Economics for Business Final Exam
Course Introduction
Economics for Business introduces students to fundamental economic principles with a focus on their application in real-world business contexts. The course explores how markets operate, the dynamics of supply and demand, and the role of government in economic decision-making. Students learn to analyze cost structures, pricing strategies, competitive markets, and the broader economic environment affecting businesses. By integrating theory with practical examples, the course equips future managers and entrepreneurs with the analytical tools needed to make informed decisions in both domestic and global markets.
Recommended Textbook
Macroeconomics 14th Canadian Edition by
Campbell R. McConnell
Available Study Resources on Quizplus
17 Chapters
661 Verified Questions
661 Flashcards
Source URL: https://quizplus.com/study-set/3444
Page 2
Chapter 1: Limits, Alternatives, and Choices
Available Study Resources on Quizplus for this Chatper
56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/68416
Sample Questions
Q1) Below are six statements.Identify whether each is a positive or normative statement.
(a)The minimum wage should be increased so low-income workers can earn a living wage.
(b)The unemployment rate is too high and should be reduced through government actions.
(c)The rate of inflation was about 2 percent last year,an all time low for the past decade.
(d)The government should take action to break up the monopoly power of Air Canada.
(e)Interest rates should be lower in Canada so that people can afford to build a home.
(f)The Federal government achieved a budget surplus for the first time in thirty years.
Answer: (a), (b), (d)and (e)are normative;and (c)and (f)are positive.
Q2) What is utility and what is its relevance to rational behaviour?
Answer: Utility is the satisfaction that individuals derive from consuming goods and services.The economic approach assumes that humans engage in rational behaviour,that individuals make decisions to maximize their utility.
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
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/68406
Sample Questions
Q1) What is the importance of competition in relation to self-interest in a market system?
Answer: Competition is important as the force,which tempers or regulates the self-interest of producers,sellers,workers,and buyers.If producers make too much profit,competitors will arise to take advantage of the opportunity and as production increases,prices and profits will fall.If workers demand too much,employers will seek other workers who are willing to work for less.If buyers are not willing to pay a fair price for the product,producers will sell the product to someone who is.In each case it is competition or the threat of competition that tempers the potential abuse of economic power.
Q2) Describe the three major virtues of a market system.
Answer: First,the market system promotes efficient use of scarce resources.Products are produced in the least costly way and the products most desired by society get produced.Second,the market system provides incentives for continual improvement and innovation.Rewards are given to entrepreneurs,workers,and consumers who attempt to make the best use of scarce resources.Third,the market system supports individual freedom for producers,consumers,and workers.Each group is able to pursue their own self-interest and thus promote the social interest.
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
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/68405
Sample Questions
Q1) In the space below each of the following,indicate the effect [increase (+),decrease (-)] on equilibrium price (P)and equilibrium quantity (Q)of each of these changes in demand and/or supply.
Answer: 11ea82f3_ff9b_8f18_9299_5735e1a694c9_TB2474_00 (a)+,+; (b)-,+; (c)-,-; (d)+,-
Q2) Use the data in the following table to explain the economic effects of a price floor at $6.
Answer: 11ea82f3_ff9c_c7a1_9299_2598df66a522_TB2474_00 A price floor is a minimum price below which the price is not allowed to fall.To be effective,a price floor must be set above the equilibrium price.Since the equilibrium price exceeds the floor price of $6,the price floor is not binding.The price floor has no effect.The market remains at equilibrium where the price and quantity are $7 and 4,500 units.
Q3) Define "supply."
Answer: Supply is a schedule or curve that shows the various amounts of a product sellers are willing and able to produce and offer for sale at each price in a series of possible prices during a specified period,other things being equal.
To view all questions and flashcards with answers, click on the resource link above.
