Canadian Economy Practice Questions
Course Introduction
This course offers a comprehensive overview of the Canadian economy, examining its structure, performance, and key sectors within a global context. Students will explore the foundations of economic growth in Canada, including natural resources, trade, and finance, as well as public policy issues such as fiscal and monetary policy, taxation, and regional disparities. The course also addresses current challenges facing the economy, such as globalization, technological change, and environmental sustainability, providing learners with analytical tools to understand contemporary economic debates and policy decisions in Canada.
Recommended Textbook
Economics Canada in the Global Environment 9th Edition by Robin Bade
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31 Chapters
4049 Verified Questions
4049 Flashcards
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Page 2
Chapter 1: What Is Economics
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212 Verified Questions
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Sample Questions
Q1) The determination of prices in individual markets is primarily a concern of A)positive economics.
B)negative economics.
C)macroeconomics.
D)microeconomics.
E)descriptive economics.
Answer: D
Q2) "There can be too much of a good thing." This statement suggests that A)choices made in self-interest cannot be applied to many economic decisions.
B)a good may be produced to the point where its marginal cost exceeds its marginal benefit.
C)certain goods and services such as education and health care are inherently desirable and should be produced regardless of costs and benefits.
D)a good may be produced to the point where its marginal benefit exceeds its marginal cost.
E)a good may be produced to the point where its marginal benefit is equal to its marginal cost.
Answer: B
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Page 3
Chapter 2: The Economic Problem
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Sample Questions
Q1) Marginal benefit from a good or service is the benefit received from consuming ________. It is measured by the most that people are willing to pay for ________.
A)goods that you prefer; an additional unit of it
B)goods that you prefer; more of it
C)one more unit of it; an additional unit of it
D)one more unit of it; more of it
E)as much as is available; the total amount consumed
Answer: C
Q2) In Figure 2.2.1, when 2,000 bicycles are produced each month,
A)the marginal benefit from another bicycle is greater than the marginal cost of another bicycle.
B)more bicycles must be produced to reach the efficient level of output.
C)fewer bicycles must be produced to reach the efficient level of output.
D)the economy is efficient at this level of production of bicycles.
E)both A and B.
Answer: E
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4
Chapter 3: Demand and Supply
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Sample Questions
Q1) In Table 3.4.1, the equilibrium price is
A)$7 a unit.
B)$5 a unit.
C)$4 a unit.
D)$3 a unit.
E)$1 a unit.
Answer: C
Q2) "As domestic car prices have increased, consumers have found foreign cars to be a better bargain. Consequently, domestic car sales have fallen and foreign car sales have risen." Based on this information alone, there has been a
A)shift in the demand curves for both domestic and foreign cars.
B)shift in the supply curves for both domestic and foreign cars.
C)movement along the demand curves for both domestic and foreign cars.
D)movement along the demand curve for domestic cars and a shift of the demand curve for foreign cars.
E)shift of the demand curve for domestic cars and a movement along the demand curve for foreign cars.
Answer: D
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Chapter 4: Elasticity
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Sample Questions
Q1) If a 12 percent fall in price results in an 8 percent increase in quantity demanded, the price elasticity of demand equals
A)0.96.
B)0.12.
C)0.67.
D)1.5.
E)0.8.
Q2) If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded, the demand curve for this good
A)is vertical.
B)is horizontal.
C)has slope equal to 1.
D)is a straight line with slope equal to 10.
E)none of the above
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6
Chapter 5: Efficiency and Equity
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Sample Questions
Q1) Refer to Figure 5.3.1. If the price is $15 a unit,
A)production is efficient.
B)marginal social benefit equals marginal social cost.
C)deadweight loss is zero.
D)the sum of consumer surplus and producer surplus is maximized.
E)all of the above
Q2) Consumer surplus
A)will definitely be low for inexpensive goods.
B)will definitely be high for inexpensive goods.
C)will definitely be low for expensive goods.
D)will definitely be high for expensive goods.
E)may be low or high for any type of good, expensive or inexpensive, depending on the characteristics of demand.
