Economics - macro test
Country: A; nominal GDP: $4 800 000 million; Population: 127 million Country B: Nominal GDP: $240 000million; Population: 7.2 million Country C: Nominal GDP: $9 800 000 million; Population: 280 million. On the basis of the information provided, which list below contains the correct ordering of GDP per person (from highest to lowest) A. A,B,C B. A,C,B C. C,B,A D. C,A,B
B. A,C,B
A Manitoba farmer buys a new tractor made in Alberta by a German company. What is the impact on investment and GDP? A. Canadian investment and German GDP increase, but Canadian GDP is unaffected. B. Canadian investment and GDP increase, but German GDP is unaffected. C. Canadian investment, Canadian GDP, and German GDP is unaffected, because tractors are intermediate goods. D. Canadian investment, Canadian GDP, and German GDP all increase.
B. Canadian investment and GDP increase, but German GDP is unaffected.
What is the relationship between income and expenditure for an economy? a. Income is greater than expenditure b. income is less than expenditure. c. income equals expenditure. d. income could be greater or less than expenditure.
C. Income equals expenditure.
How are goods that go into inventory and are not sold during the current period treated in GDP terms? a. They are counted as intermediate goods and so are not included in current-period GDP b. They are counted in current GDP only if the firm that produced them sells them to another firm. c. They are included in current-period GDP as inventory investment. d. They are included in current-period as consumption.
C. They are included in current-period GDP as inventory investment.
Jerry has the choice of two bonds, one that pays 3 percent interest and one that pays 6 percent interest. Which of the following situations is most likely? A. The 6 percent bond is less risky than the 3 percent bond. B. the 6 percent bond is a canadian government bond, and the 3 percent bond is a junk bond. C. the 6 percent bond has a longer term than the 3 percent bond. D. the 6 percent bond is canadian government bond, and the 3 percent bond is a provincial bond.
C. the 6 percent bond has a longer term than the 3 percent bond.
Year:2010; price of burgers $4.00;q 100;price of magazines $2.00; Q 180 Year:2011; price of burgers $5.00;q 120; price of magazines $2.50; Q 200 Year:2012; price of burgers$6.00;q 150; price of magazines $3.50; Q 200 Using 2011 as the base year, what can we conclude for 2010? a. Real GDP is $760, and the GDP deflator is 100. b. Real GDP is $760, and the GDP deflator is 125. c. Real GDP is $880, and the GDP deflator is 80. D. Real GDP is $950, and the GDP deflator is 80.
D. real GDP is $950, and the GDP deflator is 80.
Suppose that in a closed economy GDP is 10 000, consumption is 6500, and taxes are 2000. What value of government expenditures would make national saving equal 1000? a. 2500 b. 3500 c. 7500 d. 9000
a. 2500
In the country of Shem, the CPI is calculated using a market basket consisting of 5 apples, 4 loaves of bread, 3 robes, and 2 litres of gasoline. The per-unit prices of these goods have been as follows: Year Apples Bread 2010 $1.00 $2.00 2011 $1.00 $1.50 2012 $2.00 $2.00 2013 $3.00 $3.00 Robes Gas 2010: $10.00 $1.00 2011: $9.00 $1.50 2012: $11.00 $2.00 2013 $15.00 $2.50 What was the inflation rate, as measured by the CPI, between 2012 and 2013? a. 40 percent b. 55 percent c. 77 percent d. 140 percent
a. 40 percent
Suppose that in 2013, the demand for construction workers increased and the demands for textile and steel workers diminished. Which of the following types of unemployment does this situation illustrate? a. Frictional unemployment created by a sectoral shift. b. Structural unemployment created by a sectoral shift. c. Frictional unemployment created by efficiency wages. d. structural unemployment created by efficiency wages.
a. Frictional unemployment created by a sectoral shift.
When the quality of a good improves, what happens to the purchasing power of the dollar? a. It increases, so the CPI overstates the change in the cost of living if the quality change is not accounted for. b. It increases, so the CPI understates the change in the cost of living if the quality change is not accounted for. c.it decreases, so the CPI overstates the change in the cost of living if the quality change is not accounted for. d. it decreases, so the CPI understates the change in the cost of living if the quality change is not accounted for.
a. It increases, so the CPI overstates the change in the cost of living if the quality change is not accounted for.
