Canadian Economic Policy Test Preparation
Course Introduction
This course examines the formulation, implementation, and impact of economic policies in Canada, focusing on both historical developments and contemporary issues. Students will explore key policy areas such as fiscal and monetary policy, trade, taxation, labor markets, social welfare, and regional development. Through case studies and analysis of government interventions, the course assesses how economic theories are applied within the Canadian context and evaluates the effectiveness of various policy responses to domestic and global economic challenges. Special attention is given to debates surrounding equity, efficiency, and the interplay between federal and provincial jurisdictions in shaping policy outcomes.
Recommended Textbook
Economics 15th Canadian Edition by Christopher
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34 Chapters
4505 Verified Questions
4505 Flashcards
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T.S. Ragan
Chapter 1: Economic Issues and Concepts
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) In a modern mixed economy the government ensures that key institutions are in place to facilitate voluntary transactions between economic agents.These key institutions are
A)labour and capital markets.
B)the House of Commons and the Senate.
C)the Department of Finance and the Bank of Canada.
D)securities regulators and the court system.
E)private property and freedom of contract.
Answer: E
Q2) Consider a production possibilities boundary showing the possible combinations of military goods and civilian goods that a country can produce.Suppose that the country is currently at a point on the boundary.If the production of military goods is increased,the production of civilian goods will necessarily
A)decrease.
B)remain the same.
C)increase.
D)increase at a decreasing rate.
E)increase at a increasing rate.
Answer: A
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3
Chapter 2: Economic Theories,Data,and Graphs
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Sample Questions
Q1) An economic theory requires,among other things,
A)a set of definitions of the variables to be considered.
B)a controlled laboratory setting in which the theory can be tested.
C)that the set of predictions be correct.
D)a set of value judgments to interpret the empirical evidence.
E)the use of endogenous variables only.
Answer: A
Q2) Refer to Table 2-6.What is the index number for nickel output in Year 5?
A)-200
B)-200%
C)96
D)0.96%
E)96%
Answer: C
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4
Chapter 3: Demand, Supply, and Price
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Sample Questions
Q1) Suppose we observe that movie theatre prices are less during the daytime than in the evening.If the supply of movies does not change between daytime and evening,then the most likely explanation for this difference in price is
A)the evening demand curve is to the left of the daytime demand curve.
B)the evening demand curve is to the right of the daytime demand curve.
C)the evening supply curve is to the left of the daytime supply curve.
D)the evening supply curve is to the right of the daytime supply curve.
Answer: B
Q2) The positive slope of a supply curve indicates that
A)as price goes up,quantity supplied will decrease.
B)consumers will want to buy less at higher prices.
C)as price goes up,quantity supplied will increase.
D)if the costs of production increase,the quantity supplied will increase.
E)as price goes up,quantity supplied will remain constant.
Answer: C
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Chapter 4: Elasticity
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Sample Questions
Q1) Given that elasticity of supply changes over time,in the short run an increase in demand will generally cause
A)the price to rise above its long-run equilibrium value.
B)the price to rise to a level below its long-run equilibrium value.
C)the quantity exchanged to rise above its long-run equilibrium value.
D)both price and quantity exchanged to rise above their long-run equilibrium values.
E)supply to change.
Q2) Refer to Figure 4-2.The price elasticity of demand is continuously increasing as the price falls in diagram(s)
A)1.
B)2.
C)1,2,and 3.
D)2,3,and 4.
E)none of the above
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6
Chapter 5: Price Controls and Market Efficiency
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Sample Questions
Q1) Refer to Figure 5-8.Suppose that a binding output quota is imposed on this market at quantity Q<sub>1</sub>.The loss in economic surplus due to the quota is equal to A)areas 5 and 6.
B)areas 5,6 and 7.
C)areas 2 and 5.
D)area 1.
E)areas 1,2 and 3.
Q2) Refer to Figure 5-3.P<sub>2</sub> represents a price imposed by the government.What is the quantity of this good that would be exchanged in the market?
A)Q<sub>0</sub>
B)Q<sub>1</sub>
C)Q<sub>2</sub>
D)Q<sub>3</sub>
E)Q<sub>4</sub>
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Chapter 6: Consumer Behaviour
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Sample Questions
Q1) The substitution effect of a price change
A)will result in the consumer buying less of a good at a lower price.
B)will result in the consumer buying less of a good at a higher price.
C)outweighs the income effect for Giffen goods.
D)is equal to the income effect for normal goods.
