Survey of Economics Question
Bank
Course Introduction
Survey of Economics provides an introduction to fundamental economic concepts and principles, covering both microeconomics (individual and firm behavior, market structures, supply and demand) and macroeconomics (national income, inflation, unemployment, fiscal and monetary policy). This course is designed to give students a broad understanding of how economies operate, decision-making processes in different market settings, and the impact of government policies on economic outcomes. Students will learn to apply economic reasoning to real-world issues, interpret economic data, and critically evaluate economic policies in contemporary society.
Recommended Textbook
Principles of Macroeconomics 4th Canadian Edition by Robert H. Frank
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16 Chapters
2776 Verified Questions
2776 Flashcards
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Page 2
Chapter 1: Measuring Macroeconomic Performance: Output and
Prices
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) Tim is at a party.The 7<sup>th</sup> beer that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero.The cost-benefit principle predicts that Tim will
A) realize he has had too much to drink and go home.
B) drink the 7<sup>th</sup> beer and continue until the marginal benefit of drinking another beer is zero.
C) drink the 7<sup>th</sup> beer and continue until the marginal benefit of drinking another beer is negative.
D) not drink the 7<sup>th</sup> beer.
E) drink the 7<sup>th</sup> beer and then stop.
Answer: B
Q2) Which of the following statements is correct?
A) The total benefit exceeds the total cost for all units of activity.
B) Each of the five units of activity yields the same total benefit.
C) Each of the five units of activity yields the same average benefit.
D) Each additional unit of activity yields the same marginal benefit.
E) Each additional unit of activity yields more and more additional benefit.
Answer: A
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Chapter 2: Measuring Macroeconomic Performance:
Saving and Wealth
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139 Verified Questions
139 Flashcards
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Sample Questions
Q1) Good W is on the vertical axis and good Z is on the horizontal axis of a production possibilities curve.A technological innovation that improved labour's productivity for W but had zero effect on labour's productivity for Z would cause the production possibilities curve to
A) become steeper.
B) shift away from the origin.
C) become flatter.
D) shift towards the origin.
E) change in an unknowable way.
Answer: A
Q2) Having a comparative advantage in a particular task means that you
A) are better at it than other people.
B) give up more to accomplish that task than do others.
C) give up less to accomplish that task than do others.
D) have specialized in that task,while others have not
E) have more resources than others.
Answer: C
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Chapter 3: Measuring Macroeconomic Performance:
Wages, Employment and the Labour Market
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) The statement that a market in equilibrium leaves no unexploited opportunities for individuals is the
A) Cost-Benefit Principle.
B) Scarcity Problem.
C) Efficiency Principle.
D) Equilibrium Principle.
E) Principle of Comparative AdvantagE.
Answer: D
Q2) As more houses are needed in Calgary due to the oil boom,the demand curve for an average house in Calgary is expected to
A) shift to the right.
B) shift to the left.
C) move down along the old existing demand curve.
D) move up along the old existing demand curve.
E) move in the opposite direction as the supply curvE.
Answer: A
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Chapter 4: Short-Term Economic Fluctuations
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) A trade deficit occurs when
A) government spending exceeds government revenue.
B) government revenue exceeds government spending.
C) exports equal imports.
D) exports exceed imports.
E) exports are less than imports.
Q2) A key indicator of the hardship experienced during the Great Depression is the
A) high rate of inflation.
B) high rate of unemployment.
C) high rate of economic growth.
D) large budget deficits.
E) large trade deficits.
Q3) Structural policy refers to
A) decisions to determine the government's budget.
B) policy directed toward increasing exports and reducing imports.
C) the determination of the nation's money supply.
D) policies to reduce the power of unions and monopolies.
E) government policies aimed at changing the underlying institutions of the economy.
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Chapter 5: Spending and Output in the Short Run
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207 Flashcards
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Sample Questions
Q1) Consumption spending includes spending on A) durables,nondurables,and services.
B) stocks,bonds,and other financial instruments.
C) capital goods,residential housing,and changes in inventories.
D) goods and services by federal,provincial,and local governments.
E) goods and services sold abroad minus goods and services produced abroad.
