Principles of Macroeconomics
Chapter Exam Questions
Course Introduction
Principles of Macroeconomics introduces students to the fundamental concepts and theories that explain the behavior of economies at a national and global scale. The course covers key topics such as gross domestic product (GDP), unemployment, inflation, economic growth, fiscal and monetary policy, and international trade. Through the analysis of economic indicators and government policy tools, students develop a framework for understanding how various economic factors interact and shape overall economic performance. Emphasis is placed on real-world applications, fostering critical thinking about current economic issues and policy debates.
Recommended Textbook Economics Today The Macro View 5th Canadian Edition by Roger LeRoy Miller
Available Study Resources on Quizplus
17 Chapters
2077 Verified Questions
2077 Flashcards
Source URL: https://quizplus.com/study-set/3706
Page 2
Chapter 1: The Nature of Economics
Available Study Resources on Quizplus for this Chatper
171 Verified Questions
171 Flashcards
Source URL: https://quizplus.com/quiz/73781
Sample Questions
Q1) Sam Slapshot graduates from college with a choice of playing professional hockey at $2 million a year or (his best alternative)coaching for $50,000 a year.He decides to play hockey,but eight years later he quits as a player to make movies for $3 million a year.His opportunity cost at graduation was ________ and eight years later was
A)$2 million;$2 million
B)$2 million;$3 million
C)$50,000;$2 million
D)$50,000;$50,000
Answer: C
Q2) Explain the roles of positive and normative economics in choosing between alternative policies that might be adopted in regulating public utilities.
Answer: Positive economics is the study of "what is." That means it attempts to model how the world works and therefore to tell us what "would happen if" different policies were adopted.Normative statements are statements about what we want to bring about as a result of a policy choice.Positive economic analysis thus is the way we determine how a desired outcome might be achieved or whether a particular policy choice would achieve the end we desire.
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Production Possibilities and Economic Systems
Available Study Resources on Quizplus for this Chatper
137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/73782
Sample Questions
Q1) The more goods and services a society consumes today,
A)the more it will be able to consume in the future.
B)the harder it will be to reduce consumption in the future because people will find it difficult to accept having less.
C)the less it can consume in the future.
D)the easier it will be to consume less in the future.
Answer: C
Q2) The fact that a country's production possibilities curve bows outward tells us that A)opportunity costs are fixed as the production of a good increases.
B)opportunity costs decrease as the production of a good increases.
C)resources are of uniform quality.
D)opportunity costs increase as the production of a good increases.
Answer: D
Q3) If you are able to earn $20,000 a year teaching,$25,000 a year typing,$30,000 a year driving a cab,and $40,000 a year as a chef,you have a comparative advantage in
Answer: being a chef.
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Demand and Supply
Available Study Resources on Quizplus for this Chatper
177 Verified Questions
177 Flashcards
Source URL: https://quizplus.com/quiz/73783
Sample Questions
Q1) An increase in the price of coffee,holding other things constant,will
A)increase the demand for coffee.
B)decrease the supply of coffee.
C)decrease the quantity of coffee demanded.
D)decrease the demand for coffee.
Answer: C
Q2) There is an increase in the quantity of cream demanded when the price of coffee falls.If other things have remained constant,we can conclude that coffee and cream are A)complementary goods.
B)inferior goods.
C)independent goods.
D)substitute goods.
Answer: A
Q3) Which of the following will shift today's supply curve to the right?
A)Input prices rise
B)Prices are expected to be lower in the future
C)Sales taxes increase
D)Prices are expected to be higher in the future
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Introduction to Macroeconomics
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/73784
Sample Questions
Q1) The most general indication of economy-wide inflation is captured by the
A)Consumer Price Index.
B)GDP deflator.
C)Producer Price Index.
D)Urban Wage Deflator.
Q2) A person quits her job in order to spend time looking for a better-paying job.This is an example of
A)frictional unemployment.
B)cyclical unemployment.
C)seasonal unemployment.
D)structural unemployment.
Q3) The rate of unemployment is found by
A)dividing the number unemployed by the number of people in the labour force.
