Introduction to Economics Exam Bank
Course Introduction
Introduction to Economics offers students a foundational understanding of how economies function on both micro and macro levels. This course explores essential concepts such as supply and demand, market structures, consumer behavior, production, and the role of government in the economy. Students will examine how individuals, businesses, and governments make decisions about allocating limited resources, and how these decisions affect overall economic outcomes. Through real-world examples and analytical tools, the course prepares students to critically assess current economic issues and policies.
Recommended Textbook
Economics Canada in the Global Environment 8th Edition by Michael Parkin
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Page 2
Chapter 1: What Is Economics?
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Sample Questions
Q1) A normative statement is
A)about what should be.
B)about what is.
C)always true.
D)always false.
E)capable of evaluation, as true or false, by observation and measurement.
Answer: A
Q2) Which statement about incomes earned by factors of production is false?
A)Land earns rent.
B)Natural resources earn rent.
C)Labour earns wages.
D)Capital earns profit.
E)Entrepreneurship earns profit.
Answer: D
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Chapter 2: The Economic Problem
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Sample Questions
Q1) Refer to Table 2.4.1.For Vulcan,the opportunity cost of producing an additional unit of Y is
A)2/3 units of X.
B)1/2 units of X.
C)2 units of X.
D)3 units of X.
E)4 units of X.
Answer: B
Q2) Complete the following sentence.Given Fact 2.4.2,
A)there will be gains from trade, no matter what Brenda and Agnes specialize in, as long as they specialize.
B)there will be gains from trade only if Agnes specializes in the production of Y and Brenda in X.
C)there will be gains from trade only if Agnes becomes faster at producing X.
D)there will be no gains from trade because Agnes has an absolute advantage.
E)there will be gains from trade if Agnes specializes in the production of X and Brenda in Y.
Answer: E
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Chapter 3: Demand and Supply
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Sample Questions
Q1) When a shortage occurs,there is a tendency for the A)price to fall.
B)price to remain unchanged.
C)price to rise.
D)quantity demanded to increase.
E)quantity supplied to decrease.
Answer: C
Q2) Refer to Table 3.1.1.In 2010,the relative price of coffee in terms of tea is
A)1.25.
B)1.10.
C)1.00.
D)0.88.
E)1.14.
Answer: E
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Page 5
Chapter 4: Elasticity
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Sample Questions
Q1) If the demand curve for a good is a horizontal line,then the good has
A)zero income elasticity.
B)price elasticity of demand equal to zero.
C)infinite price elasticity of demand.
D)a price elasticity of demand that is likely to rise in the short run.
E)a price elasticity of demand that is likely to fall in the short run.
Q2) In the nation of Transporta,the income elasticity of demand for used cars is -2.66.If incomes in this nation increase by 10 percent,
A)the quantity of used cars demanded increase by 26.6 percent.
B)used cars will be normal goods.
C)the quantity of used cars demanded decrease by 26.6 percent.
D)the demand curve for used cars shifts rightward.
E)the supply curve of used cars shifts rightward.
Q3) Suppose the demand curve for good X is horizontal.This shows that the demand for good X is
A)unit elastic.
B)inelastic.
C)perfectly elastic.
D)perfect inelastic.
E)elastic.
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Chapter 5: Efficiency and Equity
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Sample Questions
Q1) An oil painting has a marginal cost of $1,000.The painting was bought for $1,500.How much producer surplus did the painter obtain?
A)$1,500
B)$1,000
C)$500
D)zero
E)cannot be determined from the information given
Q2) A monopoly leads to
A)overproduction.
B)underproduction.
C)efficient production.
D)maximization of consumer surplus.
E)zero deadweight loss.
Q3) In competitive equilibrium,which of the following statements is false?
A)Marginal social benefit equals marginal social cost.
B)Willingness to pay equals marginal cost of production.
C)The sum of consumer surplus and producer surplus is maximized.
D)Deadweight loss is maximized.
E)Resources are used efficiently to produce goods and services that people value most highly.
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Chapter 6: Government Actions in Markets
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Sample Questions
Q1) If enforcement is aimed at buyers of an illegal good,the
A)price and quantity bought decrease.
B)price and quantity bought increase.
C)price rises and quantity bought decreases.
D)price falls and quantity bought increases.
E)price change is uncertain and quantity bought decreases.
