Principles of Macroeconomics
Question Bank
Course Introduction
Principles of Macroeconomics introduces students to the fundamental concepts and analytical tools used to understand the performance, structure, and behavior of entire economies. Topics include the measurement of economic activity (such as GDP, unemployment, and inflation), the role of fiscal and monetary policy, economic growth, business cycles, and international trade. The course emphasizes how government actions and market forces interact to determine national income, employment levels, price stability, and long-term economic development. Through real-world examples and data analysis, students gain insight into current economic issues and the policy debates that shape economic outcomes globally.
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) Economists who assume that wants are "unlimited" are
A)describing the real world because they have studied individual preferences and found that no matter how much people have,they always want more.
B)making a simplifying assumption so they can consider what happens when wants are greater than can be satisfied with the resources and technology available.
C)wrong,because in the real world,people often have all they want of things.
D)making a normative statement about the world.
Answer: B
Q2) Services can be thought of as
A)free goods.
B)intangible goods.
C)unvalued goods.
D)unwanted goods.
Answer: B
Q3) Suppose you have four choices go to a movie,read a book,watch television,or go to a concert.You choose to go to a movie.The opportunity cost of the movie is ________. Answer: the value of the activity you would have selected if you hadn't gone to the movie.
To view all questions and flashcards with answers, click on the resource link above.
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 production possibilities curve shown in Figure 2-3 shows that the opportunity cost of each tonne of soybeans is
A)1 tonne of corn.
B)1/2 tonne of corn.
C)2/3 tonnes of corn.
D)2 tonnes of corn.
Answer: A
Q2) In Figure 2-4,between points b and c the opportunity cost of 250 tonnes of corn is
A)250 metres of cloth.
B)400 metres of cloth.
C)600 metres of cloth.
D)200 metres of cloth.
Answer: D
Q3) People who favour laissez-faire believe that
A)the government should play an active role in the economy.
B)firms should be prevented from charging unfairly high prices.
C)the public sector should be larger than it is.
D)the government should not interfere in the workings of the economy.
Answer: D
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) The law of demand states that,other things being equal,
A)the quantity of a good or service demanded is inversely related to its price.
B)the quantity of a good or service demanded is directly related to its price.
C)changes in price and changes in quantity demanded move in the same direction.
D)people always demand less at lower prices and more at higher prices.
Answer: A
Q2) According to Table 3-4,there is an excess demand of 1500 CDs at price
A)$10.
B)$12.
C)$8.
D)$14.
Answer: A
Q3) In Figure 3-3,other things constant,if price was at P we would expect
A)consumers to reduce their offering price for the good.
B)an excess quantity supplied to remain on the market.
C)price to drift downward until a stable equilibrium at P was achieved.
D)consumers to bid against each other for goods and force the price still higher.
Answer: C
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) A lifeguard who is out of work in the winter is
A)frictionally unemployed.
B)structurally unemployed.
C)cyclically unemployed.
D)seasonally unemployed.
Q2) An extremely severe recession is known as a A)trough.
B)peak.
C)contraction.
D)depression.
Q3) The duration of unemployment tends to
A)increase when business activity goes into a downturn.
B)increase when employment increases.
C)increase when the labour force shrinks.
D)stay consistently the same over long periods of time.
Q4) Which of the following would not be considered unemployed?
A)a new entrant to the labour force
B)a job leaver who is looking for a better job
C)an individual fired by her employer
D)a newly retired worker
To view all questions and flashcards with answers, click on the resource link above. Page 6
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) An indirect business tax
A)is levied on the corporate profits.
B)is excluded from gross domestic income.
C)includes all business taxes except taxes on corporate profits.
D)lowers the market price of goods.
Q2) If households pay $100 in interest payments and receive $120 in interest,wages equal $400,rental receipts on land are $100 and royalties are $100,profits are $150,depreciation is $50,and indirect business taxes are $50,then gross domestic income is
A)$1,070.
B)$870.
C)$820.
D)$770.
Q3) The term "value added" refers to the dollar value of
A)an industry's sales plus profits.
B)the intermediate goods purchased by an industry.
C)an industry's sales less the dollar value of the intermediate goods purchased by the industry.
D)the intermediate goods purchased by an industry plus the profits of the industry.
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) The long-run aggregate supply curve
A)shows that at higher prices,potential output increases.
B)slopes up and to the right.
C)shows that long-run aggregate supply equals potential output.
D)s very sensitive to changes in the price level.
Q2) Holding nominal money balances constant,a decrease in the price level
A)causes the real value of the money balances to increase,in turn increasing the quantity of goods and services demanded.
