Economics for Business Test Bank
Course Introduction
Economics for Business is designed to equip students with a foundational understanding of key economic principles and their application to real-world business decision-making. The course explores both microeconomic and macroeconomic concepts, including supply and demand, market structures, pricing strategies, consumer behavior, production and cost analysis, and the impact of government policies on business environments. Emphasis is placed on how economic theories inform strategic planning, resource allocation, and competitive advantage within domestic and global markets. Through case studies and practical examples, students will learn to analyze economic trends and make informed business decisions.
Recommended Textbook
Macroeconomics 3rd Edition Canadian by Paul Krugman Robin Wells
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19 Chapters
5325 Verified Questions
5325 Flashcards
Source URL: https://quizplus.com/study-set/3893
Page 2
Chapter 1: First Principles
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198 Verified Questions
198 Flashcards
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Sample Questions
Q1) Because of the opportunity cost,if Canada spends $87 billion in the rebuilding of Haiti after a Hurricane,it has to forgo the opportunity to spend $87 billion on some other programme.
A)True
B)False
Answer: True
Q2) Individuals gain from trade because:
A) of specialization in production.
B) they can sell at a lower price than they can buy at.
C) self-sufficiency is efficient.
D) of the principle of absolute advantage.
Answer: A
Q3) Which statement is one of the four principles of individual choice?
A) Resources are usually renewable.
B) The true cost of something is impossible to measure.
C) People take advantage of opportunities to make themselves better off only if there is no risk involved.
D) Choices are necessary because resources are scarce.
Answer: D
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Page 3
Chapter 2: Economic Models: Trade-Offs and Trade
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296 Verified Questions
296 Flashcards
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Sample Questions
Q1) (Table: Trade-off of Study Time and Leisure Time)Use Table: Trade-off of Study Time and Leisure Time.A student sleeps 8 hours per day and divides the remaining time between study time and leisure time.The table shows the combinations of study and leisure time that can be produced in the 16 waking hours of each day.Suppose the student completes a speed-reading course that allows him to do the same amount of studying in half as many hours.His opportunity cost: A) of leisure has increased. B) of studying has increased. C) of leisure has decreased. D) has not changed.
Answer: A
Q2) It is impossible for economists to use computers to simulate how the economy works.
A)True
B)False
Answer: False
Q3) An apple is a resource sold in the factor market.
A)True
B)False
Answer: False
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Chapter 3: Supply and Demand
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264 Verified Questions
264 Flashcards
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Sample Questions
Q1) Good X and good Y are related goods.Holding everything else constant,if the price of good X decreases and the demand for good Y increases,good X and good Y are probably:
A) complements.
B) substitutes.
C) inferior.
D) normal.
Answer: A
Q2) The supply curve for apartments in Edmonton reflects how many apartments landlords are willing and able to offer for rent at various prices.
A)True
B)False
Answer: True
Q3) Which factor would cause an INCREASE in the supply of a good?
A) rising input prices
B) a fall in the price of the good
C) an increase in the number of sellers
D) expectations of future price increases
Answer: C
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Page 5
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) 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.
Q2) Quota limits that are less than the market equilibrium quantity cause:
A) the demand price to be above the supply price.
B) the quantity demanded to be more than the quantity supplied.
C) the quantity demanded to be less than the quantity supplied.
D) the demand price to be equal to the supply price.
Q3) A minimum price that the government guarantees farmers will receive for a particular crop is a(n):
A) price ceiling.
B) price floor (or price support).
C) deficiency price.
D) export subsidy.
Q4) A rent ceiling must be set above the equilibrium rent to be binding.
A)True
B)False
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Chapter 5: International Trade
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258 Verified Questions
258 Flashcards
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Sample Questions
Q1) (Figure: The Production Possibility Frontiers for Jackson and Tahoe)Use Figure: The Production Possibility Frontiers for Jackson and Tahoe.Tahoe has an absolute advantage in producing:
A) wheat only.
B) cattle only.
C) both wheat and cattle.
D) neither wheat nor cattle.
Q2) On a production possibility frontier,opportunity cost is:
A) the decrease in the output of one good when the output of the other good is increased.
B) the rate at which people are willing to exchange goods as determined by demand and supply.
C) the dollar cost of the good given up to get another good.
D) independent of the slope of the curve.
Q3) Canada,Mexico,and Canada have:
A) joined together and are operating in what is called a closed-trade area with respect to the European Union.
B) developed a currency similar to the euro.
C) eliminated many trade barriers among themselves.
D) reduced trade among themselves to protect jobs at home.
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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) (Figure: The Business Cycle)Point B on this graph shows a(n):
A) peak.
B) trough.
C) expansion.
D) recession.
Q2) Macroeconomics focuses on:
A) the economy as a whole.
B) individual decisions.
C) wages.
D) the allocation of scarce resources.
Q3) If workers' nominal wages have risen by 50% over a 10 years and prices have increased by 40% in that same period,then we can safely conclude that the amount of goods and services workers can buy has:
A) fallen.
B) increased.
C) not changed.
D) decreased in quality.
Q4) Recessions are periods in which output and employment are falling.
