Economics for Social Sciences
Textbook Exam Questions
Course Introduction
Economics for Social Sciences introduces students to fundamental economic principles and concepts, emphasizing their relevance and application within the context of social issues and human behavior. The course explores topics such as supply and demand, market structures, the role of government, and the distribution of resources, linking them to real-world challenges like poverty, inequality, public policy, and social welfare.
Through a blend of theoretical frameworks and case studies, students learn how economic reasoning can inform and enhance the analysis of societal trends and policy decisions across various disciplines within the social sciences.
Recommended Textbook
Principles of Macroeconomics 4th Canadian Edition by Robert H. Frank
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16 Chapters
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Page 2
Chapter 1: Measuring Macroeconomic Performance: Output and
Prices
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Sample Questions
Q1) The marginal benefit of an activity is the
A) same as the total benefits of the activity.
B) total benefit divided by the level of the activity.
C) change in the activity divided by the change in benefits.
D) extra benefit associated with an extra unit of the activity.
E) total benefit divided by the change in the level of the activity.
Answer: D
Q2) Jack has a ticket to see a concert,which he paid $30 for yesterday.He takes an unpaid day off from work to get ready for the concert.When he arrives at the concert,5 different people offer him $70 for his ticket.The cost to Jack of seeing the concert is now A) $30.
B) $40.
C) $70.
D) $70 plus his forgone earnings.
E) his forgone earnings.
Answer: C
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3
Chapter 2: Measuring Macroeconomic Performance:
Saving and Wealth
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Sample Questions
Q1) The equation for Cartman's production possibilities curve is A = 13 - 0.5B,where A and B are the only two goods he can produce.The slope of Cartman's production possibilities curve is __________ and quantifies __________.
A) - 0.5;the change in A for a one-unit change in B
B) 0.5;the change in A for a one-unit change in B
C) - 0.5;the change in B for a one-unit change in A
D) 0.5;the change in B for a one-unit change in A
E) - 2;the change in A for a one-unit change in B
Answer: A
Q2) The opportunity cost of an extra acoustic guitar for Mark is
A) 0.0625 fewer electric guitars.
B) 8 fewer electric guitars.
C) 16 fewer electric guitars.
D) 20 fewer electric guitars.
E) 30 fewer electric guitars.
Answer: C
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Chapter 3: Measuring Macroeconomic Performance:
Wages, Employment and the Labour Market
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Sample Questions
Q1) As more houses are needed in Calgary due to the oil boom,the demand curve for an average house in Calgary is expected to
A) shift to the right.
B) shift to the left.
C) move down along the old existing demand curve.
D) move up along the old existing demand curve.
E) move in the opposite direction as the supply curvE.
Answer: A
Q2) Assume that column A and column C are the initial demand and supply curves.If supply and demand both change so that column B and column D are now the relevant curves,one can infer that the new equilibrium
A) price can be either greater than or less than $40.
B) price must be less than $40.
C) quantity must be greater than 70 units.
D) price must be greater than $40.
E) quantity must be less than 60 units.
Answer: D
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Chapter 4: Short-Term Economic Fluctuations
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Sample Questions
Q1) A particularly strong expansion is called a(n)
A) output excess.
B) boom.
C) growth recession.
D) bonanza.
E) production surplus.
Q2) Among economists today,the most widely accepted cause of the Great Depression is
A) poor economic policymaking.
B) wild stock market speculation.
C) globalization.
D) the inherent instability of capitalist economies.
E) Adolf Hitler's election as Chancellor of Germany.
Q3) Which of the following would be considered an example of fiscal policy?
A) A broad government initiative to reduce the country's reliance on agriculture and promote high-technology industries.
B) A reduction in income tax rates.
C) The provision of additional cash to the banking system.
D) Interest rate hikes generated by a reduction in the money supply.
E) A decision by a developing country to reduce government control of the economy and to become more market-oriented.
Page 6
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Chapter 5: Spending and Output in the Short Run
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Sample Questions
Q1) The index of economic well-being includes all of the following EXCEPT
A) per-capita consumption.
B) societal accumulation of stocks of productive resources.
C) income distribution.
D) economic security.
E) exports to developing countries.
Q2) Real GDP per capita is positively associated with all of the following EXCEPT
A) more and better goods and services.
B) better health and life expectancies.
C) better education.
D) higher net exports.
E) a higher standard of living.
Q3) Discouraged workers are
A) chronically unemployed.
