International Economics Test
Bank
Course Introduction
International Economics explores the dynamics of economic interactions among countries, focusing on the principles and theories that govern trade, finance, and investment across borders. The course examines topics such as comparative advantage, the structure of international trade flows, trade policy and its effects, exchange rates, balance of payments, and the role of international organizations like the IMF and WTO. Students will analyze how globalization, economic integration, and current events influence international economic policies and the welfare of nations, equipping them with the tools to understand and evaluate the complexities of the global economy.
Recommended Textbook
Economics Canada in the Global Environment 8th Edition by Michael Parkin
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31 Chapters
3751 Verified Questions
3751 Flashcards
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Page 2
Chapter 1: What Is Economics?
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Sample Questions
Q1) Statements about "what ought to be" are called
A)positive statements.
B)normative statements.
C)economic statements.
D)scientific statements.
E)hypotheses.
Answer: B
Q2) The data in Table 1A.2.1 shows that
A)x and y have a negative relationship.
B)x and y have a positive relationship.
C)there is no relationship between x and y.
D)there is first a negative and then a positive relationship between x and y.
E)there is first a positive and then a negative relationship between x and y.
Answer: A
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3
Chapter 2: The Economic Problem
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Sample Questions
Q1) The production possibilities frontier shifts outward when ________.
A)tastes and preferences change
B)the quantity of money in the economy grows
C)prices rise
D)human capital accumulates
E)the political party in power changes
Answer: D
Q2) In Figure 2.2.1,when 4,000 bicycles are produced each month
A)the marginal benefit from another bicycle is greater than the marginal cost of another bicycle.
B)more bicycles must be produced to reach the efficient level of output.
C)fewer bicycles must be produced to reach the efficient level of output.
D)the economy is very efficient at this level of production of bicycles.
E)both A and B.
Answer: C
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Chapter 3: Demand and Supply
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178 Flashcards
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Sample Questions
Q1) Which one of the following events shifts the demand curve for grape jelly to the right?
A)an increase in income if grape jelly is a normal good
B)a decrease in the price of strawberry preserves, a substitute for grape jelly
C)a decrease in the price of grape jelly
D)an increase in the price of peanut butter, a complement of grape jelly
E)a decrease in the population
Answer: A
Q2) Refer to Table 3.1.1.Between 2011 and 2012,the price of coffee relative to the price of tea ________ while the price of coffee relative to the price of cola ________.
A)rose;rose
B)rose;fell
C)fell;rose
D)fell;fell
E)fell;stayed constant
Answer: D
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Page 5
Chapter 4: Elasticity
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Sample Questions
Q1) When Erika's income increases by 6 percent,her demand for tickets to professional hockey games increases by 3 percent.Erika's demand for tickets is income ________.For Erika,hockey tickets are ________ good.
A)elastic;a normal
B)inelastic;an inferior
C)elastic;an inferior
D)inelastic;a normal
E)inelastic;a normative
Q2) If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue,then Saudi Arabia believes the demand for oil is A)income inelastic.
B)income elastic.
C)elastic.
D)inelastic.
E)unit elastic.
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Chapter 5: Efficiency and Equity
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Sample Questions
Q1) A modified version of utilitarism proposed by John Rawls could be summarized as
A)transfer everything to the poor.
B)transfer everything to the rich.
C)expand the size of government.
D)minimize the size of government.
E)make the poorest as well off as possible.
Q2) The market for strawberries is perfectly competitive.Joe and Haley are consuming the same amount of strawberries,but Joe's demand is much more elastic than Haley's.Which statement is true?
A)Joe's consumer surplus exceeds Haley's.
B)Haley's consumer surplus equals Joe's.
C)Haley's consumer surplus exceeds Joe's.
D)In comparing consumer surpluses, no statement can be made.
E)Any comparison of consumer surplus depends on the price of strawberries.
Q3) Deadweight loss is
A)borne entirely by consumers.
