macro_test_1_w21

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ECON303

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Economics

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Feb 20, 2024

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MACROECONOMICS TEST 1 WINTER 2021 INSTRUCTION: 1. USE THE ANSWER SHEET PROVIDED AT THE END OF THE EXAM 1) In a pure capitalist economy the least-cost combination of inputs is used to produce a good because 1) _______ A) that combination maximizes profits. B) cheaply-made goods will wear out quickly, generating additional sales in the future. C) that combination minimizes profits. D) producers are less concerned with conserving natural resources in a market economy than in any other economic system. 2) The Canadian economy is an example of 2) _______ A) command socialism. B) market socialism. C) a pure market capitalist system. D) a mixed economy. 3) Freely adjusting prices, profits, and private property are most closely associated with 3) _______ A) capitalism. B) a traditional economy. C) centralized planning. D) decentralized socialism. 4) Economic growth can be pictured in a production possibilities curve diagram by 4) _______ A) an outward shift of the production possibilities curve. B) a production possibilities curve that is less bowed out. C) an increasingly bowed out production possibilities curve. D) an inward shift of the production possibilities curve. 5) The official unemployment rate may understate the true rate of unemployment because of 5) _______ A) changes in wage rates. B) workers who hold two jobs. C) discouraged workers who no longer are actively seeking work. D) increases in worker productivity. 6) The faster the drop in the purchasing power of money, the 6) _______ A) faster the increase in the deflation rate. B) faster the drop in the inflation rate. C) the faster the increase in the inflation rate. D) faster the drop in the deflation rate. 7) Which of the following measures gives the earliest warning of increasing inflation? 7) _______ A) the Producer Price Index B) the Consumer Price Index C) the GDP deflator D) all of these should signal the same short-run inflation 8) The unemployment rate can increase when 8) _______ A) the duration of unemployment increases. B) the proportion of 18-22 year olds who go to college increases.

MACROECONOMICS TEST 1 WINTER 2021 C) the size of the military increases. D) the number of job finders increases. 9) The nominal value of a good is 9) _______ A) the price of the good in today's dollars. B) the good's value expressed in purchasing power terms. C) the price of the good in today's dollars, minus an anticipated inflation premium. D) the good's anticipated value one year from now. 10) Per capita GDP is 10) ______ A) GDP divided by a price index. B) GDP minus depreciation. C) population divided by GDP. D) GDP divided by the population. 11) The two principle methods of measuring GDP are 11) ______ A) the intermediate approach and the value-added approach. B) the flow approach and the stock approach. C) the domestic approach and the international approach. D) the expenditures approach and the income approach. 12) If C = consumption, G = government expenditures, and I = investment expenditures, the mathematical representation of GDP using the expenditure approach is 12) ______ A) GDP = C + I + G + Imports. B) GDP = C + I + G + Net exports. C) GDP = C + Imports. D) GDP = C + I + G + Transfers. 13) According to the circular flow, the dollar value of a nation's output is equal to 13) ______ A) wages. B) net income minus taxes. C) total income. D) profits. 14) Whenever statements expressing value judgments are made, we enter the realm of 14) ______ A) positive economics. B) microeconomics. C) normative economics. D) macroeconomics. 15) The unemployed and the employed combined represent 15) ______ A) the duration effect. B) the total labour force. C) the discouraged worker. D) all individuals between the ages of 18 and 55 available for work. 16) Depreciation is 16) ______ A) not included in GDP from the income side. B) added to GDP to reach NDP. C) always higher than the capital consumption allowance. D) the reduction in the value of capital goods due to physical wear and tear. 17) Which of the following is included in GDP? 17) ______ A) total exports minus total imports B) total imports C) total exports D) total imports minus total exports 18) The economic model of crime 18) ______