Q2) The evidence in the chart indicates that the official unemployment rate moves closely with
A) the number of part-time workers only.
B) the number of discouraged workers only.
C) the number of part-time and discouraged workers.
D) neither the number of part-time nor the number of discouraged workers.
E) real GDP per person.
Q3) In a country with 20 million people aged 15 years and older,12 million in the labour force,and 11.4 million employed,what is the participation rate?
A) 5%.
B) 57%.
C) 75%.
D) 60%.
E) 95%.
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Chapter 6: Fiscal Policy
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) The price of a specific good or service in comparison to the prices of other goods and services is called
A) a relative price.
B) the price level.
C) a real price.
D) indexing.
E) inflation.
Q2) A measure of overall prices at a particular point in time is called
A) a relative price.
B) the price level.
C) a real price.
D) indexing.
E) inflation.
Q3) A nominal quantity is measured
A) in physical terms.
B) in terms of current dollar values.
C) using the consumer price index.
D) by deflating.
E) by indexing.
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Page 8
Chapter 7: Money, Prices and the Reserve Bank
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) According to the Canadian Centre for Policy Alternatives (CCPA),in 1994,Canada's output gap was - 12.4% of potential output.In the same year,the unemployment rate was 10.3%.Okun's law implies that,in 1994,Canada's natural rate of unemployment was A) 8.1%.
B) 5.1%.
C) 6.1%.
D) 7.1%.
E) 4.1%.
Q2) If the cyclical rate of employment equals 1% and the actual rate of unemployment equals 8%,then the natural rate of unemployment must equal A) -7%.
B) 0%.
C) 1%.
D) 7%.
E) 9%.
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9
Chapter 8: The Reserve Bank and the Economy
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202 Flashcards
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Sample Questions
Q1) If planned aggregate expenditure (PAE)in an economy equals 2,000 + 0.5Y and potential output (Y*)equals 4,400,government purchases must ________ to eliminate any output gap.
A) increase by 20
B) increase by 200
C) increase by 250
D) decrease by 200
E) decrease by 250
Q2) The basic Keynesian model assumes that,in the _______,producers sell whatever is demanded at _______ prices.
A) short run;preset
B) long run;variable
C) long run;preset
D) medium run;preset
E) short run;variable
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Chapter 9: The Aggregate Demand - Aggregate Supply
Model
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124 Flashcards
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Sample Questions
Q1) The Bank of Canada is responsible for each of the following EXCEPT
A) monetary policy.
B) issuing bank notes.
C) maintaining the stability of the financial system.
D) central banking services.
E) fiscal policy.
Q2) The money supply in Macroland is currently 2,500,bank reserves are 400,currency held by the public is 500,and the banks' desired reserve-deposit ratio is 20%.Assuming that the values of currency held by the public and the desired reserve-deposit ratio do not change,if the Central Bank of Macroland wishes to increase the money supply to 3,000,then it should conduct an open-market _________ government bonds to/from the public.
A) purchase of 100
B) purchase of 250
C) purchase of 500
D) sale of 100
E) sale of 500
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11
Chapter 10: Macroeconomic Policy
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128 Flashcards
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Sample Questions
Q1) When the Bank of Canada raises its key policy rate,it sends a signal to financial intermediaries that it wants them to
A) raise their short-term interest rates.
B) lower their short-term interest rates.
C) raise the money supply.
D) lower the money supply.
E) lower their long-term interest rates.
Q2) The interest rate spread is the difference between
A) a nominal rate and a real rate of interest.
B) a benchmark rate and the effective lower bound.
C) a benchmark rate and a related market interest rate.
D) the key policy rate and the official interest rate
E) the upper and lower bound of the operating band.
Q3) Contractionary monetary policy is a(n)________ in interest rates with the intention of reducing a(n)________ gap.
A) reduction;expansionary
B) reduction;recessionary
C) reduction;inflationary
D) increase;expansionary
E) increase;recessionary
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Chapter 11: The Economy in the Long Run: an Introduction to Economic Growth
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134 Flashcards
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Sample Questions
Q1) The AD-AS model depicts a self-correcting economy.This means that the price level in the model adjusts automatically in response to a(n)___________ gap,so as to eliminate the ___________ gap in the long run,without requiring any help from government policies.