Q3) Refer to Figure 5.3.2. If the level of output is 150 units, the producer surplus is area A)BCF.
B)ACG.
C)DCE.
D)ACH.
E)HCG.
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Page 7
Chapter 6: Governments Actions in Markets
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Sample Questions
Q1) Provincial governments across Canada recently started legalizing and then heavily taxing gambling at casinos. The new taxes are lower than the cost of breaking the law was to the sellers of the previously illegal casino services. The costs of breaking the law to the buyers of these services also fell to zero. This change will likely lead to
A)a rise in the equilibrium price, and a decrease in the equilibrium quantity.
B)a rise in the equilibrium price, and an increase in the equilibrium quantity.
C)a fall in the equilibrium price, and an increase in the equilibrium quantity.
D)a fall in the equilibrium price, and a decrease in the equilibrium quantity.
E)an unknown change in equilibrium price and equilibrium quantity.
Q2) If the price of a good is not affected by a tax, then
A)supply is perfectly elastic.
B)demand is perfectly elastic.
C)the elasticity of supply is greater than elasticity of demand.
D)demand is unit elastic.
E)supply is unit elastic.
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8
Chapter 7: Global Markets in Action
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138 Verified Questions
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Sample Questions
Q1) The gains from free trade are enjoyed by a ________ number of people and the costs of free trade are imposed on a ________ number of people.
A)small; large B)large; small
C)small; small
D)large; large
E)We can't determine the relative number of people who benefit and lose from free trade.
Q2) Canada has a comparative advantage in producing hardwood if the Canadian price of hardwood before international trade is ________ the world price. A)equal to B)greater than C)not comparable to D)at least double E)less than
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Chapter 8: Utility and Demand
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Sample Questions
Q1) Chuck and Barry have identical total utility schedules but Chuck has a much higher income. If each is maximizing his total utility, then
A)they will have equal total utilities.
B)Chuck will have lower total utility than Barry.
C)Chuck will have lower marginal utility than Barry for each normal good consumed.
D)Chuck will have higher marginal utility than Barry for each normal good consumed.
E)they will have equal marginal utilities for each normal good consumed.
Q2) Samir consumes apples and bananas and is in consumer equilibrium. The marginal utility from his last apple is 10 and the marginal utility from his last banana is 5. If the price of an apple is $0.50, then what is the price of a banana?
A)$0.05
B)$0.10
C)$0.25
D)$0.50
E)$1.00
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10
Chapter 9: Possibilities, Preferences, and Choices
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Sample Questions
Q1) Which statement is true for a normal good?
A)The income effect dominates the substitution effect.
B)The income effect reinforces the substitution effect.
C)As income increases, consumption decreases.
D)As income increases, consumption remains constant.
E)As price falls, we do not know whether consumption increases or decreases.
Q2) If two consumption points are on different indifference curves, then one point is
A)a substitute for the other.
B)preferred to the other.
C)a complement of the other.
D)a normal good and the other point is an inferior good.
E)more expensive than the other.
Q3) Consider an initial budget line labelled RS in Figure 9.3.3. The budget line becomes RT with
A)a rise in the price of good X.
B)a fall in the price of good X.
C)a rise in the price of good Y.
D)a decrease in the preference for good X.
E)an increase in real income.
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Page 11
Chapter 10: Organizing Production
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Sample Questions
Q1) When Jitters Coffee Company, Inc., can lower the cost of packaging a kilogram of coffee by doubling the quantity packaged each day, it is achieving
A)economies of scope.
B)lower transactions costs
C)economies of scale.
D)efficient team production.
E)all of the above
Q2) The implicit rental rate
A)is the firm's opportunity cost of using the capital it owns.
B)is paid with cash.
C)has two components: economic depreciation and foregone interest.
D)both A and C are correct.
E)both B and C are correct.
Q3) A four-firm concentration ratio that exceeds 60 percent indicates
A)a perfectly competitive market.
B)a monopolistically competitive market.
C)a monopoly.
