Canadian Economic Policy Review
Questions
Course Introduction
Canadian Economic Policy explores the formulation, implementation, and impact of economic policies within Canada. The course examines the roles of federal and provincial governments in shaping economic outcomes through fiscal, monetary, trade, and regulatory policies. Students analyze policy objectives such as economic growth, price stability, employment, and income distribution, with consideration given to contemporary issues like globalization, regional disparities, and sustainable development. Case studies and current events are used to illustrate the challenges and outcomes associated with policy decisions, providing students with the tools to critically assess the effectiveness of various economic strategies within the Canadian context.
Recommended Textbook
Principles of Macroeconomics 4th Canadian Edition by Robert H. Frank
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16 Chapters
2776 Verified Questions
2776 Flashcards
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Chapter 1: Measuring Macroeconomic Performance: Output and Prices
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) Sunk costs are different from other concepts of costs in that they
A) can be either variable or fixed.
B) cannot be lessened by choosing any particular course of action.
C) influence the decision of which activity to do or not do.
D) rise as the level of the activity rises.
E) must be included for an accurate cost-benefit analysis.
Answer: B
Q2) Economists argue that
A) there is an opportunity cost associated with all decisions.
B) there is an opportunity cost associated only with decisions involving money.
C) economic decisions have opportunity costs but other decisions do not.
D) decisions do not have opportunity costs.
E) there is an opportunity cost for some economic decisions.
Answer: A
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3
Chapter 2: Measuring Macroeconomic Performance:
Saving and Wealth
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139 Verified Questions
139 Flashcards
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Sample Questions
Q1) To say some person has a comparative advantage in the writing of an economics textbook means that
A) she can write a textbook faster than anyone else.
B) she has the best word processing technology.
C) her book will have more features.
D) her book will be the easiest to read.
E) she has a low opportunity cost of writing an economics textbook.
Answer: E
Q2) The opportunity cost of an extra acoustic guitar for Mark is
A) 0.0625 fewer electric guitars.
B) 8 fewer electric guitars.
C) 16 fewer electric guitars.
D) 20 fewer electric guitars.
E) 30 fewer electric guitars.
Answer: C
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Chapter 3: Measuring Macroeconomic Performance:
Wages, Employment and the Labour Market
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) As the price decreases,the behaviour of the data in Column 1 is most consistent with A) a supply curve.
B) excess demand.
C) excess supply.
D) a demand curve.
E) an equilibrium.
Answer: D
Q2) Assume supply and demand both shift to the right so that D2 and S2 are now the relevant curves.The new equilibrium occurs at a price of _______ and ______ units exchanged.
A) $90;50
B) $60;20
C) $60;40
D) $30;30
E) $30;70
Answer: A
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Page 5
Chapter 4: Short-Term Economic Fluctuations
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) Government policies aimed at changing the underlying institutions of the nation's economy are called
A) structural policy.
B) trade policy.
C) monetary policy.
D) fiscal policy.
E) antitrust policy.
Q2) The unemployment rate is the
A) number of workers unemployed.
B) number of workers in the labour force.
C) number of workers minus those without a job.
D) percentage of the labour force that is out of work.
E) percentage of the population that is out of work.
Q3) The amount and composition of government expenditures and government revenues is determined by
A) fiscal policy.
B) monetary policy.
C) structural policy.
D) trade policies.
E) interest rate policies.
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Chapter 5: Spending and Output in the Short Run
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207 Verified Questions
207 Flashcards
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Sample Questions
Q1) An economy produces only 500,000 tables valued at $100 each.Of these,100,000 are sold to consumers,200,000 are sold to businesses,100,000 are sold to the government,and 50,000 are sold abroad.No tables are imported.The unsold tables at the end of the year are held in inventory by the table manufacturers.What is the value of GDP?
A) $5 million.
B) $40 million.
C) $45 million.
D) $50 million.
E) $95 million.
Q2) If substantially more foreign investment income comes into Brazil than leaves Brazil,then it is most likely that
A) Brazilian net foreign investment income is negative.
