The concept of opportunity cost refers to . . .

What is lost or sacrificed by deciding one thing over an alternative.

Production levels below (and to the left of) the production possibilities curve, or frontier, represent . . .

The inefficient use of available resources.

What is meant by the term ‘equilibrium price’?

A price at which quantity demanded equals quantity supplied.

Which of the following will not lead to an increase in demand for a good?

a decrease in the price of the item

How does the theory of marginal utility help to explain why a demand curve slopes down and to the right?

because the marginal utility of a good declines as more of it is consumed,

Which of the following is the best example of the fallacy of composition?

What is good for society as a whole must be good for its individual members

Which of the following is a characteristic of the market structure of perfect competition?

Firms sell an identical product

An airline finds that when it raises its fares on certain flights, total revenue increases, although the total number of

demand is inelastic because sales revenues have increased.

Which statement below is true of a perfect or purely competitive market?

it is quite rare in a modern economy, but is used to evaluate actual market

The law of increased returns comes into effect when . . .

Large scale operations find ways to use resources more efficiently.

Why do economists believe it is necessary “to economize in our use of resources”?

Our limited resources must be used carefully to satisfy unlimited wants and

a restriction placed on the amount of a product producers are allowed to pr

Communism grew out of the need for ____.

Oppressed working classes to rise up against their capitalist oppressors.

a grant of money made to a particular industry by the government

Who or what decides what will be produced in a market economy?

Consumers decide based upon their needs and wants.

The order of the four types of market structures, from most competitive to least competitive, is:

perfect competition, monopolistic competition, oligopoly, monopoly

To reduce public debt in Canada ___.

Governments must keep spending proportional to revenues.

A sound argument supporting the idea that a nation's central bank should be independent from the government is

the government's power to spend money should be separated from the banking

An individual buys one hamburger and two orders of fries. According to the theory of marginal utility, what should he do

buy one or more of the food item which provides the greatest marginal utili

What is meant by the term 'easy money''?

money is easier to borrow for consumers and businesses

In general, what effect do low inflation rates have upon interest rates and the economy?

it pushes interest rates down, which encourages borrowing, spending and in

Which of the following is the best example of a positive or analytical statement?

The unemployment rate declined for the second successive month in Canada by

Which of the following is not one of the three major production questions an economic system faces?

How much should workers be paid for their labour?

Which of the following principles was a key part of the 1945 peace treaty and economic reconstruction plan advocated str

To secure a lasting peace, the defeated enemy must be helped, not punished.

The Bank of Canada is:

is owned by the federal government

Which of the following has made full employment a difficult goal for the Canadian economy?

Outsourcing jobs to countries with lower wages

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Economics Exam Prep- Mr.Steep