Q2) Suppose a minimum wage of $4 an hour is in force,resulting in unemployment of 10 million hours.Then the demand for labour increases such that supply and demand intersect at a wage rate of $5 per hour.What will happen to the equilibrium wage rate and employment?
A)The wage rate is $5 an hour and there will be no unemployment.
B)The wage rate is $5 an hour and there will be a surplus of labour.
C)The wage rate is $4 an hour and there will be a surplus of labour.
D)The wage rate is $4 an hour and there will be no unemployment.
E)The wage rate is $4 an hour and there will be unemployment.
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8
Chapter 7: Global Markets in Action
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Sample Questions
Q1) Tariffs and import quotas differ in that
A)one is a form of trade restriction, while the other is not.
B)one is a tax, while the other is a limit.
C)one is imposed by the government, while the other is imposed by the private sector.
D)one is legal, while the other is not.
E)one increases imports, while the other decreases imports.
Q2) Consider a country that sells some of its goods as exports.Who does NOT benefit?
A)domestic consumers
B)domestic producers
C)workers in the industry
D)foreign consumers
E)everyone benefits
Q3) A country
A)imports those goods in which it has a comparative advantage.
B)exports those goods in which it has a comparative advantage.
C)imports goods produced in countries with lower wage rates.
D)exports goods produced by domestic industries with low wages relative to its trading partners.
E)B and D are correct.
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Page 9
Chapter 8: Utility and Demand
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Sample Questions
Q1) Refer to Table 8.2.3.To attain consumer equilibrium,the first $4 of income is used to purchase
A)2 units of good X.
B)3 units of good X.
C)4 units of good Y.
D)an amount of X and Y that cannot be determined from the table.
E)2 units of good Y and 1 unit of X.
Q2) Diminishing marginal utility means that
A)Ralph will enjoy his second hamburger less than the first one.
B)the utility from one hamburger is greater than the utility from two hamburgers.
C)the price of two hamburgers is less than twice the price of one.
D)the utility from eating two hamburgers will be more than twice the utility from eating the first one.
E)hamburgers seem smaller as you eat more of them.
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10
Chapter 9: Possibilities, Preferences, and Choices
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Sample Questions
Q1) Refer to Figure 9.2.5.The graphs show indifference curves for various goods.Graph ________ best describes the pair of goods baseballs and baseball bats.Graph ________ best describes the pair of goods desktop computers and laptop computers.
A)2;3
B)2;1
C)1;1
D)1;3
E)3;2
Q2) David has an income of $30 to buy movie tickets and bus tickets.The price of a movie ticket is $6 and the price of a bus ticket is $2.What is the relative price of a bus ticket in terms of movie tickets?
A)2 movie tickets
B)15 movie tickets
C)$3
D)1/3 movie tickets
E)$6
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Chapter 10: Organizing Production
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Sample Questions
Q1) If economic profit is equal to zero then the firm is making
A)a normal profit.
B)zero profit as recorded by accountants.
C)negative profit as recorded by accountants.
D)zero taxable income.
E)an amount equal to the implicit rental rate.
Q2) Which of the following industries in Canada has the lowest four-firm concentration ratio?
A)tires
B)soft drinks and ice
C)textiles
D)sugar
E)wooden windows and doors
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) Refer to Table 11.2.1 which gives Tania's total product schedule.Marginal product of labour reaches its maximum when the number of workers increases from
A)0 to 1.
B)1 to 2.
C)2 to 3.
D)3 to 4.
E)4 to 5
Q2) Refer to Table 11.4.1,which represents Swanky's production possibilities as the firm varies the quantities of knitting machines and workers per day.If Swanky increases the number of knitting machines from 1 to 2 and increases the number of workers employed from 1 to 2,the factory experiences
A)economies of scale.
B)constant returns to scale.
C)diseconomies of scale.
D)constant marginal product.
E)minimum efficient scale.
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Chapter 12: Perfect Competition
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Sample Questions
Q1) In the price range above minimum average variable cost,a perfectly competitive firm's supply curve is
A)horizontal at the market price.
B)vertical at zero output.
C)the same as its marginal cost curve.
D)the same as its average variable cost curve.
E)none of the above.
Q2) Lin's fortune cookies are identical to the fortune cookies made by dozens of other firms,and there is free entry in the fortune cookie market.Buyers and sellers are well informed about prices.The price of a fortune cookie is determined by ________.The marginal revenue of a fortune cookie equals ________.