5
Chapter 4: Market Failures: Public Goods and Externalities
Available Study Resources on Quizplus for this Chatper
38 Verified Questions
38 Flashcards
Source URL: https://quizplus.com/quiz/68404
Sample Questions
Q1) Demand in a market is represented by the equation,P = 30.5Q<sub>D</sub>.Suppose the market price is $18.
(a)How many units do buyers wish to purchase in this market?
(b)What is the maximum amount that the buyers are willing to pay for this quantity of output?
(c)What is the actual amount that buyers have to pay for this quantity of output?
(d)What is the consumer surplus that buyers obtain from purchasing this quantity of output?
Q2) What is the economic rationale for liability rules and lawsuits? What are the limitations with this approach?
Q3) Data on two individuals' preferences for a public good are reflected in the table below.P<sub>A</sub> and P<sub>B</sub> represent the prices individuals A and B,the only two people in the society,are willing to pay for an extra unit of a public good,rather than do without.
Q4) What are the basic differences between a public good and a private good?
Q5) What resource problem is created by negative externalities and what methods are suggested for dealing with this problem?
Q6) What are quasi-public goods and why does the government provide them?
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 6: An Introduction to Macroeconomics
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/68403
Sample Questions
Q1) What are inventories and what role do they play in an economy with sticky prices?
Q2) Why do economists use the term "sticky" prices rather than "stuck" prices?
Q3) What are two reasons why prices might be sticky?
Q4) Define macroeconomics and provide two key concerns it studies.
Q5) Suppose that we are in a condition of "stuck" prices so that the price of nails will not go above or below $2/kg.Further suppose that nail factories have been built on a business plan designed to deliver 6,000 kg/week.How many nails will be sold in a market in which demand (which includes a modest amount of inventory)is characterized by: (a)P = 5 - 0.5Q, (b)P = 6 - 0.5Q,and (c)P = 4 - 0.5Q,where P is in $/kg and Q is in thousands of kg/week? In each case,what happens to inventory.
Q6) Why do economists worry about unemployment?
Q7) What roles do expectations play in macroeconomics?
Q8) What is modern economic growth?
Q9) What are two broad categories of macroeconomic shocks?
Q10) What will happen to prices and output levels if there is an unexpected demand increase and prices are fully flexible?
Page 7
Q11) Why do economists measure growth in an economy using real GDP rather than nominal GDP?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Measuring the Economys Output
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/68402
Sample Questions
Q1) When would a fixed based price index cause GDP growth to be overstated?
Q2) The following is a list of figures for a given year in billions of dollars.Using this data,compute: (a)GDP by the Expenditure Method; (b)GDP by the Income Method; (c)Net exports;and (d)Net Investment.
Q3) Why is GDP a monetary measure?
Q4) Of what use is national income accounting to economists and to policy makers?
Q5) Define net exports.
Q6) Give the three categories,which comprise gross investment;and explain the difference between them.
Q7) What adjustments need to be made to go from net domestic income at factor cost to GDP?
Q8) Differentiate between nominal and real GDP.
Q9) Define GDP and its characteristics.
Q10) If Canada doubled its real GDP,it would be a much less liveable society than it is today.Explain this view.
Q11) The following table shows the price of a specific stereo receiver for a five-year period.Using Year 3 as the base year,calculate the price index for each year.
Q12) Explain what is and what is not included in government purchases in GDP. Page 8
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Economic Growth
Available Study Resources on Quizplus for this Chatper
34 Verified Questions
34 Flashcards
Source URL: https://quizplus.com/quiz/68401
Sample Questions
Q1) What is the efficiency factor?
Q2) If an economy has 2,000 workers with each working 3,000 hours per year and the average real output per worker-hour is $10,what is real GDP?
Q3) If an economy has 9,000 workers with each working 2,000 hours per year and the average real output per worker-hour is $20,what is real GDP?
Q4) Offer a skeptical perspective on the economics of the recent increase in the average rate of Productivity Growth.
Q5) How might poorer nations catch up to richer countries in terms of GDP per capita?