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Answers

1
A “representative basket” is used in the calculation of:
Unemployment rate
Current dollar GDP
Consumer Price Index
Nominal GDP
2
The main objective of contractionary fiscal policy is to
Reduce aggregate demand
Increase real GDP
Reduce the unemployment rate
Increase exports
3
Which of the following economic thinkers and their ideas can be most closely associated with the American Revolution aga
Karl Marx
David Ricardo
Thomas Robert Malthus
Adam Smith
4
The ideology occupying the extreme right position on the political spectrum is ___.
Capitalism
Fascism
Socialism
Communism
5
The concept of opportunity cost refers to . . .
Remaining neutral when being asked to choose one side.
When a person is in the wrong place at the wrong time.
What is lost or sacrificed by deciding one thing over an alternative.
Failing to take full advantage of an economic situation.
6
Production levels below (and to the left of) the production possibilities curve, or frontier, represent . . .
The law of increased relative cost taking effect.
The inefficient use of available resources.
The law of increased returns to scale taking effect.
The best an economy can do under present circumstances.
7
What is meant by the term ‘equilibrium price’?
A price at which quantity demanded equals quantity supplied.
A price which provides the best returns to sellers, and the lowest price to
A price which is not subject to change by the actions of buyers or sellers
A price which is most desirable for buyers and sellers of the product.
8
Which of the following will not lead to an increase in demand for a good?
an increase in the price of substitute products
an increase in consumer incomes
a decrease in the price of the item
a successful advertising campaign for the product
9
How does the theory of marginal utility help to explain why a demand curve slopes down and to the right?
because the marginal utility of a good declines as more of it is consumed,
the utility of a good increases as more of it is consumed; thus, price incr
as price rises, and quantity demanded falls, marginal utility falls
as price falls, and quantity demanded increases, marginal utility is incre
10
Which of the following economists and their ideas focused on the idea of Money Supply
John Kenneth Galbraith
Milton Friedman
John Maynard Keynes
Joan Robinson
11
Which of the following is the best example of the fallacy of composition?
The more people believe something; the more it tends to be true and correct
What is good for society as a whole must be good for its individual members
What you have said sounds like something you just made up.
Automobile production is a major contributor of the Canadian economy.
12
Which of the following is a characteristic of the market structure of perfect competition?
Market dominated by a single firm
The firms have a little control over their price
Firms sell an identical product
Market has a few large firms
13
Grant's income of $50 000 and spends $30 000. He receives an increase in income to $85 000,now spends $50 000. MPC?
0.86
1.75
0.60
0.57
14
An airline finds that when it raises its fares on certain flights, total revenue increases, although the total number of
demand is elastic because the number of passengers has decreased
demand is elastic because sales revenue has decreased
demand is inelastic because the number of passengers has decreased
demand is inelastic because sales revenues have increased.
15
Which economist argued for freer trade and against economic exploitation by the favoured landlord class, as an elected m
Karl Marx
David Ricardo
Adam Smith
Thomas Robert Malthus
16
Which of the following deals primarily with trying to rebalance society by increasing sales tax to fund public projects:
The Affluent Society
Law of Diminishing Returns
Division of Labour
Game Theory
17
Economists classify Canada as a _____ economy.
Free trade
Mixed market
Neutral
Command
18
The lumber costs in Jade’s construction business is an example of a(n):
Implicit cost
Variable cost
Fixed cost
Marginal cost
19
Which statement below is true of a perfect or purely competitive market?
it is an ideal or model used to evaluate actual markets, but does not exist
it is quite a common type of market for the goods and services bought and s
it is quite rare in a modern economy, but is used to evaluate actual market
it usually has one or a few sellers dominating the market who have some co
20
The law of increased returns comes into effect when . . .
Inefficient large enterprises are forced out of business.
Workers are well paid and happy to work for their employer.
Small scale operations find inventive ways to improve their competitive edg
Large scale operations find ways to use resources more efficiently.
21
Why do economists believe it is necessary “to economize in our use of resources”?
Our wants and needs can never be satisfied with the resources available.
Our wants are limited, so we should not waste our resources to satisfy them
Our needs are limited, so we should not waste our resources to satisfy them
Our limited resources must be used carefully to satisfy unlimited wants and
22
What is a quota?
a restriction placed on the amount of a product producers are allowed to pr
a payment made by government to help individual producers
a grant of money to help consumers deal with high prices for a certain prod
a restriction placed on the amount of a product consumers are allowed to pu
23
Communism grew out of the need for ____.
The ill effects of colonialization to be reversed.
More government control of the economy.
Oppressed working classes to rise up against their capitalist oppressors.
More economic stimulation to help poor countries to grow.
24
Which of the following theories best describe the idea that large firms make products and advertise to tell the consumer
