9.In a closed economy without government or the foreign sector, if the MPC is 11/15, an increase in consumption of $80 will cause GDP (income) to:

a.increase by $300

b.increase by $80

c.decrease by $80

d.decrease by $110

16.Given the equations C = 10 + .5Y and Ig = 30, which of the following is the best

answer?

a.The MPC is .5 and the equilibrium level of income is $80

b.The MPS is .5 and autonomous expenditure is $40

c.Autonomous consumption is $10 and equilibrium income is $80

d.All of the above

23.The marginal propensity to consume is the numerical value of the ____________ of the consumption curve.

a.Y-intercept

b.Equation of line

c.X-intercept

d.Slope

24.If our full employment level of output (Yf) was $785 and our equilibrium level of output (Ye) was $900, the economy would be experiencing

a.A period of unemployment

b.the prospects of lower taxes

c.Inflation

d.deflation

23.The marginal propensity to consume is the numerical value of the ____________ of the consumption curve.

a.Y-intercept

b.Equation of line

c.X-intercept

d.Slope

24.If our full employment level of output (Yf) was $785 and our equilibrium level of output (Ye) was $900, the economy would be experiencing

a.A period of unemployment

b.the prospects of lower taxes

c.Inflation

d.deflation

34. If aggregate expenditure exceeds production:

a. Firms will increase their production thus causing inventories to be reduced.

b. Firms will reduce their production thus causing inventories to be reduced.

c. Firms will increase their production thus causing inventories to build up.

d. Firms will reduce their production thus causing inventories to build up.

35. What is meant by a government engaging in 'protectionism'?

a.Protectionism means that the government is attempting to restrict exports from leaving the home country by enacting export subsidies, and export tariffs.

b.Protectionism means that the government is attempting to restrict imports from entering the home country by enacting tariffs and quotas.

c.Protectionism means that the government is attempting to restrict exports from entering the foreign country by enacting export subsidies, and export tariffs.

d.Protectionism means that the government is attempting to restrict imports from entering the foreign country by enacting tariffs and quotas and so on.

36. Recently in the Calgary Herald, it was reported that an Angus Reed poll determined Canadian consumers are feeling very optimistic about the future. What would be the impact on Canadian businesses and on the Canadian economy (real GDP)?

a. Optimistic consumers purchase fewer goods and services thus causing prices to fall and the economy to slow down - a decrease in real GDP.

b. Optimistic consumers cause businesses to produce more goods and services thus causing a surplus of products. As a result, prices will decline as business owners attempt to rid themselves of inventory. The economy then will slow down - and real GDP will decrease.

c. Optimistic consumers purchase more goods and services thus causing shortage. Shortages will cause prices to rise. Further, the economy will speed up - and real GDP will increase.

d. Optimist consumers purchase more goods and services thus causing a surplus. Surplus will cause prices to fall. Further, the economy will speed up - and real GDP will increase.

Drawing and Calculation Questions- Answer All - Various marks

1.a) On the foreign sector diagram below, properly label the axes and the curves. (1 mark)

b)At an income level of Y1, the economy would be experiencing a balance of trade _______.(1 mark)

c) Assume the Canadian economy is currently at Y2. Let's assume that President Donald Trumps is successful at blocking Canadian imports. What would we expect to be the result? [Check-mark the correct answer.] (1 mark)

Imports from the USA would decrease causing a balance of trade surplusin Canada____

Imports from the USA would decrease causing a balance of trade deficit inCanada.____

Exports to the USA would increase causing a balance of trade deficit in

Canada____

Exports to the USA would decrease causing no change in Canada's

GDP____

Exports to the USA would decrease causing a balance of trade deficit in

Canada____

d) Demonstrate the effect of the above scenario by shifting the appropriate curve on the previous diagram. (1 mark)

3.In our small country, it has been determined that out of every $1 the people receive, they tend to consume about 90%. It has also been determined that when the businesses in our country produce about $180,000 worth of goods, that we are a stable country (Ye). That is, we have no shortages or surpluses. However, we do have a relatively significantunemployment rate of 9.5%. Assume the businesses and consumers in our country became quite optimistic about the future of our country and increased their collective spending by $7000. As a result, our economy (GDP real) would increase by $_______and our new level of GDP real would be $________.[Use the space below to show your work.] (2 marks)

GDP would increase by $_____________________

New real GDP would be $_____________________

BONUS

You own a small restaurant in Calgary that serves wine. You offer your customers wine from France, Australia, Chile, and of course, Canada. Your cost for the French wine was 18 EUR (Euros), Australia wine was 20 AUD (Australian dollars), Chilean wine 12,000 CPL (Chilean Pesos), and the Canadian wine was $23 CAD (Canadian dollars).

Use the following information to calculate the prices.

$1 CAD = 484.62 CPL (Chilean Peso)

1 AUD = $1.06 CAD (Australian Dollar)

1 EUR = $1.26 CAD (Euro)

Chilean wine = $______ CAD

Australian wine = $ _____ CAD

French wine = $______ CAD

You sell each of these bottles for $30 CAD. If you sell wine from _______________ country, you will make the highest profit at $___ CAD per bottle. (5 marks)