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ECON_Q1

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1. Microeconomics studies
a. the aggregate effects of the decisions individuals, businesses, and governments make.
b. the choices individuals and businesses make.
c. changes in the cost of living.
d. Canada's business cycle.
e. all of the above
2. Economists agree that
a. overly strong expansions are desirable.
b. recessions can be avoided.
c. the business cycle can't be eliminated, but it can be smoothed.
d. the business cycle is necessary and good for the economy.
e. the business cycle is more common in developed countries.
3. Economics
a. teaches skills that are likely to be in low demand during in the next decade.
b. prepares students by developing memorizing skills.
c. prepares students by developing problem-solving skills.
d. has a low opportunity cost of time.
e. is not very challenging.
4. A study of the effects of an increase in the Canadian government's expenditure by 5 percent falls in the domain of
a. microeconomics.
b. scarcity.
c. macroeconomics.
d. rational economics.
e. the government cycle.
5. A statement that presents an opinion and cannot be tested is called a
a. positive statement.
b. ceteris paribus statement.
c. direct statement.
d. negative statement.
e. normative statement.
6. The usefulness of an economic model depends on
a. its assumptions.
b. its ability to predict.
c. how well it corresponds to real-world events.
d. both b. and c.
e. all of the above
7. For Bill Gates, a founder of Microsoft, scarcity is
a. a concern because there are a limited number of computer customers.
b. not a concern because he has many employees working for his company.
c. not a concern because he has so much money.
d. not a problem because of his work habits.
e. a concern because time is a limited resource.
8. To finance government payments, the
a. federal, provincial, and local governments combine all revenue and evenly divide the revenue by population size.

b. federal government taxes provincial and local government revenue earnings.

c. provincial and local governments receive transfer payments from the federal government.

d. federal government receives transfer payments from the provincial and local governments.

e. federal government prints money and distributes it to the provincial and local governments.
9. Macroeconomics divides the goods and services that we produce into four large groups. One of these groups is
a. government goods and services.
b. labour.
c. stocks and bonds.
d. income.
e. entrepreneurship.
10. Compared to the world, the rate of Canadian population growth is
a. about the same as in the world as a whole.
b. a little faster than in the world as a whole.
c. incomparable because we do not have accurate world population statistics.
d. much faster than in the world as a whole.
e. slower than in the world as a whole.
11. When looking at the average unemployment rates over the past 10 years for the advanced economies, we see that
a. the European Union has a lower rate than the United States.
b. Japan has had one of the highest rates.
c. the United States has the lowest rate.
d. the newly industrial nations of Asia have had the lowest rates.
e. Canada has the lowest rate.
12. The standard of living depends on the
a. quantity of goods and services produced per person.
b. standards people set for their lives.
c. standards that the government sets for people.
d. amount of money people saved.
e. quantity of goods and services sold.
13. A country produces health care and education, and is producing at a point on its production possibilities frontier. To produce more health care, the country must
a. sacrifice no units of education.
b. increase its production of education.
c. use unemployed resources to produce health care.
d. increase its production of both health care and education.
e. decrease its production of education.
14. Using the production possibilities frontier in the table below, the opportunity cost of producing 6 robots rather than 4 robots is ___ tonnes of hot dogs.
Production point Robots (number)
Hot dogs (tonnes)
A 10
and 0

B 8
and 8

C 6
and 14

D 4
and 18

E 2
and 21

F 0
and 23

a. 2
b. 6
c. 4
d. 14
e. 18
15. Production point B in the figure below indicates a production point that is

a. attainable but has unemployment of some resources.
b. unattainable.
c. attainable and has full employment of resources.
d. all of the above
e. none of the above
16. Based on the table below, if Peter and Paul specialize in producing the good in which they each have a comparative advantage, how many kilograms of apples and how many loaves of bread will they produce in total?