Law of Population
The Dependence Effect
Capital Accumulation
Theory of Comparative Advantage
25
What is a subsidy?
a grant of money made to a particular industry by the government
a grant of money made to consumers by the government
a tax paid by producers to provincial and federal governments
a restriction on production aimed at raising producers incomes
26
Who or what decides what will be produced in a market economy?
The profit motive decides what goods will be produced and in what quantitie
Businesses decide, then persuade people to buy through advertising and prom
The government decides based upon the economy’s stock of resources.
Consumers decide based upon their needs and wants.
27
The order of the four types of market structures, from most competitive to least competitive, is:
monopolistic competition, perfect competition, oligopoly, monopoly
perfect competition, monopolistic competition, oligopoly, monopoly
oligopoly, monopolistic competition, perfect competition, monopoly
monopoly monopolistic competition, oligopoly, perfect competition
28
To reduce public debt in Canada ___.
Governments must keep spending proportional to revenues.
Debt consolidation loans must be negotiated.
Government spending must be increased.
More consumers should cut up their credit cards.
29
Ice cream sales data confirms a/an ___________ relationship between price and the quantity sold.
Direct
Reciprocal
Proportional
Inverse
30
____ are used to help redistribute income more fairly in Canada.
Interest-free loans
Subsidies
Income taxes
Government transfer payments
31
The practice of moving some internal business operations to a third-party firm is known as:
Arbitration
Boycott
Outsourcing
Gig economy
32
A sound argument supporting the idea that a nation's central bank should be independent from the government is
governments often try to use the banking system for their own purposes
the central bank, not government has the knowledge and expertise to adminis
the government's power to spend money should be separated from the banking
government politicians should never have influence over money and banking i
33
An individual buys one hamburger and two orders of fries. According to the theory of marginal utility, what should he do
buy another hamburger to ensure he has two of each and thus equal utility
buy more of neither because utility will decline with one more hamburger or
buy one or more of the food item which provides the greatest marginal utili
buy more fries because it is clear he gains more satisfaction from them
34
Which of the following is NOT a factor that shifts the labour supply curve?
Changes in income tax rates
Changes in worker productivity
Changes in attitude about work
Changes in the size and composition of the population
35
To claim that the Great Depression was caused by the stock market crash of 1929 is an example of which fallacy?
Fallacy of single causation
Fallacy of composition
Post hoc fallacy
Cause-and-effect fallacy
36
2.What happens to sales revenue on a product for which the demand is elastic?
it rises as price falls
it rises and falls in proportion to price and quantity demanded
it rises as price rises
it falls as price falls
37
Which of the following economists adopted socialistic view, later in life, focused on greater equity in the distribution
Milton Friedman
John Maynard Keynes
Elinor Ostrom
Joan Robinson
38
What is meant by the term 'easy money''?
money is easier to earn for most people
interest rates are attractive to savers and borrowers
average incomes are rising throughout the economy
money is easier to borrow for consumers and businesses
39
In general, what effect do low inflation rates have upon interest rates and the economy?
low inflation rates do not affect interest rates, borrowing, spending, inv
it pushes interest rates up, which encourages borrowing, spending, and inv
it pushes interest rates down, which encourages borrowing, spending and in
it pushes interest rates down, discouraging borrowing, spending and investm
40
What is the name given to the economic system based on state control of economic production and trade and high tariffs t
Bourgeoisie
Merchantilism
Capitalism
Laissez-faire
41
According to Malthus, famine, disease and war were examples of ____ checks on population growth.
Progressive
Positive
Inevitable
Preventive
42
Macroeconomics approaches the study of economics from the viewpoint of:
The individual consumer
The government
The operation of specific markets
The entire economy
43
If Canadians collectively tend to spend 60 percent of an increase in income on domestic consumption, the multiplier is
1.7
3.2
2.5
2.0
44
Which of the following is the best example of a positive or analytical statement?
The unemployment rate declined for the second successive month in Canada by
A high unemployment rate is unacceptable to most people.
An unemployment rate of more than 7 percent should be unacceptable to the f
A change in government will surely cause the unemployment rate to fall.
45
.In one year, the government collects $50 billion in taxes and spends $80 billion. This is an example of a:
Debt
Multiplier effect
Surplus budget
Deficit budget
46
What name is given to the group of thinkers who believed that since human behaviour is governed by natural laws, all art
Merchantilists
Proletarians
Naturalists
Physiocrats
47
Which of the following is not one of the three major production questions an economic system faces?
How much should workers be paid for their labour?
How should production be organized in the economy?
How should goods be shared among the citizens?
What goods and services should be produced?
48
Which of the following principles was a key part of the 1945 peace treaty and economic reconstruction plan advocated str
To secure a lasting peace, the defeated enemy must be helped, not punished.
