Contemporary Economic Analysis
Exam Preparation Guide
Course Introduction
Contemporary Economic Analysis offers an in-depth exploration of current economic theories, models, and real-world applications that shape todays global economy. The course emphasizes both microeconomic and macroeconomic perspectives, examining topics such as market structures, fiscal and monetary policies, globalization, technological change, and economic development. Students will critically analyze contemporary economic issues, utilize quantitative and qualitative methods, and engage with recent research and policy debates to develop a comprehensive understanding of how economic principles apply to complex, modern challenges.
Recommended Textbook
Macroeconomics 3rd Edition Canadian by Paul Krugman Robin Wells
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19 Chapters
5325 Verified Questions
5325 Flashcards
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Page 2
Chapter 1: First Principles
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198 Verified Questions
198 Flashcards
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Sample Questions
Q1) You have $1 to spend on a vending machine snack.A bag of chips will cost you $1 and a candy bar will also cost you $1.If you choose the bag of chips,the opportunity cost of buying the chips would be:
A) $1 plus the enjoyment you would have received from the candy bar.
B) $2 minus the enjoyment you would have received from the bag of chips.
C) $1.
D) the enjoyment you would have received from the candy bar.
Answer: D
Q2) You are analyzing a trade-off when you compare the _____ and _____ of doing something.
A) direct costs;opportunity costs
B) marginal benefits;total benefits
C) costs;benefits
D) direct costs;total costs
Answer: C
Q3) Trade theoretically allows people to get more of what they want.
A)True
B)False
Answer: True
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Chapter 2: Economic Models: Trade-Offs and Trade
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296 Verified Questions
296 Flashcards
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Sample Questions
Q1) If a production possibility frontier is a straight line,it tells us that the opportunity cost of producing one more unit of good X is:
A) an increasing amount of good Y.
B) a decreasing amount of good Y.
C) equal to the inverse of the amount of good Y.
D) a constant amount of good Y.
Answer: D
Q2) Economic models that make unrealistic assumptions may be useful in analyzing some economic problems.
A)True
B)False
Answer: True
Q3) "Unemployment of 5% is too high" is:
A) a normative statement.
B) a positive statement.
C) the circular-flow model.
D) an example of comparative advantage.
Answer: A
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4
Chapter 3: Supply and Demand
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264 Flashcards
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Sample Questions
Q1) In the market for canned pinto beans,_____ will increase if income increases and if pinto beans are a(n)_____ good.
A) demand;inferior
B) demand;normal
C) supply;inferior
D) supply;normal
Answer: B
Q2) Excess supply occurs when the:
A) price is above the equilibrium price.
B) quantity demanded exceeds the quantity supplied.
C) price is below the equilibrium price.
D) quantity demanded exceeds the quantity supplied and the price is below the equilibrium price.
Answer: A
Q3) A decrease in the price of eggs will result in a(n):
A) increase in the demand for eggs.
B) increase in the supply of eggs.
C) shift in the supply curve for eggs.
D) movement along the demand curve for eggs.
Answer: D
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Chapter 4: Price Controls and Quotas: Meddling With Markets
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200 Verified Questions
200 Flashcards
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Sample Questions
Q1) (Table: The Market for Pop)Use Table: The Market for Pop.If the government does NOT impose a price control,the price of a can of pop will equal:
A) $0.50.
B) $0.75.
C) $1.00.
D) $1.25.
Q2) An agricultural market price support policy establishes a binding price floor,which:
A) decreases the price paid by consumers.
B) does not change the price paid by consumers.
C) increases the price received by farmers.
D) decreases the price received by farmers.
Q3) Price controls are always set below the market equilibrium price.
A)True
B)False
Q4) Which inefficiency is NOT caused by price floors?