Most, but not all, athletic apparel sold in Canada is imported from other nations. If the price of athletic apparel increase , what will happen to the GDP deflator? a. It will increase less than the CPI will b. It will increase more than the CPI will. c. It will not increase, but the consumer price index will. d. It will increase, but the consumer price index will not increase.
a. It will increase less than the CPI will
A country reported a nominal GDP of $100 billion in 2012 and $75 billion in 2011 and reported a GDP deflator of 125 in 2012 and 120 in 2011. What happened to real output and prices from 2011 to 2012? a. Real output and prices both rose. b. Real output rose and prices and fell. c. Real output fell and prices rose. d. Real output and prices both fell.
a. Real output and prices both rose.
Tom works 6 hours a day and Jerry works 8 hours. Tom can produce 6 baskets of goods while Jerry can produce 7 products. Which of the following can we conclude? a. Tom's productivity is greater than Jerry's b. Tom's and Jerry's productivities and equal because they both work one day. c. Tom's and Jerry's productivities cannot be compared. d. Tom's productivity is lower than Jerry's
a. Tom's productivity is greater than Jerry's
$6 - 40Q $5 - 30Q $4 - 20Q If there was a minimum wage of $4 and then the government instituted a minimum wage of $5, what would happen to employment in this market? a. Unemployment would be unchanged. b. unemployment would drop by 10 c. Unemployment would rise by 10 d. Unemployment would rise by 20.
a. Unemployment would be unchanged.
How is unemployment rate computed? a. as the number of unemployed divided by the labour force times 100 b. as the number of unemployed divided by the number of people employed 100 times. c. as the number of unemployed divided by the adult population times 100. d. as the number of unemployed times the participation rate times 100.
a. as the number of unemployed divided by the labour force times 100
Which of the following is a direct determinant of productivity? a. human capital b. wage c. price of output d. unemployment rate
a. human capital
Samantha, the CEO of a corporation operating in Uganda, decides to raise the wages of her workers, even though she faces an excess supply of labour. Which of the following is an expected result from her decision? a. it will increase productivity, according to the efficiency wage theory. b. it will help eliminate the excess supply of labour if she raises it sufficiently. c. It will cause unemployment to fall. d. It will decrease profits, according to the efficiency wage theory.
a. it will increase productivity, according to the efficiency wage theory.
what would an increase in the budget deficit most likely do to investment spending? a. it would make investment fall because the interest rate rises. b. it would make investment spending rise because the interest rate falls. c. it would make investment spending fall because the interest rate falls. d. it would make investment spending rise because the interest rate rises.
a. it would make investment fall because the interest rate rises.
Suppose the price of a carton of ice cream rises from $4 to $5 and the price of coffee rises from $2 to $2.50. If the CPI rises from 150 to 200, what will people likely buy? a. more ice cream and less coffee b. more ice cream and less coffee c. less ice cream and more coffee d. less ice cream and less coffee
a. more ice cream and less coffee
Suppose Nova Scotia produces only cheese and fish. Last year, 20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each. If in the base year the price of cheese was $10 unit and the price of fish was $75 per unit, what can we conclude? a. nominal GDP is $500, real GDP is $800, and the GDP deflator is 62.5 b. Nominal gdp is $500, real GDP is $800, and the GDP deflator is 160 c. Nominal GDP is $800, real GDP is $500, and the GDP deflator is 160 d. Nominal GDP is $800, real GDP is $500, and the GDP deflator is 62.5
a. nominal GDP is $500, real GDP is $800, and the GDP deflator is 62.5
Suppose OPEC succeeds in raising world oil prices by 300 percent. This price increase causes inventors to look at alternative sources of fuel for internal-combustion engines. A hydrogen-powered engine is developed, and it is cheaper to operate than gasoline engines. Which of the following problems in the construction of the CPI would this situation represent, respectively? a. substitution bias and introduction of new goods. b. introduction of new gods and unmeasured quality changes. c. unmeasured quality change and introduction of new goods. d. income bias and substitution bias
a. substitution bias and introduction of new goods.