E)is equal to the income effect for inferior goods.
Q2) If the income effect of a price change is negative and larger in absolute terms than the substitution effect,then the demand curve will be
A)upward sloping.
B)downward sloping.
C)vertical.
D)horizontal.
E)of indeterminate slope.
Q3) Economists use the term "marginal utility" to describe the
A)change in total satisfaction caused by consumption of an additional unit of a good.
B)average utility of each unit of a good consumed.
C)inverse of the measure of total utility.
D)total satisfaction received from consumption of a good.
E)price paid for every unit consumed.
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Page 8
Chapter 7: Producers in the Short Run
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Sample Questions
Q1) Refer to Table 7-5.What is the average variable cost of producing 20 chairs?
A)$22
B)$23
C)$260
D)$460
E)$13
Q2) An example of "real" capital is
A)shares in a corporation.
B)corporate bonds.
C)a firm's balance in a bank account.
D)a firm's computer systems.
E)a firm's retained earnings.
Q3) A single proprietorship is a form of business organization which
A)has one owner-manager who is personally responsible for the firm's actions and debts.
B)has a single owner but has directors who are responsible for the firm's debts.
C)has limited liability.
D)has unlimited access to money capital.
E)allows easy transferability of ownership by the trading of shares.
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Page 9
Chapter 8: Producers in the Long Run
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Sample Questions
Q1) Suppose a firm is using 1500 units of labour and 20 units of capital to produce 100 tonnes of mineral ore.The price of labour is $50 per unit and the price of capital is $800 per unit.The MP<sub>L</sub> equals 25 and the MP<sub>K</sub> equals 400.In this situation,
A)the firm is minimizing its costs.
B)the firm should increase the use of both inputs.
C)the firm could lower its production costs by decreasing labour input and increasing capital input.
D)the firm could lower its production costs by increasing labour input and decreasing capital input.
E)the firm should decrease the use of both inputs.
Q2) Refer to Figure 8-3.Suppose this firm is producing output level Q<sub>3 </sub>with plant size 2.Now suppose this firm changes to plant size 3 and is producing output level Q<sub>5</sub>.We can say that
A)the firm is then operating with the optimal plant size.
B)this firm has experienced economies of scale.
C)output has increased more than in proportion to the increase in inputs.
D)output has increased exactly in proportion to the increase in inputs.
E)output has increased less than in proportion to the increase in inputs.
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Page 10
Chapter 9: Competitive Markets
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Sample Questions
Q1) Refer to Figure 9-4.If both Firms A and B are producing a level of output such that the slope of the TC curve is equal to the slope of the TR curve,
A)then MC = MR and the firm is maximizing profit (or minimizing losses).
B)then the ATC is at a minimum and the firm is maximizing profits.
C)then both firms are suffering losses because the distance between TR and TC is the smallest.
D)then both firms are earning positive economic profits because the distance between TR and TC is the greatest.
E)then MC = MR but the firm may not be maximizing its profits.
Q2) If a perfectly competitive market is in a short-run equilibrium and each firm has P > SRATC,then
A)individual firms in the industry will increase their output.
B)new firms will enter the market because existing firms are earning economic profits.
C)the market supply curve will become less elastic.
D)existing firms will continue to earn economic profits in the long run.
E)price will fall in the short run as it is too high and firms are making economic profits.
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Chapter 10: Monopoly, cartels, and Price Discrimination
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Sample Questions
Q1) Refer to Figure 10-6.Assume this pharmaceutical firm charges a single price for its drug.At its profit-maximizing level of output,it will generate a total profit represented by A)the sum of areas A through K.
B)areas A + B + C + F + G.
C)areas B + C + F + G + H + I.
D)areas D + E.
E)It is not possible to determine with the information provided.
Q2) Suppose that a single-price monopolist calculates that at its present output,marginal revenue is $2 and marginal cost is $1.If the price of the product is $3,the monopolist could maximize its profits by
A)lowering price and raising output.
B)lowering price and leaving output unchanged.
C)raising price and leaving output unchanged.
D)doing nothing.
E)shutting down.
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Chapter 11: Imperfect Competition and Strategic Behaviour
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Sample Questions
Q1) Consider the three largest cell-phone service providers in Canada - Bell,Telus,and Rogers.If we observe that all three companies increase their monthly service fees simultaneously,we might conclude that A)there is tacit collusion among these firms.
B)these firms have monopolized the industry.
C)they are perfect competitors and they are unable to set the price.