B)gained by producers.
C)the social loss from inefficiency.
D)not a problem with overproduction.
E)all of the above.
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Chapter 6: Government Actions in Markets
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Sample Questions
Q1) First-come,first-served allocates housing to those
A)whose names are on waiting lists.
B)who share similar views to the owner of the housing.
C)who are rich.
D)who are poor.
E)who are lucky.
Q2) Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.Government revenue from the tax is
A)$4,000.
B)$5,000.
C)$22,400.
D)$26,400.
E)$30,000.
Q3) The buyer pays most of a tax if demand is relatively inelastic because
A)the buyer cannot easily substitute to other markets.
B)the buyer can easily substitute to other markets.
C)the government forces the seller to bear the burden of the tax.
D)there is a black market for this good.
E)the seller cannot easily substitute to other goods.
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Page 8
Chapter 7: Global Markets in Action
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129 Flashcards
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Sample Questions
Q1) Outsourcing occurs when a firm in Canada
A)hires foreign labour and produces in other countries.
B)buys finished goods, components, or services from other firms in other countries.
C)hires Canadian labour and produces in Canada.
D)buys finished goods, components, or services from other firms in Canada.
E)Both B and D are correct.
Q2) Canada has a comparative advantage in producing airplanes if
A)it can produce them at a lower dollar cost than another country.
B)it can produce a larger quantity than another country.
C)it has a larger quantity of skilled workers than another country.
D)it can produce them at a higher opportunity cost than another country.
E)it can produce them at a lower opportunity cost than another country.
Q3) In Figure 7.2.1,international trade ________ total surplus in Canada by ________.
A)increases;$128 million
B)decreases;$192 million
C)increases;$320 million
D)decreases;$256 million
E)decreases;$128 million
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Chapter 8: Utility and Demand
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Sample Questions
Q1) The fact that your fourth slice of pizza does not generate as much satisfaction as your third slice is an example of
A)consumer surplus.
B)diminishing total utility.
C)diminishing marginal utility.
D)the paradox of value.
E)the law of demand.
Q2) Sam buys gasoline and coffee each week.To draw his budget line for gasoline and coffee,Sam needs to know
A)if his income is expected to rise in the future.
B)if the price of gasoline is expected to rise in the future.
C)if the price of coffee is expected to fall in the future.
D)the goods that he considers to be substitutes for gasoline and for coffee.
E)how much income he has to spend and the prices of one litre of gasoline and one cup of coffee.
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Chapter 9: Possibilities, Preferences, and Choices
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Sample Questions
Q1) The price of a good increases relative to other goods.Which one of the following statements must be true? The resulting
A)income effect is negative.
B)income effect is positive.
C)substitution effect is negative.
D)substitution effect is positive.
E)income effect is zero.
Q2) If the price of a normal good rises,the income effect
A)will increase consumption of the good and the substitution effect will decrease consumption.
B)will decrease consumption of the good and the substitution effect will increase consumption.
C)and the substitution effect will both increase consumption of the good.
D)and the substitution effect will both decrease consumption of the good.
E)is always larger than the substitution effect.
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11
Chapter 10: Organizing Production
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Sample Questions
Q1) A firm with a lower unit cost from producing a wider range of goods and services has economies of
A)transactions costs.
B)scale.
C)scope.
D)team production.
E)market coordination.
Q2) In a monopoly,the four-firm concentration ratio is
A)75 percent.
B)100 percent.
C)almost zero.
D)25 percent.
E)50 percent.
Q3) Which one of the following would not likely be a firm with economies of scale?
A)an electrical production plant
B)a steel mill
C)a telephone company
D)a firm that produces handmade cabinetry
E)a multi-store dry-cleaning firm
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Page 12
Chapter 11: Output and Costs
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Sample Questions
Q1) Marginal cost ________.
