Contemporary Canadian Economy
Exam Materials
Course Introduction
This course provides an in-depth analysis of the structure and dynamics of the Canadian economy in the 21st century. Topics include key industries, trade relationships, government fiscal and monetary policy, regional economic development, labor markets, resource management, and the impact of globalization and technological change. Students will examine contemporary economic issues such as housing markets, inequality, environmental challenges, and Indigenous economic participation, gaining a comprehensive understanding of the forces shaping Canadas present and future economic landscape.
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
212 Flashcards
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Sample Questions
Q1) Which curve or curves in Figure 1A.2.4 shows a negative relationship between unemployment and inflation?
A)A
B)A and B
C)B, C, and D
D)A and D
E)B and C
Answer: C
Q2) Complete the following sentence. Marginal cost is
A)the total cost of an activity.
B)the total cost of a decrease in an activity.
C)the opportunity cost of an increase in an activity.
D)the opportunity cost of a decrease in an activity.
E)equal to marginal benefit.
Answer: C
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Chapter 2: The Economic Problem
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159 Flashcards
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Sample Questions
Q1) A situation in which resources are either unused or misallocated or both is represented in a production possibilities frontier diagram by
A)any point on either the horizontal or the vertical axis.
B)a point above or to the right of the production possibilities frontier.
C)a point outside the production possibilities frontier.
D)a point inside the production possibilities frontier.
E)a point on or inside the production possibilities frontier.
Answer: D
Q2) Refer to Table 2.2.1. Marginal benefit from food crops
A)equals the marginal cost of food crops.
B)remains constant as the quantity of food crops increases from 1 tonne a day to 2 tonnes a day.
C)cannot be calculated from the table.
D)increases as the quantity of food crops increases from 1 tonne a day to 2 tonnes a day.
E)equals 70 barrels of ethanol.
Answer: C
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Chapter 3: Demand and Supply
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Sample Questions
Q1) The demand curve is P = 700 - 20QD. The supply curve is P = 300 + 20QS. At market equilibrium, the equilibrium quantity is ________ and the equilibrium price is
A)10; 500
B)500; 10
C)0.10; 20
D)20; 0.10
E)400; 40
Answer: A
Q2) Refer to Table 3.4.1. A surplus occurs if
A)the price is $2 a unit.
B)the price is $3 a unit.
C)the price is above $4 a unit.
D)the price is $1 a unit.
E)the price is $4 a unit.
Answer: C
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Chapter 4: Elasticity
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Sample Questions
Q1) A unit elastic demand
A)means that the ratio of a change in quantity demanded to a change in price is equal to 1.
B)means that the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1.
C)means that the ratio of a change in price to a change in quantity demanded is equal to 1.
D)is illustrated by a horizontal demand curve.
E)is illustrated by a vertical demand curve.
Q2) The demand for a good is price inelastic if
A)a rise in price results in an increase in total revenue.
B)a rise in price results in a decrease in total revenue.
C)an increase in income results in a decrease in total revenue.
D)an increase in income results in an increase in total revenue.
E)the good is a luxury.
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Chapter 5: Efficiency and Equity
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Sample Questions
Q1) A market demand curve is constructed by
A)adding the prices all consumers are willing to pay for any given quantity.
B)determining the quantity supplied by all producers at all possible prices.
C)subtracting the quantity supplied by all producers from the quantity demanded by all individuals at each price.
D)adding the quantities demanded by all individuals at each price.
E)subtracting the quantity demanded by all individuals from the quantity supplied by all producers at each price.
Q2) The two big approaches to thinking about fairness are
A)it's not fair if my income is less than yours and it's not fair if my opportunities in life are less than yours.
B)it's not fair if the result isn't fair and it's not fair if the rules aren't fair.
C)the fairness of democracy and the fairness of central planning.
D)the fairness of income equality and the fairness of educational equality.
E)it's not fair if you are treated unkindly and it's not fair if you treat someone unkindly.
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Chapter 6: Governments Actions in Markets
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130 Flashcards
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Sample Questions
Q1) In an unregulated housing market with no rent ceiling, the rent is determined by the
A)landlords only.