B)dividing the number unemployed by the number employed.
C)dividing the number employed by the number of people in the labour force.
D)dividing the number employed by the number unemployed.
Q4) What is a price index? How do the CPI,the PPI and the GDP deflator differ?
Q5) How are the effects of anticipated and unanticipated inflation different on individuals and the economy?
Page 6
Q6) What is meant by full employment? Why isn't the full employment rate zero?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Measuring the Economys Performance
Available Study Resources on Quizplus for this Chatper
106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/73785
Sample Questions
Q1) Which of the following is part of gross private domestic investment?
A)purchases of stocks and bonds
B)a decline in consumer debt
C)purchases of hamburgers for a family dinner
D)a positive change in business inventories
Q2) How is interest measured when used in deriving GDP?
Q3) Which of the following is a final good?
A)seed used for corn
B)wheat used for bread
C)electricity used for producing automobiles
D)a lawn mower purchased by a household
Q4) Goods that are used up entirely in the production of final goods are known as A)durable goods.
B)value added goods.
C)intermediate goods.
D)consumer goods.
Q5) Describe in detail the "other" components of GDP and National Income Accounting.
Q6) Explain what we mean by True Purchasing Power Parity.Once complete,explain the notion using an example of your own.
Q7) Explain how value added is used to compute GDP.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Modelling Real Gdp and the Price Level in the Long Run
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/73786
Sample Questions
Q1) When a change in the price level causes a change in the purchasing power of currency,which then changes the desired rate of consumption at all income levels,it is called
A)the real-balance effect.
B)the substitution effect.
C)the open-economy effect.
D)the interest rate effect.
Q2) When the relative prices of American-made goods go up,the result is
A)an increase in the exports of Canadian-made goods.
B)a decrease in exports of Canadian-made goods.
C)a decrease in imports of Canadian-made goods.
D)no net change in imports or exports of Canadian-made goods.
Q3) Other things constant,the economy's aggregate demand curve shows that
A)as the price level falls,so does real national income.
B)any change in the general price level causes the curve to shift.
C)real GDP decreases when the price level rises.
D)real GDP and the price level are not related.
Q4) How does a recession in Europe affect Canada's aggregate demand and Canada's aggregate demand curve?
Q5) What information is provided by the aggregate demand curve?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Economic Growth and Development
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/73787
Sample Questions
Q1) Economic growth
A)is sustainable with the help of "green" initiatives.
B)occurs when there are increases in per-capita GDP.
C)occurs when there are increases in real GDP.
D)occurs when there are increases in nominal GDP.
Q2) Entrepreneurship functions better when
A)the government performs the entrepreneurial function.
B)there is a well-defined property rights system.
C)saving is relatively low.
D)most of the population has low levels of education.
Q3) Traditionally,economists regarded improvements in technology as
A)the most important factor that helped explain economic growth,and basically the only factor that would cause economic growth.
B)an outside factor that helped explain economic growth.
C)an important factor in explaining economic growth that was due to economic forces that also could easily be explained.
D)unrelated to economic growth in any systematic way.
Q4) What is labour productivity,and why is it important to economic growth?
Q5) What are the benefits and costs of economic growth?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Modelling Real Gdp and the Price Level in the Short Run
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/73788
Sample Questions
Q1) In the short run,a decrease in the price level induces firms to contract production because
A)prices of inputs are held constant so the lower prices for their product implies that it is not profitable to contract production.
B)each firm must keep its production level at the level of its rivals,and some firms will contract production as the price level decreases.
C)the lower prices allow the firm to hire more inputs by offering higher prices to the inputs,which increases productivity and profits.
D)they can increase profits by increasing maintenance costs.
Q2) ________ will be associated with a constant price level when the increase in aggregate demand exactly equals the increase in long-run aggregate supply.
A)Economic growth
B)Economic stagnation
C)Economic inflation
D)Economic recession
Q3) Explain what is meant by cost-push inflation?
Q4) What is the affect of a rise in the price level on potential output?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Consumption, investment, and the Multiplier
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/73789
Sample Questions
Q1) If the MPS = 0.33,a $100 increase in net exports will
A)reduce national income by $100.
