeconomics 9th Edition by John Sayre
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13 Chapters
2035 Verified Questions
2035 Flashcards
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Page 2
Chapter 1: The Economic Problem
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Sample Questions
Q1) Refer to the above information to answer this question.Which of the above are macroeconomic concepts?
A)2,4 and 6.
B)1,2 and 4.
C)2,3 and 6.
D)2,3 and 5.
E)1,3 and 4.
Answer: B
Q2) Refer to the graph above to answer this question.What is indicated by the shape of both the PPI and the PPII curves?
A)Constant costs.
B)Alternative costs.
C)Increasing costs.
D)Decreasing costs.
Answer: C
Q3) Which form of efficiency stresses the production of the 'right type' of products?
Answer: Allocative efficiency.
Q4) Productivity refers to which type of efficiency?
Answer: Productive efficiency.
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Chapter 2: Demand and Supply: an Introduction
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Sample Questions
Q1) Refer to the above graph to answer this question.What is the minimum price the quantity sold at a price of $14 could have been sold for?
A)$6.
B)$8.
C)$10.
D)$12.
E)Cannot be determined.
Answer: B
Q2) Which of the following best describes a normal product?
A)A product that people both need and like.
B)A product whose demand increases if income increases.
C)A product whose demand increases if income decreases.
D)A staple product that everyone needs.
Answer: B
Q3) What is meant by the term ceteris paribus?
A)A downward-sloping demand curve.
B)Other things being equal.
C)All things vary.
D)Prices remain constant.
Answer: B
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Chapter 3: Measuring the Economy 1: GDP and Economic Growth
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Sample Questions
Q1) Refer to the information above to answer this question.What is the value of net national income at basic prices?
A)$845
B)$855
C)$910
D)$935
E)$1010
Answer: A
Q2) What is net domestic income at basic prices?
A)It is the income of Canadians earned abroad.
B)It is the income earned in Canada.
C)It is the income of Canadians earned in Canada.
D)It is the income earned by Canadians.
Answer: B
Q3) What is national income?
A)It is the income of Canadians earned abroad.
B)It is the income earned in Canada.
C)It is the income of Canadians earned in Canada.
D)It is the income earned by Canadians.
Answer: D
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Chapter 4: Measuring the Economy 2: Unemployment and Inflation
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184 Flashcards
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Sample Questions
Q1) Refer to the information above to answer this question.What is the price index in 2016?
A)22
B)120
C)115
D)100
Q2) Assume that between 2005 and 2015 the price level doubled.What is the approximate average annual rate of inflation over this ten-year period?
A)10%
B)7%
C)5%
D)2%
E)1%
Q3) "For every 1 percent that the actual unemployment rate exceeds the natural rate,the economy's GDP falls 2.5 percent short of its potential." What is this a statement of?
A)The natural law of unemployment.
B)Okun's Law.
C)The rule of 70.
D)The law of full employment.
Page 6
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Chapter 5: Aggregate Demand and Supply
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Sample Questions
Q1) What is true of a movement up the aggregate supply curve?
A)The nominal wage remains constant but the real wage declines.
B)The real wage remains constant but the nominal wage declines.
C)The real wage remains constant but the nominal wage increases.
D)Both the nominal and real wages decline.
Q2) An increase in exports will have what effect on aggregate demand?
A)It will decrease.
B)It will increase.
C)It may increase or decrease depending on the marginal propensity to import.
D)It will have no effect on aggregate demand.
Q3) "The aggregate quantity of goods and services produced by all sellers at various prices".Of what is this a definition?
A)Aggregate expenditure.
B)Aggregate supply.
C)Aggregate demand.
D)Potential GDP.
Q4) "A change in aggregate supply implies a change in Potential GDP and a change in Potential GDP implies a change in aggregate supply." Evaluate this statement.
Q5) List the four factors that can cause a decrease in exports?
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Chapter 6: Aggregate Expenditures
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Sample Questions
Q1) If the MPE is equal to 0.6,what is the value of the MLR?
A)0.4.
B)0.6.
C)1.66.
D)2.5
Q2) Define marginal propensity to consume.
Q3) Refer to the information above to answer this question.What is the value of the marginal propensity to expend?
A)0.46
B)0.50
C)0.78
D)0.86
Q4) Refer to the above graph to answer this question.What is the value of the MPC?
A)0
B)0.4
C)0.6
D)1
E)2.5
Q5) What five factors will cause a change in autonomous investment?
Q6) What shifts the aggregate expenditures function? What changes its slope?
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Chapter 7: Fiscal Policy
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Sample Questions
Q1) Counter-cyclical fiscal policy is aimed at balancing the budget,whereas a balanced-budget fiscal policy is aimed at balancing the economy.
A)True
B)False
Q2) What is a budget deficit?
A)It is government spending of all types in excess of net tax revenue.
B)It is government spending on goods and services in excess of net tax revenue.
C)It is government spending of all types plus net tax revenues.
D)It is the amount by which federal government spending of all types is below net tax revenues.
Q3) What is the primary goal of counter-cyclical fiscal policy? What are three criticisms of it?
Q4) Which of the following would close an inflationary gap?
A)An increase in government spending.
B)A decrease in government spending.
C)A decrease in taxes.
D)An increase in exports.
Q5) What are the problems associated with a cyclically balanced budget fiscal policy?
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Chapter 8: Money and Banking
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Sample Questions
Q1) Why are Canadian banks called chartered banks?
A)Because they are protected under the Charter of Rights and Freedoms.
B)Because they receive a charter under the Bank Act.
C)Because they are run by chartered accountants.
D)Because they receive a charter to print money.