A) inefficiently low quality
B) inefficient allocation of sales among sellers
C) wasted resources
D) illegal activity
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Chapter 5: International Trade
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258 Verified Questions
258 Flashcards
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Sample Questions
Q1) (Table: The Production Possibilities for Tractors and Crude Oil)Use Table: The Production Possibilities for Tractors and Crude Oil.In Canada,the opportunity cost of producing 40 tractors is _____ barrels of crude oil.
A) 80 000
B) 60 000
C) 40 000
D) 20 000
Q2) (Figure: The Production Possibility Frontiers for Jackson and Tahoe)Use Figure: The Production Possibility Frontiers for Jackson and Tahoe.Jackson has an absolute advantage in producing:
A) wheat only.
B) cattle only.
C) both wheat and cattle.
D) neither wheat nor cattle.
Q3) Since labour is relatively scarce in Canada,free trade should cause the wages paid to Canadian labour to rise.
A)True
B)False
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Chapter 6: Macroeconomics: the Big Picture
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) The General Theory of Employment,Interest,and Money was written by:
A) Robert Lucas.
B) David Ricardo.
C) John Maynard Keynes.
D) Thomas Malthus.
Q2) One type of macroeconomic policy is manipulating the money supply.
A)True
B)False
Q3) The annual percentage change in the aggregate price level is negative when there is:
A) deflation.
B) disinflation.
C) inflation.
D) spiraling inflation.
Q4) The point on a business cycle when real GDP stops falling and begins rising is a(n):
A) peak.
B) expansion.
C) trough.
D) recession.
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Chapter 7: Gdp and the Cpi: Tracking the Macroeconomy
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321 Verified Questions
321 Flashcards
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Sample Questions
Q1) (Table: Pizza Economy III)Use Table: Pizza Economy III.Considering 2010 as the base year,real GDP between 2010 and 2011 grew at a rate of:
A) 53.19%.
B) 39.47%.
C) -39.47%.
D) -58.67%.
Q2) (Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model.The flow of funds into and out of the rest of the world is:
A) $30.
B) $80.
C) $160.
D) $240.
Q3) (Table: Price Index)What is the inflation rate between 2010 and 2011?
A) 6.8%
B) 4%
C) 7%
D) 6%
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9
Chapter 8: Unemployment and Inflation
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332 Flashcards
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Sample Questions
Q1) The rate of unemployment when the economy is at full employment is:
A) zero.
B) the natural rate.
C) the structural rate.
D) less than the full employment rate of unemployment.
Q2) (Table: Unemployment and Employment Data)Use Table: Unemployment and Employment Data.If marginally attached workers are included in the labour force and in the unemployment rate,the unemployment rate in this economy is _____%.
A) 8.4
B) 7.8
C) 5
D) 3
Q3) Inflation reduces nominal interest rates.
A)True
B)False
Q4) Income divided by the price level is _____ income.
A) personal
B) real
C) disposable
D) national
Page 10
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Chapter 9: Long-Run Economic Growth
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298 Flashcards
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Sample Questions
Q1) Real GDP per capita in Canada increased almost _____ times between 1900 and 2016.
A) 2
B) 3
C) 8
D) 10
Q2) Suppose that real GDP per capita of Canada is $32 000 and its growth rate is 2% per year and that real GDP per capita of China is $4 000,and its annual growth rate is 7%.How long will it take China's real GDP per capita to double?
A) 14 years
B) 10 years
C) 35 years
D) 50 years
Q3) (Table: Kenya's Economy in 2010)Use Table: Kenya's Economy in 2010.The population at the end of 2010 was about:
A) 400 million.
B) 41 million.
C) 14 million.
D) 401 million.
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Page 11
Chapter 10: Savings, Investment Spending, and the Financial System
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385 Verified Questions
385 Flashcards
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Sample Questions
Q1) Interest rates decreased during the 1980s because expectations of future inflation were lower.
A)True
B)False
Q2) The savings-investment spending identity says that:
A) each person in the economy must invest as much as he or she saves.
