Macro Test 1 Questions
Which of the following relates factors of production to the sources of income correctly?
A. Capital earns profit. B. Entrepreneurship earns rent. C. Land earns interest. D. Labour earns rent. E. Land earns rent. (correct)
Which of the following is not correct?
A. Depreciation decreases the value of a firm's capital. B. Gross investment is the amount by which the value of capital increases. correct. C. Gross investment is the total amount spent buying new capital and replacing depreciated capital. D. Investment is the purchase of new plant, equipment, and buildings and the additions to inventories. E. Net investment equals gross investment minus depreciation.
Which of the following statements is a normative macroeconomic statement?
A. Governments should lower taxes on cigarettes. B. More generous unemployment benefits increase the unemployment rate. C. A decrease in cigarette taxes will encourage more people to smoke. D. The Canadian government should increase unemployment benefits. (correct)
Markets I. enable buyers and sellers to get information. II. are defined by economists as geographical locations where trade occurs. III. have evolved because they facilitate trade. Which of the above statements are correct?
A. I only B. II and III only C. I and III only correct answer. D. I, II and III E. III only
Choose the correct statement.
A. The fundamental source of labour productivity growth is physical capital. B. Most technologies are embodied in physical capital. correct. C. Growth in average hours per work increase labour productivity. D. The largest contribution to labour productivity growth comes from human capital.
Which of the following statements is a positive microeconomic statement?
A. The price of an iPad will fall over the next year. correct B. Interest rates will rise as the economy expands. C. The government should lower taxes to increase economic growth. D. Apple should lower the price of its iPad to discourage competitors from entering the market.
Which of the following would not be included in GDP for 2014?
A. a car produced in 2013 and sold in 2014 correct. B. a car produced in 2014 and held in inventory until 2015 C. the value of all cars produced in 2014 D. a car produced in 2014 and sold in 2015 E. a car produced in January of 2014 and sold in November of 2015
The HDI might be better than real GDP as a measure of economic welfare because the HDI ______. The HDI includes measurements of ______, which are not measured in real GDP.
A. includes real GDP, but also includes other factors that influence our standard of living; health, life expectancy, and education correct. B. is easier to measure than real GDP; resource depletion and carbon emissions C. includes real GDP, but also includes other factors that influence our standard of living; resource depletion and carbon emissions D. is easier to measure than real GDP; health, life expectancy, and education
If the HDI is expanded to include items such as pollution, resource depletion, and political freedom ______.
A. it would be difficult to measure correct. B. it would be easy to weight each component C. most countries would adopt the HDI as the official measurement of the standard of living D. life expectancies would increase
Which of the following is not a reason for GDP incorrectly measuring the value of total output?
A. leisure time B. household production C. underground economic activity D. environmental quality E. depreciation (correct)
Once the preconditions for growth are in place, the influences on the pace of labour productivity growth are _______.
A. low inflation, low unemployment, and investment in physical capital B. physical capital growth, human capital growth, and technological advances correct. C. human capital growth, population growth, and low inflation D. physical capital growth, population growth, and human capital growth
Think about the following news items. Which items involve a microeconomic issue and which involve a macroeconomic issue? A. 7 ways streaming music will change in 2017 B. WHO recommends tax of at least 20 % on sugary drinks C. Inflation rate cools to 2 percent D. Why are incomes growing much faster in China and India than in Canada question mark Statement A involves a ______ issue. Statement B involves a ______ issue. Statement C involves a ______ issue. Statement D involves a ______ issue.
A. macro; macro B. micro; macro C. micro; micro (correct) D. macro; micro A. micro; micro B. micro; macro C. macro; micro D. macro; macro (Correct)
Choose the definition that gives the best overview of economics. Economics is the social science that studies the choices _______.
A. made by the military B. that we make when we trade with other countries C. that individuals, businesses, governments, and entire societies make as they cope with scarcity (Correct) D. made by politicians
Suppose that Canada and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ______ will gain from that trade because ______.
