Survey of Economics
Final Exam Questions
Course Introduction
Survey of Economics provides an introductory overview of fundamental economic principles and concepts, including the basics of both microeconomics and macroeconomics. The course examines how individuals, households, businesses, and governments make economic decisions, exploring topics such as supply and demand, market structures, fiscal and monetary policy, economic growth, unemployment, and inflation. Emphasis is placed on understanding how economic theory applies to real-world issues and public policy, helping students develop skills to analyze economic events and make informed decisions as consumers, workers, and citizens. This course is designed for students with little or no prior background in economics.
Recommended Textbook
Macroeconomics 3rd Edition Canadian by Paul Krugman Robin Wells
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19 Chapters
5325 Verified Questions
5325 Flashcards
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Chapter 1: First Principles
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198 Verified Questions
198 Flashcards
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Sample Questions
Q1) Whenever a choice is made:
A) the cost of that choice is the opportunity cost.
B) the cost is easy to measure in dollar terms.
C) efficiency is improved.
D) scarcity is not a problem.
Answer: A
Q2) The opportunity cost of something is:
A) larger during periods of rising prices.
B) equal to the monetary cost.
C) smaller during periods of falling prices.
D) what is given up to acquire it.
Answer: D
Q3) An economic situation is in equilibrium when no individual would be better off taking a different action.
A)True
B)False
Answer: True
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Chapter 2: Economic Models: Trade-Offs and Trade
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296 Flashcards
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Sample Questions
Q1) The value of a mortgage-backed security is something that was tied to the overall market for American homes.
A)True
B)False
Answer: False
Q2) (Figure: Production Possibilities and Circular-Flow Diagram)Use Figure: Production Possibilities and Circular-Flow Diagram.Assume the two figures represent the same economy.Suppose that in the circular-flow diagram there is a significant increase in the amount of human capital flowing to both coconut producers and fish producers.If all other variables remain unchanged,then the adjustment in this economy would be BEST represented in the production possibilities figure by a movement from point A toward:
A) point A (no movement).
B) point B (a decrease in coconut production and an increase in fish production).
C) point C (a decrease in coconut production).
D) point D (an outward shift of the entire curve).
Answer: D
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Chapter 3: Supply and Demand
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264 Flashcards
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Sample Questions
Q1) If supply is upward sloping,a shift of a demand curve to the right,all other things unchanged,will:
A) increase equilibrium price and quantity.
B) decrease equilibrium price and quantity.
C) decrease equilibrium quantity and increase equilibrium price.
D) increase equilibrium quantity and decrease equilibrium price.
Answer: A
Q2) (Figure: Demand for Online Movie Rentals)Use Figure: Demand for Online Movie Rentals.A decrease in the price of Google Chromecast adapters (a complement good)would result in a change illustrated by the move from:
A) f to g in panel (a).
B) h to i in panel (b).
C) j to k in panel (c).
D) l to m in panel (d).
Answer: B
Q3) An increase in demand for good X can be caused by a decrease in the price of X.
A)True
B)False
Answer: False
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Chapter 4: Price Controls and Quotas: Meddling With Markets
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200 Flashcards
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Sample Questions
Q1) Suppose that the province of Ontario sets a price floor in the market for peaches.If the floor is set below the market-clearing price of peaches,the floor will cause a surplus of peaches.
A)True
B)False
Q2) (Figure: Rent Controls)Use Figure: Rent Controls.If rent controls are imposed and the government wants them to be immediately effective,they will most likely be set at either _____ or _____.
A) Rent<sub>0</sub>;Rent<sub>1</sub>
B) Rent<sub>1</sub>;Rent<sub>3</sub>
C) Rent<sub>3</sub>;Rent<sub>4</sub>
D) Rent<sub>2</sub>;Rent<sub>4</sub>
Q3) The upper limit on the quantity of a good that can be bought and sold is the:
A) quota limit.
B) price ceiling.
C) price floor.
D) tariff.
Q4) A rent ceiling must be set above the equilibrium rent to be binding.