B) Brazilian net foreign investment income is zero.
C) Brazilian GDP exceeds Brazilian GNP.
D) Brazilian GNP exceeds Brazilian GDP.
E) Brazilian GNP equals Brazilian GDP.
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Chapter 6: Fiscal Policy
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) The consumer price index for a given year measures the cost of living in that year relative to
A) what it was in the base year.
B) what it was in the previous year.
C) the cost of the basic goods and services need to sustain a typical household.
D) the amount spent on goods and services by the randomly selected families in the Consumer Expenditure Survey.
E) the cost of the basic goods and services in the base year.
Q2) Suppose the value of the consumer price index (CPI)is 110 in year 1,121 in year 2,and
133.1 in year 3.Assume also that the price of computers increases by 3% between year 1 and year 2,and by another 3% between year 2 and year 3.The price level is increasing,the inflation rate is _______,and the relative price of computers is _________.
A) increasing;increasing
B) constant;increasing
C) constant;decreasing
D) increasing;decreasing
E) decreasing;decreasing
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Page 8
Chapter 7: Money, Prices and the Reserve Bank
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) From 1947 - 2010,the longest expansion in Canada lasted ________ months.
A) 36
B) 59
C) 108
D) 112
E) 186
Q2) In Macroland,potential GDP equals $20 billion and actual GDP equals $19.2 billion.Macroland has a(n)_________ gap equal to ________% of potential GDP.
A) expansionary;4.2
B) expansionary;4.0
C) recessionary;4.2
D) recessionary;4.0
E) recessionary;8.0
Q3) Over time,if customer demand is continuously below potential output,firms will eventually
A) raise their production levels aggressively.
B) lower their production levels or raise them only slightly.
C) raise their prices aggressively.
D) lower their prices or raise them only slightly.
E) require government intervention.
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Chapter 8: The Reserve Bank and the Economy
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) As disposable income decreases,the
A) average propensity to consume increases.
B) average propensity to consume decreases.
C) level of consumption increases.
D) level of investment increases.
E) level of savings increases.
Q2) Consider the Canadian economy initially at potential output.An economic recession in the U.S.__________ the demand for exports from Canada,resulting in a reduction in Canadian planned aggregate expenditure and a(n)________ output gap in Canada.
A) reduces;expansionary
B) increases;expansionary
C) reduces;recessionary
D) increases;recessionary
E) reduces;autonomous
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Chapter 9: The Aggregate Demand - Aggregate Supply
Model
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) If a bank's desired reserve-deposit ratio is 33% and it has deposit liabilities of $100 million and reserves of $50 million,it A) has too few reserves and will reduce its lending. B) has excess reserves and will increase its lending. C) has the correct amount of reserves and outstanding loans. D) should increase the amount of its reserves. E) should decrease the amount of its reserves.
Q2) In Econland,all $5,000,000 in currency is held by banks as reserves.The public does not hold any currency.If the banks' desired reserve-deposit ratio is 10%,the money supply in Econland equals
A) $4,545,545.
B) $5,000,000.
C) $5,500,000.
D) $50,000,000.
E) $55,000,000.
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Chapter 10: Macroeconomic Policy
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128 Verified Questions
128 Flashcards
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Sample Questions
Q1) The electronic wire system overseen by the Bank of Canada that allows major financial institutions operating in Canada to send large payments back and forth to each other is called the
A) Large Value Payment System.
B) Large Value Transfer System.
C) Large Value Wire System.
D) Financial Wire System.
E) Transfer Payment System.
Q2) The prime business rate refers to
A) the interest rate that commercial banks charge to their least risky business borrowers. B) the market interest rate that financial institutions charge each other for overnight loans.
C) a term used to describe the range of possible overnight interest rates.
D) the interest rate that the Bank of Canada charges commercial banks for overnight loans.
E) accounts held at the Bank of Canada by financial institutions for the purpose of settling their net payment obligations to one another.