D)they are engaged in predatory pricing.
E)they are creating entry barriers to prevent entry by new firms.
Q2) An oligopolistic firm often detects a change in the demand for its product by first observing a change in A)average cost.
B)market price.
C)marginal revenue.
D)marginal cost.
E)sales.
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13
Chapter 12: Economic Efficiency and Public Policy
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Sample Questions
Q1) The economic efficiency of a natural monopoly can be improved with the use of two-part tariffs because it allows the monopoly to
A)charge users according to their willingness to pay.
B)charge residential users different rates than business users.
C)charge users according to their ability to pay.
D)charge users separately for fixed and variable costs.
E)lower its total costs.
Q2) The administrative agency established to enforce the provisions of the Competition Act is the
A)Competition Bureau.
B)Federal Free Trade Practices Commission.
C)Department of Consumer and Corporate Affairs.
D)Competition Tribunal Act.
E)Director of Investigations.
Q3) The deadweight loss of monopoly is
A)its fixed cost.
B)any negative profit due to cyclical decreases in demand.
C)the loss of economic surplus due to the low monopoly output level.
D)the cost of maintaining effective barriers to entry.
E)the extra administrative costs of operating a large firm.
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Chapter 13: How Factor Markets Work
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Sample Questions
Q1) Refer to Table 13-1.The marginal product of the 12th unit of the factor of production is A)4.
B)14.
C)20.
D)44.
E)64.
Q2) Other things being equal,if it becomes more difficult to substitute capital for labour in the production of cell phones,the demand curve for labour in that industry
A)will shift parallel to the left.
B)will shift parallel to the right.
C)will remain unchanged.
D)will become more elastic.
E)will become more inelastic.
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15
Chapter 14: Labour Markets and Income Inequality
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Sample Questions
Q1) Refer to Figure 14-4.Suppose this labour market is in a monopsonistic equilibrium.Then,suppose the provincial government of British Columbia imposes a minimum wage for employees in this industry of $30 per hour.What will be the effects on wages and employment?
A)wages will fall by $5 per hour and employment will increase by 250 units of labour
B)wages will not change and employment will increase by 250 units of labour
C)wages will rise by $5 per hour and employment will increase by 250 units of labour
D)wages will not change and employment will change by between 0 and 250 units of labour
E)wages will not change and employment will not change
Q2) Refer to Figure 14-5.Suppose the labour market is competitive.If a minimum wage of W<sub>3</sub> is then imposed,the number of unemployed workers would be
A)0Q<sub>2</sub>.
B)Q<sub>3</sub> - Q<sub>1</sub>.
C)Q<sub>3</sub> - Q<sub>2</sub>.
D)Q<sub>4</sub> - Q<sub>2</sub>.
E)0Q<sub>4</sub>.
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Page 16
Chapter 15: Interest Rates and the Capital Market
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107 Flashcards
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Sample Questions
Q1) Present value is computed by
A)evaluating a stream of future sums resulting from a piece of capital.
B)summing all future payments.
C)multiplying a stream of future sums by the interest rate.
D)discounting a stream of future payments by today's purchase price.
E)discounting a stream of future sums by the interest rate.
Q2) Suppose a firm producing aircraft engines is considering the purchase of a robotic assembly machine at a price of $4 million.The firm expects the discounted MRP of the machine to be $1 million over each of the first 3 years,and $0.5 million each in years 4 and 5,after which the machine has no value.This firm should
A)not buy the machine because its present value is less than its purchase price.
B)buy the machine because its present value is more than its purchase price.
C)be indifferent about the purchase because its present value is equal to its purchase price.
D)not buy the machine because its marginal cost is greater than its marginal revenue.
E)buy the machine because its marginal cost is less than its marginal revenue.
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Chapter 16: Market Failures and Government Intervention
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Sample Questions
Q1) Refer to Figure 16-1.Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A.If the social marginal costs and social marginal benefits are represented by MC<sub>0</sub> and MB<sub>1</sub>,respectively,then there exists
A)an external benefit.
B)an external cost.
C)an external benefit and an external cost.
D)a social cost that exceeds the private cost.
E)no external benefits or costs.
Q2) Economists generally agree that government intervention in the economy is appropriate
A)whenever there is a market failure.
B)whenever the costs of market failure are greater than the benefits of the existence of markets.
C)whenever the benefits of the correction of the market failure through intervention are greater than the costs of the intervention itself.
D)only when the market fails to provide a socially useful good.