A)True B)False
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Chapter 5: International Trade
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258 Flashcards
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Sample Questions
Q1) If Japan levies tariffs on Canadian goods entering Japan,this will tend in the short run to _____ Canadian producers and _____ Japanese producers.
A) benefit;benefit
B) damage;benefit
C) benefit;damage
D) damage;damage
Q2) When a country moves from autarky to free international trade,consumers and producers in the import and export sectors all gain (i.e. ,both consumer surplus and producer surplus increase in both sectors).
A)True
B)False
Q3) Britain must give up the production of 75 hats to produce 25 additional sweaters.The opportunity cost of producing 4 sweaters is _____ hats.
A) 4
B) 12
C) 71
D) 79
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Page 7
Chapter 6: Macroeconomics: the Big Picture
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) A recession does NOT lead to:
A) higher unemployment.
B) reduced output.
C) reduced income and living standards.
D) higher employment.
Q2) Which two types of policy are considered to be macroeconomic?
A) monetary and fiscal policy
B) monetary and regulation policy
C) fiscal and regulation policy
D) fiscal policy and price controls
Q3) Changing the level of government spending is an example of _____ policy.
A) a fiscal
B) an interest rate
C) a monetary
D) an exchange rate
Q4) Long-run economic growth is best measured by:
A) a sustained rise in the production of goods and services.
B) the growth of the money supply.
C) trade surpluses in the long run.
D) the rate of private saving.
Page 8
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Chapter 7: Gdp and the Cpi: Tracking the Macroeconomy
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321 Verified Questions
321 Flashcards
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Sample Questions
Q1) The BEST available common measure of a nation's standard of living is:
A) nominal GDP.
B) market GDP.
C) real GDP per capita.
D) nominal GDP per capita.
Q2) Inventory is counted as investment because it:
A) is used for future production.
B) is a source of future sales.
C) has no opportunity cost.
D) is tax deductible.
Q3) Chain linking is the method of calculating changes in real GDP using averages between an early base year and a late base year.
A)True
B)False
Q4) _____ is considered to be an IOU.
A) A tock
B) A bond
C) Interest
D) A dividend
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Chapter 8: Unemployment and Inflation
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332 Verified Questions
332 Flashcards
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Sample Questions
Q1) A survey reveals that,on a small island,1 000 people have jobs,200 people don't have jobs but are looking for jobs,and 200 people are neither working nor looking for work.The unemployment rate on the island is _____%.
A) 12.5
B) 16.7
C) 20
D) 30
Q2) If more women enter or re-enter the labour force,the natural rate of unemployment is likely to:
A) decrease.
B) remain unchanged.
C) increase.
D) decrease if they are well educated.
Q3) Internet employment agencies have simplified the job search for the applicants.They have also led to a(n)_____ unemployment.
A) increase in frictional
B) increase in cyclical
C) decrease in frictional
D) decrease in structural
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Page 10
Chapter 9: Long-Run Economic Growth
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Sample Questions
Q1) The economy has grown by 4% per year over the past 30 years.During the same period,the labour force has grown by 1% per year and the quantity of physical capital has grown by 5% per year.Each 1% increase in physical capital per worker is estimated to increase productivity by 0.4%.Assume that human capital has not changed during the past 30 years.How much has growing physical capital per worker contributed to productivity growth?
A) 6%
B) 5.4%
C) 2%
D) 1.6%
Q2) Technological change:
A) raises total factor productivity.
B) is not as important as infrastructure maintenance.
C) shifts the aggregate production function downward.
D) relies on consumption increases at the expense of saving.
Q3) Which institution(s)is/are important for channelling savings into investment?
A) schools
B) religious institutions
C) banks
D) the federal government
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Chapter 10: Savings, Investment Spending, and the Financial System
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385 Verified Questions
385 Flashcards
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Sample Questions
Q1) Which index includes the most companies and provides the broadest measure of stock market performance?
A) the Dow Jones Industrial Average
B) the producer price index
C) S&P/TSX Composite Index
D) the NASDAQ
Q2) In an open economy,government spending was $30 billion,consumption was $70 billion,taxes were $20 billion,GDP was $100 billion,and investment spending was $10 billion.As a result,there was:
A) a net capital inflow of $10 billion.