B) involuntary part-time workers.
C) short-term unemployed workers.
D) not counted as unemployed.
E) long-term unemployed workers.
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7
Chapter 6: Fiscal Policy
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Sample Questions
Q1) A labour contract provides for a first-year wage of $15 per hour,and specifies that the real wage will rise by 2% in the second year of the contract and by another 2% in the third year.The consumer price index (CPI)is 100 in the first year,109 in the second year,and 115 in the third year.What dollar wage must be paid in the third year?
A) $15.00 per hour.
B) $15.30 per hour.
C) $15.61 per hour.
D) $17.24 per hour.
E) $17.95 per hour.
Q2) A college graduate in 1972 found a job paying $7,200,when the consumer price index (CPI)was 21.9.A college graduate in 2000 found a job paying $30,000,when the CPI was 95.4.The 1972 graduate's job paid ________ in nominal terms and ________ in real terms than the 2000 graduate's job.
A) more;less
B) more;more
C) less;the same
D) less;more
E) less;less
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Page 8
Chapter 7: Money, Prices and the Reserve Bank
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Sample Questions
Q1) In Macroland,potential GDP equals $20 billion and real GDP equals $21.5 billion.Macroland has a(n)_________ gap equal to ________% of potential GDP.
A) expansionary;7.5
B) expansionary;7.0
C) expansionary;1.5
D) recessionary;7.5
E) recessionary;7.0
Q2) When actual output is less than potential output,there is a(n)
A) budget deficit.
B) budget surplus.
C) trade deficit.
D) recessionary gap.
E) expansionary gap.
Q3) At the full-employment unemployment rate,there is only
A) cyclical and frictional unemployment.
B) frictional,structural,and seasonal unemployment.
C) demand-deficient unemployment.
D) "discouraged workers" unemployment.
E) cyclical,structural,and frictional unemployment.
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Page 9
Chapter 8: The Reserve Bank and the Economy
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Sample Questions
Q1) If planned aggregate expenditure (PAE)in an economy equals 2,000 + 0.6Y and potential output (Y*)equals 4,900,taxes must be increased by ________ (rounded to the nearest whole number)to eliminate any output gap.
A) 67
B) 200
C) 225
D) 250
E) 1,000
Q2) Suppose C = 100 + 0.6(Y - T)and T = 0.25Y,I = 150,G = 250 and NX = 50.An increase in government purchases of goods and services from G = 250 to G = 265 will result in an increase in Y (GDP)of
A) 10.
B) 13.
C) 27.
D) 34.
E) 43.
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Chapter 9: The Aggregate Demand - Aggregate Supply
Model
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Sample Questions
Q1) A bank run is an episode in which
A) depositors,spurred by news or rumours of the possible bankruptcy of multiple banks,rush to withdraw deposits from the banking system.
B) depositors,spurred by news or rumours of the possible bankruptcy of a particular bank,rush to withdraw deposits from that bank.
C) commercial banks,concerned about high interest rates,rush to borrow from the overnight market.
D) depositors,afraid of increasing interest rates,attempt to engage in borrowing from the Bank of Canada.
E) the Bank of Canada,concerned about unusually rapid increases in the money supply,refuses to make loans to commercial banks.
Q2) When the central bank buys $5,000,000 worth of government bonds to the public,the money supply
A) increases by more than $5,000,000.
B) increases by $5,000,000.
C) increases by less than $5,000,000.
D) does not change.
E) decreases by $5,000,000.
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Chapter 10: Macroeconomic Policy
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Sample Questions
Q1) In an economy in which planned aggregate expenditure is given by PAE = 3,000 + 0.75Y - 10,000r,the central bank is currently setting the interest rate at 0.06 (6%).If potential output equals 8,400,the central bank must _______ the interest rate to _______ to restore full employment.
A) lower;3%
B) lower;4%
C) lower;5%
D) raise;8%
E) raise;9%
Q2) Because inflation tends to change relatively ________,action by the Bank of Canada to change the ________ interest rate causes the ________ interest rate to change by about the same amount.
A) quickly;nominal;real
B) quickly;real;nominal
C) slowly;nominal;real
D) slowly;real;nominal
E) slowly;prime business;overnight
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Chapter
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Q1) In the AD-AS model,stagflation does not persist,because the working of the self-correcting mechanism of the economy ___________ the level of output and ___________ the price level until the economy eventually returns to a long-run equilibrium state,where actual output ___________ potential output.
