Introductory Economics Review
Questions
Course Introduction
Introductory Economics provides a foundational understanding of economic principles and the functioning of market and non-market systems. This course addresses core concepts such as supply and demand, opportunity cost, elasticity, and the role of government in the economy. Students will explore both microeconomic topics, such as consumer behavior and production costs, and macroeconomic issues, including unemployment, inflation, and economic growth. Through real-world examples and case studies, learners will develop analytical skills to assess economic policies and their impacts on individuals, businesses, and society as a whole.
Recommended Textbook
ECON Macro Principles of Macroeconomics 1st Canadian Edition by Moir OShaughnessy
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20 Chapters
2444 Verified Questions
2444 Flashcards
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Chapter 1: The Art and Science of Economic Analysis
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Which of the following would an economist classify as capital?
A) 100 shares of Microsoft stock
B) a $50 bill
C) a credit card
D) a lawyer's office computer
Answer: D
Q2) What is a hypothesis?
A) an assumption about behaviour
B) a prediction of what will occur given certain assumptions
C) a prediction of what will occur regardless of assumptions
D) a forecast of future events
Answer: B
Q3) Which of the following is an example of human capital?
A) dump trucks
B) a college education
C) rent
D) money
Answer: B
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Chapter 2: Economic Tools and Economic Systems
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Refer to the exhibit.At which labelled point would current production lead to the largest outward shift in the production possibilities frontier in a later year?
A) at point a, because this point represents a greater consumption level than point b
B) at point b, because this point represents greater total production than the other two points
C) at point c, because this point represents a greater consumption level than the other two points
D) at point c, because this point represents greater production of capital than the other two points
Answer: D
Q2) Which of the following will make a production possibilities frontier shift outwards?
A) a decrease in capital stock
B) a decrease in resource availability
C) an increase in unemployment
D) an improvement in technology
Answer: D
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4
Chapter 3: Economic Decision Makers
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145 Flashcards
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Sample Questions
Q1) Why government is a participant in a market-oriented economy?
A) to enforce contracts and protect private property
B) to promote collusion
C) to promote the growth of natural monopolies
D) to provide more inequality in the distribution of income
Answer: A
Q2) Mark and Charles are roommates at college.Each has written a 25-page term paper for the same English class.They are equally poor typists.Charles types his own paper and gets paid by Mark to type his, too.Which statement best describes Mark and Charles's behaviours from an economic perspective?
A) Mark is wealthier than Charles.
B) Mark needs more time to study than Charles.
C) Mark and Charles have different utilities for typing but place the same value on time.
D) Mark's opportunity cost of typing is higher than Charles's.
Answer: D
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Chapter 4: Demand, Supply, and Markets
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203 Flashcards
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Sample Questions
Q1) Which of the following events would increase the supply of tomatoes?
A) the introduction of mechanized tomato pickers, which raises the cost of production
B) an increase in wages for the tomato pickers
C) a decrease in the cost of fertilizer for the tomato plants
D) unseasonably hot, dry weather in the tomato-growing regions of the nation
Q2) Which of the following would be most likely to increase the demand for downtown parking in a large city?
A) improved bus service to the downtown area
B) lower downtown parking fees
C) more downtown parking lots
D) more freeways leading to the downtown area
Q3) Suppose the wearing of fur hats becomes more fashionable.What would be expected regarding the price and quantity of fur hats?
A) Price and quantity will both decrease.
B) Price will increase and quantity will decrease.
C) Price will decrease and quantity will increase.
D) Price and quantity will both increase.
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Chapter 5: Algebraic Approach to Demand, Supply, and Equilibrium
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12 Flashcards
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Sample Questions
Q1) Market demand is given as Qd = 200 - 3P.Market supply is given as Qs = 2P + 100.What would result if the market price were $30?
A) a shortage of 110
B) a surplus of 110
C) a surplus of 50
D) a shortage of 50
Q2) Market demand is given as QD = 100 - 2P.Market supply is given as QS = P + 10.Which legally imposed price would constitute a binding price floor?
A) $60
B) $45
C) $30
D) $15
Q3) Market demand is given as QD = 100 - 2P.Market supply is given as QS = P + 10.Which legally imposed price would constitute a binding price ceiling?
A) $10
B) $30
C) $40
D) $60
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Chapter 6: Introduction to Macroeconomics
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) Keynes advocated federal budget deficits.What did he believe that such a deficit would overcome?
A) inflation
B) unemployment
C) trade deficits
D) trade surpluses
Q2) Which statement best characterizes Canadian business cycle activity since 1980?
A) Only one business cycle has occurred.
B) No recessions have occurred.
C) Expansions have generally lasted longer than contractions.
D) Each cycle has lasted longer than the previous one.
Q3) In terms of budget deficits, which is a flow variable and which is a stock variable?
A) A budget deficit is a flow variable; debt is a stock variable.
B) A budget deficit is a stock variable; debt is a flow variable.
C) A budget deficit and the debt are both stock variables.
D) A budget deficit and the debt are both flow variables.