A. neither country; their consumption possibilities will not change B. only Cuba; consumption possibilities in Cuba will lie outside its PPF and Canada's consumption possibilities will not change C. both countries; consumption possibilities in both Cuba and Canada will lie outside their PPFs correct. D. only Canada; consumption possibilities in Cuba will lie outside its PPF and Canada's consumption possibilities will not change
The goods and services that we sell to people in other countries are ______. The goods and services that we buy from people in other countries are ______.
A. net exports; net imports B. imports; exports; C. net imports; net exports D. exports; imports; (correct)
Expenditure _______.
A. on the cars purchased by Canadians is part of consumption expenditure in calculating Canada's GDP correct. B. made by Toyota on building the assembly plant in Ontario is recorded as an import in Canada's GDP C. on any parts for the cars that come from Japan is recorded as investment in Canada's GDP D. on any parts for the cars that come from Japan are recorded as a positive entry in calculating Canada's GDP
Nominal GDP will increase
A. only if both the average level of prices rises and the quantity of goods and services produced increases. B. only if the average level of prices rises. C. only if the quantity of goods and services produced increases. D. only if the unemployment rate rises. E. if either the average level of prices rises or the quantity of goods and services produced increases. (correct)
Keynesian macroeconomists recommend ______.
A. policies that minimize the disincentive effects of taxes on employment, investment, and technological change B. policies that actively offset changes in aggregate demand that bring recession correct. C. an increase in the quantity of money to offset decreases in aggregate demand and a decrease in the quantity of money to offset increases in aggregate demand D. policies that actively offset changes in long-run aggregate supply that result in negative economic growth
If you want to investigate the claim that more goods and services were produced in the economy during 2014 than 2015, what should you study?
A. real GDP correct. B. nominal GDP C. GDP calculated using the expenditure approach D. intermediate GDP E. GDP calculated using the income approach
In calculating GDP, all of the following are excluded except
A. subsidies from the government. B. the value of used goods. C. purchases of stocks and bonds. D. the value of intermediate goods. E. the value of all homes built in the year in question. (correct)
The defining feature of the Keynesian view of macroeconomics is that the economy is ______.
A. that the quantity of money is the most significant influence on aggregate demand B. rarely at full employment correct. C. constantly bombarded by shocks that arise from the uneven pace of technological change D. self-regulating and always at full employment
Individuals A and B can both produce goods X and Y. Individual A has a comparative advantage in the production of X if
A. the amount by which A must reduce production of Y is less than the amount by which B must reduce production of Y to produce an additional unit of X. correct. B. the amount by which A must reduce production of Y is more than the amount by which B must reduce production of Y to produce an additional unit of X. C. B has superior knowledge about how to produce X. D. A has a preference to consume X. E. A is faster than B at producing X.
When the government chooses to use resources to build a dam, those resources are no longer available to build a highway. This illustrates the concept of
A. the big tradeoff. B. opportunity cost. correct. C. macroeconomics. D. a market. E. a "how" tradeoff.
What is your opportunity cost of remaining in school? By remaining in school, you are paying an opportunity cost that includes _______.
A. the free time you could have every evening to watch movies correct. B. the money you spend on late dash night snacks C. the time you spend doing laundry D. the money you spend on clothes
Gross domestic product is ______.
A. the market value of all the final goods and services produced within a country in a given time period correct. B. the factor cost of all the consumption goods and services produced by all citizens of a country in a given time period C. the factor cost of all the final goods and services produced by all citizens of a country in a given time period D. the market value of all the consumption goods and services produced within a country in a given time period
Goods and services are ______.
A. the objects that people value and produce to satisfy human wants correct. B. the things that one person produces or performs purely for the benefit of other people C. any objects that get produced or tasks that get performed D. the gifts of nature
Which one of the following concepts is not illustrated by a production possibilities frontier?
A. the tradeoff between producing one good versus another B. monetary exchange correct. C. opportunity cost D. scarcity E. attainable and unattainable points
The components and robots for Toyota auto assembly lines in Canada are built in Japan. Toyota assembles cars for the Canadian market in Ontario. Explain where these activities appear in Canada's National Income and Expenditure Accounts.
