Canadian Macroeconomic Policy
Exam Questions
Course Introduction
Canadian Macroeconomic Policy examines the formulation, implementation, and impact of macroeconomic policies within the Canadian context. The course covers core topics such as fiscal and monetary policy, inflation control, unemployment, economic growth, and international trade, with an emphasis on the roles played by key institutions like the Bank of Canada and the federal government. Students will analyze historical and contemporary policy decisions, evaluate their effectiveness in achieving economic stability and growth, and explore current debates related to issues such as deficit management, interest rates, and exchange rate regimes. The course integrates theoretical frameworks with case studies and empirical data to equip students with a thorough understanding of how macroeconomic policy shapes Canadas economic landscape.
Recommended Textbook
Macroeconomics 14th Canadian Edition by Campbell R. McConnell
Available Study Resources on Quizplus
18 Chapters
3156 Verified Questions
3156 Flashcards
Source URL: https://quizplus.com/study-set/3441
Page 2
Chapter 1: Limits, Alternatives, and Choices
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/68350
Sample Questions
Q1) International specialization and trade:
A) allow a nation to get more of a desired good at less sacrifice of some other good.
B) can allow an economy to circumvent the output limits imposed by its domestic production possibilities curve.
C) Has the same effect as having more and better resources.
D) All of the above.
Answer: D
Q2) Which of the following is a macroeconomic statement?
A) The gross profits of all Canadian businesses were $70 billion last year.
B) The price of beef declined by 3 percent last year.
C) General Motors' profits increased in 2012.
D) The productivity of steelworkers increased by 1 percent in 2012.
Answer: A
Q3) An economy will always operate at some point on its production possibilities curve.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: The Market System and the Circular Flow
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/68340
Sample Questions
Q1) The development of MP3 players that significantly reduce the market for CDs and DVDs would be an example of:
A) specialization.
B) derived demand.
C) roundabout production.
D) creative destruction.
Answer: D
Q2) The Canadian economy most closely approximates:
A) mixed capitalism
B) a command economy
C) market socialism
D) authoritarian capitalism
Answer: A
Q3) Households and businesses are both suppliers in the product market.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Demand, Supply, and Market Equilibrium
Available Study Resources on Quizplus for this Chatper
284 Verified Questions
284 Flashcards
Source URL: https://quizplus.com/quiz/68339
Sample Questions
Q1) A price floor in a competitive market will result in persistent shortages of a product.
A)True
B)False
Answer: False
Q2) Which are not generally considered to be complementary goods?
A) gasoline and motor oil
B) beef and chicken
C) beer and pretzels
D) razors and razor blades
Answer: B
Q3) In this market:
A) the equilibrium position has shifted from M to K.
B) an increase in supply is more than the increase in demand.
C) the new equilibrium price and quantity are both greater than originally.
D) point M shows the new equilibrium position.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Market Failures: Public Goods and Externalities
Available Study Resources on Quizplus for this Chatper
122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/68338
Sample Questions
Q1) The creation of a market for pollution rights would:
A) reduce air and water pollution to zero.
B) stimulate the search for pollution-reducing technologies.
C) induce an increase in the supply of pollution rights.
D) be in conflict with the concept of user charges.
Q2) The term "allocative efficiency" refers to:
A) the production of the product-mix most desired by society.
B) the allocation of resources to the production of a particular product.
C) the production of the product-mix most desired by producers.
D) the production of a good at the lowest average total cost.
Q3) If the price of a product increases:
A) the consumer surplus will increase.
B) the producer surplus will increase.
C) the price increase has no effect on the producer surplus.
D) the consumer surplus will not change.
Q4) Which of the following is a characteristic of a private good:
A) free-rider problem
B) external benefits
C) external costs
D) excludability
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Governments Role and Government Failure
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/68337
Sample Questions
Q1) Vote for my special local project and I will vote for yours.This political technique:
A) illustrates the paradox of voting.
B) is called "logrolling."
C) illustrates the median voter model.
D) undermines the benefits-received principle.
Q2) Which of the following is an activity of government that is not an activity of private firms?
A) Enforcing involuntary transactions.
B) Paying equitable wages.
C) Creating positive externalities.