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Chapter 7: Tracking the Canadian Economy
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) Suppose nominal GDP increased by 4 percent and increases in real GDP remained constant.How much did prices increase?
A) 0 percent
B) 4 percent
C) 8 percent
D) 12 percent
Q2) Which of the following would be included as consumption in the expenditures approach to calculating GDP?
A) spending by businesses on a plant and equipment
B) spending by government on office buildings
C) spending by households on new single-family houses
D) purchases of dental services by patients
Q3) Why is GDP a poor measure of social well-being?
A) because revenue earned on Canadian exports is ignored
B) because each dollar of government spending is valued at less than one-half of private spending
C) because the value of leisure time is NOT counted in GDP
D) because consumer spending is more important than business spending and should be considered more valuable
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Chapter 8: Unemployment and Inflation
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) How do inflation and real income relate to each other?
A) Inflation always reduces real income.
B) Inflation reduces the real income of workers when wages increase more than prices do.
C) Inflation reduces the real income of workers when wages increase less than prices do.
D) Inflation increases the real income of workers only when wages increase less than prices do.
Q2) Which one of the following people will most likely qualify for unemployment compensation benefits?
A) a new college graduate who CANNOT find work despite a desperate job search
B) an unemployed coal miner who has been receiving benefits for the past six months
C) a former retail clerk who quit her job because the boss was too demanding
D) a spot welder who has just gotten his layoff notice in the mail after ten years of continuous employment
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Chapter 9: Productivity and Growth
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68 Verified Questions
68 Flashcards
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Sample Questions
Q1) Why is productivity growth important?
A) because it is the only way an economy can increase GDP
B) because it ultimately increases a nation's standard of living
C) because a large increase in productivity growth causes a small decrease in GDP
D) because it causes an increase in the quantity of all resources available to an economy
Q2) In order for a society to have a rising standard of living, what must happen to the growth of the output per worker?
A) The output per worker must be growing more slowly than the labour force.
B) The output per worker must be growing at the same rate as the population.
C) The output per worker must be growing faster than the population.
D) The output per worker must be growing more slowly than the population.
Q3) What would an improvement in the quality of capital do to the per-worker production function?
A) It would rotate the per-worker production function upward.
B) It would make the per-worker production function flatter.
C) It would shift the per-worker production function downward.
D) It would rotate the per-worker production function downward.
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Chapter 10: Aggregate Expenditure and Aggregate
Demand
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147 Flashcards
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Sample Questions
Q1) What is the term for that fraction of a change in disposable income that is consumed?
A) the marginal propensity to save
B) induced consumption
C) the multiplier
D) the marginal propensity to consume
Q2) What is the marginal propensity to consume?
A) It is the decrease in disposable income that occurs as a result of an increase in consumption.
B) It is the increase in disposable income that occurs as a result of an increase in consumption.
C) It is the decrease in consumption that occurs as a result of an increase in disposable income.
D) It is the increase in consumption that occurs as a result of an increase in disposable income.
Q3) How will an increase in the price level affect the aggregate expenditure line?
A) It will shift the aggregate expenditure line upward.
B) It will shift the aggregate expenditure line downward.
C) It will result in a movement upward along the aggregate expenditure line.
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D) It will result in a movement downward along the aggregate expenditure line.
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Chapter 11: Aggregate Supply
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) Suppose the price level turns out to be higher than expected in the short run.Which of the following actions will businesses take?
A) Businesses will increase production.
B) Businesses will decrease production.
C) Initially, the short-run aggregate supply curve will shift rightward, but later an upward movement will occur along that curve.
D) Initially, the short-run aggregate supply curve will shift rightward, but later a downward movement will occur along that curve.
Q2) On what does the steepness of the short-run aggregate supply curve primarily depend?
A) on the length of time for which resource prices are fixed
B) on the length of time for which output prices are fixed
C) on the difference between the expected price level and the actual price level
D) on how quickly production costs increase as output expands
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Chapter 12: Fiscal Policy
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167 Verified Questions
167 Flashcards
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Sample Questions
Q1) Refer to the table in the exhibit.Suppose government purchases increased to $300.By what amount would equilibrium real GDP demanded increase?
A) by $300
B) by $500
C) by $1,200
D) by $1,500
Q2) Refer to the graph in the exhibit.Which one of the following sets of policies would move the economy to full employment?
A) increase government purchases, increase taxes, and decrease transfer payments
B) decrease government purchases, increase taxes, and decrease transfer payments
C) increase government purchases, decrease taxes, and increase transfer payments
D) increase government purchases, increase in taxes, and increase transfer payments
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Chapter 13: Money and the Financial System
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95 Flashcards
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Sample Questions
Q1) Which of the following is an important function of chartered banks?
A) to print new currency
B) to issue fiat money
C) to mint coins
D) to make loans
Q2) What is fiat money backed by?
A) gold or silver
B) fractional reserves
C) the promise of a bank to redeem it upon presentation
D) nothing
Q3) Which of the following is NOT a depository institution?
A) a chartered bank
B) a caisses populaire
C) a stockbroker
D) a credit union
Q4) Which of the following is NOT a depository institution?