A)True
B)False
Page 8
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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) Aggregate output is:
A) equal to consumer spending on goods and services.
B) the value of new construction,changes in inventories,and the purchase of physical capital by businesses.
C) the total quantity of intermediate goods produced by an economy.
D) the total quantity of final goods and services produced by an economy.
Q2) If nominal GDP increases from $10 trillion to $12 trillion in a year,it can only mean that aggregate output grew by 20%.
A)True
B)False
Q3) (Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model.What is the value of disposable income?
A) $1 020
B) $1 000
C) $870
D) $850
Q4) Real GDP will increase if aggregate output increases.
A)True
B)False
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Chapter 8: Unemployment and Inflation
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332 Verified Questions
332 Flashcards
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Sample Questions
Q1) The rate of unemployment is found by dividing the: A) number of people looking for work by the population.
B) number of people not working but looking for work by the sum of the number of people not working but looking for work and the number of people employed.
C) labour force by the number of people looking for work.
D) unemployed and discouraged workers by the labour force.
Q2) If the labour force becomes younger,the natural rate of unemployment will fall.
A)True B)False
Q3) Firms pay an efficiency wage because:
A) it reduces the risk of losing the best workers.
B) it is required by law.
C) they don't have to offer health insurance if they pay efficiency wages. D) it reduces the employee's income tax liability.
Q4) The use of online banking increases the unit-of-account cost of a high inflation rate. A)True B)False
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Chapter 9: Long-Run Economic Growth
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298 Verified Questions
298 Flashcards
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Sample Questions
Q1) The convergence hypothesis:
A) apparently applies only to wealthy countries.
B) seems to hold only when other things such as education and infrastructure are held equal.
C) suggests that relatively poor countries will continue to be poor regardless of their level of saving.
D) states that countries' growth depends on the amount of government intervention in the marketplace.
Q2) If an economy has a real GDP per capita growth rate of 2%,it will take 14 years for GDP per capita to double.
A)True
B)False
Q3) According to the rule of 70,if real GDP per capita is growing at 2% a year,in 100 years it will have increased by:
A) about 4 times.
B) about 7 times.
C) almost 30 times.
D) almost 60 times.
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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) The value of all accumulated savings of a household is called:
A) wealth.
B) income.
C) debt.
D) wages.
Q2) A random walk is:
A) the unpredictable movement over time of a variable.
B) the predicted fluctuations of a known variable.
C) the movement of GDP growth per capita in the long run.
D) a description of the economic fluctuations in the short run.
Q3) Bonds are less risky than stocks because a company legally must pay what it owes to lenders before it can distribute profits to stockholders.
A)True
B)False
Q4) A decrease in the domestic demand for loanable funds would MOST likely be caused by a(n):
A) decrease in the inflation rate.
B) increase in the budget deficit.
C) decrease in expected business opportunities.
D) increase in expected business opportunities.
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Chapter 11: Income and Expenditure
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) The marginal propensity to consume is:
A) increasing if the marginal propensity to save is increasing.
B) the proportion of total disposable income that the average family saves.
C) the change in consumer spending divided by the change in aggregate disposable income.
D) the change in consumer spending minus the change in aggregate disposable income.
Q2) The main reasons that retail sales fell in Finland during 2016 were:
A) a decrease in imports and declining sales at Nokia,which led to reduced household incomes.
B) an increase in imports and declining sales at Nokia,which led to reduced household incomes.
C) an increase in exports and rising sales at Nokia,which led to reduced household incomes.
D) a decrease in exports and declining sales at Nokia,which led to reduced household incomes.
Q3) A $200 million increase in investment spending will increase real GDP by exactly $200 million.
A)True
B)False
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Chapter 12: Aggregate Demand and Aggregate Supply
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345 Verified Questions
345 Flashcards
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Sample Questions
Q1) Changes in short-run aggregate supply can be caused by changes in:
A) wages.
B) wealth.
C) government spending.
D) consumption spending.
Q2) (Figure: Aggregate Supply Movements)Refer to Figure: Aggregate Supply Movements.Which statement is correct?
A) An increase in the price level is responsible for pushing the curve to the right.
B) A decrease in the price level is responsible for pushing the short-run aggregate supply curve to the right.
C) Short-run aggregate supply has increased.
D) Short-run aggregate supply has decreased.
Q3) In the long run,the aggregate price level falls.This could result from:
A) a leftward shift in AD.
B) a rightward shift in AD.
C) a leftward shift in short-run AS.
D) more spending by consumers.
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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) The cyclically adjusted budget balance refers to:
A) the size of the budget in the current year.
B) the average size of the budget over the long run.
C) the swings in the budget as the business cycle changes.
D) the budget balance if actual output were equal to potential output.
Q2) (Figure: AD-AS)Refer to Figure: AD-AS.Suppose the economy is producing the output level Y<sub>P</sub> and a negative demand shock shifts the AD<sub>1</sub> curve to AD<sub>3</sub>.The economy now has a(n)_____ gap,which can be closed by _____ fiscal policy.