Q6) Which is more important-the quantity of inputs or the productivity of inputs-as a source of economic growth in Canada? Explain.
Q7) Does the recent increase in the average rate of Productivity Growth mean that the downward trends of the rate of economic growth will not occur in the future?
Q8) Summarize the historical growth record of Canada between 1961 and 2011 in terms of real GDP growth and in terms of real GDP per capita growth.
Q9) Summarize the anti-growth view of economic growth.
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
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/68400
Sample Questions
Q1) "The economic cost of unemployment is measured by the GDP gap." Explain this statement.
Q2) Evaluate the statement: "Inflation only benefits the rich."
Q3) Which types of industries are hit hardest by a recession? Explain.
Q4) What is Okun's law? Give an example of how it works.
Q5) How has the rate of inflation in Canada changed in the past five decades?
Q6) What is meant by the term business cycle? List the four phases of the business cycle.
Q7) Assume that nominal income is $35,000 and the price index is 1.20 in year 1.In year 2,nominal income rises to $38,000 and the price index rises to 1.25.What was the percentage change in real income from year 1 to year 2? What was the absolute amount of increase in real income? Make your calculations of the percentage change in real income and the absolute change in real income using the approximation formula and using the more precise method with index numbers.
Q8) What is "demand-pull" inflation?
Q9) Explain the difference between nominal and real interest rates.
Q10) Discuss the unequal burden of unemployment for different demographic groups in Canada.
Q11) What are the economic and non-economic costs of unemployment?
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Basic Macroeconomic Relationships
Available Study Resources on Quizplus for this Chatper
26 Verified Questions
26 Flashcards
Source URL: https://quizplus.com/quiz/68415
Sample Questions
Q1) Complete the accompanying table.
Q2) Suppose that the linear equation for consumption in a hypothetical economy is C = 50 + 0.9 Y.Also suppose that income (Y)is $400.Determine the following: (a)MPC; (b)MPS; (c)level of consumption; (d)APC; (e)APS.
Q3) What are the relationships between the multiplier and the marginal propensities to consume and save?
Q4) Define the multiplier.How is it related to real GDP and the initial change in spending? How can the multiplier have a negative effect?
Q5) Describe the relationship shown by the investment demand curve.
Q6) What is the effect of increase in wealth on the consumption and saving schedules?
Q7) Describe the relationship between the Great Recession of 2008-2009 and the Paradox of Thrift.
Q8) What are two key facts that serve as the rationale for the multiplier effect?
Q9) State four factors that explain why investment spending tends to be unstable.
Q10) Describe the relationship between the Great Recession of 2008-2009 and the Investment Riddle.
Q11) Complete the accompanying table.
Q12) Explain how consumption and saving are related to disposable income. Page 12
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 11: The Aggregate Expenditures Model
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/68414
Sample Questions
Q1) Describe the impact of an increase in government spending assuming no change in taxes and less than full-employment output.
Q2) What is the difference between the multiplier in a closed private economy and the multiplier in a mixed open economy?
Q3) Explain the difference between an equilibrium level of GDP and a level of GDP that is in disequilibrium.
Q4) At the current level of real GDP,
S<sub>a</sub> = $160
I<sub>g</sub> = $180
X = $320
M = $280
G = $270
T = $240
(a)What is the size of injections? Leakages?
(b)Is GDP at its equilibrium level? Explain.
(c)What is the unplanned change in inventories? Explain.
Q5) What is the difference between the investment-demand curve and the investment schedule for the economy?
Q6) What are two components of aggregate expenditures in a closed private economy?
Page 14
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
34 Verified Questions
34 Flashcards
Source URL: https://quizplus.com/quiz/68413
Sample Questions
Q1) Explain the relationship between the aggregate expenditures model in graph (A)below and the aggregate demand model in graph (B)below where aggregate demand is shifting.
Q2) How can the aggregate demand curve be derived from the aggregate expenditures model?