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Chapter 11: The Economy in the Long Run: an Introduction to Economic Growth
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) The idea that a change in the price level changes the real wealth of people,and therefore their consumption spending,is called the
A) real-balances effect.
B) saving effect.
C) consumption effect.
D) foreign trade effect.
E) Fisher effect.
Q2) The rightward shift in the aggregate demand (AD)curve,from AD1 to AD2,shown in the diagram above may be caused by a(n)
A) increase in autonomous consumption.
B) decrease in government expenditure on education.
C) decrease in autonomous private investment.
D) increase in imports.
E) increase in the interest ratE.
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Chapter 12: The Production Function Approach to Understanding Growth
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211 Verified Questions
211 Flashcards
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Sample Questions
Q1) In a self-correcting model of the economy,recessionary gaps are eventually eliminated by
A) rising inflation and rising real interest rates.
B) falling inflation and falling real interest rates.
C) increasing potential output.
D) decreasing potential output.
E) government policy.
Q2) If,for any given inflation rate,the Bank of Canada raises interest rates more than normal,this is called a monetary _________ and the aggregate demand (ADI)curve shifts to the __________.
A) "tightening";right
B) "tightening";left
C) gap;right
D) "easing";right
E) "easing";left
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Chapter 13: Savings, Capital Formation and Comparative
Economic Growth
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203 Verified Questions
203 Flashcards
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Sample Questions
Q1) When the nominal exchange increases from 0.643 euros per dollar to 0.653 euros per dollar,the dollar has
A) appreciated.
B) depreciated.
C) become overvalued.
D) become undervalued.
E) been devalued.
Q2) For given domestic and foreign price levels,an increase in the nominal exchange rate __________ the real exchange rate.
A) increases
B) decreases
C) may either increase or decrease
D) does not change
E) offsets any change in
Q3) A balance-of-payments surplus is the
A) amount by which exports exceed imports over a year.
B) amount by which imports exceed exports over a year.
C) net increase in a country's stock of international reserves over a year.
D) net decrease in a country's stock of international reserves over a year.
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E) difference between capital inflows and capital outflows.
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Chapter 14: International Trade
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175 Verified Questions
175 Flashcards
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Sample Questions
Q1) Assume that an economy has 50 workers,each of whom works 3,000 hours per year.If labour productivity is $8,total output for this economy will be
A) $150,000.
B) $750,000.
C) $1,000,000.
D) $1,200,000.
E) $1,500,000.
Q2) Holding all else constant,if the share of the population employed decreases,real GDP per person
A) increases.
B) decreases.
C) remains constant.
D) fluctuates.
E) may increase or decreasE.
Q3) High rates of investment in the private sector promote economic growth by
A) increasing human capital.
B) increasing physical capital.
C) improving technology.
D) improving the social and legal environment.
E) increasing the availability of natural resources.
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Chapter 15: Exchange Rates and the Open Economy
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) An agreement that involves two or more countries that agree to eliminate tariffs and other trade restrictions on most or all mutual trade of their own goods and services,but each have different tariffs for imports from non-member countries,is called
A) a free trade area.
B) a customs union.
C) a common market.
D) an economic and monetary union.
E) a political union.
Q2) Refer to the above table.At what price will exports be equal to 100 units?
A) $9.00.
B) $8.00.
C) $7.00.
D) $6.00.
E) There is no price at which exports will be equal to 100 units.
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Chapter 16: The Balance of Payments: Net Exports and International Capital Flows
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247 Verified Questions
247 Flashcards
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Sample Questions
Q1) You own shares in a start-up internet company.If the company announces the development of a valuable new application program,but the program will not be put on the market for at least a year,then the price of your shares will ________,holding all other factors constant.
A) increase
B) decrease
C) not change
D) either increase or decrease
E) be indeterminate
Q2) The trend in high-income nations from the 1980s until the great recession of 2008-2009 was towards a(n)
A) reduction in financial intermediaries.
B) more regulated financial system.
C) less regulated financial system.
D) elimination of central banks.
E) reduction in the volume of international capital flows.
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