ECON CH 8 Quiz

1.

1 point

Which of the following has led to an increase in the NAIRU in Canada?

increase in oil prices

increasing labour force participation by women

increasing rate of productivity improvements among Canadian workers

a reduction in payroll taxes

2.

1 point

If interest rates have been lowered substantially and increases in spending have not come about, then lowering the rate further is unlikely to encourage spending, this is know as:

the Fisher equation of exchange

a liquidity trap

interest rate inelasticity

an automatic stabilizer

3.

1 point

Which of the following has led to an increase in the NAIRU in Canada?

changes in employment insurance legislation

increasing rate of productivity improvements among Canadian workers

decreasing labour force participation rates

decrease in foreign trade and regulation of certain industries

4.

1 point

Fiscal policies such as increased government spending and reduced taxes will:

increase unemployment but reduce inflation

increase both unemployment and inflation

increase inflation but reduce unemployment

reduce both unemployment and inflation

5.

1 point

Which of the following is not an example of an automatic stabilizer?

tariff on goods imported into Canada

employment insurance

progressive income tax

general welfare assistance

6.

1 point

Which of the following is a negative aspect of Canada's public debt?

the money is owed primarily to Canadians and not to individuals in other countries

it may cause interest rates to increase by increasing the demand for money

it is necessary to finance large capital projects

it is better than raising taxes in a recession

7.

1 point

Which of the following is not a lag associated with discretionary fiscal policy?

decision

political

recognition

implementation

8.

1 point

How does a fiscal policy conflict with monetary policy?

In a recessionary period, the Bank of Canada wants low interest rates to discourage spending, but heavy government borrowing for fiscal expansion pushes up interest rates

In a recessionary period, the Bank of Canada wants low interest rates to encourage spending, but heavy government borrowing for fiscal expansion pushes up interest rates

In an inflationary period, the Bank of Canada wants high interest rates to encourage spending, but government wants low interest rates for its borrowing

In an inflationary period, the Bank of Canada wants low interest rates to increase spending, but government wants high interest rates for its borrowing

9.

1 point

Monetary policy aimed at reducing the money supply will:

increase inflation and reduce unemployment

increase unemployment and reduce inflation

reduce both unemployment and inflation

increase both unemployment and inflation

10.

1 point

Monetary policy that increases the amount of money in circulation:

will cause a decrease in interest rates and decrease in aggregate demand

will cause an increase in interest rates and increase in aggregate demand

will cause an increase in interest rates and decrease in aggregate demand

will cause a decrease in interest rates and increase in aggregate demand