Q3) Economists think of three different aggregate supply curves based upon the time frame of observation.Briefly describe each.
Q4) What determines the equilibrium price level and the level of real GDP in the aggregate demand-aggregate supply (short-run)model?
Q5) Suppose that a hypothetical economy has the following relationship between its real domestic output and the input quantities necessary for producing that level of output.
Q6) Suppose the aggregate demand and short-run aggregate supply schedules for a hypothetical economy are as shown below:
Q7) Using the aggregate demand-aggregate supply (short-run)model,explain the impact of the public's expectations of severe inflation on real GDP and the price level.
Q8) How is the long-run aggregate supply curve sloped? Explain.
Page 15
Q9) In the table below are aggregate demand and aggregate supply schedules.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Fiscal Policy, Deficits, Surpluses, and Debt
Available Study Resources on Quizplus for this Chatper
51 Verified Questions
51 Flashcards
Source URL: https://quizplus.com/quiz/68412
Sample Questions
Q1) In Year 1,the full-employment budget showed a deficit of $100 billion and the actual budget showed a deficit of $125 billion.In Year 2,the full employment budget showed a deficit of $100 billion and the actual budget showed a deficit of $150 billion.Based on the data,what can be concluded about the direction of fiscal policy and the performance of the economy between Years 1 and 2?
Q2) How does the public debt contribute to income inequality?
Q3) In Year 1,the full-employment budget showed a deficit of $100 billion and the actual budget showed a deficit of $150 billion.In Year 2,the full employment budget showed a deficit of $75 billion and the actual budget showed a deficit of $100 billion.Based on the data,what can be concluded about the direction of fiscal policy and the performance of the economy between Years 1 and 2?
Q4) Differentiate between discretionary fiscal policy and non-discretionary policy (or built-in stabilization).
Q5) In Year 1,the full-employment budget showed a deficit of $100 billion and the actual budget showed a deficit of $150 billion.In Year 2,the full employment budget showed a deficit of $125 billion and the actual budget showed a deficit of $175 billion.Based on the data,what can be concluded about the direction of fiscal policy and the performance of the economy between Years 1 and 2?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 14: Money, Banking, and Money Creation
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/68411
Sample Questions
Q1) What is a chartered bank (in Canada)?
Q2) Money is what money does.Explain.
Q3) What is the function of the Canadian Payments Association (CPA)?
Q4) What is meant by the overnight lending rate?
Q5) When would money that is declared legal tender be worthless?
Q6) What is the difference between the M1 and M2 definitions of the money supply?
Q7) Define the desired reserve ratio.
Q8) Use the figures in the table below to answer the following questions.
Q9) Why is the intrinsic value of token money less than its face value?
Q10) What is the difference between the M2 and M2+ definitions of the money supply?
Q11) What are the three functions that a commodity must fulfill to be useful as money?
Q12) Give an equation that shows the relationship between excess cash reserves,maximum demand-deposit expansion,and the monetary multiplier.
Q13) Suppose depositors at chartered banks transfer $10 billion from their savings deposits to their deposits in non-bank institutions.What impact does this have on M1,M2,and M2+?
Q14) What is the problem with printing money to pay down national debt? Page 17
Q15) What is the history behind the idea of a fractional reserve banking system?
Q16) Define the monetary multiplier.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 15: Interest Rates and Monetary Policy
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/68410
Sample Questions
Q1) Why is the transactions demand for money less than nominal GDP?
Q2) Identify two key tools of monetary policy.
Q3) What are the two instruments the Bank of Canada has for influencing the money supply? Which instrument is more important?
Q4) The Bank of Canada is the bankers' bank.Explain.
Q5) How does an increase in the price level affect the equilibrium rate of interest?