D) Pursuing economic efficiency.
Q3) Public choice theory focuses on the economics of:
A) fiscal and monetary policy.
B) the behavior of business firms.
C) antitrust and regulatory policy.
D) government decision making,politics,and elections.
Q4) Changes in tax rates are a form of monetary policy.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: An Introduction to Macroeconomics
Available Study Resources on Quizplus for this Chatper
58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/68336
Sample Questions
Q1) If the economy's output and income double in 35 years,we can:
A) not say anything about the average annual rate of growth.
B) conclude that its average annual rate of growth is about 5.5 percent.
C) conclude that its average annual rate of growth is about 2 percent.
D) conclude that its average annual rate of growth is about 4 percent.
Q2) In response to some unexpected changes in demand:
A) the economy could always adjust its production level if the prices are inflexible.
B) the economy would always produce less than what was expected if the prices of goods and services are inflexible.
C) the economy could always produce at its optimal capacity if the prices of goods and services are inflexible.
D) the economy could always produce at its optimal capacity if the prices of goods and services are fully flexible.
Q3) Several factors contribute to short-run price stickiness.These include:
A) consumer preference for lower prices and the quality of the product.
B) durability and the quality of the product.
C) frequent sales and,inventory pile ups.
D) consumer preference for predictable prices and,the fear of price war.
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Measuring the Economys Output
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/68335
Sample Questions
Q1) Refer to the above data.From 2003 to 2006,prices rose by:
A) 3 percent.
B) 7 percent.
C) 9 percent.
D) 10.7 percent.
Q2) In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:
A) of changes in our trade deficits and surpluses.
B) the length of the workweek has declined historically.
C) the price level may change over time.
D) depreciation may be greater or smaller than gross investment.
Q3) Refer to the above information.The gross domestic product is:
A) $328
B) $402
C) $382
D) $336
Q4) Government purchases include expenditures for social capital such as schools and highways that have long lifetimes.
A)True
B)False
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Economic Growth
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/68334
Sample Questions
Q1) The best measure of economic growth adjusted for the population of a nation is the increase in:
A) aggregate demand over time.
B) real GDP per worker over time.
C) real GDP per capita over time.
D) real GDP per dollar of capital stock over time.
Q2) The countries which have begun modern economic growth later than the others can catch up because:
A) for them,it is quicker to adopt technology rather than inventing one.
B) for them,it is harder to adopt technology rather than inventing one.
C) for them,it is as hard to adopt technology as it is to invent one.
D) for them,it is very easy to invent a new technology with lower cost.
Q3) Refer to the above diagram.If the production possibilities curve for an economy is at AB but the economy is operating at point 4,the reasons are most likely to be because of:
A) supply and environmental factors.
B) demand and efficiency factors.
C) labour inputs and labour productivity.
D) technological progress.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Business Cycles, Unemployment, and Inflation
Available Study Resources on Quizplus for this Chatper
184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/68333
Sample Questions
Q1) Kimberly voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree.With degree in hand she is now searching for a position in management.Kimberly presently is:
A) cyclically unemployed.
B) structurally unemployed.
C) frictionally unemployed.
D) not a member of the labour force.
Q2) A large negative GDP gap implies:
A) an excess of imports over exports.
B) a low rate of unemployment.
C) a high rate of unemployment.
D) a sharply rising price level.
Q3) When the Canadian economy has achieved "full employment," the unemployment rate is at or below:
A) 7 percent.
B) 4.0 percent.
C) 3.3 percent.
D) 2.5 percent.
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Basic Macroeconomic Relationships
Available Study Resources on Quizplus for this Chatper
187 Verified Questions
187 Flashcards
Source URL: https://quizplus.com/quiz/68349
Sample Questions
Q1) Refer to the above diagram.At disposable income level D,consumption:
A) is equal to CD.
B) is equal to OD minus CD.
C) is equal to CD/OD.
D) is equal to CD plus BD.
Q2) If the marginal propensity to save is 0.2 in a private closed economy,a $20 billion rise in investment spending will increase:
A) GDP by $120 billion.
B) GDP by $20 billion.
C) saving by $25 billion.
D) consumption by $80 billion.
