Question1

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A technological advance shifts ?

Select one:

a.both SAS and AD rightward.

b.both SAS and LAS leftward.

c.SAS rightward but leaves LAS unchanged.

d.LAS rightward but leaves SAS unchanged.

e.both SAS and LAS rightward.

Question2

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An increase in autonomous consumption ?

Select one:

a.shifts the consumption function upward.

b.shifts the consumption function downward.

c.creates a movement downward along the consumption function.

d.creates a movement upward along the consumption function.

e.changes the slope of the consumption function.

Question3

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An increase in the price level?

Select one:

a.shifts the AE curve upward and increases equilibrium expenditure.

b.shifts the AE curve upward and decreases equilibrium expenditure.

c.shifts the AE curve downward and increases equilibrium expenditure.

d.shifts the AE curve downward and decreases equilibrium expenditure.

e.has no impact on the AE curve.

Question4

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Choose the correct statements about the real exchange rate. 1. The real exchange rate is a measure of how much of one money exchanges for a unit of another money. 2. The real exchange rate is the value of the Canadian dollar expressed in units of foreign currency per Canadian dollar. 3. The real exchange rate is the relative price of Canadian-produced goods and services to foreign-produced goods and services. 4. The real exchange rate is a measure of the quantity of the real GDP of other countries that we get for a unit of Canadian real GDP.

Select one:

a.Statements 1 and 2 are correct.

b.Statements 2 and 4 are correct.

c.Statements 1 and 3 are correct.

d.Statements 3 and 4 are correct.

e.Statements 2 and 3 are correct.

Question5

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Everything else remaining the same, an increase in foreign income?

Select one:

a.increases Canada's aggregate supply.

b.increases Canada's aggregate demand.

c.decreases Canada's aggregate demand.

d.creates a movement downward along Canada's aggregate demand curve.

e.decreases Canada's aggregate supply.

Question6

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If the current account is in surplus and the capital and financial account is also in surplus, then the official settlements account balance is ?

Select one or more:

a.equal to the sum of the current account and the capital account.

b.probably close to zero, but could be either negative or positive.

c.positive.

d.zero.

e.negative.

Question7

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If the marginal propensity to consume is 0.85, what change in consumption expenditure would you expect if disposable income increases by $200 million?

Select one:

a.$20 million

b.$170 million

c.$180 million

d.$1,800 million

e.$18 million

Question8

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If the price level rises, then the wealth effect leads to?

Select one:

a.an increase in real wealth, an increase in current consumption expenditure, and an increase in saving.

b.an increase in real wealth, an increase in current consumption expenditure, and a decrease in saving.

c.a decrease in real wealth, an increase in current consumption expenditure, and an increase in saving.

d.a decrease in real wealth, an increase in current consumption expenditure, and a decrease in saving.

e.a decrease in real wealth, a decrease in current consumption expenditure, and an increase in saving.

Question9

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Long-run aggregate supply will increase for all of the following reasons except?

Select one:

a.a fall in the money wage rate.

b.an increase in human capital.

c.the introduction of new technology.

d.an increase in the full-employment quantity of labour.

e.an increase in the quantity of capital.

Question10

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Refer to Figure 26.3.1. As Econoworld automatically adjusts to long-run equilibrium, the Select one: ?

a.SAS curve shifts rightward.

b.AD curve shifts rightward.

c.SAS curve shifts leftward.

d.AD curve shifts leftward.

e.LAS curve shifts leftward.

Question11

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Refer to Figure 27.1.1. When disposable income is $500 billion, saving is equal to?

Select one:

a.disposable income.

b.zero.

c.$20 billion.

d.consumption expenditure.

e.$40 billion.

Question12

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Refer to Figure 27.2.1. When real GDP is equal to Yb, then?

Select one:

a.actual expenditure is less than planned expenditure.

b.actual expenditure is greater than planned expenditure.

c.planned expenditure is equal to actual expenditure.

d.real GDP increases.

e.real GDP decreases.

Question13

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Refer to Figure 27.3.1. The multiplier for this economy is?

Select one:

a.2.

b.4.

c.2.5.

d.1.

e.3.

Question14

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Refer to Table 25.1.1. Between 2009 and 2010, the Canadian dollar________ versus the euro and________ versus the yen?

Select one:

a.appreciated; depreciated

b.appreciated; appreciated

c.depreciated; depreciated

d.depreciated; appreciated

e.not changed; not changed

Question15

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Suppose that the Canadian dollar exchanges for 1.05 U.S. dollars and also for 0.65 euros. A U.S. dollar exchanges for?

Select one:

a.1.00 euro.

b.1.70 euros.

c.0.40 euros.

d.0.68 euros.

e.0.62 euros.

Question16

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Suppose the Bank of Canada follows a fixed exchange rate of $1 U.S. per Canadian dollar. If the demand for Canadian dollars temporarily increases, to maintain the target exchange rate, the Bank can?