A)market demand and market supply;price
B)the ingredients that Lin's uses to produce his fortune cookies;average total cost
C)the number of cookies that Lin's produces;average variable cost
D)the freshness of the fortune cookies;average fixed cost
E)market demand and market supply;the price elasticity of demand
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14
Chapter 13: Monopoly
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Sample Questions
Q1) One difference between perfectly competitive markets and a single-price monopoly is that
A)marginal revenue equals marginal cost for perfectly competitive firms, but not for single-price monopolists.
B)marginal cost equals average variable cost for perfectly competitive firms but not for single-price monopolists.
C)price equals minimum average total cost for single-price monopolists but not for perfectly competitive firms.
D)marginal revenue equals price for perfectly competitive firms, but not for single-price monopolists.
E)none of the above
Q2) Refer to Table 13.4.1.If a perfect price-discriminating monopoly faces the demand schedule shown in Table 13.4.1 and if marginal cost is constant at $3,output is A)2 units.
B)3 units.
C)4 units.
D)5 units.
E)6 units.
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Chapter 14: Monopolistic Competition
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Sample Questions
Q1) The existence of a large number of firms in monopolistic competition
A)means that each firm has a small market share.
B)makes it possible for each firm's price to deviate by a large amount from the average price of the other firms.
C)means that a firm must pay attention to the behaviour of all of its competitors.
D)All of the above answers are correct.
E)None of the above answers are correct.
Q2) The profit-maximizing condition for a firm in monopolistic competition is to produce the quantity at which
A)marginal cost equals price.
B)price equals marginal revenue.
C)average total cost equals price.
D)marginal cost equals marginal revenue.
E)average variable cost equals price.
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Chapter 15: Oligopoly
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Sample Questions
Q1) Once a cartel determines the profit-maximizing price,
A)all members of the cartel have a strong incentive to abide by the agreed-upon price.
B)each member will face the temptation to cheat on the cartel price to increase its sales and profit.
C)changes in the output of any member firms will have no impact on the market price.
D)entry into the industry of rival firms will have no impact on the profit of the cartel.
E)entry into the industry of rival firms will raise cartel profit as long as the new firms join the cartel.
Q2) The distinguishing features of oligopoly are ________ and ________ in the industry.
A)no barriers to entry;a small number of firms
B)barriers to entry;a large number of firms
C)no barriers to entry;a large number of firms
D)barriers to entry;one firm
E)barriers to entry;a small number of firms
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Chapter 16: Externalities
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Sample Questions
Q1) Refer to Figure 16.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then the price is
A)P<sub>1</sub>.
B)P<sub>3</sub>.
C)P<sub>2</sub>.
D)greater than P<sub>4</sub>.
E)P<sub>4</sub>.
Q2) The Coase theorem will apply only if
A)an individual who is not affected by the externality can negotiate a settlement between the parties imposing the externality and the parties that are harmed by the externality.
B)the small number of people are involved.
C)the market is perfectly competitive.
D)the courts can be used to determine the amount of compensation that must be made to the damaged party.
E)the amount of compensation that must be made to the damaged party is small.
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Chapter 17: Public Goods and Common Resources
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Sample Questions
Q1) Suppose in a country there are only two persons.Person A is willing to pay $50 to have one unit of a public good produced;person B is willing to pay $60 to have one unit of a public good produced and $50 to have two units produced.A point on the country's marginal social benefit curve for this public good is a price of ________ and quantity demanded of ________.
A)$50;1 unit
B)$60;1 unit
C)$110;2 units
D)$110;1 unit
E)$55;1 unit
Q2) Private goods are
A)nonrival and excludable.
B)nonrival and nonexcludable.
C)always produced in a non-regulated market.
D)rival and excludable.
E)rival and nonexcludable.
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19
Chapter 18: Markets for Factors of Production
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Sample Questions
Q1) To increase the demand for union labour,unions do all of the following except support
A)increases in the minimum wage.
B)increases in import restrictions.
C)immigration restrictions.
D)an increase in the supply of foreign workers.
E)training schemes and apprenticeship programs.
Q2) For a monopsonist facing an upward-sloping supply curve of labour,the marginal cost of labour curve
A)intersects the value of marginal product curve of labour at the equilibrium wage rate.
B)is below and parallel to the supply of labour curve.
C)is identical to the supply of labour curve.
D)is above and parallel to the supply of labour curve.
E)is above the supply curve of labour.
Q3) Coal is an example of
A)a nonrenewable natural resource.