Suppose the average price of gas in 2012 was $0.95 per liter and $0.97 in 2013. The inflation rate was 3 percent in 2013. What was the 2013 price of gas in 2012 dollars? a. $0.922 b. $0942 c. $0.978 d. $0.999
b. $0942
Suppose that in a closed economy GDP is equal to 10 000, taxes are equal to 2500, consumption is equal to 6500, and government expenditures are equal to 2000. What is private saving? a. 1500 b. 1000 c. 500 d. 0
b. 1000
Which of the following best defines "indexation"? a. It is a process of adjusting the nominal interest rate so that it is equal to the real interest rate. b. It is the use of a law or contract to automatically correct a dollar amount for the effects of inflation. c. It is the use of a price index to deflate dollar values. d. It is an adjustment made by Stats Can to the CPI so that the index is in the line with the GDP deflator.
b. It is the use of a law or contract to automatically correct a dollar amount for the effects of inflation.
Suppose that an economy with constant returns to scale doubled its physical capital stock, doubled its available natural resources, and doubled its human capital, but kept the size of the labour force the same. How does the change in output compare to the change in productivity? a. Output would stay the same and so would its productivity. b. Output and productivity would increase, but by less than double. c. output and productivity would increase by more than double. d. Output would increase by less than double, but productivity would double.
b. Output and productivity would increase, but by less than double.
What do property rights refer to? a. A document stating the rights of ownership that accompany owning property b. The ability of people to exercise authority over the resources they own c. The right of the government to exercise over property owners d. The right to use a common property
b. The ability of people to exercise authority over the resources they own
Suppose that the nominal interest rate was 3 percent and the inflation rate was 1 percent. What happened with the value of savings? a. The dollar value of savings increased at 1 percent, and the value of savings measured in goods increased at 2 percent. b. The dollar value savings increased at 2 percent, and the value of savings measured in goods increased at 3 percent. c. The dollar value of savings increased at 3 percent, and the value of savings measured in goods increased at 2 percent. d. The dollar value of savings increased at 4 percent, and the value of savings measured in goods increased at 3 percent.
b. The dollar value savings increased at 2 percent, and the value of savings measured in goods increased at 3 percent.
In 2000 in Japan, based on concepts similar to those used to compute Canadian employment statistics, the unemployment rate was about 4.8 percent, the labour force participation rate was about 62 percent, and the adult population was about 108 million. How many people were employed? a. About 52 million b. about 64 million c. about 67 million d. about 103 million
b. about 64 million
How is Canadian GNP calculated from Canadian GDP? a. by including income earned by foreigners in Canada and excluding income by Canadian citizens abroad. b. by including income earned by Canadian citizens abroad and excluding income earned by foreigners c. by including income earned by foreigners in Canada d. By excluding income earned by Canadian citizens abroad.
b. by including income earned by Canadian citizens abroad and excluding income earned by foreigners
Which of the following is included in Canadian GDP? a. the difference in the price of the sale of an existing home and its original purchase b. goods produced by foreign citizens working in Canada. c. Known illegal activities. d.goods produced by a Canadian company in France
b. goods produced by foreign citizens working in Canada.
One of the ten principles of economics is that people face tradeoffs. The growth that arises from capital accumulation is not a free lunch. What is the opportunity cost of that capital accumulation? a. people need to work longer hours, thus having less time for leisure. b. people need to consume less goods and services now in order to enjoy more consumption in the future. c. people need to recycle resources so that future generations can produce goods and services with the accumulated capital. d. people need to devote less time in school and more at work.
b. people need to consume less goods and services now in order to enjoy more consumption in the future.
Suppose parliament instituted an investment tax credit. which of the following would most likely happen in the market for loanable funds? a. the interest rate and investment would both fall. b. the interest rate and investment would both rise. c. the interest rate would rise, and investment would fall. d. the interest rate would fall, and investment would rise.
b. the interest rate and investment would both rise.
