Intermediate Macroeconomics Practice Exam
Course Introduction
Intermediate Macroeconomics builds on foundational macroeconomic principles to provide a deeper understanding of aggregate economic activity and policy. The course explores key concepts such as national income determination, economic growth, unemployment, inflation, and the roles of fiscal and monetary policy. It examines the behavior of consumers, firms, and governments within macroeconomic frameworks like the IS-LM and AD-AS models, and introduces students to modern topics such as expectations, open economy macroeconomics, and short-run versus long-run analysis. Through analytical tools and real-world applications, students gain the skills necessary to interpret economic data and assess the impact of policy decisions on national and global economies.
Recommended Textbook
Macroeconomics Canada in the Global Environment 8th Edition by Michael Parkin
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15 Chapters
1897 Verified Questions
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Page 2
Chapter : 1 What Is Economics
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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) The expansion of international trade,borrowing and lending,and investment is
A)the big tradeoff.
B)industrial revolution.
C)corporate revolution.
D)globalization.
E)antiglobalization.
Answer: D
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Page 3
Chapter 2: The Economic Problem
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Sample Questions
Q1) Refer to Table 2.1.3.In moving from combination C to combination B,the opportunity cost of producing one additional hockey stick is
A)2 maple leaves.
B)1/2 maple leaves.
C)6 maple leaves.
D)1/6 maple leaves.
E)3 maple leaves.
Answer: E
Q2) The diagram of the production possibilities frontier corresponding to the data in Table 2.1.1 would be
A)negatively sloped and linear.
B)negatively sloped and bowed inward.
C)negatively sloped and bowed outward.
D)positively sloped for X and negatively sloped for Y.
E)a horizontal line.
Answer: C
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Chapter 3: Demand and Supply
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Sample Questions
Q1) Refer to Figure 3.5.2,which represents the market for beer.If the price of pizza,a complement of beer rises,what is the new beer equilibrium,ceteris paribus?
E)6
Answer: B
Q2) Good A is a normal good if
A)a rise in the price of a complement causes the demand for A to decrease.
B)income and the demand for A are negatively related.
C)a rise in the price of a substitute causes the demand for A to increase.
D)the demand for A increases when income rises.
E)good A satisfies the law of demand.
Answer: D
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Chapter 20: Measuring Gdp and Economic Growth
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Sample Questions
Q1) 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
Q2) The purchasers in the goods markets are
A)households and government only.
B)households and firms only.
C)households and net exporters only.
D)households, firms, and government only.
E)households, firms, government, and those who import our goods.
Q3) Which of the following relationships is correct?
A)Gross Investment = Net Investment + Depreciation
B)Consumption expenditure = Net Investment - Depreciation
C)Net Investment = Gross Investment + Depreciation
D)Depreciation = Gross Investment - Consumption expenditure
E)Saving = Gross Investment - Taxes
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Chapter 21: Monitoring Jobs and Inflation
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Sample Questions
Q1) Who of the following would be counted as unemployed in Canada?
A)Doris only works five hours a week but is looking for a full-time job.
B)Kanhaya has stopped looking for work since he was unable to find a suitable job during a two-month search.
C)Sharon is a college student with no job.
D)Maurice has been laid off from his job for 20 weeks but expects to be called back soon.
E)Bogdan has been laid off from his job but does not expect to be called back, and is not looking.
Q2) In a recession,typically
A)unemployment decreases.
B)the labour force participation rate increases.
C)the employment-to-population ratio decreases.
D)the employment-to-population ratio increases.
E)none of the above.
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Chapter 22: Economic Growth
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Sample Questions
Q1) During 2011,the country of Economia had real GDP of $115 billion and the population was 0.9 billion. In 2010,real GDP was $105 billion and the population was 0.85 billion. In 2011,real GDP per person was
A)$124.
B)$135.
C)$117.
D)$12,778.
E)$128.
Q2) Ceteris paribus,an increase in population results in a
A)higher level of labour employed and higher potential GDP per hour of labour.
B)lower level of labour employed and higher potential GDP per hour of labour.
C)higher level of labour employed and lower potential GDP per hour of labour.
D)lower level of labour employed and lower potential GDP per hour of labour.
E)constant level of labour employed and constant potential GDP per hour of labour.
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Chapter 23: Finance,saving,and Investment
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Sample Questions
Q1) Capital is
A)the tools, instruments, machines, buildings, and other items that have been produced in the past and that are used today to produce goods and services.
B)financial wealth.
C)the sum of investment and government expenditure on goods.
D)net investment.
E)gross investment.
Q2) According to the Ricardo-Barro effect,
A)government deficits raise the real interest rate.
B)taxpayers fail to foresee that government deficits imply higher future taxes.
C)households increase personal saving when governments run budget deficits.
D)government budget deficits increase households' expected future disposable income.
E)a government deficit decreases the supply of loanable funds.
Q3) The quantity of loanable funds demanded increases when
A)expected profit decreases.
B)the real interest rate rises.
C)the real interest rate falls.
D)the supply of loanable funds decreases.
E)wealth increases.
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Page 9
Chapter 24: Money,the Price Level,and Inflation
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Sample Questions
Q1) If the interest rate is below the equilibrium,how is equilibrium achieved in the money market?
A)People buy goods to get rid of their excess money, lowering the price of goods and raising the interest rate.
B)People sell goods to get rid of their excess money, lowering the price of goods and raising the interest rate.
C)People sell bonds to get rid of their excess money, lowering the price of bonds and raising the interest rate.
D)People sell bonds to try and raise more money, lowering the price of bonds and raising the interest rate.