Q6) The following are simplified balance sheets for the chartered banking system and the Bank of Canada.Perform the two following transactions, (1)and (2),making appropriate changes in columns (1)and (2)in each balance sheet.Do not cumulate your answers.Also,answer these three questions for each part: (a)What change,if any,took place in the money supply as a direct result of this transaction? (b)What change,if any,occurred in chartered bank reserves? (c)What change occurred in the money-creating potential of the chartered banking system if the reserve ratio is 20%? All figures are in billions of dollars.
Q7) Use the graph below to answer the following questions.D<sub>t</sub> is the transactions demand for money,D<sub>m</sub> is the total demand for money,and S<sub>m</sub> is the supply of money.
Q8) Use the table below to answer the questions.
Q9) How does an increase in nominal GDP affect the equilibrium rate of interest?
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 16: Long-Run Macroeconomic Adjustments
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/68409
Sample Questions
Q1) In general,the Canadian economy has experienced ongoing inflation.Explain how this is possible.
Q2) (a)Using a graph showing aggregate demand,short-run aggregate supply,and long-run aggregate supply,illustrate an economy that faces an inflationary gap.
Q3) What is the long-run equilibrium in the aggregate demand-aggregate supply model?
Q4) Suppose the potential level of real GDP for a hypothetical economy is $160 and the price level (P)initially is 200.Use the following short-run aggregate supply schedules to answer the questions.
Q5) What are three severe criticisms of the Laffer Curve?
Q6) (a)Using a graph showing aggregate demand,short-run aggregate supply,and long-run aggregate supply,illustrate an economy that faces a recessionary gap.
Q7) Describe the characteristics of the short-run aggregate supply curve.Explain what happens to: (1)nominal wages; (2)real wages profits as the price level increases from the full-employment level of output.Then explain what happens to these variables as the price level decreases from the full-employment-level of output.
Q8) Answer the questions based on the following diagram.
Page 20
Q9) Explain the basic arguments for supply-side economics.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: International Trade
Available Study Resources on Quizplus for this Chatper
31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/68408
Sample Questions
Q1) How important is international trade for Canada?
Q2) In 2010,what were the top five exporting nations (measured in dollars)?
Q3) What is the problem associated with the importing of goods by high-income nations from low-income nations? Explain how consumer organisations in high-income nations have tried to circumvent this problem.
Q4) Explain and evaluate the validity of the self-sufficiency argument for trade protection.
Q5) What is the problem with protecting industries in Canada from the dumping of foreign products on the domestic market?
Q6) What are the similarities and differences in the economic effects of tariffs and quotas?
Q7) How do protectionist policies affect consumers,workers,producers,and the government? Explain.
Q8) Who gains and who loses from a protective tariff? Explain.
Q9) "The international flow of goods helps compensate for the international immobility of resources." Analyze and explain.
Q10) What are Canada's top four exports and imports?
Q11) In what ways are national economies linked?
Q12) Critique the argument that trade protection is needed to protect Canadian jobs. Page 21
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 18: Exchange Rates and the Balance of Payments
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/68407
Sample Questions
Q1) Explain the problems with exchange rate controls.
Q2) What is meant by currency appreciation?
Q3) Explain how the exchange rate gets determined in a flexible exchange rate system.
Q4) Answer the next five questions on the basis of the following hypothetical data for a hypothetical nation Economia.All numbers are in billions of dollars.Assume that there is no Statistical Discrepancy.
Q5) Answer the next five questions on the basis of the following hypothetical data for a nation Malthusia.All numbers are in billions of dollars.Assume that there is no Statistical Discrepancy.
Q6) What is the difference between a fixed exchange rate system and a flexible (floating)exchange rate system?
Q7) How does a fixed exchange rate system work? How can a nation maintain its fixed exchange rate?
Q8) If a nation's balance of payments is always in balance,why isn't it also always in equilibrium?
Q9) What happens in the foreign exchange market when there is a Canadian export transaction?
Q10) What is the "managed float"?
To view all questions and flashcards with answers, click on the resource link above. Page 23