B)tenants only.
C)government only.
D)market.
E)landlords, tenants, and the government.
Q2) Refer to Figure 6.3.3. Suppose a tax of $1 is imposed. In which market would the seller pay the highest portion of the tax?
A)(a)
B)(b)
C)(c)
D)(d)
E)all markets equally
Q3) In a market with an effective production quota,
A)marginal social benefit exceeds marginal social cost.
B)marginal social benefit equals marginal social cost.
C)marginal social cost exceeds marginal social benefit.
D)marginal social cost is greater than the equilibrium price.
E)marginal social benefit is less than the equilibrium price.
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Page 8
Chapter 7: Global Markets in Action
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138 Flashcards
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Sample Questions
Q1) Tariffs and import quotas both result in
A)lower levels of domestic production.
B)the domestic government gaining revenue.
C)lower levels of imports.
D)higher levels of domestic consumption.
E)the elimination of deadweight loss.
Q2) Canada produces both lumber and wine. Canada exports lumber and imports wine. The rest of the world imports Canadian lumber and exports wine to Canada. If Canada did not trade with the rest of the world, then the equilibrium price of lumber would be ________ in Canada than the rest of the world, and the equilibrium price of wine would be ________ in Canada than the rest of the world.
A)lower; higher
B)higher; lower
C)higher; higher
D)lower; lower
E)the same or lower; the same or higher
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9
Chapter 8: Utility and Demand
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Sample Questions
Q1) Danny has $12 to spend on two goods: pies and pop. The price of a pie is $4, and the price of a can of pop is $2. To maximize his utility, Danny buys
A)2 pies and 2 cans of pop.
B)3 pies and no pop.
C)the combination that gives him the same marginal utility per dollar on pies as on pop.
D)6 cans of pop and no pie.
E)the combination that gives him the same total utility from pies as from pop.
Q2) Jim has made his best affordable choice of muffins and coffee. He spends all of his income on 10 muffins at $1 each and 20 cups of coffee at $2 each. Now the price of a muffin rises to $1.50 and the price of coffee falls to $1.75 a cup. Jim can still afford to buy 10 muffins and 20 cups of coffee. Jim will buy ________ muffins and ________ coffee.
A)more; fewer
B)fewer more
C)more; more
D)fewer; fewer
E)the same quantity of; the same quantity of
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Page 10
Chapter 9: Possibilities, Preferences, and Choices
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Sample Questions
Q1) Which one of the following statements about Figure 9.3.2 is true?
A)Point S is preferred to point Q, but S is not affordable.
B)Point R is not affordable.
C)Point T is preferred to point Q, but T is not affordable.
D)Points Q and S cost the same, but Q is preferred to S.
E)Point R is the best affordable point.
Q2) Refer to Fact 9.3.2. If the price of used clothing falls and income remains the same, the substitution effect ________ the quantity of used clothing bought and the income effect ________ the quantity of used clothing bought.
A)increases; decreases B)increases; increases C)decreases; increases
D)decreases; decreases E)does not change; increases
Q3) Refer to Fact 9.2.1. What is the marginal rate of substitution?
A)3.6
E)10 + 36
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Chapter 10: Organizing Production
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111 Flashcards
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Sample Questions
Q1) The difference in the market value of a new van owned by a firm and the market value of the same van one year later is
A)economic depreciation.
B)physical depreciation.
C)economic deterioration.
D)physical deterioration.
E)conventional depreciation.
Q2) The principal-agent problem exists when
A)there is no command system in place.
B)firms operate as sole proprietorships.
C)agents do not act in the best interest of principals.
D)principals do not act in the best interest of agents.
E)the future value of money is more than its current value.
Q3) In a monopoly, the four-firm concentration ratio is
A)75 percent.
B)100 percent.
C)almost zero.
D)25 percent.
E)50 percent.
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Page 12
Chapter 11: Output and Costs
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142 Flashcards
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Sample Questions
Q1) Refer to Figure 11.3.2, which illustrates the short-run average and marginal cost curves. The marginal cost curve is curve
A)A.
B)B.
C)C.
D)D.