The assembly line components and robots appear as _______. A. exports in Canada's GDP B. investment in Canada's GDP C. imports in Canada's GDP correct. D. a positive entry in calculating Canada's GDP
The Government of Canada promises to produce more defence goods without any decrease in the production of other goods. This promise is valid
A. if Canada is producing at a point outside its PPF. B. if Canada is producing at a point on its PPF. C. only if technology advances or capital increases. D. only if the PPF shifts rightward. E. if Canada is producing at a point inside its PPF. (correct)
Classify each of the following items as a final good or service or an intermediate good or service and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services: Item 1. The purchase of a new security system for Parliament Item 2. Upper A new house bought by Alanis Morissette Item 3. Upper A textbook bought by a student Item 4. Fertilizer bought by an Ontario tomato grower Item 1 is ______ and item 2 is ______. Item 3 is ______ and item 4 is ______.
A. a final good which is government expenditure; a final good that is investment correct B. a final good that is investment; a final good that is consumption expenditure C. a final good that is investment; a final good that is investment D. a final good which is government expenditure; a final good that is consumption expenditure A. an intermediate good; a final good that is investment B. an intermediate good; an intermediate good C. a final good that is consumption expenditure; an intermediate good correct. D. a final good that is consumption expenditure; a final good that is investment
Why does GDP equal aggregate income and also equal aggregate expenditure? GDP equals aggregate income and also equals aggregate expenditure because _______.
A. aggregate income measures profit as net profit and aggregate expenditure measures investment as net investment B. labour produces final goods and all purchases in the economy are purchases of final goods C. firms pay out as incomes (aggregate income) everything they receive from the sale of their output (aggregate expenditure) correct. D. Statistics Canada has defined GDP in such a way that it can be calculated by either summing total income or by summing total expenditures
The flows in the market economy that go from firms to households are _______. The flows in the market economy that go from households to firms are _______.
A. all flowing through goods markets; all flowing through factor markets B. all flowing through factor markets; all flowing through goods markets C. the real flows of goods and services and the income flows of wages, rent, interest, and profit; the real flows of labour, land, capital, and entrepreneurship and the flow of expenditure on goods and services correct D. the income flows of wages, rent, interest, and profit and the flow of expenditure on goods and services; the real flows of goods and services and the real flows of labour, land, capital, and entrepreneurship
Classical macroeconomists recommend ______.
A. an increase in the quantity of money to offset decreases in aggregate demand and a decrease in the quantity of money to offset increases in aggregate demand B. policies that actively offset changes in long-run aggregate supply that result in negative economic growth C. policies that minimize the disincentive effects of taxes on employment, investment, and technological change correct. D. policies that actively offset changes in aggregate demand that bring recession
A final good is _______. An example of a final good is _______.
A. an item that is bought by its final user or an item that is a component of a final good; tires B. an item that is bought by its final user during a specified time period; bread sold to a consumer correct. C. an item that is bought by its final user during a specified time period; the ice cream that an ice cream parlor buys to make milkshakes D. the last item of a given type that a consumer will buy; a house that is purchased by a retired couple
An intermediate good is _________. An example of an intermediate good is _______.
A. an item that is produced by one firm, bought by another firm, and used as a component of a final good or service; wheat sold to a baker to make bread correct. B. an item that is produced by one firm, bought by another firm, and used as a component of a final good or service; a used car C. a good that is used for only part of the year; snow tires D. an item that is used for a given period of time and then must be replaced; winter boots
The value of exports of goods and services minus the value of imports of goods and services is ______.
A. called net imports B. always a negative value in the Canadian economy C. always a positive value in the Canadian economy D. called net exports (correct)
The income approach to measuring GDP sums together ______. The largest component is ______.