D)an oligopoly.
E)a competitive market.
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Page 12
Chapter 11: Output and Costs
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Sample Questions
Q1) Which type of cost does not change as the quantity of output produced changes?
A)average total cost
B)marginal cost
C)average fixed cost
D)total fixed cost
E)Both C and D are correct.
Q2) A cost that has been incurred and cannot be recovered is a
A)marginal cost.
B)sunk cost.
C)variable cost.
D)business cost.
E)significant cost.
Q3) The average variable cost curve will shift upward if
A)there is an increase in fixed cost.
B)there is a technological advance.
C)the price of the variable input decreases.
D)the price of the variable input increases.
E)the price of output increases.
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Chapter 12: Perfect Competition
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Sample Questions
Q1) Suppose a firm is trying to decide whether or not to temporarily shut down to minimize total loss. If price equals average variable cost, then
A)total revenue equals total fixed cost, and the loss equals total variable cost.
B)total revenue equals total variable cost, and the loss equals total fixed cost.
C)total fixed cost is zero.
D)total variable cost equals total fixed cost.
E)total cost equals total variable cost.
Q2) The shutdown point occurs at the point of minimum A)marginal cost.
B)average variable cost.
C)average fixed cost.
D)total cost.
E)average total cost.
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14
Chapter 13: Monopoly
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Sample Questions
Q1) In a natural monopoly, the long-run average cost curve
A)is downward sloping in the relevant range of output levels.
B)is horizontal in the relevant range of output levels.
C)is upward sloping in the relevant range of output levels.
D)may be either upward sloping or downward sloping in the relevant range of output levels.
E)lies below the marginal cost curve.
Q2) Refer to Fact 13.1.1. The firm described in ________ can price discriminate if it can
A)statements 2, 3, 6, and 7; eliminate the barriers to entry
B)statements 2, 3, 6, and 7; distinguish between different classes of consumers
C)statements 2 and 3; eliminate the current barriers to entry
D)statement 1; increase advertising
E)statement 1; decrease its costs
Q3) Refer to Figure 13.3.1. The efficient quantity is
A)20 units.
B)40 units.
C)60 units.
D)80 units.
E)zero units.
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Chapter 14: Monopolistic Competition
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Sample Questions
Q1) Refer to Figure 14.2.3. Assume this firm faces demand curve D . If this firm in monopolistic competition is maximizing economic profit,
A)there will be entry of rival firms into the industry.
B)rival firms will exit the industry.
C)it is producing the efficient quantity.
D)the number of firms in the industry will remain constant.
E)economic profit will fall over time.
Q2) Refer to Figure 14.2.2. This firm
A)is incurring an economic loss.
B)is in long-run equilibrium.
C)is making an economic profit.
D)must raise its price to maximize economic profit.
E)will make more economic profit in the long run.
Q3) Firms in monopolistic competition have rivals that
A)will always match their price increases.
B)will always match their price decreases but not their price increases.
C)all agree on a common price.
D)set their price where the demand curve is tangent to the average cost curve.
E)set their price according to the demand they face.
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Page 16
Chapter 15: Oligopoly
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Sample Questions
Q1) Refer to Fact 15.2.1. What is the Nash equilibrium?
A)Both firms cheat on the agreement.
B)One firm cheats and one firm complies.
C)Both firms comply with the agreement.
D)New firms enter the market.
E)Both firms charge the price that would exist in a perfectly competitive market.
Q2) Table 15.2.2 gives the payoff matrix in terms of economic profit for firms A and B when there are two strategies facing each firm: (1)charge a low price, or (2)charge a high price. Refer to the nonrepeated game in the table. If both firms could successfully collude, what would be firm A's economic profit?
A)-$10
B)$2
C)$10
D)$20
E)$5
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Chapter 16: Externalities
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Sample Questions
Q1) Refer to Table 16.3.1. The table shows marginal private benefit and the marginal social benefit from the consumption of chemical fertilizer and the marginal social cost of the production of fertilizer. If production is left to the private market, the quantity produced is A)1 unit.