B)reduce national income by $300.
C)increase national income by $33.
D)increase national income by $300.
Q2) Total planned expenditures in a closed economy are equal to
A)consumption + investment + government.
B)consumption + savings + transfers + investment.
C)savings + investment + government.
D)investment + savings + transfers.
Q3) For an investment to be considered autonomous,it must
A)be negatively related to the interest rate.
B)increase as the level of income increases.
C)include fixed components.
D)be independent of the level of real disposable income.
Q4) Dissaving occurs when
A)income exceeds consumption.
B)planned savings is negative.
C)the consumption function is below the 45-degree line drawn from the origin.
D)planned savings is positive.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: The Public Sector
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/73790
Sample Questions
Q1) A national sales tax with a constant percentage tax rate would be
A)progressive.
B)progressive at low incomes and proportional at high incomes.
C)proportional.
D)regressive.
Q2) Which of the following is an example of the free-rider problem?
A)a neighbour refuses to help pay for a street light that is intended to help reduce crime
B)a law enforcement officer receives a uniform from the police department
C)a student refuses to buy a college catalog
D)a fast food employee is provided food at work
Q3) If corporate income taxes are collected on a firm's economic profit rather than its accounting profits,how will the firm change its output and price as a result?
Q4) Grants to support needy students are an example of A)transfers in kind.
B)transfer payments.
C)public goods.
D)externalities.
Q5) How do public goods differ from a merit goods?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Fiscal Policy and the Public Debt
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/73791
Sample Questions
Q1) If the government decreases government spending,then the
A)short-run aggregate supply curve shifts to the right.
B)long-run aggregate supply curve shifts to the left.
C)aggregate demand curve shifts to the right.
D)aggregate demand curve shifts to the left.
Q2) Suppose there is a contractionary gap and the economy is in equilibrium on the SRAS at an output level beyond the economy's long-run real GDP.In the short run,if the government increases spending then
A)output will decrease but prices will rise.
B)output will increase but prices will fall.
C)output and prices will fall.
D)output and prices will rise.
Q3) If the government decreases taxes,then the
A)short-run aggregate supply curve shifts to the right.
B)long-run aggregate supply curve shifts to the left.
C)aggregate demand curve shifts to the right.
D)aggregate demand curve shifts to the left.
Q4) What are automatic stabilizers? How do they help stabilize economic activity?
Q5) Explain how fiscal policy can correct a contractionary gap.
Q6) Explain why government deficits are related to current account deficits.
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Money and the Banking System
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/73792
Sample Questions
Q1) Assets that can be easily converted into money without loss of value are A)transactions balances.
B)liquid.
C)currencies.
D)liabilities.
Q2) Money is defined as
A)a person's net worth.
B)anything people generally accept in exchange for goods and services.
C)a byproduct of a barter economy.
D)any financial instrument that is backed by gold.
Q3) What is liquidity? Why is money the most liquid of all assets? What is the cost of this liquidity?
Q4) A bank has chequable deposits of $400,savings deposits of $900,other deposits of $900,loans of $950,government securities of $900,outstanding credit card balances of $400,currency of $40 held at the bank,and deposits in its reserve account at the Bank of Canada of $40.What amount of this bank's deposits are in the form of M2+?
Q5) Explain the structure of the Canadian Banking system.
Q6) Describe the issue of asymmetric information and relate it to insurance companies and financial institutions.
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Money Creation and Deposit Insurance
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/73793
Sample Questions
Q1) If the desired reserve ratio is 25 percent,the maximum money multiplier is A)1)
B)4)
C)8)
D)25.
Q2) The money multiplier gives us
A)the growth in real national income when the money supply increases.
B)the growth in the money supply when real national income increases.
C)the maximum potential change in total deposits due to a change in reserves.
D)the maximum potential change in the money supply due to a change in real national income.
Q3) If a bank holds $20,000 in desired reserves in order to meet a desired reserve ratio of 40 percent,demand deposits must equal
A)$20,000.
B)$40,000.
C)$50,000.