E)whenever the costs of the intervention are greater than the value of the correction of the market failure.
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Page 18
Chapter 17: The Economics of Environmental Protection
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Sample Questions
Q1) Refer to Figure 17-3.What area on the diagram represents the net total benefit of abating pollution by the optimal amount?
A)the area under the MB curve,and above the MC curve,to the left of Q*
B)the area above the MB curve,and below the MC curve,to the right of Q*
C)the area that is below both the MB and MC curves
D)the area that is above both the MB and MC curves
E)the total area below the MB curve,to the left of Q*
Q2) Consider global greenhouse-gas emissions.Suppose that in 2016,greenhouse gases emitted per unit of energy consumed decreased by 2%,energy use per unit of GDP decreased by 2%,and world GDP increased by 4%.What will be the approximate change in global greenhouse gas emissions in 2012?
A)increase by 4%
B)increase by 16%
C)decrease by 4%
D)decrease by 16%
E)no change
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Chapter 18: Taxation and Public Expenditure
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Sample Questions
Q1) When assessing a tax system,"vertical equity" refers to
A)equity within a given income group.
B)equity across income groups.
C)equity between corporate entities.
D)unequal treatment of persons with unequal incomes.
E)equity across different periods of time.
Q2) From the perspective of individuals,the goods and services tax (GST)applies to
A)additional income earned.
B)expenditure rather than income.
C)profits for self-employed individuals.
D)saving rather than expenditure.
E)total taxable income.
Q3) The federal corporate income tax in Canada is
A)a proportional tax on profits.
B)a progressive tax on revenues.
C)a proportional tax on revenues.
D)a flat tax on revenues.
E)a progressive tax on profits.
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Chapter 19: What Macroeconomics Is All About
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Sample Questions
Q1) Which of the following is an accurate statement about real national income?
A)it always equals nominal national income
B)it changes by the same amount and in the same direction as does nominal national income
C)it changes only when the underlying quantities change
D)it refers to national income with no adjustment for changes in prices
E)it refers to national wealth but is not an indicator of current production
Q2) If a country is experiencing inflation,the change in the nominal national product will
A)equal the change in the real national product.
B)overstate the inflation rate.
C)overstate the change in the real value of production.
D)understate the value of national income.
E)be negative and will be falling faster than the rate of inflation.
Q3) The Canadian exchange rate is defined to be the
A)number of Canadian dollars needed to buy one unit of foreign currency.
B)number of ounces of gold it takes to buy one hundred Canadian dollars.
C)system of quotas imposed on the international exchange of goods.
D)term for foreign currencies or claims on foreign currencies.
E)value of one Canadian dollar in terms of foreign currencies.
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Page 21
Chapter 20: The Measurement of National Income
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Sample Questions
Q1) Consider the investment component (I)of GDP.To calculate the change in the value of inventories for the investment component of GDP,one should use their
A)cost of production at the time they were produced.
B)cost of production minus the costs of labour and capital.
C)current market value.
D)market value at the time they were produced.
E)value at the time the goods are sold and removed from inventory.
Q2) When calculating GDP from the expenditure side,"actual consumption expenditures" includes
A)a tractor purchased by an Ontario farmer.
B)fees paid by Google Canada to a Toronto law firm.
C)robotic paint equipment purchased by Bombardier.
D)snow-plow equipment purchased by the City of Montreal.
E)Canadian fashion designs purchased by a Swiss department store.
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22
Chapter 21: The Simplest Short-Run Macro Model
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Sample Questions
Q1) Investment expenditure is the ________ volatile component of GDP,and changes in investment are ________ associated with business-cycle fluctuations.
A)most; strongly
B)most; weakly
C)least; strongly
D)least; weakly
E)least; not
Q2) In the simple macroeconomic model,"autonomous expenditures" are A)dependent on national income.
B)not dependent on national income.
C)induced expenditures.
D)those which are constant.
E)non-domestic expenditures.
Q3) Refer to Table 21-2.The marginal propensity to consume is equal to A)0.2.
B)0.4.
C)0.6.
D)0.67.
E)0.8.
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Page 23
Chapter 22: Adding Government and Trade to the Simple
Macro Model
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Sample Questions
Q1) Consider the government's budget balance.Suppose G = 500 and the government's net tax revenue is equal to 0.25Y.When Y = 2920,the government is running a budget
A)deficit of 730.
B)surplus of 230.
C)balance.
D)deficit of 230.
E)surplus of 730.