A. consumption expenditure, investment, government expenditure on goods and services, and net exports; government expenditure on goods and services B. wages, salaries, and supplementary labour income, other factor incomes, indirect taxes less subsidies, and depreciation; other factor incomes C. wages, salaries, and supplementary labour income, other factor incomes, indirect taxes less subsidies, and depreciation; wages, salaries, and supplementary labour income correct. D. consumption expenditure, investment, government expenditure on goods and services, and net exports; consumption expenditure
Real GDP per person is real GDP _____.
A. divided by the population correct. B. multiplied by the population C. divided by the total labour hours D. divided by aggregate demand
Capital accumulation and technological change bring economic growth: Production that was unattainable yesterday becomes attainable today; production that is unattainable today will become attainable tomorrow. Why doesn't economic growth bring an end to scarcity one day?
A. does not eliminate scarcity because capital accumulation and technological change decrease marginal benefit B. does eliminate scarcity in countries that are rich enough to enjoy capital accumulation and technological change, but not in poorer countries C. does not eliminate scarcity because we still must give up production of one good to increase production of a second good and remain on the production possibilities frontier correct. D. does not eliminate scarcity because capital accumulation and technological change increase marginal benefit
The defining feature of the classical view of macroeconomics is that the economy is ______.
A. driven by expectations called "animal spirits" B. constantly bombarded by shocks that arise from the uneven pace of technological change C. rarely at full employment D. self-regulating and always at full employment correct.
Which one of the following topics does macroeconomics study?
A. effects of taxes on the price of gasoline B. prices of individual goods and services C. the performance of the global economy correct. D. decisions of individual firms E. effects of government safety regulations on the price of cars
Nominal GDP is ______. Real GDP is ______.
A. the value of final goods and services produced in a given year when valued at the prices of a reference base year; calculated as the quantity produced in a given year multiplied by the prices that prevailed in that year B. the value of the final goods and services produced in a given year valued at the prices of that year; a more precise name for GDP C. the value of the final goods and services produced in a given year valued at the prices of that year; the value of final goods and services produced in a given year when valued at the prices of a reference base year correct. D. the value of final goods and services produced in a given year when valued at the prices of a reference base year; calculated as the quantity produced in the base year multiplied by the prices that prevailed in the given year
Refer to Figure 20.1.1, which shows the circular flow of expenditure and income for Venus. During 2014, A was $100, B was $50, C was $30 and D was $10. How much is net exports?
A. $100 B. $50 C. $25 D. $30 E. $10 (correct)
All points on the PPF are points of ________ efficiency. When we produce at the point on the PPF that we prefer above all other points we achieve ________ efficiency.
A. allocative; allocative B. allocative; production C. production; allocative correct D. productive; prominent E. unattainable; attainable
A ______ macroeconomist believes that the economy is self-regulating and always at full employment. A ______ macroeconomist believes the economy requires active help from fiscal policy and monetary policy to maintain full employment.
A. classical; Keynesian correct. B. new classical; monetarist C. classical; monetarist D. Keynesian; new Keynesian
Other influences on economic welfare that could be included in a comprehensive measure include _______.
A. discrimination, free elections, and the beauty of local scenery B. religious freedom, discrimination, and civil or international conflict correct. C. civil or international conflict, the exchange rate vs the U.S. dollar and the euro, and trade barriers D. trade barriers, public or private education, the exchange rate vs the U.S. dollar and the Chinese yuan
What is the expenditure approach to measuring GDP? The expenditure approach to measuring GDP sums together ______, and the largest component is ______.
A. wages, salaries, and supplementary labour income and other factor incomes; wages, salaries, and supplementary labour income B. consumption expenditure, investment, government expenditure on goods and services, and net exports; government expenditure on goods and services C. net domestic income at factor cost, indirect taxes less subsidies, and depreciation; net domestic income at factor cost D. consumption expenditure, investment, government expenditure on goods and services, and net exports; consumption expenditure (correct)
Economics explains the choices that end up determining ______ goods and services get produced.
A. why, where, and how B. what, how, and when C. where, when, and how D. what, how, and for whom (correct)
List some examples of the scarcity that you face
Examples of scarcity common to students include not enough income to afford both tuition and a nice car.