Question 1

1. Since non-market exchanges are excluded from measures of GDP, the GDP measure tends to

a)underestimate the total production of an economy.

b)place too much value on market transactions.

c)be of little significance in determining the total production of an economy.

d)overestimate the total production of an economy.

e)be of little use to anyone but market economists.

Question 2

1. Which one of the following people would be counted as unemployed in Canada?

a)Veena is not working, but she is looking for a full-time job.

b)Sharon is a university student with a job.

c)Kathy has stopped looking for work since she was unable to find a suitable job during a one-month search.

d)Benoit was laid off when his firm closed down two months ago and has not been looking for work, as he is going back to school.

e)Christos was laid off from his job a month ago and has not been looking for a new job, as he is waiting for a severance package from his former employer.

Question 3

1. If goodsXandYare substitutes in production, then a rise in the price of goodX

a)increases the supply of goodY.

b)decreases the demand for goodY.

c)decreases the supply of goodY.

d)increases the demand for goodY.

e)might change the supply ofY; it depends on whetherXandYare also substitutes.

Question 4

1. Each of the following would be considered a macroeconomic topicexcept

a)the selection of production techniques.

b)the effect of the government budget deficit on inflation.

c)the cause of recessions.

d)the reasons for a decrease in the unemployment rate.

e)the determination of aggregate income.

Question 5

1. The labour force participation rate is

a)the percentage of the working-age population who are either unemployed or employed.

b)the percentage of the working-age population who are employed.

c)the percentage of the labour force who are employed.

d)the percentage of the labour force who are unemployed or employed.

e)equal to the employment rate plus the unemployment rate.

Question 6

1. Suppose we observe a rise in the price of good Aand an increase in the quantity of good Abought and sold. Which one of the following is a likely explanation?

a)The law of demand is violated.

b)The supply ofAincreased.

c)The demand forAdecreased.

d)The supply ofAdecreased.

e)The demand forAincreased.