Q2) Government's transfer payments to individuals affect desired aggregate expenditure
A) directly.
B) through the consumption function.
C) through the investment function.
D) through net exports.
E) through the government's budget deficit.
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Chapter 23: Output and Prices in the Short Run
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Q1) Other things being equal,as the price level rises exogenously,the aggregate expenditure (AE)function shifts
A)down and the economy will move upward to the left along the AD curve.
B)down and the economy will move downward to the right along the AD curve.
C)upward and the economy moves upward to the left along the AD curve.
D)upward and the economy moves downward to the right along the AD curve.
E)to the right and the AD curve will also shift to the right.
Q2) Suppose the economy is hit by a shock and we observe that the price level has decreased whereas real GDP has increased.We can conclude that this shock was
A)a positive AD shock.
B)a negative AD shock.
C)a positive AS shock.
D)a negative AS shock.
E)a negative technology shock.
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Chapter 24:
From the Short Run to the Long Run: The Adjustment of Factor Prices
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Q1) In our macro model,the level of aggregate output is determined in the short run by ________ but in the long run by the level of ________.
A)the output gap; factor productivity
B)the AD curve; interest rates
C)the AS curve; potential output
D)the AD and AS curves; Y*
E)the AD and AS curves; factor utilization
Q2) Refer to Table 24-1.Which of the economies are experiencing an inflationary gap?
A)Economies A and B
B)Economies B and C
C)Economies C and D
D)Economies D and E
E)none of the economies
Q3) The Phillips curve provides a theoretical link between
A)the liquidity preference and investment demand schedules.
B)labour markets and foreign-exchange markets.
C)the goods market and productivity.
D)the goods market and the labour market.
E)inflation and the demand for money.
Page 26
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Chapter 25: Long-Run Economic Growth
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Sample Questions
Q1) New theories of economic growth based on the idea that growth is endogenous
A)assume that the rate of growth of the economy is equal to the rate of population growth.
B)assume that the growth rate of technology is exogenous.
C)incorporate factors such as central-bank behaviour.
D)ignore the role of technology.
E)stress the role of knowledge and learning in the economy's rate of growth.
Q2) Over the long term,by far the most potent force for raising average material living standards is
A)economic growth.
B)reducing inefficiencies.
C)redistributing income.
D)increasing the money supply.
E)appropriate fiscal policies.
Q3) Refer to Table 25-3.What is the level of private saving for this economy?
A)$50
B)$100
C)$500
D)$2000
E)$3000
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Chapter 26: Money and Banking
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Sample Questions
Q1) Money is commonly defined as
A)a generally accepted medium of exchange.
B)gold.
C)foreign-exchange reserves.
D)paper currency.
E)the Canadian dollar.
Q2) Refer to Table 26-3.What are the reserves held by Bank West?
A)$500
B)$700
C)$1200
D)$19 800
E)$21 000
Q3) If the target reserve ratio in the banking system is 20%,there is no cash drain,and there are no excess reserves,a new deposit of $1 will lead to an eventual expansion of the money supply of
A)$0.20.
B)$1.20.
C)$2.00.
D)$5.00.
E)$20.00.
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Chapter 27: Money, Interest Rates, and Economic Activity
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Sample Questions
Q1) If the annual interest rate is 3%,$10 000 received today has the same present value as ________ received one year from now.
A)$10 000
B)$13 000
C)$300
D)$9707.74
E)$10 300
Q2) Which of the following correctly describes the way in which a change in the money supply affects aggregate demand?
A)a shift of the I<sup>D</sup> curve and a movement along the aggregate demand curve
B)a movement along the I<sup>D</sup> curve and a shift of the aggregate demand curve
C)a shift of both the I<sup>D </sup>curve and the aggregate demand curve
D)movements along the I<sup>D</sup> curve and the aggregate demand curve
E)a movement along the aggregate demand curve
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Chapter 28: Monetary Policy in Canada
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Sample Questions
Q1) Any central bank,including the Bank of Canada,can implement its monetary policy by directly influencing either ________ or ________,but not both.
A)money supply; money demand
B)aggregate supply; aggregate demand
C)the money supply; the interest rate
D)aggregate demand; the interest rate
E)the price level; the interest rate
Q2) Many central banks have established formal targets for the rate of inflation because of the following fundamental observations about economic relationships: 1.there are high costs associated with inflation
2.high inflation causes high unemployment
3.monetary policy is the cause of sustained inflation
A)1 only
B)2 only
C)3 only
D)1 and 3 only
E)1,2,and 3
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Chapter 29: Inflation and Disinflation
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Q1) A major reason why it is so difficult to eliminate a constant inflation is that inflationary expectations
A)make it impossible to stop the rightward shift of the AD curve.