B)causes the real value of the money balances to decrease,in turn decreasing the quantity of goods and services demanded.
C)causes the real value of the money balances to increase,thereby increasing the interest rate.
D)generates a reduction in the value of the money balances,leading to higher interest rates and a decrease in the quantity of goods and services demanded.
Q3) What is secular deflation? Explain fully.
Q4) What are the three forces that cause the aggregate demand curve to slope down? Explain.
Q5) What is the long-run aggregate supply 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) Productive capacity usually refers to
A)resources use.
B)nominal income.
C)satisfaction.
D)economic growth.
Q2) Sustainable development means
A)increases in per capita real GDP measured by its rate of change per year.
B)method of redistributing income to the poorest in society.
C)improvements in labour productivity which lead to greater economic growth and higher living standards.
D)economic development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Q3) If population growth is more than growth of real output,
A)real per capita GDP growth will be less than the growth of GDP.
B)there can be no economic growth.
C)real per capita GDP growth will be greater than the growth of GDP.
D)real per capita GDP and GDP will be growing at the same rate.
Q4) Why are economic growth and saving related?
Q5) Explain the relationship between economic growth and labour productivity.
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) If the price level kept decreasing,the short-run aggregate supply curve would get flatter because
A)all the unemployed would eventually be hired.
B)we could hire any and all resources at the going rate without increasing prices or the price of inputs..
C)the rate at which capacity can be expanded increases indefinitely.
D)the long-run aggregate supply curve is horizontal.
Q2) Explain what is meant by cost-push inflation?
Q3) In Figure 8-4,the expansionary gap can correctly be identified as
A)the difference between 125 and 120.
B)the difference between 7 billion and 7.2 billion.
C)LRAS minus SRAS.
D)A D
Q4) Explain the problem of "sticky wages" and the implications for the long-run equilibrium.Can something be done to eliminate this problem?
Q5) Suppose real GDP is equal to potential GDP.Explain what happens if the aggregate demand curve shifts either rightward or leftward.
Q6) How can a country experience economic growth and stable prices?
Q7) 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) When disposal income is $50 million,consumption expenditure is $45 million.When disposal income is $60 million,consumption expenditure is $50 million.What is the MPC?
Q2) Which of the following is a TRUE statement?
A)The C + I + G + X - M curve has no relationship to the aggregate demand curve other than some of the variables that affect one curve also affect the other.
B)The C + I + G + X - M curve is used to derive the aggregate demand curve,but the C + I + G + X - M curve is drawn for one price level while price levels vary along the aggregate demand curve.
C)The C + I + G + X - M curve is used to derive the aggregate demand curve,but the aggregate demand curve is drawn for one price level.
D)Both the C + I + G + X - M curve and the aggregate demand curve are drawn for one price level.
Q3) At an income level of Y and planned expenditures of (C + I)1 in Figure 9-4, A)planned saving exceeds planned investment.
B)the economy is in equilibrium.
C)the quantity of aggregate demand exceeds the real output produced. D)there is full employment.
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) Corporate profits are taxed
A)at too low a rate.
B)three times once by the corporate tax system,again by the personal tax system,and again as capital gains.
C)twice once by the corporate tax system and again by the personal tax system when they are paid to stockholders as dividends.
D)only when a stockholder sells his or her shares of stock.
Q2) To protect the competitive economic system by restricting the formation of monopolies,the government has passed and enforced
A)anti-combines laws.
B)tort laws.
C)zoning laws.
D)regulatory laws.
Q3) A capital gain is defined as
A)the tax rate one pays when one moves into a higher tax bracket.
B)a positive difference between the purchase price and the sale price of an asset.
C)an unanticipated increase in income.
D)the tax paid when one sells an asset.
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) To shift the aggregate demand curve outward and thereby reduce a contractionary gap,the government could
A)increase taxes.
B)increase government spending.
C)decrease government spending.
D)increase Social Security benefits.
Q2) Suppose the government lowered marginal tax rates from 50 percent to 30 percent.This would be an example of A)crowding out.
B)demand-side economics.
C)an expansionary fiscal policy.
D)a contractionary fiscal policy.
Q3) If the government wants to decrease real GDP levels,it could A)increase government expenditures.
B)increase taxes.
C)wait for inflationary pressure to come.
D)decrease government expenditures and increase taxes.
Q4) What are the various time lags that affect discretionary fiscal policy,and what are their effects?
Q5) Explain how fiscal policy can correct a contractionary gap.