B)2 units.
C)3 units.
D)4 units.
E)5 units.
Q2) Refer to Figure 16.3.2. The figure shows the market for good B. How many units of good B are produced and consumed in an unregulated market?
A)0 units
B)3 units
C)5 units
D)6 units
E)9 units
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Chapter 17: Public Goods and Common Resources
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Sample Questions
Q1) An individual transferable quota is a production limit that
A)has a price equal to marginal cost.
B)is assigned to every producer in the industry at a predetermined price.
C)is assigned to an individual who must transfer the quota to anyone the government assigns.
D)is assigned to an individual who is free to transfer the quota to someone else.
E)has a price equal to marginal benefit.
Q2) Common resources are overused because
A)the marginal private benefit of operating a boat is the quantity of fish a boat can catch.
B)the social benefits outweigh the private benefits.
C)the marginal private benefit will always exceed the marginal social cost.
D)external costs are not considered.
E)social costs are controlled by production quotas.
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Chapter 18: Markets for Factors of Production
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Sample Questions
Q1) The value of marginal product of oil is the ________ influence on demand. The greater the quantity of oil used, the ________ is the value of marginal product of oil.
A)speculative; greater
B)fundamental; greater
C)fundamental; smaller
D)speculative; smaller
E)none of the above
Q2) In the short run, the market supply of land is
A)relatively elastic.
B)relatively inelastic.
C)perfectly elastic.
D)perfectly inelastic.
E)either elastic or inelastic depending on the productivity of the land.
Q3) A decrease in the price of a firm's output
A)decreases the supply of labour.
B)increases the supply of labour.
C)increases the value of marginal product of labour.
D)decreases the quantity of labour demanded.
E)decreases the value of marginal product of labour.
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Page 20
Chapter 19: Economic Inequality
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Sample Questions
Q1) Refer to Figure 19.3.5. This figure shows the labour supply curves and the value of marginal product curves for high-skilled and low-skilled workers. If there is an increase in the supply of high-skilled workers and the supply of high-skilled workers is now equal to the supply of low-skilled workers, then
A)wages paid to high-skilled workers would fall to $4 an hour.
B)wages paid to high-skilled workers would fall to $5 an hour.
C)wages paid to high-skilled workers would fall to $6 an hour.
D)there would be no change in the wages of high-skilled workers, because high-skilled workers always earn more than low-skilled workers.
E)there would be no change in the wages of high-skilled workers, because their value of marginal product is unchanged.
Q2) If the supply of labour curve is upward sloping but not vertical, and if the value of marginal product of labour increases,
A)the supply of labour increases.
B)the wage rate rises.
C)the marginal cost of production increases.
D)the exploitation of workers decreases.
E)employment is unchanged.
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Chapter 20: Measuring Gdp and Economic Growth
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Sample Questions
Q1) Which one of the following is not an example of investment in the expenditure approach to measuring GDP? General Motors
A)buys a new auto stamping machine.
B)adds 500 new cars to inventories.
C)buys shares in another company.
D)builds another assembly plant.
E)replaces some worn-out stamping machines.
Q2) In recent history, real GDP has risen less rapidly than nominal GDP. This is because
A)the general price level fell.
B)capital increased.
C)the goal of zero population growth has been reached.
D)the general price level rose.
E)the level of population rose.
Q3) The purchase of a new home is categorized as
A)consumption expenditure.
B)consumption expenditure and investment.
C)investment only if the home owners take out a mortgage.
D)investment.
E)consumption expenditure only if the home owners do not take out a mortgage.
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Page 22
Chapter 21: Monitoring Jobs and Inflation
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Sample Questions
Q1) If the inflation rate is positive, the price level in an economy is
A)falling rapidly.
B)rising.
C)constant.
D)falling slowly.
E)zero.
Q2) Of the following sequences of price levels, which correctly represents a 5 percent inflation rate?