E)People buy bonds to get rid of their excess money, raising the price of bonds and raising the interest rate.
Q2) Real money is equal to
A)nominal income divided by the velocity of circulation.
B)nominal income divided by the price level.
C)nominal money divided by the price level.
D)the price level divided by nominal money.
E)nominal money divided by nominal income.
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Chapter 25: The Exchange Rate and the Balance of Payments
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Sample Questions
Q1) Suppose that the Canadian dollar exchanges for 1.05 U.S.dollars and also for 0.65 Euros.A U.S.dollar exchanges for
A)1.00 Euro.
B)1.70 Euros.
C)0.40 Euros.
D)0.68 Euros.
E)0.62 Euros.
Q2) Appreciation of a currency means
A)an increase in the amount of goods and services that currency can purchase within its own country.
B)an increase in the precious metal content in coins.
C)a shortage of currency.
D)that currency can buy more foreign currency.
E)that currency can buy less foreign currency.
Q3) The higher the exchange rate,all other things remaining the same,the
A)smaller is the supply of Canadian imports.
B)smaller is the volume of Canadian imports.
C)greater is the volume of Canadian imports.
D)greater is the supply of Canadian imports.
E)greater is the demand for Canadian exports.
Page 11
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Chapter 26: Aggregate Supply and Aggregate Demand
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Sample Questions
Q1) Refer to Figure 26.3.1.Short-run macroeconomic equilibrium real GDP in Econoworld is
A)$360 billion.
B)$400 billion.
C)$440 billion.
D)$480 billion.
E)$520 billion.
Q2) Refer to Figure 26.3.1.As Econoworld automatically adjusts to long-run equilibrium,the
A)SAS curve shifts rightward.
B)AD curve shifts rightward.
C)SAS curve shifts leftward.
D)AD curve shifts leftward.
E)LAS curve shifts leftward.
Q3) Complete the following sentence.Potential GDP
A)increases as the price level rises.
B)is the level of real GDP when unemployment is zero.
C)increases as the quantity of money in the economy increases.
D)does not vary with the price level.
E)never changes.
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12
Chapter 27: Expenditure Multipliers: the Keynesian Model
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Sample Questions
Q1) Which of the following quotations illustrates a decrease in aggregate expenditure?
A)"The new stadium will generate $200 million in spin off spending."
B)"Higher expected profits are leading to higher investment spending by business, and will lead to higher consumer spending."
C)"The projected cuts in government jobs will hurt the local retail industry."
D)"Taking the grain elevator out of our small town will destroy 300 jobs."
E)Both C and D.
Q2) An increase in autonomous expenditure shifts the AE curve
A)upward but leaves its slope unchanged.
B)upward and the curve becomes steeper.
C)downward but leaves its slope unchanged.
D)downward and the curve becomes steeper.
E)upward and the curve becomes less steep.
Q3) Which one of the following variables has an induced component?
A)investment
B)consumption
C)exports
D)government expenditure on goods and services
E)all of the above
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Page 13
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Sample Questions
Q1) Suppose the quantity of money is expected to remain unchanged but it actually increases.The price level
A)rises and real GDP increases.
B)rises and real GDP decreases.
C)falls and real GDP increases.
D)falls and real GDP decreases.
E)rises and real GDP stays the same.
Q2) A movement down along the short-run Phillips curve results from an unanticipated
A)decrease in aggregate demand.
B)increase in aggregate demand.
C)decrease in short-run aggregate supply.
D)increase in short-run aggregate supply.
E)increase in the natural unemployment rate.
Q3) Refer to Figure 28.1.2.If the short-run aggregate supply curve does not shift,and remains at SAS0,then the expected inflation rate is A)zero.
B)10 percent.
C)15 percent.
D)5 percent.
E)-10 percent.
Page 14
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Chapter 29: Fiscal Policy
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Sample Questions
Q1) During a recession,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.
Q2) 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
Q3) In 2011,Canada had ________.
A)a structural deficit and a cyclical deficit
B)a structural deficit and a cyclical surplus
C)a structural surplus and a cyclical deficit
D)a structural surplus and a cyclical surplus
E)a balanced structural budget and a cyclical deficit
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Chapter 30: Monetary Policy
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Sample Questions
Q1) A decrease in the overnight loans rate leads to
A)an increase in the quantity of money.
B)a fall in the exchange rate.
C)an increase in exports.
D)an increase in consumption expenditure.
E)all of the above.
Q2) When the Bank of Canada fights recession by lowering the overnight loans rate,the supply of reserves curve shifts ________ and the supply of money curve shifts
A)leftward; leftward
B)leftward; rightward
C)rightward; leftward
D)rightward; rightward
E)rightward; rightward, and the demand for loanable funds increases
Q3) An increase in the quantity of money leads to
A)an increase in short-run aggregate supply.
B)a decrease in net exports.
C)a decrease in real GDP.
D)a decrease in the price level.
E)an increase in aggregate demand.
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Chapter 15: International Trade Policy
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Sample Questions
Q1) Table 31.1.1 shows Glazeland's doughnut market before international trade.Glazeland opens up to international trade.If the world price is $0.60,then Glazeland will produce ________ doughnuts and will ________ doughnuts.
A)2 million; import 3 million
B)4 million; import 1 million
C)4 million; export 1 million
D)5 million; import 3 million
E)5 million; export 3 million
Q2) In Figure 31.1.2,Canada ________ helicopters per year.
A)exports 480
B)exports 720
C)imports 480
D)imports 240
E)exports 240
Q3) Of the following,in which decade were Canada's tariffs at their lowest level?
A)1990s
B)1970s
C)1950s
D)1930s
E)1890s
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