B)a renewable natural resource.
C)capital.
D)a common resource.
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Chapter 19: Economic Inequality
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Sample Questions
Q1) The Gini coefficient for a perfectly equal distribution of income is
A)equal to zero.
B)equal to 1.
C)equal to 100.
D)equal to infinity.
E)negative.
Q2) Consider the Lorenz curves in Figure 19.1.2.Which point indicates that the poorest 20 percent of families earn 9 percent of the income?
A)a
B)b
C)c
D)d
E)none of the above
Q3) Complete the following sentence.Assortative mating
A)tends to breakdown barriers between the social classes.
B)tends to increase the equality of the income distribution.
C)tends to increase the equality of the distribution of wealth.
D)tends to keep the income and wealth distributions from becoming more equal.
E)occurs rarely these days due to changes in social values.
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Page 21
Chapter 20: Measuring GDP and Economic Growth
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Sample Questions
Q1) Consumption expenditure includes only ________.
A)expenditure by Canadian households on goods and services produced in Canada
B)expenditure by Canadian households and firms on goods and services produced in Canada
C)expenditure by Canadian households, firms, and governments on goods and services produced in Canada
D)expenditure by Canadian households on goods and services produced in Canada and in the rest of the world
E)expenditure by Canadian households and foreigners on goods and services produced in Canada
Q2) Refer to Table 20.4.1.Chained-dollar real GDP in 2012 is
A)$1665.
B)$1950.5.
C)$1707.75.
D)$1250.
E)$1100.
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Chapter 21: Monitoring Jobs and Inflation
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Sample Questions
Q1) If there is a 5 percent increase in the CPI,then there will most likely be
A)a 5 percent rise in the cost of living.
B)a less than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods.
C)a more than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods.
D)a less than 5 percent rise in the cost of living because of falling quality of goods over time.
E)a more than 5 percent rise in the cost of living because of the introduction of new goods.
Q2) The commodity substitution bias is that
A)consumers substitute high-quality goods for low-quality goods.
B)government spending is a good substitute for investment expenditures.
C)national saving and foreign borrowing are interchangeable.
D)consumers decrease the quantity they buy of goods whose relative prices rise and increase the quantity of goods whose relative price falls.
E)consumers substitute more expensive goods for less expensive goods when technology advances.
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Chapter 22: Economic Growth
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Sample Questions
Q1) In the classical growth theory,economic growth eventually stops due to A)diminishing returns.
B)knowledge capital being easily replicated.
C)the real rate of interest falling back down to its target rate.
D)real GDP per person becoming too high.
E)high population growth resulting from the increase in real GDP per person.
Q2) In which of the following decades did Canada experience the slowest economic growth?
A)1960s
B)1970s
C)1980s
D)1940s
E)1990s
Q3) Which theory of economic growth concludes that technological advances are influenced by the profit motive?
A)classical growth theory
B)neoclassical growth theory
C)new growth theory
D)neo growth theory
E)none of the theories
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Chapter 23: Finance, Saving, and Investment
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Sample Questions
Q1) Crowding out leads to all of the following EXCEPT
A)a higher real interest rate.
B)a decrease in investment.
C)a smaller quantity of capital in the future.
D)a decrease in private saving.
E)crowding out leads to all of the above.
Q2) Technological progress that increases expected profit shifts the demand for loanable funds curve
A)leftward and decreases the real interest rate.
B)rightward and increases the real interest rate.
C)rightward and decreases the real interest rate.
D)leftward and increases the real interest rate.
E)rightward and the supply of loanable funds curve leftward.
Q3) In the market for loanable funds,if the interest rate is above the equilibrium level
A)a shortage of loanable funds exists.
B)a surplus of loanable funds exists.
C)expected profit falls.
D)government expenditure decreases.
E)wealth increases.
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Page 25
Chapter 24: Money, the Price Level, and Inflation
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Sample Questions
Q1) Real GDP is $2,000 billion,the price level is 120,and the velocity of circulation is 5.Nominal GDP is
A)$24 billion.
B)$600 billion.
C)$2,000 billion.
D)$2,400 billion.
E)$166.67 billion.
Q2) The banks on Sunny Island have deposits of $4 million,reserves of $600,000,and loans of $2.4 million.The desired reserve ratio is 10 percent.The banks have ________ of desired reserves and ________ of excess reserves.