A)is constantly increasing, but as output increases it increases by smaller and smaller amounts
B)decreases at low outputs until it reaches its minimum value, then remains constant
C)decreases at low outputs and increases at high outputs
D)increases at low outputs until it reaches its maximum value, then remains constant
E)is constantly decreasing, but as output increases it decreases by smaller and smaller amounts
Q2) Refer to Figure 11.4.4,which illustrates the long-run average total cost curve.Given an increase in output from Q? to Q?,
A)economies of scale exist.
B)diseconomies of scale exist.
C)constant returns to scale exist.
D)average total cost is increasing.
E)average total cost is decreasing.
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13
Chapter 12: Perfect Competition
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Sample Questions
Q1) Refer to Figure 12.5.1.Given the increase in market demand from D? to D?,the graph represents
A)a constant cost industry.
B)an increasing cost industry.
C)a decreasing cost industry.
D)an inefficient market.
E)a market experiencing a technological change.
Q2) Technological change spreads through a perfectly competitive market.Choose the statement that is incorrect.
A)The market price falls and the equilibrium quantity increases.
B)The technological change brings permanent gains for consumers and producers.
C)Firms that do not change to the new technology will incur an economic loss and eventually go out of business.
D)Firms that are quick to adopt to the new technology will make economic profits initially, but in the long run they will make zero economic profit.
E)Average cost will fall for firms who adopt the new technology.
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14
Chapter 13: Monopoly
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Sample Questions
Q1) A monopoly is a market with a single firm that
A)produces a good or service for which no close substitute exists and which is protected by a barrier that prevents other firms from selling that good or service.
B)purchases its factors of production from only one supplier because of a barrier preventing it from buying from other suppliers.
C)produces a good or service for which no close substitute exists and that sells all its output to one buyer because there is barrier preventing other buyers from purchasing the good or service.
D)cannot control the price it sets for its good or service because there is barrier that prevents the firm from changing the price.
E)produces its good or service using labour from a single source, which is usually a union.
Q2) Which of the following is true for a perfect price-discriminating monopoly?
A)P = MR for each unit sold.
B)P = ATC for each unit sold.
C)P = MC for each unit sold.
D)P > MC for each unit sold.
E)P > MR for each unit sold.
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Page 15
Chapter 14: Monopolistic Competition
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111 Flashcards
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Sample Questions
Q1) Monopolistic competition differs from monopoly because in monopolistic competition
A)firms maximize profits.
B)firms set marginal revenue equal to marginal cost to maximize profit.
C)firms are free to enter and exit.
D)All of the above are differences between monopoly and monopolistically competitive firms.
E)None of the above are differences between monopoly and monopolistically competitive firms.
Q2) Mrs.Smith's bakery shop is a firm in monopolistic competition.If in the short-run Mrs.Smith incurs an economic loss,she will keep producing as long as
A)price is less than average variable cost.
B)price is equal to marginal cost.
C)price is greater than or equal to average variable cost.
D)marginal revenue is greater than or equal to average variable cost.
E)marginal revenue is less than average variable cost.
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16
Chapter 15: Oligopoly
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Sample Questions
Q1) Two firms,Alpha and Beta,produce identical computer hard drives.They have identical costs,and the hard drives they produce are identical.The industry is a natural duopoly.Alpha and Beta enter into a collusive agreement,according to which they split the market equally.If both firms cheat on the agreement so the market is the same as a competitive market,
A)each firm makes zero economic profit in the long run.
B)each firm makes the monopoly profit.
C)the oligopoly will produce fewer hard drives than a profit-maximizing monopoly would produce.
D)the oligopoly will produce the same number of hard drives as a profit-maximizing monopoly would produce.
E)each firm incurs an economic loss and exits the market in the long run.
Q2) A trigger strategy can be used
A)in a single-play game or a repeated game.
B)in a single-play game but not a repeated game.
C)in a repeated game but not a single-play game.