B) savings and investment spending are always equal for the economy as a whole.
C) savings must equal government investment for the economy as a whole.
D) each person in the economy must save as much as he or she invests.
Q3) Crowding out results in a(n):
A) decrease in private investment spending resulting from government deficit spending.
B) increase in accumulation of physical capital,which leads to higher economic growth.
C) increase in private investment spending resulting from government deficit spending.
D) increase in consumption spending as a result of higher investment spending.
Q4) Usually the rate of return on stock is lower than the rate of return on bonds.
A)True
B)False
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Chapter 11: Income and Expenditure
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130 Flashcards
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Sample Questions
Q1) In an economy with no taxes or imports,if disposable income decreases by $2 000 and consumption decreases by $1 400,the marginal propensity to save is 0.3.
A)True
B)False
Q2) A $50 million increase in investment spending will eventually cause equilibrium real GDP to:
A) decrease by $50 million.
B) increase by $50 million.
C) increase by more than $50 million.
D) increase by less than $50 million.
Q3) The marginal propensity to save:
A) is the change in consumer savings divided by the change in consumption.
B) is the change in savings divided by the change in disposable income.
C) equals MPC + 1.
D) changes when the marginal propensity to consume is constant.
Q4) If the consumption function is C = $100 million + 0.8 * YD,then the marginal propensity to consume is $100 million.
A)True
B)False
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Chapter 12: Aggregate Demand and Aggregate Supply
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345 Flashcards
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Sample Questions
Q1) Besides consumption,the component(s)of aggregate demand is/are:
A) investment expenditures.
B) investment expenditures and government expenditures.
C) investment expenditures and net exports.
D) investment expenditures,government expenditures,and net exports.
Q2) Suppose that consumer expectations improve.The aggregate demand curve will undergo a:
A) shift to the left.
B) movement upward.
C) shift to the right.
D) movement downward.
Q3) In 2011,the Bank of Canada was facing:
A) hyperinflation,which can be reversed only with disinflationary policies.
B) stagflation,a combination of high inflation and high unemployment,which cannot be reversed easily.
C) the deepest recession since the Great Depression combined with rapidly falling prices.
D) a very severe deflation,rare in history,which was experienced only by Japan.
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14
Chapter 13: Fiscal Policy
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346 Verified Questions
346 Flashcards
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Sample Questions
Q1) Policy makers use a contractionary fiscal policy when they want to close:
A) a recessionary gap.
B) any kind of output gap.
C) an inflationary gap.
D) an open economy.
Q2) If a government has large consecutive budget deficit,but its GDP is growing faster than its debt,the ratio of debt to GDP will increase.
A)True
B)False
Q3) If the economy is at equilibrium below potential output,there is a(n)_____ gap,and a(n)_____ fiscal policy is appropriate.
A) recessionary;expansionary
B) inflationary;expansionary
C) recessionary;contractionary
D) inflationary;contractionary
Q4) If the government were required to balance the budget during a recession,it would have to decrease taxes and increase government spending.
A)True
B)False
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Chapter 14: Money, Banking, and the Federal Reserve System
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428 Verified Questions
428 Flashcards
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Sample Questions
Q1) Suppose you find a $50 bill that you put in a coat pocket last winter.If you deposit it in your chequing account:
A) M1+ increases by $50.
B) M2 increases by $50.
C) M1+ and M2 both increase by $50.
D) there is no change in M1+ or M2.
Q2) Most of the subprime loans were made by loan originators,who sold the loans to other investors for securitization.
A)True
B)False
Q3) (Scenario: Money Supply Changes)Refer to Scenario: Money Supply Changes.By how much will the money supply contract as a result of the withdrawal?
A) $0
B) $5000
C) $45000
D) $50000
Q4) Today Canadian dollars are redeemable for gold or silver.