D)$100,000.
Q4) Why did the federal government set up CDIC?
Q5) What forces can make the money multiplier smaller than the reciprocal of the required reserve ratio?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: The Bank of Canada and Monetary Policy
Available Study Resources on Quizplus for this Chatper
131 Verified Questions
131 Flashcards
Source URL: https://quizplus.com/quiz/73794
Sample Questions
Q1) If the economy is underutilizing its economic resources,the Bank of Canada should
A)discourage investment spending.
B)expand the money supply to increase aggregate demand.
C)decrease aggregate supply.
D)contract the money supply.
Q2) In the Keynesian view,
A)an increase in money supply will increase interest rates.
B)an increase in money supply will decrease interest rates.
C)a decrease in money supply will decrease interest rates.
D)a decrease in money supply will not change interest rates.
Q3) When the Bank of Canada wants to undertake open market operations,it
A)can require all commercial banks to buy from or sell to it.
B)can require all member banks to buy from or sell to it.
C)buys or sells securities by writing a cheque.
D)buys from or sells to the Canadian Treasury.
Q4) What are monetarists? How do they differ from Keynesians with respect to the effects of monetary policy on the macroeconomy?
Q5) Explain how fiscal and monetary policies interact with international markets through the net export effect.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Issues in Stabilization Policy
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/73795
Sample Questions
Q1) What are the criticisms of supply-side economics?
Q2) The natural rate of unemployment includes
A)frictional and cyclical unemployment.
B)only cyclical unemployment.
C)only unemployment due to lay-offs and corporate downsizing.
D)frictional unemployment and structural unemployment.
Q3) The Phillips curve shows
A)a positive relationship in the long-run between the rate of inflation and the rate of unemployment.
B)a negative relationship between the inflation rate and the unemployment rate,at least in the short run.
C)a positive relationship between contractionary monetary policy and higher price levels.
D)a positive relationship between price stability and constant,small-increment changes in the fiscal policy on the part of the Bank of Canada.
Q4) What is meant by the natural rate of unemployment?
Q5) Describe new Keynesian economics and the arguments used to support the ideas.
Q6) According to the work of Phillips,what Type of relationship was believed to exist between unemployment and inflation?
Page 17
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Comparative Advantage and the Open Economy
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/73796
Sample Questions
Q1) What must a government know for the infant industry argument to be a valid reason for imposing tariffs?
Q2) For infant-industry tariff protection to be valid requires that A)the tariff be allowed to last forever.
B)only industries that currently are producing efficiently should be protected.
C)government officials can predict which industries will eventually be able to compete with more established foreign producers.
D)the industries protected have substantial monopoly power in the absence of foreign competition.
Q3) That each individual should engage in economic activities in which he or she is relatively most efficient is an application of the concept of A)competition.
B)absolute advantage.
C)scarcity.
D)comparative advantage.
Q4) Distinguish between absolute advantage and comparative advantage.
Q5) With the aid of diagrams explain the effect of a tariff on American-made computer software
Q6) What do you think are the main benefits of China's membership in the WTO?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Exchange Rates and the Balance of Payments
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/73797
Sample Questions
Q1) Why does the supply curve of euros slope up?
Q2) Flexible exchange rates occur when
A)no one knows what the true value of a currency is.
B)governments and central banks spend foreign reserves to prop an exchange rate at a certain level.
C)exchange rates are determined by forces of supply and demand.
D)speculators bet that a currency will soon be depreciated.
Q3) Canada's balance of payments is likely to improve when
A)the inflation rate increases in Canada relative to other countries.
B)there is an increases in political instability in other countries.
C)the world demand for Canadian products falls.
D)the Canadian government increases its spending on foreign aid.
Q4) With a pure gold standard,
A)a nation may not pursue an independent monetary policy.
B)an inflow of gold will reduce the money supply of a country.
C)there will be a tendency for a too rapid increase in the volume of world trade.
D)a balance of payments deficit will lead to an increase in the domestic price level.
Q5) Outline how exchange rates are determined in a free market.
To view all questions and flashcards with answers, click on the resource link above. Page 19