MIDTERM EXAM

1.

1 point

Structural unemployment occurs when:

unemployed people do not have the required skills to fill job vacancies

attractive unemployment insurance benefits discourage people from taking a job

unemployed workers are between jobs

the name of the industry changes, such as the switch from big cars to small cars

2.

1 point

Investment, as part of the calculation of GDP, includes:

spending by both business and government on new machinery, equipment, and buildings

spending by the business community alone on factories, equipment, and raw materials

the purchase of shares in a company listed on the stock exchange

the purchase of a Government of Canada bond

3.

1 point

If you were unemployed and decided to return to college:

the opportunity costs associated with both your time and your money must be calculated separately.

there would be an opportunity cost associated with the money you spent on books

there would be an opportunity cost associated with the use of your time

all over the above are correct

4.

1 point

IF the government were interested in raising revenue from the imposition of an excise tax, on which of the following products should it place a tax?

potato chips

air conditioners

cigarettes

magazines

5.

1 point

A production-possibilities curve is an example of:

direct or positive relationship

a convex relationship

a linear relationship

indirect or negative relationship

6.

1 point

If the market price for a product is below the equilibrium price:

the quantity demanded will increase and the quantity supplied will decrease

the demand will increase and the supply will decrease

the demand will decrease and the supply will increase

the quantity demanded will decrease and the quantity supplied will increase

7.

1 point

When the economy is at full-employment:

all resources are fully utilized

only frictional unemployment exists

some resources are sitting idle

only structural unemployment exists

8.

1 point

Of all the age groups which one has the highest unemployment rate?

25-44 years

15-24 years

45-64 years

65+ years

9.

1 point

In drawing the supply curve for cars, which of the following do we keep constant?

wages, the price of cars, and consumer expectations

the price of cars, technology, and wages

technology, wages, and expected profit

wages, taxes, and consumer expectations

10.

1 point

When we say that there has been a decrease in the demand for beef we mean that:

the price of beef has decreased

the price of beef has increased

the demand curve for beef has shifted to the left

the demand curve for beef has shifted to the right

11.

1 point

The following program in an example of price ceiling:

agricultural price support

rent control

guaranteed annual income

pollution-control legislation

12.

1 point

If the quantity supplied of a product remains the same regardless of the price, the supply is:

perfectly inelastic

relatively inelastic

relatively elastic

perfectly elastic

13.

1 point

Adam Smith believed that:

government should regulate third-party effects

incomes should be distributed more equitably in our economy

the free market system promotes the welfare of everyone

market imperfections such as a lack of information should be corrected by government

14.

1 point

When comparing the economic systems of Canada to those of the United States, it can be seen that:

the free market system is more predominant in Canada

the free market system is more predominant in the United States

Canada is a mixed economy and the United States is not

the United States is a mixed economy and Canada is not

15.

1 point

Theories developed by economists:

are not the result of laboratory research and are therefor useless

are never applicable to real-world situtations

are only applicable to real-world situations when certain conditions exist

need 100 percent backing from fellow economists before being included in economics

16.

1 point

The command approach is based on:

individual and centralized decision makers

public resource ownership and centralized decision makers

private resource ownership and individual decision makers

public and private resources ownership

17.

1 point

Which of the following will lead to an increase in investment spending?

negative GDP forecasts

the introduction of rent controls

an increase in the interest rate

the introduction of word-processing equipment

18.

1 point

If you pay $1000 tax on $10 000 income and $2000 tax on $20 000 income, the tax structure is described as:

proportional

marginal

regressive

progressive

19.

1 point

If a country is operating at a point on its production-possibilities curve, more of one good can be produced only if less of another good is produced because:

of the law of diminishing returns

the resources used to produce each good are not identical

resources are available only in limited amounts

most resources are specialized and can only be used to produce certain goods

20.

1 point

The introduction of labour-saving machinery in the production of automobiles will:

decrease the price of automobiles and decrease the quantity sold

increase the price of automobiles but reduce the quantity sold

increase the price of automobiles and quantity sold

decrease the price of automobiles and increase the quantity sold

21.

1 point

Personal disposable income is equal to:

personal consumption plus savings

consumption plus personal income taxes

net domestic income minus personal income taxes

gross investment minus savings

22.

1 point

When aggregate supply is greater then aggregate demand:

inventories are depleted and the price level will tend to rise

inventories are depleted and the price level will tend to fall

inventories accumulate and the price level will tend to rise

inventories accumulate and the price level will tend to fall

23.

1 point

Assume that a country can only produce two products: corn and spears. A technological advance in spear production will:

will not influence the production of spears or corn unless there is an accompanying increase in resources

permit only the production of more spears

permit the production of more spears but less corn

permit the production of both more spears and more corn

24.

1 point

Demand and supply concepts can be used to explain prices:

only in government-regulated industries

only in product markets, such as cars and house

in all markets

in labour and product markets, but not in money markets

25.

1 point

If the demand for a product and the supply of a product both increase:

the quantity exchanged will increase but the price could either increase or decrease

the price will decrease and the quantity exchanged will increase

the price will increase and the quantity exchanged will decrease

both the price and the quantity exchanged will increase

26.

1 point

If the market price for a product is above equilibrium price:

the demand will increase and the supply will decrease

the quantity demanded will increase and the quantity supplied will decrease

the quantity demanded will decrease and the quantity supplied will increase

the demand will decrease and the supply will increase

27.

1 point

In 2006, Canada's population was approximately:

10 tril

30 mil

20 mil

40 mil

28.

1 point

The term equilibrium in market analysis means:

a situation in which there is no tendency for the price or quantity to change

the quantity buyers are willing to purchase

the quantity that suppliers will supply to the market at a specific price

the government-established price for a product

29.

1 point

What impact will a $25 million decrease in taxes have on a GDP? (If MPC = 0.75)

decrease GDP by $75 million

decrease GDP by $100 million

increase GDP by $100 million

increase GDP by $75 million

30.

1 point

Which of the following economic concepts is not represented by a production-possibilities curve?

direct costs

scarcity

opportunity costs

law of diminishing returns

31.

1 point

The free market may not provide such services as sidewalks and lighthouse because:

governments prohibit the free market from operating in these areas

governments have already provided the service

there is no market for these services

it is difficult to charge the users of the service

32.

1 point

Which of the following statements regarding the responsibility for taxation in Canada is true?

only the provincial governments can levy indirect taxes

only the provincial governments can levy direct taxes

both the federal government and the provincial government can levy indirect taxes

only the federal government can levy indirect taxes

33.

1 point

Equalization payments:

are made under Established Program Financing

ensure that provincial revenues do not decline substantially from year to year

are paid by the federal government to all provinces

are a recognition that provinces vary in their ability to collect taxes

34.

1 point

Suppose a price ceiling is placed on apartment rent above the equilibrium price. The likely result will be:

an increase in the demand for apartments

a higher equilibrium rent for apartments

a lower equilibrium rent for apartments

a decrease in the demand for apartments

35.

1 point

Unmet public needs are not provided by the free market because:

government regulation prohibits the private sector from providing these services

private companies do not believe them to be necessary services

only the rich can afford them

if provided for one person, others can benefit from them as well

36.

1 point

The science of economics is primarily concerned with:

how individuals make a living

how a country provides for its citizens

how a country decides to use it available resources

how a company manufactures a product and distributes it to customers