E)B minus curve A
Q2) The average product of labour equals
A)the slope of the total product curve.
B)the slope of the marginal product curve.
C)the increase in total product divided by the increase in labour employed.
D)total product divided by the quantity of labour employed.
E)the difference between the total product and the marginal product of labour.
Q3) The average product of labour is
A)the inverse of the average product of capital.
B)the slope of the marginal product of labour curve.
C)the slope of the total product curve.
D)greater than the average product of labour.
E)calculated as total product divided by the total quantity of labour employed.
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Page 13
Chapter 12: Perfect Competition
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117 Flashcards
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Sample Questions
Q1) Assume that the leather market is a perfectly competitive market. The market demand curve for leather is ________ and each individual leather producer's demand curve is ________.
A)vertical; downward sloping
B)downward sloping; horizontal
C)downward sloping; vertical
D)horizontal; horizontal
E)horizontal; downward sloping
Q2) Refer to Figure 12.1.1. The firm competes in a perfectly competitive market. Curve A is a straight line because the firm
A)is a price taker.
B)faces constant returns to scale.
C)wants to maximize profits.
D)has perfect information.
E)has constant marginal cost.
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14
Chapter 13: Monopoly
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Sample Questions
Q1) Consider the revenue and cost curves in Figure 13.3.3. What is the difference in producer surplus between a single-price monopoly and a perfectly competitive market?
A)EADH
B)EABH
C)ABD
D)ACD
E)EABH - BCD
Q2) A perfect price-discriminating monopoly is
A)less efficient than a single-price monopoly.
B)more efficient than a single-price monopoly, but less efficient than a perfectly competitive industry.
C)as efficient as a single-price monopoly.
D)more efficient than a perfectly competitive industry.
E)as efficient as a perfectly competitive industry.
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Page 15
Chapter 14: Monopolistic Competition
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Sample Questions
Q1) Advertising costs of a monopolistically competitive firm are
A)greater than a monopoly and the same as a perfectly competitive firm.
B)greater than a perfectly competitive firm.
C)less than a perfectly competitive firm.
D)the same as a monopoly.
E)less than a monopoly.
Q2) In the short-run, the similarity between a monopolist and a monopolistically competitive firm is that
A)they both make the same decisions about the level of output and output price.
B)they both face an upward-sloping supply curve for their products.
C)they both try to maximize their total revenues.
D)they both try to minimize their average fixed costs.
E)they set the price such that marginal revenue equals average total cost.
Q3) Refer to Fact 14.1.1. The market for automobiles is ________ and the market for sporting goods is ________.
A)monopolistic competition; an oligopoly
B)an oligopoly; perfectly competitive
C)an oligopoly; monopolistic competition
D)an oligopoly; an oligopoly
E)Perfectly competitive; perfectly competitive
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Chapter 15: Oligopoly
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Sample Questions
Q1) Refer to Table 15.2.5. Two software firms have developed an identical new software application. They are debating whether to give the new application away free and then sell add-ons or sell the application at $30 a copy. The payoff matrix is above and the payoffs are profits in millions of dollars. What is Firm 1's best strategy?
A)Give away the application regardless of what Firm 2 does.
B)Sell the application at $30 a copy regardless of what Firm 2 does.
C)Give away the application only if Firm 2 sells the application.
D)Give away the application only if Firm 2 gives away the application.
E)Sell the application only if Firm 2 sells the application.
Q2) Which one of the following industries is the best example of an oligopoly?
A)the battery industry
B)the sporting goods industry
C)the footwear industry
D)the cosmetics industry
E)the power industry
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Chapter 16: Externalities
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Sample Questions
Q1) When the production of a good has an external cost, the
A)marginal social cost curve lies below the marginal private cost curve.
B)marginal social benefit curve lies above the marginal private benefit curve.
C)equilibrium quantity in an unregulated, competitive market has a marginal social cost greater than the marginal social benefit.
D)equilibrium quantity in an unregulated, competitive market has a marginal social cost less than the marginal social benefit.
E)good should not be produced.
Q2) In Figure 16.3.2. The figure shows the market for good B. Which of the following government policies creates an efficient outcome?