Q3) The relationship between consumption and disposable income is such that:
A) an inverse and stable relationship exists between consumption and income.
B) a direct,but very volatile,relationship exists between consumption and income.
C) a direct and quite stable relationship exists between consumption and income.
D) the two are always equal.
Q4) The wealth effect will tend to decrease consumption and increase saving.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: The Aggregate Expenditures Model
Available Study Resources on Quizplus for this Chatper
230 Verified Questions
230 Flashcards
Source URL: https://quizplus.com/quiz/68348
Sample Questions
Q1) During the recession of 2008 - 2009:
A) both after-tax consumption and government expenditures declined.
B) both after-tax consumption and investment expenditures declined.
C) both government expenditures and investment expenditures declined.
D) government expenditures declined but after- tax consumption
Q2) Which of the following will cause the investment schedule to shift downward?
A) an increase in the real interest rate
B) a decline in wage rates
C) a significant decline in the real interest rate
D) a new technological advance which cuts the price of steel by one-half
Q3) During the recession of 2008-2009 the federal government undertook various policies intended to stimulate private spending and investment.
A)True
B)False
Q4) If an increase in aggregate expenditures results in no increase in real GDP we can conclude that the:
A) economy is in a deep recession.
B) MPC equals 1.
C) economy is already operating at full employment.
D) price level has fallen.
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Aggregate Demand and Aggregate Supply
Available Study Resources on Quizplus for this Chatper
229 Verified Questions
229 Flashcards
Source URL: https://quizplus.com/quiz/68347
Sample Questions
Q1) When deriving the aggregate demand (AD)curve from the aggregate expenditure model,an increase in Canadian product prices would cause:
A) an increase in the value of household wealth and reduced consumption expenditures.
B) an increase in interest rates and lower investment expenditures.
C) an increase in exports and imports.
D) an increase in Canadian resource prices and an increase in aggregate supply.
Q2) The interest-rate effect suggests that:
A) a decrease in the supply of money will increase interest rates and reduce interest-sensitive consumption and investment spending.
B) an increase in the price level will increase the demand for money,reduce interest rates,and decrease consumption and investment spending.
C) an increase in the price level will increase the demand for money,increase interest rates,and decrease consumption and investment spending.
D) an increase in the price level will decrease the demand for money,reduce interest rates,and increase consumption and investment spending.
Q3) How is the immediate short-run aggregate supply curve sloped? Explain.
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Fiscal Policy, Deficits, Surpluses, and Debt
Available Study Resources on Quizplus for this Chatper
223 Verified Questions
223 Flashcards
Source URL: https://quizplus.com/quiz/68346
Sample Questions
Q1) Which combination of fiscal policy actions would most likely be offsetting?
A) increase in taxes and government spending
B) decrease in taxes and increase in government spending
C) increase in taxes,but make no change in government spending
D) decrease in taxes,but make no change in government spending
Q2) A contractionary fiscal policy in Canada which reduces domestic interest rates is most likely to:
A) depreciate the international value of the dollar and increase Canadian net exports.
B) depreciate the international value of the dollar and decrease Canadian net exports.
C) appreciate the international value of the dollar and increase Canadian net exports.
D) appreciate the international value of the dollar and decrease Canadian net exports.
Q3) Built-in stabilizers:
A) intensify the business cycle.
B) reduce the size of the multiplier.
C) increase the government's deficit during a recession.
D) are a part of discretionary fiscal policy.
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: Money, Banking, and Money Creation
Available Study Resources on Quizplus for this Chatper
203 Verified Questions
203 Flashcards
Source URL: https://quizplus.com/quiz/68345
Sample Questions
Q1) A chartered bank has desired reserve of $6000 and the reserve ratio is 20 percent.What are the chartered bank's demand-deposit liabilities?
A) $1,200
B) $9,000
C) $30,000
D) $120,000
Q2) Subprime mortgage loans refer to:
A) low-interest rate loans by financial institutions to home buyers with higher-than -average credit risk.
B) high-interest rate loans by financial institutions to home buyers with higher-than -average credit risk.
C) high-interest rate loans by financial institutions to home buyers with no credit risk.