Select one:

a.sell Canadian dollars.

b.buy Canadian dollars.

c.violate interest rate parity.

d.violate purchasing power parity.

e.enforce interest rate parity.

Question17

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Suppose the price of a burger is $4.50 Canadian in Toronto, and the exchange rate is 103 U.S. cents per Canadian dollar. Then?

Select one:

a.the price of a burger is $4.50 U.S. in New York if purchasing power parity holds.

b.the price of a burger is $4.64 U.S. in New York if interest rate parity holds.

c.the price of a burger is $4.64 U.S. in New York if purchasing power parity holds.

d.the Canadian dollar is expected to appreciate according to purchasing power parity.

e.the Canadian dollar is expected to depreciate according to purchasing power parity.

Question18

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The aggregate expenditure curve and the aggregate demand curve are?

Select one:

a.not related at all.

b.the same curve, just with different names.

c.linked because if the price level rises, the aggregate expenditure curve shifts downward, and the aggregate demand curve shifts leftward.

d.linked because if the price level rises, the aggregate expenditure curve shifts downward, and there is a movement up along the aggregate demand curve.

e.linked because if the price level rises, the aggregate expenditure curve shifts downward, and there is a movement down along the aggregate demand curve.

Question19

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The Canadian exchange rate appreciates if?

Select one:

a.prices increase in the United States and other countries but remain constant in Canada.

b.the Canadian interest rate falls.

c.the U.S. interest rate rises.

d.all of the choices (above/below)

e.none of the choices (above/below)

Question20

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The defining feature of the Keynesian view of macroeconomics is?

Select one:

a.that the economy is rarely at full employment.

b.that the economy is self-regulating and always at full employment.

c.that the quantity of money is the most significant influence on aggregate demand.

d.that the economy is constantly bombarded by shocks that arise from the uneven pace of technological change.

e.that no active stabilization is needed to offset changes in aggregate demand.

Question21

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The exchange rate is the?

Select one:

a.volume of currency exchanged between importers and exporters.

b.price at which one currency exchanges for another currency.

c.rate of currency appreciation or depreciation.

d.percentage change in the volume of currency exchanges.

e.average rate at which foreign currencies are exchanged.

Question22

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The long-run aggregate supply curve is vertical because?

Select one:

a.potential GDP is independent of the price level.

b.actual output can never exceed, even temporarily, the output rate implied by the economy's long-run aggregate supply curve.

c.a vertical long-run aggregate supply curve indicates the maximum output rate that an economy can ever reach.

d.a vertical long-run supply curve indicates that an increase in aggregate demand will lead to a larger real GDP, but not a larger nominal GDP.

e.potential GDP never changes.

Question23

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The marginal propensity to consume?

Select one:

a.is negative if dissaving is present.

b.is greater than 1 if dissaving is present.

c.is between 1/2 and 1.

d.is greater than 1 but less than 2.

e.is between zero and 1.

Question24

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The multiplier shows that as ________ expenditure changes, real GDP changes by ________ amount?

Select one:

a.autonomous; an even larger

b.autonomous; the same

c.induced; the same

d.induced; an even larger

e.induced; a smaller

Question25

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The quantity of real GDP demanded is the sum of real consumption expenditure (C), investment (I),

Select one:

a.government expenditure (G), exports (X), and imports (M).

b.government expenditure (G), and exports (X) minus imports (M).

c.exports (X), and imports (M).

d.and exports (X) minus imports (M).

e.and government expenditure (G).

Question26

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When the actual unemployment rate is equal to the natural unemployment rate, then the?

Select one:

a.inflation rate must be zero.

b.long-run aggregate supply curve is upward sloping.

c.short-run aggregate supply curve is vertical.

d.economy is operating at potential GDP.

e.the money wage rate will rise.

Question27

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Which of the following events would shift the consumption function upward?

Select one:

a.an increase in disposable income

b.a decrease in disposable income

c.a decrease in wealth

d.a decrease in expected future disposable income

e.an increase in wealth

Question28

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Which of the following factors influence the demand for Canadian dollars?

Select one:

a.The exchange rate and the world demand for Canadian exports.

b.Canadian demand for foreign assets such as foreign bonds

c.The world demand for Canadian exports and Canadian demand for imports.

d.All of the choices (above/below).

e.None of the choices (above/below).

Question29

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Which of the following shifts the supply curve of Canadian dollars rightward?

Select one:

a.An increase in the demand for foreign goods by Canadians

b.A decrease in the demand for Canadian goods by foreigners

c.The dollar is expected to appreciate.

d.U.S. interest rates fall.

e.Canadian interest rates rise.

Question30

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Which one, if any, of the following events shift the short-run aggregate supply curve but not the long-run aggregate supply curve?

Select one:

a.a change in factor prices

b.a change in the quantity of capital

c.an advance in technology

d.an increase in the full-employment quantity of labour

e.none of the choices (above/below)