B)make it impossible to reduce aggregate expenditure.
C)keep shifting the AS curve upward.
D)keep shifting the AS curve downward.
E)cannot be influenced by monetary policy.
Q2) Assuming that the economy is currently in a long-run equilibrium with real GDP equal to Y<sup>*</sup>,a positive AD shock (with no change in the money supply)will eventually result in
A)no change in the price level.
B)an ongoing inflation in the economy.
C)a lower price level and GDP below its potential level.
D)a higher price level and GDP at its potential level.
E)a lower price level and GDP at its potential level.
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Chapter 30: Unemployment Fluctuations and the Nairu
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Q1) Which statement by an employer is consistent with the market-clearing theory of unemployment?
A)"I pay more than the going rate so I can hire good workers."
B)"I pay only enough to attract workers who are at the bottom of the pay scale."
C)"I love it when inflation goes up because that drives down my wage costs."
D)"Workers can always find jobs,if only they lower their expectations."
E)"Unions have only their current members' interests at heart."
Q2) Some economists argue that increases in labour-force participation rates by young people and females in the 1970s and 1980s caused
A)a decrease in frictional unemployment.
B)a decrease in cyclical unemployment.
C)a decrease in NAIRU.
D)an increase in NAIRU.
E)an increase in cyclical unemployment.
Q3) "Efficiency wages" are said to exist when wages are
A)such that cyclical unemployment is zero.
B)such that the NAIRU is zero.
C)high enough above market levels that workers increase their productivity.
D)equal to the market wage.
E)just high enough to induce a worker to take a job.
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Chapter 31: Government Debt and Deficits
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Q1) Refer to Table 31-2.Consider the year 2004.Based on the data in the table we can conclude that
A)fiscal policy was expansionary in that year.
B)real output was less than potential in that year.
C)real output was equal to potential in that year.
D)real output was greater than potential in that year.
E)monetary policy was expansionary in that year.
Q2) The government's structural budget deficit adjusts for A)any primary budget surplus or deficit incurred by the federal government.
B)changes in investment to smooth fluctuations in national income.
C)changes in spending or tax revenues caused by deviations in national income from potential output.
D)increases in the money supply in excess of the real growth in the economy.
E)interest rate changes that affect the absolute amount of debt-service payments.
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Chapter 32: The Gains From International Trade
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Q1) The division of the gains from trade between two trading countries depends on the A)difference between the terms of trade and the countries' autarkic relative prices.
B)long-run costs.
C)quantity of resources held by each country.
D)level of unemployment in both countries.
E)size of the absolute advantages possessed by each country.
Q2) Consider a country that is initially autarkic and then engages freely in international trade.If this country has a comparative advantage in the production of soybeans,it will most probably
A)derive no advantage from any trade in soybeans.
B)decrease the production of soybeans for domestic consumption.
C)increase the production of soybeans for domestic consumption.
D)increase the production of soybeans to allow for the export of soybeans.
E)import soybeans
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Chapter 33: Trade Policy
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Q1) Suppose five countries in Central America agree that products are to be freely traded across their borders,they will share a common set of import duties,and that the flow of people will continue to be restricted.This is an example of a A)common market.
B)political union.
C)customs union.
D)free-trade area.
E)trade association.
Q2) Continued tariff protection for industries that have already attained all potential economies of scale and possibilities for learning by doing is likely to A)increase employment in the protected industries.
B)reduce average real income for the country's residents.
C)redistribute income away from the factors used in the protected industries.
D)decrease prices to consumers of the products produced in the protected industries.
E)both A and B are correct.
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Chapter 34: Exchange Rates and the Balance of Payments
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Sample Questions
Q1) If Canadian demand for French wine increases,the supply of Canadian dollars to the foreign-exchange market will ________ and the demand for euros will therefore ________.
A)decrease; decrease B)decrease; increase C)increase; decrease D)increase; increase E)increase; remain the same
Q2) Consider a country's balance of payments.An excess of receipts over payments on the current account
A)must equal the net credit balance of the capital account.
B)must equal the net debit balance of the current account.
C)is not possible.
D)must be matched by an excess of payments over receipts on the capital account.
E)must be matched by an excess of receipts over payments on the capital account.
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