A)Tax the production of B by $3 per unit.
B)Tax the production of B by $4 per unit.
C)Provide vouchers for consumption of B of $1 per unit.
D)Provide vouchers for consumption of B of $3 per unit.
E)Provide vouchers for consumption of B of $4 per unit.
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18
Chapter 17: Public Goods and Common Resources
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Sample Questions
Q1) Minimum differentiation among the political parties suggests that
A)the parties will have few ideas in common on their platforms.
B)the parties will offer few ideas on minimizing the size and scope of government.
C)the platforms of the parties will tend to become similar as they try to appeal to a majority of voters.
D)the platforms of the parties will tend to become dissimilar as they try to appeal to a loyal majority of voters.
E)the platforms of the parties will tend to have few, if any, new ideas.
Q2) Public choice theory predicts that
A)voters are fully informed about the effects of policies.
B)voters are rationally ignorant.
C)governments make choices that achieve an efficient provision of public goods.
D)votes are based on reality, not perceptions.
E)votes are based on lobbyists' viewpoints.
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19
Chapter 18: Markets for Factors of Production
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Sample Questions
Q1) Refer to Table 18.2.1. If the firm can sell all the output it wants for the price of $5 a unit, what is the value of marginal product of the 6th worker?
A)$20
B)$0
C)$25
D)$40
E)$185
Q2) If a strike or lockout occurs in a bilateral monopoly situation, it is usually because
A)the demand for labour is relatively inelastic.
B)the demand for labour is relatively elastic.
C)the supply of labour is relatively inelastic.
D)the supply of labour is relatively elastic.
E)one party has misjudged the costs each party can inflict on the other.
Q3) The demand curve for labour will shift rightward as a result of
A)a decrease in the price of the firm's output.
B)an increase in the wage rate.
C)a decrease in the price of a substitute factor of production.
D)an increase in the price of a substitute factor of production.
E)a decrease in the wage rate.
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Page 20
Chapter 19: Economic Inequality
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Sample Questions
Q1) Refer to Figure 19.3.2. At an employment level of 20 hours per week, firms are willing to pay
A)a wage rate of $7 an hour to low-skilled workers.
B)a maximum of $5 an hour to high-skilled workers.
C)up to $7 an hour for high-skilled workers.
D)the same for high-skilled workers as for low-skilled workers.
E)$3 an hour more for high-skilled workers.
Q2) Wealth differs from income because
A)income is a stock and wealth is a flow.
B)wealth is derived from income.
C)income is what you earn and wealth is what you own.
D)income is what you own and wealth is what you earn.
E)wealth is preferable to income.
Q3) The vertical distance between the two supply curves in Figure 19.3.1
A)is the compensation for the cost of acquiring human capital.
B)is the VMP of skill.
C)is the result of discrimination against low-skilled workers.
D)is the result of subsidies for high-skilled workers.
E)will disappear if there is free entry in the high-skilled market.
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Page 21
Chapter 20: Measuring Gdp and Economic Growth
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Sample Questions
Q1) Refer to Table 20.2.4. Net investment is equal to
A)$250.
B)$210.
C)$510.
D)$560.
E)$150.
Q2) Suppose Mail Boxes Etc. buys a new copier for its store for $1,000. A year later, when the firm wants to upgrade to a new copier, it finds that the old copier is only worth $750. Over the year the copier was used, ________ has occurred.
A)depreciation
B)demarcation
C)devaluation
D)denouement
E)disparity
Q3) Table 20.2.7 shows items of income and expenditure in an economy. GDP equals
A)$1,242 billion.
B)$435 billion.
C)$802 billion.
D)$875 billion.
E)$2,267 billion.
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Chapter 21: Monitoring Jobs and Inflation
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Sample Questions
Q1) If the economy is at full employment,
A)the entire population is employed.
B)the entire labour force is employed.
C)the only unemployment is frictional unemployment plus discouraged searchers.
D)real GDP equals potential GDP.
E)all unemployment is cyclical and structural.
Q2) The consumer price index is a measure of
A)the average of the prices paid by urban consumers for a fixed basket of consumer goods and services.