A) a chartered bank
B) a trust and mortgage loan company
C) an insurance company
D) a credit union
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Chapter 14: Banking and the Money Supply
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) Suppose the simple money multiplier is 5.What must the desired reserve ratio be?
A) 0
B) 5 percent
C) 10 percent
D) 20 percent
Q2) Suppose a bank has $100 million in chequable deposits, and the desired reserve ratio is 0.1.The bank has $5 million in actual reserves.What are the excess reserves?
A) ?$10 million
B) ?$5 million
C) 0
D) $5 million
Q3) Which of the following is NOT a liability to a chartered bank?
A) chequable deposits
B) net worth
C) borrowings from the Bank of Canada
D) deposits with the Bank of Canada
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Chapter 15: Monetary Theory and Policy in an Open Economy
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) Suppose the amount of money in the economy times the velocity of money equals $800 million.According to the equation of exchange, what does the $800 million represent?
A) real GDP
B) nominal GDP
C) velocity
D) quantity of money
Q2) In the aggregate demand-aggregate supply model, what will be the effects of a decrease in the money supply in the short run?
A) an increase in the price level, and an increase in real GDP
B) a decrease in the price level, and a decrease in real GDP
C) an increase in real GDP, and a decrease in the price level
D) a decrease in real GDP, and an increase in the price level
Q3) What is the equation of exchange?
A) QS = QD
B) P × V = M × Y
C) M × V = P × Y
D) C × I = Y × G
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Chapter 16: Macro Policy Debate: Active or Passive
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) Suppose the economy had been operating along a given short-run Phillips curve for several years, and then the economy experienced a year of stagflation.How would the year of stagflation be represented?
A) as a move upward along the short-run Phillips curve
B) as a move downward along the short-run Phillips curve
C) as a point above the short-run Phillips curve
D) as a point below the short-run Phillips curve
Q2) In the conduct of macroeconomic policy, what are the four lags that complicate the timing of the policy's implementation?
A) the recognition lag, the decision-making lag, the correction lag, and the feedback lag
B) the statistical lag, the decision-making lag, the implementation lag, and the effectiveness lag
C) the recognition lag, the decision-making lag, the implementation lag, and the effectiveness lag
D) the statistical lag, the decision-making lag, the correction lag, and the effectiveness lag
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Chapter 17: International Finance
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) What does the demand curve for euros illustrate?
A) a direct relationship between the dollar price of a euro and the quantity of euros demanded
B) an inverse relationship between the dollar price of a euro and the quantity of euros demanded
C) that the higher the dollar price of a euro, the greater the quantity demanded
D) that the more expensive it is to buy euros, the larger the quantity of European goods demanded by Canadians
Q2) What do critics allege about the current system of flexible exchange rates?
A) that the current system promotes inflation
B) that the current system promotes unemployment
C) that the current system gives central banks too little discretion over their money supplies
D) that the current system restricts the growth of developing countries
Q3) Which of the following is NOT classified as a service in the current account?
A) transportation
B) insurance
C) tourist expenditures
D) unilateral transfers
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Page 19
Chapter 18: International Trade
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) What is the primary difference between an import tariff and an import quota?
A) A tariff causes prices to rise, but a quota does NOT.
B) A quota causes prices to rise, but a tariff does NOT.
C) A quota results in a net welfare loss, but a tariff does NOT.
D) Tariff revenues go to government, but a quota benefits those with the right to sell foreign goods domestically.
Q2) Relative to its trading partners, which goods are the most economically feasible for a country to export?
A) only those goods for which the country has an absolute advantage
B) only those goods for which the country has the highest opportunity cost
C) only those goods for which the country has the strongest demand
D) only those goods for which the country has the lowest opportunity cost
Q3) What was the largest category of imports to Canada in 2011?
A) services
B) consumer goods
C) petroleum and related products
D) motor vehicles and parts
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Chapter 19: Economic Development
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57 Flashcards
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Sample Questions
Q1) Which of the following best describes social capital?
A) the shared values and trust that promote cooperation in the economy
B) the buildings and equipment used to produce goods and services
C) a government regulation aimed at improving health and safety
D) the accumulated knowledge, skill, and experience of the labour force
Q2) What comprises the bulk of exports from non-industrial countries?
A) manufactured goods
B) primary products
C) services
D) natural resources
Q3) Which of the following is most unlikely to be an industrial market?
A) Western Europe
B) North American
C) Australia
D) sub-Saharan African economies
Q4) What must developing countries have in order to pay for imports?
A) foreign aid
B) private investment
C) public investment
D) foreign exchange
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Chapter 20: Understanding Graphs
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52 Flashcards
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Sample Questions
Q1) Which of the following best describes the slope of a horizontal line?
A) It is infinitely large.
B) It is zero.
C) It is negative.
D) It is infinitely small.
Q2) Refer to the exhibit.Which graph illustrates a direct or positive relationship between variable X and variable Y?
A) graph a
B) graph b
C) graph c
D) graph d
Q3) What part of a graph is most applicable to marginal analysis?
A) the origin
B) the slope
C) the horizontal axis
D) the dependent variable
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