B) capital inflows of $10 billion and capital outflows of $20 billion.
C) a trade surplus of $20 billion and a financial deficit of $20 billion.
D) a net capital outflow of $10 billion.
Q3) Interest rates were high during the 1970s and decreased during the 1980s because expected inflation was:
A) high during both decades.
B) low during both decades.
C) high during the 1970s and decreased during the 1980s.
D) low during the 1970s and increased during the 1980s.
Page 12
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Chapter 11: Income and Expenditure
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) (Figure: Planned Aggregate Expenditures Curve II)Use Figure: Planned Aggregate Expenditures Curve II.Suppose that the consumption function in this economy rises by $200.Equilibrium real GDP would rise by:
A) $100.
B) $200.
C) $250.
D) $500.
Q2) If planned investment is $50 billion and unplanned inventory investment is $10 billion,then actual investment is $40 billion.
A)True
B)False
Q3) If the marginal propensity to save is small,it will:
A) make the multiplier smaller.
B) make the multiplier larger.
C) not affect the value of the multiplier.
D) increase the interest rate.
Q4) People use wealth to smooth consumption over their life cycle.
A)True
B)False
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Chapter
12: Aggregate Demand and Aggregate Supply
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Sample Questions
Q1) The short-run aggregate supply curve is positively sloped because:
A) business people are subject to money illusion.
B) wages are sticky.
C) workers care about nominal wages,not real wages.
D) of diminishing returns to labour.
Q2) As an inflationary gap self-corrects,the equilibrium price level _____ and the equilibrium real output _____.
A) rises;decreases
B) rises;increases
C) falls;decreases
D) falls;increases
Q3) Suppose the equilibrium aggregate price level and the equilibrium level of real GDP are both rising.This is probably the effect of a(n)_____ in aggregate _____.
A) increase;supply
B) increase;demand
C) decrease;supply
D) decrease;demand
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14
Chapter 13: Fiscal Policy
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346 Flashcards
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Sample Questions
Q1) The theory of Ricardian equivalence argues that expansionary fiscal policy:
A) will have no effect on the economy because consumers,anticipating higher taxes to pay for government spending,will decrease spending today to save for higher taxes.
B) is not effective because it causes higher interest rates and crowds out investment spending.
C) is effective,but contractionary fiscal policy is not.
D) is more effective than expansionary monetary policy.
Q2) Suppose that the economy is in a recessionary gap.A $100 billion _____ is likely to increase real GDP by the LARGEST amount.
A) decrease in taxes
B) increase in government purchases
C) increase in transfer payments
D) increase in government purchases,paid for by a $100 billion increase in taxes
Q3) An inflationary gap occurs when:
A) prices are too low.
B) real output is too low.
C) potential output exceeds actual output.
D) actual output exceeds potential output.
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Chapter 14: Money, Banking, and the Federal Reserve System
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428 Flashcards
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Sample Questions
Q1) Canadian Treasury bills held by the Bank of Canada are assets for the Canadian government.
A)True
B)False
Q2) The use of counterfeit money leads to:
A) costs for a government only if government has endorsed fiat money.
B) losses only if consumers recognize that counterfeit money is present.
C) lost revenue to pay for operations of the economy's government.
D) problems only when commodity-backed money is used.
Q3) As a result of the S&L crisis,in 1989 Congress:
A) decreased regulation of thrifts.
B) merged all remaining S&Ls with financially sound commercial banks.
C) passed legislation prohibiting any financial institution other than S&Ls to make mortgages.
D) empowered two government agencies,Fannie Mae and Freddie Mac,to take over much of the mortgage lending previously done by S&Ls.
Q4) A dixie was the first gold coin issued by the Canadian Mint.
A)True
B)False
Page 16
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Chapter 15: Monetary Policy
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340 Verified Questions
340 Flashcards
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Sample Questions
Q1) Economists argue that money is neutral in:
A) both the short run and the long run.
B) the short run only.
C) the long run,but money does affect the price level.
D) the long run,but money does not affect the price level.