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) Transactions accounts in commercial banks and other financial institutions are classified as money because
A)they are not liabilities of the banks.
B)they sometimes earn an interest income for the depositor.
C)they are generally acceptable in the payment of debt.
D)banks hold currency in their vaults equal to the value of demand deposits.
Q2) Describe the issue of asymmetric information and relate it to insurance companies and financial institutions.
Q3) Savings deposits are
A)a liability to a commercial bank.
B)an asset to a commercial bank.
C)a liability to the household or firm that has the account.
D)an asset for the Bank of Canada.
Q4) Provide an overview of the Canadian financial system.
Q5) What is included in M1+ money supply?
Q6) 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.
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) A bank with deposits of $500 million has $75 million in cash on hand,$50 million in deposits with the Bank of Canada,and $80 million in government securities.If the reserve requirement is 15 percent,the bank has excess reserves of A)0)
B)$5 million.
C)$50 million.
D)$130 million.
Q2) Changes in the money supply are important because
A)there is a relationship between changes in the money supply and changes in government spending.
B)there is a relationship between changes in the money supply and changes in nominal GDP.
C)there is an inverse relationship between changes in the money supply and the inflation rate.
D)there is a direct relationship between changes in the money supply and changes in interest rates.
Q3) What is the difference between adverse selection and moral hazard?
Q4) What are reserves? Discuss the various types of reserves used in the Canadian banking system.
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) The income velocity of money is
A)the time it takes to produce money.
B)the time lag from when the Bank of Canada decides to increase the money supply until the effect takes place.
C)the number of times per year a dollar is spent on final goods and services.
D)the time it takes for monetary policy to have an effect on world financial markets.
Q3) Describe with the aid of diagrams the effect of an increase in the money supply on interest rates and in turn aggregate demand and the price level.
Q4) Explain how fiscal and monetary policies interact with international markets through the net export effect.
Q5) Discuss the Bank of canada and its organizational structure.
Q6) How can the Bank of Canada direct the money supply?
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) The nonaccelerating inflation rate of unemployment (NAIRU)is
A)discretionary policy making.
B)nondiscretionary policy making.
C)natural rate of unemployment.
D)the rate of unemployment below which the rate of inflation tends to rise and above which the rate of inflation tends to fall.
Q2) What is the main tenet(s)of the Real Business Cycle Theory?
Q3) The small-menu cost theory states that
A)prices are not fully flexible because it is costly for firms to change prices every time there is a demand change.
B)economic agents quickly learn the likely responses of the Bank of Canada to changes in unemployment.
C)wages depend on the productivity of workers.
D)the economy is characterized by perfect competition.
Q4) Describe new Keynesian economics and the arguments used to support the ideas.
Q5) What is meant by the natural rate of unemployment?
Q6) Describe the Rational Expectations Hypothesis and how it can affect aggregate output.
Q7) What are the criticisms of supply-side economics?
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) If there are two goods and two countries,then one country can have
A)an absolute advantage in both goods but a comparative advantage in only one good.
B)an absolute advantage in both goods and a comparative advantage in both goods.
C)an absolute advantage in one good,an absolute disadvantage in the other good,and a comparative advantage in neither.
D)an absolute advantage in neither good and a comparative advantage in both goods.
Q2) An import quota specifies
A)the amount of money that can be charged to any imported good.
B)the amount of taxes that must be paid on any imported good.
C)the maximum amount of a commodity that may be imported during a specified period.
D)the minimum amount of a commodity that may be imported during a specified period.
Q3) Why was the WTO,formerly GATT,created?
Q4) List and explain fully the arguments against free trade.
Q5) Distinguish between absolute advantage and comparative advantage.
Q6) What do you think are the main benefits of China's membership in the WTO?
Q7) What are the effects of a tariff on a good?
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) The price of foreign currency in terms of domestic currency is A)the balance of trade.
B)the imported inflation.
C)the law of comparative advantage.
D)the foreign exchange rate.
Q2) Any transaction that leads to a receipt by a resident of a country or its government is a(n)
A)asset.
B)minus item.
C)deficit item.
D)surplus item.
Q3) An increase in the French demand for British pounds causes
A)an increase in the euro-price of a pound.
B)an increase in the pound-price of a euro.
C)an increase in the demand for French goods.
D)a decrease in the supply of pounds.
Q4) Explain in detail the difference between fixed and flexible exchange rates.Once completed,with the aid of diagrams explain why monetary policy is ineffective under fixed exchange rates.
Q5) How are deficit and surplus items determined in the balance of payments?
Page 19
To view all questions and flashcards with answers, click on the resource link above.