A)100, 100, 100, 100
B)100, 105, 105, 105
C)100, 105, 110, 115
D)100, 105, 110.25, 115.76
E)95, 100, 105, 110
Q3) In China, suppose that the price level was 100 in 2007, 110 in 2008, 120 in 2009, and 130 in 2011. Over this time period,
A)zero inflation occurred.
B)the inflation rate increased.
C)the inflation rate was positive.
D)the inflation rate decreased.
E)Both C and D are correct.
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Chapter 22: Economic Growth
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Sample Questions
Q1) Labour productivity grows as
A)consumption expenditure increases.
B)depreciation increases.
C)physical capital grows.
D)human capital grows.
E)Both C and D are correct.
Q2) Suppose a country is producing $20 million of real GDP. If the economy grows at 10 percent per year, approximately how many years will to take for real GDP to grow to $80 million?
A)14
B)7
C)4
D)30
E)3.5
Q3) If real GDP per person is growing at 4 percent per year, it will double in
A)17.5 years.
B)25 years.
C)4 years.
D)8 years.
E)56 years.
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Chapter 23: Finance, Saving, and Investment
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Sample Questions
Q1) Elena owns a Canada Savings Bond with a a price of $5,000, which pays $500 per year. The price of the bond rises in the bond market to $7,500. What is the new interest rate on the bond?
A)5 percent
B)6.67 percent
C)10 percent
D)20 percent
E)500 percent
Q2) Which of the following is false?
A)Y = C + I + G + M - X
B)I = S + (T - G)+ (M - X)
C)Y = C + S + T
D)Y + M = C + I + G + X
E)Y = C + I + G + X -M
Q3) National saving equals
A)private saving + private wealth.
B)private saving + government saving.
C)private saving - net taxes.
D)government saving.
E)investment.
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Chapter 24: Money, the Price Level, and Inflation
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Sample Questions
Q1) The amount of real money people want to hold will decrease if either ________ or the interest rate ________.
A)the price level increases; rises
B)the price level decreases; falls
C)real GDP increases; falls
D)real GDP decreases; rises
E)the price of bonds increase; rises
Q2) Which of the following does not affect the size of the monetary base?
A)the amount of notes issued by the Bank of Canada
B)the amount of loans issued by chartered banks
C)the amount of coins issued by the Canadian Mint
D)the amount of chartered bank deposits at the Bank of Canada
E)none of the above
Q3) The opportunity cost of holding money increases when the A)purchasing power of money increases.
B)nominal interest rate rises.
C)price of goods and services decrease.
D)income of consumers increases.
E)income of consumers decreases.
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Page 26
Chapter 25: The Exchange Rate and the Balance of Payments
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Sample Questions
Q1) Suppose that a U.S. dollar can earn interest of 5 percent a year in Chicago and a Canadian dollar can earn interest of 7 percent a year in Winnipeg. Will money flow from Chicago to Winnipeg?
A)Yes, because the returns on money are higher in Winnipeg.
B)No, because the outflow of U.S. funds would create a decrease in the U.S. dollar value, penalizing investors when they attempted to recover their funds.
C)No, if investors expect that the Canadian dollar will appreciate by at least 2 percent per year.
D)No, if investors expect the U.S. dollar to appreciate by at least 2 percent per year.
E)No, as long as the U.S. dollar maintains higher purchasing power than the Canadian dollar.
Q2) Which one of the following shifts the demand curve for dollars rightward?
A)An increase in the demand for foreign goods by Canadians
B)A decrease in the demand for Canadian goods by foreigners
C)The dollar is expected to appreciate.
D)The dollar is expected to depreciate.
E)U.S. interest rates rise.
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Page 27
Chapter 26: Aggregate Supply and Aggregate Demand
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Sample Questions
Q1) Toyota and Honda build additional plants in Canada. This event ________ short-run aggregate supply and ________ long-run aggregate supply.
A)does not change; increases B)increases; increases C)increases; does not change D)does not change; does not change E)decreases; increases
Q2) We observe an increase in the price level and an increase in real GDP. Which of the following is a possible explanation?