D)in neither a single-play game nor a repeated game.
E)only when there is no Nash equilibrium.
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Chapter 16: Externalities
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Sample Questions
Q1) Refer to Table 16.2.2.Fertilizer has a marginal
A)external cost of $100 a tonne.
B)social cost of $100 a tonne.
C)external cost of $30 a tonne.
D)private cost of $30 a tonne.
E)external cost of $0.
Q2) Refer to Table 16.2.2.The efficient output of fertilizer is A)1 tonne.
B)2 tonnes.
C)3 tonnes.
D)4 tonnes.
E)5 tonnes.
Q3) Sixty percent of our air pollution comes from A)solid waste disposal.
B)electric utilities.
C)a growing world population.
D)road transportation and industrial processes.
E)none of the above.
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Chapter 17: Public Goods and Common Resources
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Sample Questions
Q1) When a production quota is used to remedy the problem of the commons,then
A)the production quota is set so that use of the resource is where marginal private benefit equals marginal cost.
B)the production quota is set so that use of the resource is where marginal private benefit equals marginal social benefit.
C)the market equilibrium, but not the efficient outcome, is achieved.
D)all users of the resource have an incentive to cheat on the production quota.
E)the production quota is set so that marginal social benefit is maximized.
Q2) Although both cable television and air-traffic control are nonrival,they differ from each other because
A)cable television is a private good and air-traffic control is a public good.
B)cable television is a public good and air-traffic control is a private good.
C)cable television is nonexcludable and air-traffic control is a public good.
D)cable television is nonexcludable and air-traffic control is excludable.
E)cable television is excludable and air-traffic control is nonexcludable.
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Chapter 18: Markets for Factors of Production
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Sample Questions
Q1) A profit-maximizing firm will continue to hire labour until the A)wage rate equals the last worker's marginal product.
B)last worker's value of marginal product is maximized.
C)last worker's value of marginal product is negative.
D)wage rate equals the last worker's value of marginal product.
E)last worker's value of marginal product equals zero.
Q2) If the interest rate is 10 percent per year,the present value of $100 in two years is
A)$80.00.
B)$82.64.
C)$90.91.
D)$120.00.
E)$121.00.
Q3) Which one of the following would unions be most likely to support?
A)increased barriers to imports
B)eased immigration restrictions
C)a decrease in the minimum wage
D)decreasing demand for the goods their workers produce
E)decreasing the marginal product of its workers
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Chapter 19: Economic Inequality
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Sample Questions
Q1) In the absence of government policies to redistribute income,the income distribution will be the
A)market distribution.
B)unfair distribution.
C)capitalist distribution.
D)efficient distribution.
E)line of equality.
Q2) If the average tax rate increases as income increases,the income tax is
A)progressive.
B)proportional.
C)negative.
D)regressive.
E)excessive.
Q3) If each household made the same amount of income,then the Lorenz curve would be
A)not defined, because it measures income inequality not income equality.
B)the line of poverty.
C)the line of equality.
D)a right angle.
E)horizontal.
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Chapter 20: Measuring GDP and Economic Growth
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Sample Questions
Q1) SaskWidget produces plastic parts.At the beginning of the year,they held $24 million worth of capital.At the end of the year,they held $20 million worth of capital.One can conclude that
A)net investment increased by $4 million.
B)gross investment decreased by $4 million.
C)gross investment increased by $4 million.
D)depreciation exceeded gross investment by $4 million.
E)depreciation equals $4 million.
Q2) Stock and bond sales are not included in GDP because they
A)do not occur in the year in which the production represented by them takes place.
B)represent corporate production.
C)represent indebtedness.
D)are not goods and services.
E)are not sold in the country in which they are produced.
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Chapter 21: Monitoring Jobs and Inflation
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Sample Questions
Q1) In Table 21.2.1,which person is cyclically unemployed?