Which of the following is the consumer price index used for? a. to differentiate between gross national product and gross domestic product. b. to turn dollar figures into meaningful measures of purchasing power c. to characterize the types of goods and services that consumers purchase. d. to measure the quantity of goods and services that the economy produces.
b. to turn dollar figures into meaningful measures of purchasing power
Laura bought a word processing software for $50. A year later, Laura's twin brother Laurence bought an upgraded version of the same software for $50. Which of the following problems in the construction of the CPI does this situation best represent? a. substitution bias b. unmeasured quality change c. introduction of new goods d. income bias
b. unmeasured quality change
Year:2010; price of burgers $4.00;q 100;price of magazines $2.00; Q 180 Year:2011; price of burgers $5.00;q 120; price of magazines $2.50; Q 200 Year:2012; price of burgers$6.00;q 150; price of magazines $3.50; Q 200 Refer to this following diagram: What is the nominal GDP? a.$680 for 2010. $880 for 2011, and $1200 for 2012. b. $760 for 2010, $880 for 2011, and $1000 for 2012. c. $760 for 2010, $1100 for 2011, and $1600 for 2012. d. $960 for 2010, $1280 for 2011, and $1300 for 2012.
c. $760 for 2010, $1100 for 2011, and $1600 for 2012.
You know that a chocolate bar cost five cents in 1962. You also know the CPI for 1962 and the CPI for today. Which of the following would use to compute the price of the candy bar in today's prices? a. 5 cents x (1962 CPI/today's CPI) b. 5 cents x (1962 CPI/(today's CPI - 1962 CPI)) c. 5 cents x (today's CPI/1962 CPI) d. 5 cents x today's CPI - five cents x 1962 CPI
c. 5 cents x (today's CPI/1962 CPI)
Not in the Labour force: Male: 45 million; Female: 35 million Unemployed: Male: 5 million; Female: 5 million Employed: Male: 85 million Female: 65 million What is the adult male unemployment rate? a. 3.70% b. 4.00% c. 5.56% d. 5.88%
c. 5.56%
What is a rough estimate of the natural rate of unemployment in Canada? a. 1 to 2.5 percent b. 3 to 5.5 percent. c. 6 to 8 percent. d. 8.5 to 11 percent.
c. 6 to 8 percent.
Not in the Labour force: Male: 45 million; Female: 35 million Unemployed: Male: 5 million; Female: 5 million Employed: Male: 85 million Female: 65 million What is the adult female labour force? a. 35 million b. 40 million c. 70 million d. 85 million
c. 70 million
Once one person discovers an idea, the idea generally enters society's pool of knowledge. Therefore, knowledge is generally what kind of good? a. A societal good. b. A private good. c. A public good. d. A normal good.
c. A public good.
Why would the opening of a new Canadian-owned factory in Egypt tend to increase Egypt's GDP more than it increases Egypt's GNP? a.Some of the income from the factory accrues to people who live in Egypt. b. GDP is income earned by residents only, whereas GNP is income earned by residents and nonresidents. c. All of the income from the factory is included in Egypt's GDP, but not all is included in GNP. d. Foreign direct investment is part of GDP, but it is not part of GNP.
c. All of the income from the factory is included in Egypt's GDP, but not all is included in GNP.
When the government runs a budget deficit, which of the following is most likely to happen? a. Interest rates become lower than they would be otherwise. b. National saving gets higher than it would be otherwise. c. Investment gets lower than it would be otherwise. d. Government debt decreases by the amount of the deficit.
c. Investment gets lower than it would be otherwise.
Which of the following lists includes all the categories into which Stats canada divides the adult population? a. employed, unemployed? b. discourage workers, employed, unemployed. c. employed, unemployed, not in the labour force. d. discouraged workers, employed, not in the labour force.
c. employed, unemployed, not in the labour force.
If your Canadian based-based firm opens and operates a new watch factory in Panama, what type of investment is your firm engaging in? a. Foreign portfolio investment b. foreign financial investment c. foreign direct investment d. foreign capital investment.
c. foreign direct investment
If your firm has constant returns to scale, what would happen to you firm's output if you doubled all your outputs? a. it would not change b. it would increase, but by less than double. c. it would double. d.it would more than double.
c. it would double.