D) high-interest rate loans by financial institutions to home buyers with lower-than -average credit risk.
Q3) Chartered banks are the major source of money creating in the Canadian economy.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Interest Rates and Monetary Policy
Available Study Resources on Quizplus for this Chatper
238 Verified Questions
238 Flashcards
Source URL: https://quizplus.com/quiz/68344
Sample Questions
Q1) In recent years,the Bank of Canada has adopted a monetary policy that focuses on:
A) the money supply as the policy target.
B) overnight lending rate as the policy target.
C) net exports as the policy target.
D) the prime interest rate as a policy target.
Q2) International flows of financial capital in response to interest rate changes in Canada:
A) weaken domestic monetary policy through an offsetting net export effect.
B) strengthen domestic monetary policy through a supporting net export effect.
C) strengthen domestic fiscal policy through an offsetting net export effect.
D) weaken domestic monetary policy through an offsetting real wealth effect.
Q3) The interest rate will fall when the:
A) quantity of money demanded exceeds the quantity of money supplied.
B) quantity of money supplied exceeds the quantity of money demanded.
C) demand for money increases.
D) supply of money decreases.
Q4) An expansionary monetary policy reduces the supply of money.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Long-Run Macroeconomic Adjustments
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/68343
Sample Questions
Q1) Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P<sub>2</sub> and that the economy initially is operating at its full-employment level of output Q <sub>f</sub>.In the short run,an increase in the price level from P<sub>2</sub> to P<sub>3</sub> will:
A) change aggregate supply from AS<sub>2</sub> to AS<sub>3</sub>.
B) increase real output from Q<sub>1</sub> to Q<sub>2</sub>.
C) change aggregate supply from AS<sub>2</sub> to AS<sub>1</sub>.
D) increase real output from Q<sub>f</sub> to Q<sub>2</sub>.
Q2) An increase in inflation is likely to occur when government:
A) counters cost-push inflation with a stimulative fiscal policy or monetary policy.
B) adopts a hands-off approach to cost-push inflation.
C) increases aggregate supply by lowering nominal wages.
D) increases aggregate demand by raising nominal wages.
Q3) Inflation accompanied by falling real output and employment is known as:
A) Laffer's law.
B) Okun's law.
C) stagflation.
D) the Phillips Curve.
To view all questions and flashcards with answers, click on the resource link above.
18
Chapter 17: International Trade
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/68342
Sample Questions
Q1) Refer to the above diagrams.The solid lines are production possibilities curves;the dashed lines are trading possibilities curves.The data contained in the production possibilities curves are based on the assumption of:
A) imperfect substitutability of resources as between beer and pizza production.
B) constant costs.
C) decreasing costs.
D) increasing costs.
Q2) Refer to the above graph which shows the import demand and export supply curves for two nations that produce a product.The export supply curves for the two nations are represented by lines:
A) 5 and 7.
B) 5 and 6.
C) 6 and 8.
D) 7 and 8.
Q3) Refer to the above data.Beta:
A) should specialize in catching fish and trade with Alpha for chips.
B) should specialize in producing chips and trade with Alpha for fish.
C) will not realize gains from specialization and trade.
D) will export both fish and chips to Alpha.
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Exchange Rates and the Balance of Payments
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/68341
Sample Questions
Q1) If the Canadian dollar price of United States dollars increases from $.80 to $1.00,it can be concluded that:
A) the Canadian dollar has appreciated in value to the United States dollar.
B) both countries are on the international gold standard.
C) the American dollar has depreciated in value relative to the Canadian dollar.
D) the Canadian dollar has depreciated in value relative to the United States dollar.
Q2) Which one of the following will directly affect Canada's balance on goods and services,but not affect its balance of trade?
A) an increase in merchandise exports
B) a decrease in exports of services
C) an increase in official reserves
D) an increase in net transfers
Q3) Assume that Switzerland and Britain have flexible exchange rates.Other things unchanged,if economic growth is more rapid in Switzerland than in Britain:
A) gold bullion will flow out of Switzerland.
B) the Swiss franc will depreciate.
C) the pound will depreciate.
D) the Swiss franc will appreciate.
To view all questions and flashcards with answers, click on the resource link above. Page 20