B)the commodity prices paid by urban consumers for a fixed basket of consumer goods and services.
C)the consumer prices paid by average households for a fixed basket of goods and services.
D)the average of the prices paid by rural consumers for a fixed basket of consumer goods and services.
E)the lowest prices paid by urban consumers for a fixed basket of consumer goods and services.
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Chapter 22: Economic Growth
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Sample Questions
Q1) Using the Rule of 70, if the country of Flowerdom's current growth rate of real GDP per person is 7 percent a year, how long will it take the country's real GDP per person to double?
A)1 year
B)2 years
C)10 years
D)49 years
E)7 years
Q2) Between 1960 and 2010, growth rates in real GDP per person in Hong Kong, Korea, Singapore, Taiwan, and China ________ the growth rate of real GDP per person in Canada. China's real GDP per person in 2010 is approximately equal to real GDP per person in Hong Kong in ________.
A)exceeded; 1998
B)were less than; 1988
C)were less than; 1976
D)exceeded; 1976
E)were approximately equal to; 1968
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Chapter 23: Finance, Saving, and Investment
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Sample Questions
Q1) The increase in the value of capital is
A)gross investment.
B)depreciation.
C)net investment.
D)private sector spending.
E)wealth.
Q2) If the real interest rate rises from 3 percent to 5 percent,
A)the nominal interest rate falls.
B)the demand for loanable funds curve shifts rightward.
C)there is a movement up along the demand for loanable funds curve.
D)the supply of loanable funds curve shifts rightward.
E)there is a movement down along the supply of loanable funds curve.
Q3) Which of the following is FALSE?
A)Saving adds to wealth.
B)Income left after paying taxes can either be consumed or saved.
C)Saving equals wealth minus consumption expenditure.
D)Saving is the source of funds used to finance investment.
E)Saving supplies funds in loan markets, bond markets, and stock markets.
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25
Chapter 24: Money, the Price Level, and Inflation
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Sample Questions
Q1) Anything can be money as long as it
A)has low transactions costs.
B)is not too bulky.
C)has intrinsic worth.
D)meets the double coincidence of wants.
E)is acceptable as a medium of exchange.
Q2) During a period of severe inflation, which function of money is most seriously affected?
A)store of value
B)unit of account
C)medium of exchange
D)means of payment
E)barter
Q3) Refer to Figure 24.5.2. Which one of the following best describes the response to a decrease in the market price of bonds?
A)A movement from A to B
B)A movement from A to C
C)A movement from A to F
D)A movement from A to E
E)A movement from E to A
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Chapter 25: The Exchange Rate and the Balance of Payments
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Sample Questions
Q1) Complete the following sentence. Foreign borrowing
A)always leads to a lower level of consumption in the future for the debtor nation because part of its future GDP is used to pay off the foreign debt.
B)always leads to a higher level of consumption in the future for the debtor nation because foreign borrowing enables a greater than otherwise possible increase in the nation's capital stock.
C)could lead to higher consumption levels in the future, if the borrowing is used to finance investment that generates economic growth.
D)could lead to lower consumption levels in the future, if the borrowing is used for current consumption.
E)C and D
Q2) Refer to Table 25.4.1. The country Mengia came into existence at the beginning of year 1. Given the information, in year 4 Mengia is a
A)net lender and a creditor nation.
B)net lender and a debtor nation.
C)net borrower and a creditor nation.
D)net borrower and a debtor nation.
E)net lender and neither a creditor nor a debtor nation.
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Chapter 26: Aggregate Supply and Aggregate Demand
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Sample Questions
Q1) Refer to Figure 26.3.1. Consider statements (1)and (2)and select the correct answer. (1) The economy of Econoworld is experiencing an above full-employment equilibrium. (2) SAS will automatically shift rightward as the economy adjusts to long-run equilibrium.
A)(1)is true; (2)is false.
B)(2)is true; (1)is false.
C)(1)and (2)are false.
D)(1)and (2)are true.
E)(1)is true; (2)is true if unemployment is below the natural rate.
Q2) The Canadian price level rises. This event
A)increases short-run aggregate supply.