A)a decrease in the quantity of money
B)a decrease in expected future income
C)an increase in factor prices
D)an increase in the quantity of capital
E)an increase in expected future profits
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28
Chapter 27: Expenditure Multipliers
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Sample Questions
Q1) An economy has a fixed price level, no imports, and no income taxes. MPC is 0.5 and real GDP is $300 billion. Businesses increase investment by $10 billion. The new level of real GDP is
A)$320 billion.
B)$20 billion.
C)$5 billion.
D)$305 billion.
E)$300 billion.
Q2) The sum of the marginal propensity to save and the marginal propensity to consume
A)always equals 1.
B)sometimes equals 1.
C)always equals 0.
D)never equals 1.
E)is greater than zero but less than 1.
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Chapter 28: The Business Cycle, Inflation, and Deflation
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Sample Questions
Q1) Demand-pull inflation can start
A)aggregate demand increases.
B)aggregate supply decreases.
C)input costs rise.
D)people incorrectly forecasting inflation.
E)unemployment that is above the natural rate.
Q2) Consider Fact 28.4.2. Choose the correct statement.
A)The short-run Phillips curve shifted downward because people believed that the Bank of New Zealand was serious about meeting the new low inflation target.
B)A movement occurred down along the short-run Phillips curve because although the inflation rate fell, expectations did not change.
C)Neither actual inflation nor expected inflation changed, and there was no change in the short-run Phillips curve.
D)The short-run Phillips curve was abolished and New Zealand now has only a long-run Phillips curve.
E)The short-run Phillips curve shifted leftward because when inflation expectations fall, the natural unemployment rate decreases.
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Chapter 29: Fiscal Policy
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Sample Questions
Q1) The main components of government revenues are
A)transfer payments, investment income, and indirect taxes.
B)personal income taxes, corporate income taxes, indirect taxes, and investment income.
C)debt interest, expenditures on goods and services, and income taxes.
D)corporate income taxes, indirect taxes, and transfer payments.
E)debt interest, corporate income taxes, and income taxes.
Q2) Refer to Figure 29.3.1, which shows the outlays and revenues for the government of Pianoland. If real GDP equals $550 billion, the budget is
A)in balance.
B)a surplus of $60 billion.
C)a surplus of $40 billion.
D)a deficit of $60 billion.
E)a deficit of $40 billion.
Q3) Fiscal policy is
A)the use of the federal budget to achieve macroeconomic objectives.
B)any policy by the Bank of Canada.
C)budgeting policy by aggregate households.
D)any attempt by the federal government or Bank of Canada to control inflation.
E)effective only when the federal government has a budget surplus.
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Chapter 30: Monetary Policy
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) The policy tools used by the Bank of Canada include
A)prime rate and bank rate.
B)the operating band and open market operations.
C)open market operations and prime rate.
D)prime rate and the exchange rate.
E)the exchange rate and open market operations.
Q2) Refer to Figure 30.3.2. The figure shows the economy of Freezone. Potential GDP is $250 billion. To return the economy to full employment, the central bank can ________ the overnight rate and ________ securities.
A)lower; sell
B)raise; sell
C)raise; buy
D)lower; buy
E)lower; not change its holdings of
Q3) The purchase of government bonds by the Bank of Canada
A)raises the overnight loans rate.
B)decreases bank reserves.
C)decreases the supply of loanable funds.
D)increases aggregate demand.
E)decreases the quantity of money.
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Chapter 31: Macro Only: International Trade Policy
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126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/29212
Sample Questions
Q1) A tariff on watches which are imported by Atlantis ________ the price of watches in Atlantis and ________.
A)lowers; imports of watches increase B)raises; watch production in Atlantis increases C)raises; watch production in Atlantis decreases D)lowers; watch production in Atlantis increases E)lowers; watch production in Atlantis decreases
Q2) Usually the removal of trade barriers affecting a particular good benefits ________ people domestically, each of whom gains a ________.
A)a few; little
B)a few; lot
C)many; little
D)many; lot
E)We can't determine the relative benefits from the removal of trade barriers.
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