A) output;output
B) recessionary;recessionary
C) expansionary;expansionary
D) recessionary;expansionary
E) expansionary;recessionary
Q2) An SRAS curve would be ___________ if wages did not increase as soon as the general price level increased.
A) horizontal
B) vertical
C) positively sloped
D) negatively sloped
E) U-shaped
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Chapter 12: The Production Function Approach to Understanding Growth
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211 Flashcards
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Sample Questions
Q1) A large increase in oil prices is an example of A) a downward inflation shock.
B) an upward inflation shock.
C) inflation inertia.
D) excessive aggregate demand.
E) a self-correcting tendency.
Q2) Policy-makers' use of stabilization policy is more appropriate when the self-correcting mechanism that eventually eliminates an output gap works ________ and when the output gap is very ________.
A) rapidly;large
B) rapidly;small
C) rapidly;recent
D) slowly;large
E) slowly;small
Q3) An increase in aggregate demand is most likely to be caused by a decrease in A) the wealth of consumers.
B) consumer confidence.
C) interest rates for home mortgages.
D) tax rates on household income.
E) business subsidies.
Page 14
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Chapter 13: Savings, Capital Formation and Comparative
Economic Growth
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203 Verified Questions
203 Flashcards
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Sample Questions
Q1) The proposition that if transportation costs are relatively small,then the price of an internationally traded commodity must be the same in all locations,is called
A) Okun's law.
B) purchasing power parity.
C) the law of one price.
D) the fixed-exchange-rate rule.
E) international trade proposition.
Q2) The currency used in the Duchy of Saxony is the ducet.If the market equilibrium value of the exchange rate equals $0.20 per ducet,but the ducet is officially fixed at $0.25 per ducet,then the ducet exchange rate is __________ and,to maintain this exchange rate,there will be __________ in the government's stock of international reserves.
A) undervalued;a net decline
B) undervalued;a net increase
C) overvalued;no change
D) overvalued;a net decline
E) overvalued;a net increase
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Chapter 14: International Trade
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175 Flashcards
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Sample Questions
Q1) Holding all else constant,if average labour productivity increases,real GDP per person
A) increases.
B) decreases.
C) remains constant.
D) fluctuates.
E) may increase or decreasE.
Q2) In Econland,500,000 of the 2 million people in the country are employed.Average labour productivity in Econland is $15,000 per worker.Real GDP per person in Econland totals
A) $1,250.
B) $3,750.
C) $11,250.
D) $15,000.
E) $18,750.
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16
Chapter 15: Exchange Rates and the Open Economy
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143 Flashcards
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Sample Questions
Q1) If a tariff is placed on a good,the domestic price of the good ________,domestic production of the good ________,and domestic consumption of the good ________.
A) increases;increases;increases
B) increases;increases;decreases
C) increases;decreases;decreases
D) decreases;decreases;decreases
E) decreases;increases;increases
Q2) The demand for shoes in a country is given by D = 60 - 0.5P,where P is the price of a pair of shoes.Supply by domestic producers is given by S = 20 + 0.5P.The world price of a pair of shoes equals $30.In equilibrium,when this economy is closed to trade,the quantity of shoes demanded domestically equals _________,and when this economy opens to trade,the quantity of shoes demanded domestically equals _________.
A) 40;35
B) 40;45
C) 35;40
D) 45;40
E) 45;35
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Chapter 16: The Balance of Payments: Net Exports and International Capital Flows
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Sample Questions
Q1) A higher real interest rate has both positive and negative effects on saving;
A) it increases the reward for saving,but decreases the amount people need to save each year to reach a specific target.
B) it increases the reward for saving,and increases the amount people need to save each year to reach a specific target.
C) it decreases the reward for saving,and decreases the amount people need to save each year to reach a specific target.
D) it decreases the reward for saving,but increases the amount people need to save each year to reach a specific target.
E) it initially increases,then decreases,the reward for saving,but decreases the amount people need to save each year to reach a specific target.
Q2) Anything of market value one owns is called a(n)
A) asset.
B) liability.
C) investment.
D) capital loss.
E) capital gain.
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