E)Because they receive a charter to operate in a specific province.
Q2) If Guy and Laraine both have chequing accounts at the same bank and Guy writes a cheque for $1,000,payable to Laraine,what will happen to the bank's accounts?
A)They will not be affected.
B)Assets and liabilities will both decrease by $1,000.
C)Liabilities will decline and the bank's equity will increase by $1,000.
D)Reserves and demand deposits will both decrease by $1,000.
E)Demand deposits will increase and loans to customers will decrease by $1,000.
Q3) Peter deposits $100 cash into his account at a commercial bank.Has the amount of money supply changed? Explain.
Q4) Individuals in a society that had no medium of exchange would be forced to barter all goods and services directly.
A)True
B)False
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Chapter 9: The Money Market and Monetary Policy
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Sample Questions
Q1) What will an increase in the money supply tend to do?
A)Increase interest rates and lower the equilibrium GDP.
B)Increase interest rates and increase the equilibrium GDP.
C)Lower interest rates and increase the equilibrium GDP.
D)Lower interest rates and lower the equilibrium GDP.
E)Interest rate and equilibrium GDP does not change.
Q2) What is the price of money?
Q3) The interest rate can be thought of as which of the following?
A)As a reflection of the demand for money.
B)As a reflection of the supply of money.
C)As the price of money.
D)As a result of the level of investment.
E)As a result of the level of saving.
Q4) What is the relationship between the economic policies of the Bank of Canada and those of the federal government?
A)They are always unrelated.
B)They are identical.
C)They are usually in conflict.
D)They usually have similar goals concerning the direction to move the economy.
E)They are both controlled by Parliament.
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Chapter 10: International Trade
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Sample Questions
Q1) Refer to the information above to answer this question.Suppose that the two countries specialize and engage in free trade and establish the terms of trade at 1 unit of rice cake = 1.5 units of soya milk.If Etheric exports 30 million units of rice cakes to Mental,what will be the consumption combinations for Etheric?
A)30 million units of soya milk and 55 million units of rice cakes.
B)45 million units of soya milk and 90 million units of rice cakes.
C)55 million units of soya milk and 30 million units of rice cakes.
D)90 million units of soya milk and 45 million units of rice cakes.
E)10 million units of soya milk and 30 million units of rice cakes.
Q2) To what extent are the conclusions of the theory of comparative advantage affected if unit costs increase rather than remain the same as output increases?
Q3) What does it mean if the opportunity costs differ between two countries?
A)Then comparative costs must be the same.
B)There can be no gains from trade.
C)It is possible for both countries to gain from specialization and trade.
D)Then absolute costs must be the same.
Q4) What are Canada's main exports?
Q5) List five ways to restrict imports.
Q6) Explain why free trade may not be possible.
Page 12
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Chapter 11: Exchange Rates and the Balance of Payments
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Sample Questions
Q1) What will depreciation of the Hong Kong dollar do?
A)Make Hong Kong exports cheaper,but its imports more expensive.
B)Make Hong Kong exports more expensive,but its imports cheaper.
C)Make Hong Kong's exports and imports both less expensive.
D)Make Hong Kong exports and imports both more expensive.
E)Will lead to a balance of payments surplus for Hong Kong.
Q2) List the five factors that explain the differences in the purchasing power parity.
Q3) All of the following,except one,are determinants of the international demand for a nation's currency.Which is the exception?
A)The level of foreign incomes.
B)The price of its products relative to the price of foreign products.
C)The level of its GDP.
D)Foreigner's preferences.
E)The level of its interest rates relative to foreign interest rates.
Q4) Assume Canada has a flexible exchange rate regime.Explain the impact on the Canadian foreign exchange market if there is a decrease in the Canadian price level.
Q5) Explain who and why demands Canadian dollar in the foreign exchange market?
Q6) Distinguish between portfolio investment and direct investment.
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Chapter 12: Macroeconomic Policy Revisited
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Sample Questions
Q1) Stagflation is the simultaneous occurrence of both:
A)A recession and deflation.
B)A recession and inflation.
C)Inflation and rapid growth in GDP.
D)Recession and rapid growth in GDP.
Q2) Monetary policy cannot be used effectively when a country has a fixed exchange rate.
A)True
B)False
Q3) If Canadian policy-makers wish to maintain the value of the dollar relative to the U.S.dollar,what should they do?
A)Keep the money supply constant
B)Continually adjust the money supply to keep interest rates in line with American rates
C)Increase the money supply whenever the U.S.dollar starts to appreciate against the Canadian dollar
D)Purchase American dollars
Q4) The Canadian dollar has not fallen below $0.80 U.S.for over twenty years.
A)True
B)False
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Chapter 13: A Walk Through the Twentieth Century and Beyond
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Sample Questions
Q1) Sub-prime mortgages and derivatives are associated with stagflation. A)True
B)False
Q2) What policy approaches were used during post World War II to stabilize the economy?
Q3) According to the neoclassical economists,what would happen if production exceeded total spending in an economy?
Q4) How did the supply-siders explain the high inflation and high unemployment rates of the 1970s?
Q5) Explain the foundation of Keynes's disagreement with neoclassical economists with respect to the inflexibility of prices.
Q6) According to Neoclassicist economists,what are the four pillars upon which the macroeconomy operates?
Q7) What is a 'restraint program'?
Q8) According to Keynes,how does an economy recover from a recession?
Q10) Explain the development of sub-prime mortgages into bundled financial security. Page 15
Q9) According to neo-classical economists,if prices are truly flexible,what determines aggregate supply?
Q11) According to neoclassical theory,why is involuntary unemployment impossible?
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