Q2) Improvements in information technology have:
A) shifted the demand for cash to the right.
B) decreased the demand for money.
C) not affected the demand for money.
D) increased the demand for money.
Q3) The Bank of Canada uses _____ to target the overnight rate.
A) open market operations
B) changes in the bank rate
C) changes in deposit insurance maximums
D) government spending
Q4) When long-term rates are lower than short-term rates,the market is signalling that it expects short-term rates to fall.
A)True
B)False
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Chapter 16: Inflation, Disinflation, and Deflation
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Sample Questions
Q1) In economies with persistently high inflation,an increase in the money supply will have:
A) a positive effect on the real quantity of money in the long run.
B) a negative effect on the real quantity of money,as the aggregate price level increases by more than the money supply.
C) a positive effect on the aggregate real output in the long run.
D) no effect on the real quantity of money,making money neutral in the long run.
Q2) (Figure: Expected Inflation and the Short-Run Phillips Curve)
SRPC<sub>0</sub> is the Phillips curve with an expected inflation rate of zero;SRPC<sub>2</sub> is the Phillips curve with an expected inflation rate of 2%.
Refer to Figure: Expected Inflation and the Short-Run Phillips Curve.Suppose that this economy has an unemployment rate of 6%,inflation of 2%,and an expectation of 2% future inflation.If the central bank decreases the money supply such that aggregate demand shifts to the left and unemployment rises to 8%,then inflation will:
A) fall to zero.
B) not change.
C) rise to 2%.
D) rise to 4%.
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Page 18
Chapter 17: Macroeconomics: Events and Ideas
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Sample Questions
Q1) Most economists favour discretionary monetary policy because the velocity of money has been very stable since the 1980s.
A)True
B)False
Q2) The Great Moderation consensus about macroeconomic policy is that monetary policy:
A) is effective.
B) can reduce the unemployment rate below the natural rate.
C) makes the economy unstable.
D) should follow a policy rule.
Q3) Which argument was made in favour of using discretionary fiscal policy in fighting the Great Recession?
A) Monetary policy could not be effective,since interest rates were near zero.
B) If taxes were increased,the budget could be balanced.
C) If government spending decreased,the budget surplus would increase.
D) The lags associated with monetary policy would be destabilizing.
Q4) Monetarism asserts that GDP will grow steadily if the money supply grows steadily.
A)True
B)False
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Chapter 18: International Macroeconomics
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441 Flashcards
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Sample Questions
Q1) All other things being equal,a recession in Mexico would cause Canadian exports to Mexico to increase and Canadian aggregate demand to increase.
A)True
B)False
Q2) A country has a financial account surplus if the balance on the:
A) financial account is negative.
B) financial account is positive.
C) current account is zero.
D) current account is positive.
Q3) Which group would supply euros in the foreign exchange market?
I.Canadians who want to buy Canadian goods,services,and assets
II.Canadians who want to buy European goods,services,and assets
III.Europeans who want to buy Canadian goods,services,and assets
A) I only
B) II only
C) III only
D) I,II,and III
Q4) Fixed exchange rates lead to more stable conditions for international trade.
A)True
B)False
Page 20
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Chapter 19: Graphs in Economics
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Sample Questions
Q1) (Figure: Demand and Supply of Shirts)Use Figure: Demand and Supply of Shirts.In the graph,if the line labeled D shows how many shirts per week will be demanded at various prices,then it is clear that,as the price of shirts falls:
A) fewer shirts will be demanded.
B) more shirts will be demanded.
C) the same quantity of shirts will be demanded.
D) it is unclear what will happen to the quantity of shirts demanded.
Q2) (Figure: Seasonally Adjusted Unemployment Rate)Use Figure: Seasonally Adjusted Unemployment Rate.The distance between each labeled point on the horizontal axis is 1 year,and the distance between each labeled point on the vertical axis is 1 percentage point of unemployment.What is the approximate slope of the graph between 1/2004 and 1/2006 (using percentage point and years as the units on the vertical and horizontal axes,respectively)?
A) 1/2
B) 1
C) -1/2
D) -2
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