A)A
B)B
C)C
D)D and B
E)A and C
Q2) If prices at Wendy's rise,more consumers buy their meals at McDonald's and fewer consumers buy their meals at Wendy's.This is an example of
A)consumers' action to boycott Wendy's.
B)outlet substitution.
C)commodity substitution.
D)both A and B.
E)both B and C.
Q3) Jesse just graduated from university,and is looking for her first job.Jesse is A)frictionally unemployed.
B)structurally unemployed.
C)not unemployed.
D)cyclically unemployed.
E)not in the labour force.
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Page 23
Chapter 22: Economic Growth
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Sample Questions
Q1) Refer to Figure 22.3.2.The equilibrium quantity of labour is
A)100 billion hours.
B)150 billion hours.
C)200 billion hours.
D)50 billion hours.
E)250 billion hours.
Q2) Which of the following is not a source of economic growth?
A)increasing stock market prices
B)better educated workers
C)growing physical capital
D)appropriate incentive system
E)advances in technology
Q3) Which theory of economic growth argues that population growth lowers the real wage rate and stops economic growth?
A)classical growth theory
B)neoclassical growth theory
C)new growth theory
D)all of the theories
E)none of the theories
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Page 24
Chapter 23: Finance, Saving, and Investment
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Sample Questions
Q1) When government saving is negative,
A)the real interest rate rises.
B)the real interest rate falls.
C)investment increases.
D)the real interest rate falls if crowding-out occurs.
E)the supply of loanable funds increases.
Q2) A government budget surplus occurs,which ________ loanable funds.The real interest rate ________,household saving ________,and investment ________.
A)increases the demand for;rises;increases;decreases
B)increases the supply of;falls;increases;decreases
C)increases the supply of;falls;decreases;increases
D)decreases the demand for;falls;decreases;increases
E)decreases the supply of;decreases;decreases;increases
Q3) National saving equals
A)private saving + private wealth.
B)private saving + government saving.
C)private saving - net taxes.
D)government saving.
E)investment.
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Page 25
Chapter 24: Money, the Price Level, and Inflation
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Sample Questions
Q1) In a world with no money,costs are expressed in terms of other goods.If one video game costs two hamburgers,and a hamburger costs three pops,how many pops would it take to buy a video game?
A)5
B)3
C)6
D)3/2
E)1/6
Q2) Suppose that the banking system has excess reserves of $10 million,the desired reserve ratio is 10 percent and the currency drain ratio is 40 percent.By how much will the quantity of money increase?
A)$12.5 million
B)$28 million
C)$50 million
D)$40 million
E)$22 million
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26
Chapter 25: The Exchange Rate and the Balance of Payments
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Sample Questions
Q1) Choose the correct statements.
1.The exchange rate is the value of the Canadian dollar expressed in units of foreign currency per Canadian dollar.
2.The real exchange rate is the relative price of Canadian-produced goods and services to foreign-produced goods and services.
3.The exchange rate is a measure of the quantity of the real GDP of other countries that a unit of Canadian real GDP buys.
4.The exchange rate is the relative price of Canadian-produced goods and services to foreign-produced goods and services.
A)Statements 1 and 2 are correct.
B)Statements 3 and 4 are correct.
C)Statements 1 and 3 are correct.
D)Statements 2 and 4 are correct.
E)Statements 2 and 3 are correct.
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Chapter 26: Aggregate Supply and Aggregate Demand
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Sample Questions
Q1) Which of the following does not change short-run aggregate supply?
A)a change in the money wage rate
B)technological change
C)a change in the full-employment quantity of labour
D)an increase in the quantity of capital
E)a change in expected future profits
Q2) A technological advance shifts
A)both SAS and AD rightward.
B)both SAS and LAS leftward.
C)SAS rightward but leaves LAS unchanged.
D)LAS rightward but leaves SAS unchanged.
E)both SAS and LAS rightward.