Deferred savings must be used to help repay war debts.
To secure a lasting peace, Japan must not be allowed to dominate the Pacifi
Germany must be divided into two countries to prevent the build-up of a pow
49
The Bank of Canada is:
is owned by the chartered banks
a competitor of the chartered banks
is owned by the federal government
trades shares on the stock exchange
50
Which of the following has made full employment a difficult goal for the Canadian economy?
Outsourcing jobs to countries with lower wages
Decreasing imports for Canadian consumers
Government transfer payments
Increasing exports to foreign markets
51
Most governments equate economic growth with ___.
Increased taxation
Responsible stewardship
Increased prosperity
Reduced crime
52
Why is the law of diminishing returns considered ultimately inevitable?
Available resources become too expensive when in high demand.
Scarce productive resources cannot all be increased when needed.
Producers hire new workers only if these extra workers will generate extra
Resources are available only to the highest bidder.
53
To claim that all Canadians will benefit from increased global trade is an example of which fallacy?
Cause-and-effect fallacy
Post hoc fallacy
Fallacy of single causation
Fallacy of composition
54
Which of the following is the best example of a market economy?
Canada
Australia
USSR
United States
55
Which of the following statements is not true about environment for enterprise?
Environment for enterprise bolsters both investor and consumer confidence.
Economists consider environment for enterprise as an important tangible res
All of the above are true.
To create an environment for enterprise a society and its government must b
56
Once an economy has reached full-employment GDP, an increase in aggregate demand will
Cause more rapid rates of inflation
Require expansionary fiscal policy
Be unlikely to occur
Lead to government intervention
57
Which of the following best describes the Iron Law of Wages:
Assets earned from investment tend to earn profits that add on to the capit
Prices should be set based on the length of time it took to make
Spending in Recessions and Saving during Prosperity
More workers = lower wages, Less workers = higher wages
58
Aggregate demand is the total demand for goods and services by
All sectors of the economy
Businesses
Government
Households
59
Steel companies are able to store their steel products indefinitely. Which of the following defines their supply elastic
PES is inelastic
PES cannot be determined
PES is elastic
PES is unitary
60
Which of the following is an injection in the circular flow of income?
Investment
Imports
Savings
Taxes
61
Which of the following terms is used to describe state ownership of a business enterprise?
Nationalization
Privatization
Amalgamation
Expropriation
62
Chartered banks are
privately owned corporations
partially owned by the government and public
owned by the federal government
owned by the provincial government
63
Which development would cause the demand curve for a product to shift downwards to the left?
an increase in the number of potential consumers
consumers believe the price of the product will rise in the future
a successful advertising campaign for the product
consumer incomes decline
64
China’s communist government prefers to describe their economic system as a . . .
Socialist market economy
Benevolent command economy
Traditional economy
Mixed market economy
65
Identify one important economic trade-off for increased government spending on infrastructure projects like road, bridge
Increased public debt
Less spending on imports
Economic freedom
Full employment
66
The concept of opportunity cost refers to . . .
Remaining neutral when being asked to choose one side.
Failing to take full advantage of an economic situation.
What is lost or sacrificed by deciding one thing over an alternative.
When a person is in the wrong place at the wrong time.
67
Which of the following are the best examples of capital goods?
Food and clothing
Higher education and training
Government buildings and property
Tools and machinery
68
A new capital good is provided to workers that makes them more productive. What will be the impact on the labour market?
Increase in demand; decrease in wage rate
Decrease in demand; increase in wage rate
Increase in demand; increase in wage rate
Decrease in demand; decrease in wage rate
69
Which of the following is considered an intangible productive resource?
Capital
Land
Raw materials
Education and training
70
In economics, value added is the result of _____.
Government intervention in the marketplace.
Additional processing or product refinement.
Brand preference and changing consumer tastes.
Shrewd negotiation of market prices.
71
Which of the following will cause the value of the Canadian dollar to decline in foreign money markets?
Keeping imports and exports stable and of comparable value.
A small decrease in Canadian imports relative to exports.
Increasing exports to foreign markets.
A sharp decrease in Canadian exports relative to imports.
72
What is one possible outcome of a floor price?
it may cause the quality of the product to suffer
it may create a black market for the product
it causes shortages of the product in the market
it creates surpluses of the product that are difficult to deal with
73
Which of the following is an example of the “fallacy of composition”?
If the GST had not been introduced in 1990, the recession of the early 199
If one firm benefits from cutting its prices, often other firms try to ben
If the Canadian economy can attain a 4-5 per cent growth rate, as in the la
If workers in one industry benefit from a wage increase, it follows that al
74
Large supermarkets lowering the price of goods would be an example of a:
Physiocrats
Monopolies
Theory of the Firm
Monopsony

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