MACROECONOMICS TEST 1 WINTER 2021 A) cannot be used to predict real-world behaviour because it assumes criminals are rational B) is not scientific because it is so highly simplified. C) is not scientific because it cannot be replicated in a laboratory. D) can have details added to it in order to predict behaviour not included in the simple model. 19) Macroeconomics studies economics from the standpoint of 19) ______ A) a typical firm. B) the economy as a whole. C) a specific individual. D) a typical household. 20) The goal of legislation aimed at lowering the use of marijuana in Canada is best described as 20) ______ A) positive. B) legislative.C) scientific. D) normative. 21) Another term for an "economic model" is an21) ______ A) economic design. B) economic assumption. C) economic theory. D) economic science. 22) A society currently operating on its production possibilities curve is 22) ______ A) consuming too much output. B) technologically inefficient. C) under-utilizing its resources. D) fully utilizing its productive resources. 23) Dividing the number unemployed by the number of people in the labour force yields 23) ______ A) the inflation rate. B) the labour force participation rate. C) the Help Wanted Index. D) the rate of unemployment. 24) Structural unemployment results 24) ______ A) when consumers' demand for a product falls so dramatically that workers specializing in the production of that product find themselves out of work. B) when individuals enter the labour market in June following graduation. C) when workers face layoffs following a decrease in economic activity. D) when a reduction in consumer income reduces demand for products. 25) Which of the following is part of gross private domestic investment? 25) ______ A) purchases of stocks and bonds B) purchases of hamburgers for a family dinner C) a positive change in business inventories D) a decline in consumer debt 26) The CPI may be an inaccurate measure of changes in the price level because 26) ______ A) consumers rarely switch to less expensive products when the price of a particular good increases. B) consumers can substitute higher priced goods when the price of a particular good increases. C) the market basket of goods was determined arbitrarily by the government without conducting surveys of spending patterns. D) it is a changing quantity index. 27) The most general indication of economy-wide inflation is captured by the 27) ______ A) GDP deflator. B) Urban Wage Deflator. C) Consumer Price Index. D) Producer Price Index. 28) The formula for computing a basic price index is 28) ______

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MACROECONOMICS TEST 1 WINTER 2021 A) (100/cost of market basket in base year) + cost of market basket today. B) (cost of market basket today/cost of market basket in base year) × 100. C) (cost of market basket in base year/cost of market basket today) × 100. D) (cost of market basket in base year/100) × cost of market basket today. 29) Which one of the following is a durable consumer good? 29) ______ A) furniture B) food C) gasoline D) office supplies that will be used up this year 30) Ceteris paribus means 30) ______ A) let the buyer beware. B) making all the necessary changes. C) other things constant. D) for certain parameters. 31) Assume a ten percent decrease in the price of all goods in 1991; if the base year is 1990, then the price index in 1991 will be 31) ______ A) 1100. B) 90. C) 110. D) 200. 32) Canadians have been spending more time on line each year. One change we can be sure has resulted is 32) ______ A) they have had to give up time spent on other activities. B) they have increased their satisfaction levels C) they have increased their incomes. D) they have purchased more pizza 33) The law of increasing relative cost states that 33) ______ A) producing additional units of one good results in increasing amounts of lost output of the other. B) the economy will be producing on its production possibilities curve. C) producing additional units of one good results in proportionately smaller reductions in output of the other. D) the production possibilities curve will be a straight line. Figure 2-1

MACROECONOMICS TEST 1 WINTER 2021 34) In Figure 2-1, at point D, resource use is 34) ______ A) more efficient than t point B. B) less efficient than at point B. C) less efficient than at point C. D) more efficient than at point A. Figure 2-4 35) In Figure 2-4, the bowed-out shape of the production possibilities curve indicates that 35) ______ A) resources are being used inefficiently. B) production is efficient but the economy is experiencing allocative inefficiency. C) some resources are relatively better at producing corn and others are better at producing cloth. D) resources are being used efficiently.

MACROECONOMICS TEST 1 WINTER 2021 1) A 2) D 3) A 4) A 5) C 6) C 7) A 8) A 9) A 10) D 11) D 12) B 13) C 14) C 15) B 16) D 17) A 18) D 19) B 20) D 21) C 22) D 23) D 24) A 25) C 26) B 27) A 28) B 29) A 30) C 31) B 32) A 33) A 34) D 35) C

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