A)$400,000;$600,000
B)$200,000;$400,000
C)$400,000;$200,000
D)$600,000;$200,000
E)$200,000;$600,000
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Chapter 25: The Exchange Rate and the Balance of Payments
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Q1) A change in the exchange rate,other things remaining the same,brings a
A)change in the quantity of Canadian dollars demanded and a movement along the demand curve.
B)change in the quantity of Canadian dollars demanded with no movement along the demand curve.
C)shift of the demand curve for Canadian dollars with a movement along the demand curve.
D)change in the quantity of Canadian dollars demanded and a shift of the demand curve.
E)shift of the demand curve for Canadian dollars with no movement along the demand curve.
Q2) Suppose the interest rate in Canada falls and the interest rate in Japan remains the same.Interest rate parity implies that given equal risk
A)the inflation rate is higher in Japan.
B)Japanese financial investments are more profitable.
C)the yen is expected to depreciate against the dollar.
D)the yen is expected to appreciate against the dollar.
E)Canadian financial investments are less profitable.
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Page 27
Chapter 26: Aggregate Supply and Aggregate Demand
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Q1) Which of the following will lower the price level for sure?
A)The AD curve shifts rightward and the SAS curve shifts leftward.
B)The AD curve shifts rightward and the SAS curve remains unchanged.
C)The SAS curve shifts leftward.
D)The LAS curve shifts leftward.
E)None of the above.
Q2) Refer to Figure 26.2.1.Which graph illustrates what happens when government expenditure increases?
A)(a)
B)(b)
C)(c)
D)(d)
E)None of the above
Q3) Refer to Figure 26.3.5.If the aggregate demand curve is AD?,real GDP is
A)$13 trillion.
B)$13.5 trillion.
C)more than $13 trillion and less than $13.5 trillion.
D)less than $13 trillion.
E)100
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Chapter 27: Expenditure Multipliers: The Keynesian Model
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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) The slope of the AE curve equals
A)aggregate expenditure divided by real GDP.
B)the change in aggregate expenditure divided by the change in real GDP.
C)the change in consumption divided by the change in real GDP.
D)the change in consumption plus government expenditure divided by the change in aggregate income.
E)the change in income divided by the change in autonomous expenditure.
Q3) Refer to Figure 27.1.2.The marginal propensity to consume is A)800.
B)0.8.
C)0.2.
D)0.25.
E)0.75.
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Chapter 28: Canadian Inflation, Unemployment, and Business Cycle
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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) Refer to Figure 28.3.1.Suppose the economy moves from point D to point B.According to the monetarist theory of the business cycle,what could have caused this movement?
A)a decrease in the money wage rate
B)an increase in uncertainty about future sales and profits
C)an increase in the growth rate of the quantity of money
D)an increase in the money wage rate
E)a decrease in exports
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Chapter 29: Fiscal Policy
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Sample Questions
Q1) Consider the economy of NoTax,where the multiplier is 2.5.If the government desires to shift the AD curve rightward by $5 billion,the correct increase in government expenditure is
A)$2 billion.
B)$2.5 billion.
C)$3 billion.
D)$7.5 billion.
E)$8.33 billion.
Q2) Currently the government of Ricardia has outlays equal to $100 billion,and a tax scheme that is related positively to real GDP by the following equation: Taxes = $25 billion + 0.1(real GDP).What is the real GDP when the government has a balanced budget?
A)$100
B)$250
C)$1,250 billion
D)$750 billion
E)$1,000 billion
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Chapter 30: Monetary Policy
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88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/12224
Sample Questions
Q1) Suppose the Bank of Canada uses the Taylor rule to set the overnight loans rate.If the inflation rate is 3 percent,and the output gap is 0 percent,then the Taylor rule sets the overnight rate equal to
A)5 percent.
B)5.5 percent.
C)0 percent.
D)2.5 percent.
E)6 percent.
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
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Chapter 31:International Trade Policy
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116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/12225
Sample Questions
Q1) Consider a country that sells some of its goods as exports.Who does NOT benefit?
A)domestic consumers
B)domestic producers
C)workers in the industry
D)foreign consumers
E)everyone benefits
Q2) If Canada imposes a tariff on imported steel,the tariff
A)raises the Canadian price of imported steel.
B)decreases the Canadian production of steel.
C)increases the total Canadian consumption of steel.
D)decreases employment in the Canadian steel industry.
E)all of the above.
Q3) In a market that moves from a situation of no trade to a situation where a good is imported,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
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