Which of the following causes of unemployment is NOT associated with an excess supply of labour? a. minimum-wage laws. b. unions. c. job search d. efficiency wages.
c. job search
What is the average amount of goods and services produced from each hour of a worker's time called? a. per capita GDP b. per capita GNP c. productivity d. human capital
c. productivity
Suppose that investment rises and interest rates fall. Which of the following best explains these changes? a. The government went from surplus to deficit b. The government instituted an investment tax credit. c. the government reduced the tax rate on savings. d. The government repealed an investment tax credit
c. the government reduced the tax rate on savings.
2012: Peaches: $14 per bushel; Pecans: $9 per bushel 2013: Peaches: $12 per bushel; Pecans: $14 per bushel. Suppose that the typical consumer basket consists of 5 bushels of peaches and 10 bushels of pecans and that the base year is 2012. What is the CPI for 2013? a. 80 b.100 c.125 d.200
c.125
In Japan in 2000, nominal interest rates were 1.5 percent and the inflation rate was -0.5 percent. What was the real interest rate? a. -2 percent b. -1 percent c. 1 percent d. 2 percent
d. 2 percent
Which of the following is consistent with the catch-up effect? a. The United States had a lower growth rate before 1900 than after. b. Japan has a higher growth rate then Germany c. Although Canada has a relatively high level of output per person, its growth rate is still high compared to some poorer countries, such as Pakistan. d. After World War 2, Canada had lower growth rates than war-ravaged European countries.
d. After World War 2, Canada had lower growth rates than war-ravaged European countries.
Henry buys a bond issued by Bombardier, which uses the funds to buy new machinery for one of its factories. Who is investing and who is saving? a. Henry and Bombardier are both investing. b. Henry and Bombardier are both saving. c. Henry is investing; Bombardier is saving. d. Henry is saving; Bombardier is investing.
d. Henry is saving; Bombardier is investing.
Which of the following best describes the pattern in the returns index funds? a. They typical have about the same rate of return as more actively managed funds. b. They typically have lower rates of return than more actively managed funds. c. There is no pattern; they may have either higher or lower rates than more actively managed funds. d. They typically have higher rates of return than more actively managed funds.
d. They typically have higher rates of return than more actively managed funds.
Which of the following equations most simply represents GDP in a closed economy? a. Y=C+I+G+NX b. S=I-G c. I=Y-C+G d. Y=C+I+G
d. Y=C+I+G
Suppose that there are diminishing returns to capital. Suppose also that two countries except one has less capital, and so less real GDP per person. Suppose that both increase their saving rate from 3 percent to 4 percent. Which of the following will happen in the long run? a. Both countries will have permanently higher growth rates of real GDP per person, and the growth rate will be higher in the country with more capital. b. Both countries will have permanently higher growth rates of real GDP per person and the growth rate will be higher in the country with less capital. c. Both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with more capital. d. both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with less capital.
d. both countries will have higher levels of real GDP per person, and the temporary increase in growth in the level of real GDP per person will have been greater in the country with less capital.
Prime Minister Bigego is running for re-election against Finance Minister Pander. Bigego proclaims that more people are woring now than when he took office. Pander says that the unemployment rate is higher now than when Bigego took office. Which of the following can you conclude? a. Both of them could be telling the truth if the labour-force participation rate and the labour force both grew. b. Both of them could be telling the truth if the labour-force participation rate and the labour force both fell. c. Both of the could be telling the truth if the labour force grew slower than employment. d. both of them could be telling the truth if the labour force grew faster than employment.
d. both of them could be telling the truth if the labour force grew faster than employment.
In a closed economy, what does (Y - T- C) represent? a. national saving b. government tax revenue c. public saving d. private saving
d. private saving
In a closed economy, what does (T-G) represent? a. national saving b. investment c. private saving d. public saving
d. public saving
In which of the following situations would Stats Canada count a person as unemployed? a. when that person is not in the labour force b. when that person is not looking for work c. when that person is under the age of 15 d. when that person is age 15 or over and looking for work
d. when that person is age 15 or over and looking for work
When is a budget surplus created? a. when the government sells more bonds than it buys back b. when the government spends more than it receives in tax revenue. c. when private savings are greater than zero. d. when the government spends less than the tax revenue.
d. when the government spends less than the tax revenue