B)increases the quantity of real GDP supplied.
C)decreases the quantity of real GDP supplied.
D)increases long-run aggregate supply.
E)decreases short-run aggregate supply.
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Chapter 27: Expenditure Multipliers
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Sample Questions
Q1) Refer to Fact 27.5.1. If autonomous consumption increases by 10, what is the new equation of the aggregate expenditure function for this economy?
A)AE = 26 + 0.7Y
B)AE = 36 + 0.7Y
C)AE = 46 + 0.7Y
D)AE = 46 + 0.8Y
E)AE = 46 + 0.9Y
Q2) In an economy, autonomous spending is $20 trillion and the slope of the AE curve is 0.8. The equation of the AE curve is
A)AE = 0.2Y-20.
B)AE = 20 + 0.2Y.
C)AE = 20 + 0.8Y.
D)AE = 0.8Y - 20.
E)AE = 20 - 0.8Y.
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Chapter 28: The Business Cycle, Inflation, and Deflation
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Sample Questions
Q1) An increase in the price level due to an increase in the price of oil
A)creates stagflation in the short-run and will trigger a cost-push inflation.
B)creates stagflation in the short-run and may trigger off a cost-push inflation.
C)increases output above potential GDP.
D)leads to an increase in the money wage rate.
E)leads to a decrease in the money wage rate.
Q2) Refer to Figure 28.4.1. The figure illustrates an economy's Phillips curves. What is the natural unemployment rate?
A)9 percent
B)6 percent
C)4 percent
D)7 percent
E)cannot be determined without more information
Q3) When the price level is rising and, simultaneously, real GDP is decreasing,
A)the natural unemployment rate is rising.
B)the natural unemployment rate is falling.
C)stagflation is occurring.
D)the economy is experiencing an expansionary gap.
E)potential GDP is decreasing.
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Chapter 29: Fiscal Policy
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Sample Questions
Q1) Norland has the budget deficit of $15 billion. According to the government economists, Norland has a structural deficit of $3 billion. What is a cyclical deficit in Norland?
A)$18 billion
B)$15 billion
C)$10 billion
D)$12 billion
E)zero
Q2) What are the main categories of the federal government outlays?
A)transfer payments, expenditures on goods and services, and debt interest
B)indirect taxes, farmers' subsidies, and debt interest
C)personal income taxes, expenditures on goods and services, and debt interest
D)investment income, debt interest and transfer payments
E)property taxes and sales taxes.
Q3) During an expansion, revenues
A)and government outlays decrease.
B)decrease and government outlays increase.
C)increase and government outlays decrease.
D)and government outlays increase.
E)remain constant and government outlays increase.
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Chapter 30: Monetary Policy
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Sample Questions
Q1) 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.
Q2) Core inflation is the percentage change in
A)the Consumer Price Index including the eight most volatile prices.
B)an inflation rate that ranges between 1 percent and 3 percent annually.
C)the Consumer Price Index excluding the eight most volatile prices.
D)the average of the 8 most volatile prices in the Consumer Price Index.
E)the target midpoint inflation rate of 2 percent per year.
Q3) The overnight loans rate is the interest rate
A)banks charge their best loan customers.
B)banks pay on term deposits.
C)the Bank of Canada pays on reserves held by banks.
D)the Bank of Canada charges when it lends reserves to banks.
E)on overnight loans that the big banks make to each other.
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Chapter 31: Macro Only: International Trade Policy
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Q1) A Canadian tariff imposed on items that can be produced more cheaply abroad
A)benefits Canadians by making these goods cheaper.
B)makes the goods more expensive in foreign markets.
C)creates a social loss.
D)equalizes the cost of production between Canada and foreign producers.
E)all of the above
Q2) When an import quota is imposed, the gap between the domestic price and the price received in the exporting country is captured by
A)consumers in the importing country.
B)the domestic producers of the good.
C)the government of the importing country.
D)foreign exporters.
E)the importers of the good.
Q3) In Figure 31.1.2, with international trade Canadian firms buy ________ helicopters per year. A)240 B)480 C)720 D)360 E)600
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