Q3) Refer to Figure 26.3.2.When the economy of Mythlo is in short-run macroeconomic equilibrium,the price level is A)65.
B)95.
C)70.
D)75.
E)80.
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Chapter 27: Expenditure Multipliers: The Keynesian Model
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Sample Questions
Q1) The aggregate expenditure curve will become steeper if A)people become thriftier.
B)people show an increased preference for foreign-made products.
C)firms expect an increase in future profit.
D)income tax rates are lowered.
E)income tax rates are raised.
Q2) In Figure 27.2.3,the marginal propensity to consume,assuming no income taxes,is A)0.3.
B)0.6.
C)0.9.
D)1.0.
E)0.93.
Q3) Refer to Table 27.3.1.What is the slope of the AE curve?
A)0.8
B)0.6
C)0.75
D)1
E)1.3
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29
Chapter 28: Canadian Inflation, Unemployment, and Business Cycle
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Sample Questions
Q1) Refer to Figure 28.1.5.Which one of the graphs in the figure represents an economy experiencing stagflation?
A)(a)
B)(b)
C)(c)
D)(d)
E)none of the above
Q2) Suppose that the money prices of raw materials rise.With no action by the Bank of Canada,
I.the aggregate demand curve shifts rightward and the price level rises.
II.the aggregate demand curve shifts rightward and the aggregate supply curve shifts leftward.
III.the initial outcome is lower employment and a rise in the price level.
A)I only
B)II only
C)III only
D)I and II only
E)I, II, and III
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Chapter 29: Fiscal Policy
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Sample Questions
Q1) Refer to Figure 29.3.1,which shows the outlays and revenues for the government of Pianoland.Discretionary fiscal policy would be shown as a movement
A)from right to left along the revenues curve.
B)from left to right along the revenues curve.
C)from right to left along the outlays curve.
D)from left to right along the outlays curve.
E)none of the above.
Q2) Consider all the effects of fiscal policy.A cut in the income tax
A)shifts the AD curve rightward but does not shift either the LAS or SAS curve.
B)shifts the AD, SAS, and LAS curves rightward.
C)shifts the SAS curve rightward but does not shift either the AD or LAS curve.
D)shifts both the SAS and LAS curves rightward but does not shift the AD curve.
E)shifts the LAS curve rightward but does not shift either the AD or SAS curve.
Q3) Prior to World War II,the purpose of the federal budget was to ________.
A)stabilize the economy
B)achieve macroeconomic objectives such as full employment and price level stability
C)finance the business of government
D)provide incentives to encourage investment
E)oversee revenue equalization among the provinces
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Page 31
Chapter 30: Monetary Policy
Available Study Resources on Quizplus for this Chatper
88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/12224
Sample Questions
Q1) 25 basis points is
A)a quarter of a percentage point.
B)a quarter of the Bank of Canada's target inflation rate.
C)the spread between the savings rate and the lending rate.
D)the spread between the bank rate and the settlement balances rate.
E)the gap by which real GDP exceeds potential GDP.
Q2) Refer to Figure 30.3.1.Everything else remaining the same,which graph best illustrates the effect of the Bank of Canada raising the overnight rate?
A)(a)
B)(b)
C)(c)
D)(d)
E)none of the above
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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Page 32
Chapter 31:International Trade Policy
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/12225
Sample Questions
Q1) In a market that moves from a situation of no trade to a situation where a good is exported,the price of the good ________ and the quantity produced by the domestic industry ________.
A)rises;increases
B)falls;decreases
C)does not change;increases
D)does not change;decreases
E)rises;does not change
Q2) Tariffs
A)generate revenue for consumers.
B)generate revenue for the government.
C)encourage domestic consumers to buy more imports.
D)encourage domestic producers to produce less.
E)lower prices for consumers.
Q3) In Figure 31.1.2,Canada ________ helicopters per year.
A)exports 480
B)exports 720
C)imports 480
D)imports 240
E)exports 240
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