Peter's Production Possibilities Paul's Production Possibilities
Production point Apples (kilograms)
Bread (loaves) Production point Apples (kilograms)
Bread (loaves)
A 0 and 20
A 0 and 30

B 1 and 16
B 1 and 24

C 2 and 12
C 2 and 18

D 3 and 8
D 3 and 12

E 4 and 4
E 4 and 6

F 5 and 0
F 5 and 0

a. 30 loaves of bread and 5 kilograms of apples
b. 5 loaves of bread and 30 kilograms of apples
c. 50 loaves of bread and 0 kilograms of apples
d. 20 loaves of bread and 5 kilograms of apples
e. 50 kilograms of apples and 0 loaves of bread
17. If the number of farmers growing roses increases, the supply of roses ________ and the supply curve of roses shifts ________.
a. decreases / leftward
b. increases / rightward
c. decreases / rightward
d. increases / leftward
e. increases / upward
18. The demand curve shows the relationship between
a. price and quantity demanded.
b. consumer wealth and quantity demanded.
c. price and production costs.
d. consumer money income and quantity demanded.
e. consumer preferences and the quantity demanded.
19. An effective minimum wage will ________ the wage rate paid workers and ________ employment.
a. raise / decrease
b. lower / increase
c. improve / increase
d. lower / decrease
e. raise / increase
20. When Mick Jagger chose to join a rock band, he
a. gave up studying ancient sculpture.
b. incurred no opportunity cost because he made a lot money.
c. made a rational choice.
d. made an irrational choice.
e. never understood opportunity cost and incentives.
21. A study that describes the possible economic policies to deal with inflation falls under
a. positive economics.
b. positive assumption.
c. pure economics.
d. normative economics.
e. abstract economics.
22. The approximate number of people who live in the transition economies is
a. 5 billion.
b. 1 billion.
c. 5 million.
d. 200 million.
e. 6 billion.
23. Most of the people around the world live in countries with an average income of ________ per day.
a. less than $32
b. less than $5
c. between $50 and $60
d. more than $95
e. more than $32
24. Based on the table below, Paul's opportunity cost of producing one kilogram of apples is _______.

Peter's Production Possibilities Paul's Production Possibilities
Production point Apples (kilograms)
Bread (loaves) Production point Apples (kilograms)
Bread (loaves)
A 0 and 20
A 0 and 30

B 1 and 16
B 1 and 24

C 2 and 12
C 2 and 18

D 3 and 8
D 3 and 12

E 4 and 4
E 4 and 6

F 5 and 0
F 5 and 0

a. 6 loaves of bread
b. 4 loaves of bread
c. 1/6 of a loaf of bread
d. 2 loaves of bread
e. 3 loaves of bread
25. Other things remaining the same, if the price of Pepsi increases, the
a. demand for Pepsi decreases.
b. quantity demanded of Pepsi increases.
c. supply of Pepsi decreases.
d. quantity supplied of Pepsi increases.
e. supply of Pepsi increases.
26. Over time, the cost of living in Canada has ________ and the standard of living has ________.
a. fallen / decreased
b. risen / increased
c. remained constant / decreased
d. risen / decreased
e. fallen / increased
27. An example of a good supplied by a provincial or local government is
a. national defense.
b. Environment Canada's weather forecasts.
c. pensions to retired people.
d. employment insurance payments.
e. public schools.
28. Currently, Hong Kong and Canada have similar production possibilities frontiers. If Hong Kong continues to devote more resources to capital accumulation than Canada, in the future
a. Hong Kong's PPF will shift outward more rapidly than the Canadian PPF.

b. Hong Kong's PPF and Canada's PPF will shift outward at the same rate.

c. Hong Kong will no longer trade with Canada.

d. the Canadian PPF will shift outward more rapidly than Hong Kong's PPF.

e. Hong Kong's and Canada's PPFs will remain the same because the population of Hong Kong is less than the population of Canada.
29. If buyers and sellers both expect the price of a car to rise within the next six months, the demand for cars today will
a. decrease, the supply of cars will increase, and the price of a car will fall.
b. increase, the supply of cars will decrease, and the price of a car will rise.
c. decrease, the supply of cars will decrease, and the price of a car might rise or fall.
d. increase, the supply of cars will increase, and the price of a car might rise or fall.
e. increase, the supply of cars will decrease, and the price of a car will fall.
30. Economists use economic experiments to study the real world by
a. polling people about the conclusions of economic theories.
b. studying people placed in decision-making situations.
c. gathering facts from a controlled experiment.
d. statistically analyzing real-world data.
e. studying real-world economic situations that naturally arise.

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