A)True
B)False
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Chapter 15: Monetary Policy
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340 Verified Questions
340 Flashcards
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Sample Questions
Q1) A decrease in the supply of money will lead to a(n)_____ in equilibrium real GDP and a(n)_____ in equilibrium interest rates.
A) increase;increase
B) increase;decrease
C) decrease;increase
D) decrease;decrease
Q2) (Figure: A Money Market)Refer to Figure: A Money Market.If the current interest rate is i<sub>1</sub>,the interest rate will _____ because there is a _____ of money in the market.
A) fall;surplus
B) fall;shortage
C) rise;surplus
D) rise;shortage
Q3) In the long run,changes in the money supply _____ the aggregate price level and _____ aggregate output.
A) affect;affect
B) affect;do not affect
C) do not affect;affect
D) do not affect;do not affect
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Chapter 16: Inflation, Disinflation, and Deflation
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221 Verified Questions
221 Flashcards
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Sample Questions
Q1) From 2000 to 2008 Zimbabwe's prices:
A) decreased by 50%.
B) increased by 50%.
C) increased by 100%.
D) increased by 80 trillion percent.
Q2) In debt deflation,deflation raises the cost of existing debt by increasing the value of money needed to pay it off,leading to a(n)_____ in aggregate _____.
A) increase;supply
B) reduction;supply
C) increase;demand
D) reduction;demand
Q3) The inflation tax refers to:
A) moving into higher tax brackets.
B) the reduction in the real value of money when inflation falls.
C) the reduction in the real value of money when inflation rises.
D) the tax imposed on inflation by the government.
Q4) The difference between the actual and potential GDP is the output gap.
A)True
B)False
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Chapter 17: Macroeconomics: Events and Ideas
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309 Verified Questions
309 Flashcards
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Sample Questions
Q1) The belief that neither monetary nor fiscal policy can reduce unemployment is consistent with _____ economics.
A) Keynesian
B) classical
C) rational expectations
D) Great Moderation consensus
Q2) The Great Moderation consensus is that fiscal policy has no effect on aggregate demand.
A)True
B)False
Q3) Joseph believes that changes in the business cycle can be attributed to shifts in the vertical aggregate supply curve.These shifts are caused by faster or slower increases in economic productivity.Joseph is best described as supporting the _____ theory.
A) rational expectations
B) supply-side
C) real business cycle
D) new Keynesian
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Page 19
Chapter 18: International Macroeconomics
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441 Verified Questions
441 Flashcards
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Sample Questions
Q1) All other things being equal,a depreciation of the domestic currency will cause aggregate demand to increase.
A)True
B)False
Q2) Which group would demand Canadian dollars in the foreign exchange market?
I.Canadians who want to buy Canadian goods,services,and assets
II.Canadians who want to buy European goods,services,and assets
III.Europeans who want to buy Canadian goods,services,and assets
A) I only
B) II only
C) III only
D) I,II,and III
Q3) After a revaluation,all other things being equal,probably exports will increase,and imports will decrease.
A)True
B)False
Q4) An exchange rate regime is a rule governing policy for the exchange rate.
A)True
B)False
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Chapter 19: Graphs in Economics
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60 Verified Questions
60 Flashcards
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Sample Questions
Q1) If two variables are negatively related:
A) as one goes up in value,the other must go up in value,too.
B) as one goes up in value,the other must go down in value.
C) there is no relationship between the two.
D) one variable is always the reciprocal of the other.
Q2) (Figure: Cold Drinks Sold and Temperature)Use Figure: Cold Drinks Sold and Temperature.If we move from point C to point E in the figure,the outside temperature has _____ degrees and the number of cold drinks sold has _____.
A) decreased by 30;decreased by 30
B) increased by 20;increased by 20
C) increased by 30;increased by 30
D) increased by 40;increased by 40
Q3) If two variables are positively related,on a graph they will always be represented by a:
A) line or curve that slopes downward.
B) straight line.
C) horizontal line.
D) line or curve that slopes upward.
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