A) inflationary;expansionary
B) recessionary;contractionary
C) recessionary;expansionary
D) inflationary;contractionary
Q3) Suppose the marginal propensity to consume is 0.8.If the government cut taxes by $100 billion,then real GDP would increase by $500 billion.
A)True
B)False
Q4) The budget deficit usually decreases when the unemployment rate increases.
A)True
B)False
Page 15
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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) If the reserve ratio is 25% and the money supply increases by $100 000,then the initial reserve injection by the Bank of Canada was:
A) $2 500.
B) $10 000.
C) $4 000.
D) $25 000.
Q2) Money is anything that:
A) serves as a medium of exchange for goods and services.
B) can be converted to silver with relatively little loss in value.
C) can be converted to gold with relatively little loss in value.
D) is traded in the stock market.
Q3) (Scenario: Money Supply Changes)Refer to Scenario: Money Supply Changes.After the withdrawal reserves _____,and chequable deposits _____ by $5000.
A) decrease by $5000;decrease
B) decrease by $5000;increase
C) increase by $5000;decrease
D) increase by $500;increase
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Page 16
Chapter 15: Monetary Policy
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340 Verified Questions
340 Flashcards
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Sample Questions
Q1) Given a recessionary gap,the Bank of Canada will use monetary policy to _____ interest rates and _____ aggregate demand.
A) increase;increase
B) increase;decrease
C) decrease;increase
D) decrease;decrease
Q2) If the economy is at potential output and the Bank of Canada increases the money supply,real GDP will likely remain the same in the short run.
A)True
B)False
Q3) (Figure: Output Gap)Refer to Figure: Output Gap.If the economy is producing at Y<sub>2</sub>,then it has a(n)_____ gap,as _____ real GDP exceeds _____ real GDP,and the Bank of Canada should use _____ monetary policy.
A) recessionary;actual;potential;expansionary
B) recessionary;potential;actual;expansionary
C) inflationary;actual;potential;contractionary
D) inflationary;potential;actual;contractionary
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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) A long-run Phillips curve has a(n)_____ slope because _____.
A) negative;there is a positive relationship between the output gap and the nonaccelerating inflation rate of unemployment (NAIRU)
B) infinite;any unemployment rate below the NAIRU leads to ever-accelerating inflation
C) zero;there is a positive relationship between expected inflation and unemployment
D) positive;any unemployment rate above the NAIRU leads to ever-accelerating inflation
Q2) (Figure: AD-AS)Refer to Figure: AD-AS.Suppose that the economy is initially at E<sub>1</sub>,where AD<sub>1 </sub>intersects SRAS<sub>1</sub> and LRAS.Now,suppose that the AD<sub>1 </sub>shifts to AD<sub>2.</sub>That shift could be due to a(n):
A) increase in the aggregate price level.
B) decrease in government expenditure.
C) increase in tax rates.
D) increase in money supply.
Q3) In June 2008,Zimbabwe had the world's highest unemployment rate.
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) Since 2012,Japan has _____ government spending and _____ monetary expansion,resulting in ____ growth.
A) cut;increased;strong
B) increased;increased;very mild
C) cut;decreased;record-setting
D) increased;decreased;no
Q2) Which statement about new classical macroeconomics is FALSE?
A) It returned to the classical view that shifts in the aggregate demand curve affect only the aggregate price level,not aggregate output.
B) It challenged traditional arguments about the slope of the short-run aggregate supply curve based on the concept of rational expectations.
C) It suggested that changes in productivity cause economic fluctuations.
D) It embraced the Keynesian notion that changes in aggregate demand may affect aggregate output in the short run.
Q3) Monetarists argued that fiscal policy was ineffective if the money supply increased.
A)True
B)False
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19
Chapter 18: International Macroeconomics
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441 Verified Questions
441 Flashcards
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Sample Questions
Q1) If foreign countries are increasing their demand for Canadian financial assets,then we can expect the Canadian dollar to _____ and the current account balance to _____,all other things being equal.
A) appreciate;increase
B) appreciate;decrease
C) depreciate;increase
D) depreciate;decrease
Q2) (Scenario: Gizmovia II)Refer to Scenario: Gizmovia II.If Gizmovia uses foreign exchange controls,it should require licences to _____ gizmos and _____ dollars.
A) buy;buy
B) buy;sell
C) sell;sell
D) sell;buy
Q3) Foreign exchange reserves are stocks of foreign currencies that a government maintains to buy its currency in foreign exchange markets.
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) (Table: Hours Studied and Quiz Score)Use Table: Hours Studied and Quiz Score.The table shows data for students in an economics class.If we were to graph these data and draw a line through the points,we would choose _____ to be the independent variable;the vertical intercept of our line would be _____;and the slope of our line would be _____.
A) quiz score;y = 2;-2
B) quiz score;x = 0;-2
C) hours studied;y = 0;+2
D) hours studied;y = 2;+2
Q2) (Figure: y = f(x))Use Figure: y = f(x).The slope of the relation between x and y is:
A) positive and constant.
B) negative and getting steeper.
C) positive and getting steeper.
D) positive and getting flatter.
Q3) If two variables are negatively related,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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Page 21