A) decreases;increases;equals B) increases;decreases;exceeds C) decreases;decreases;falls short of D) increases;decreases;equals E) decreases;increases;exceeds
Q2) According to the AD-AS model,the economy depicted above has a short-run equilibrium output of ___________ and a(n)___________ gap equal to
A) 650;expansionary;50
B) 500;recessionary;100
C) 600;recessionary;50
D) 650;expansionary;100
E) 600;recessionary;650
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Page 13
Chapter 12: The Production Function Approach to Understanding Growth
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Q1) A downward shift of the Bank of Canada's monetary policy rule corresponds to a _________ the aggregate demand (ADI)curve,and a decrease in autonomous aggregate demand corresponds to a _________ the aggregate demand (ADI)curve.
A) shift to the left of;movement up B) shift to the left of;shift to the right of C) movement up;movement down D) movement up;shift to the right of E) shift to the right of;shift to the left of
Q2) The economy pictured in the diagram above is in short-run equilibrium with the combination of inflation and output indicated by point ________.The long-run equilibrium combination of inflation and output for this economy is indicated by point
A) A;B
B) A;C
C) B;A
D) B;C
E) C;A
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14
Chapter 13: Savings, Capital Formation and Comparative
Economic Growth
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Sample Questions
Q1) For given domestic and foreign price levels,a decrease in the nominal exchange rate
__________ the real exchange rate.
A) increases
B) decreases
C) may either increase or decrease
D) does not change
E) offsets any change in
Q2) During summer 2002,the nominal exchange rate was $1 to 5.5 Mexican pesos.The dollar per peso equivalent exchange rate was
A) $9.50 per peso.
B) $0.095 per peso.
C) $10.50 per peso.
D) $0.182 per peso.
E) $105 per peso.
Q3) Speculative attacks against a currency are caused by fears of A) exchange rate revaluations.
B) exchange rate devaluations.
C) monetary policy tightening.
D) balance-of-payments surpluses.
E) increases in the market equilibrium value of the exchange ratE.
Page 15
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Chapter 14: International Trade
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Sample Questions
Q1) The ___________ refers to low and middle-income countries with an abundance of natural resources but that do not necessarily achieve higher output levels than otherwise similar countries.
A) heavily indebted poor countries
B) newly industrialized countries
C) emerging market economies
D) import substitution policy
E) resource curse
Q2) The faster the rate of technological change,the
A) lower the rate of growth in productivity.
B) lower the rate of economic growth.
C) higher the rate of unemployment.
D) higher the rate of growth in productivity.
E) higher the rate of capital accumulation.
Q3) The key variable in determining changes in a country's standard of living is the A) interest rate.
B) inflation rate.
C) unemployment rate.
D) population growth rate.
E) long-run rate of economic growth.
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Chapter 15: Exchange Rates and the Open Economy
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Sample Questions
Q1) If the economy is initially suffering from a recessionary gap,the gap could be closed by
A) a decrease in government purchases.
B) an increase in taxes.
C) a decrease in transfers.
D) an increase in the interest rate.
E) an increase in net exports.
Q2) If the equation for planned aggregate expenditure is given by PAE = 4,000 + 0.6Y and potential output is equal to 9000,then there is a(n)________ gap equal to ________ units,so if net exports ________ by ________,the economy will return to potential output.
A) expansionary;1,000;decrease;400
B) expansionary;100;decrease;40
C) expansionary;5,000;increase;2,000
D) recessionary;1,000;increase;400
E) recessionary;100;increase;40
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17
Chapter 16: The Balance of Payments: Net Exports and International Capital Flows
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Sample Questions
Q1) The value of the marginal product of new capital depends on the _________ and the _________.
A) productivity of new capital;relative price of the firm's output
B) price of new capital goods;real interest rate
C) relative price of the firm's output;real interest rate
D) taxes levied on the revenue generated;price of new capital goods
E) productivity of new capital;real interest rate
Q2) National saving equals
A) private saving + public saving.
B) household saving + public saving.
C) corporate saving + public saving.
D) small business saving + public saving.
E) private saving + corporate saving.
Q3) Identify the correct relationship from the list below.
A) Change in wealth = saving + capital losses - capital gains.
B) Savings = capital gains - change in wealth + capital losses.
C) Capital gains + capital losses = change in wealth - saving.
D) Change in wealth + capital losses = saving - capital gains.
E) Capital losses = capital gains - change in wealth + saving.
Page 18
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