Lecture 2 Flashcards
The Canadian exchange rate is defined to be the
A) system of quotas imposed on the international exchange of goods.
B) number of Canadian dollars needed to buy one unit of foreign currency.
C) term for foreign currencies or claims on foreign currencies.
D) number of ounces of gold it takes to buy one hundred Canadian dollars.
E) value of one Canadian dollar in terms of foreign currencies.
B) number of Canadian dollars needed to buy one unit of foreign currency.
If the cyclical unemployment rate is negative, then the
A) economy is operating at less than full employment.
B) real-wage unemployment rate is negative.
C) economy is operating beyond full employment.
D) frictional unemployment rate is greater than the structural unemployment rate.
E) frictional unemployment rate is negative.
C) economy is operating beyond full employment.
Which of the following is the best example of frictional unemployment?
A) Bank tellers are unable to find jobs due to technological advances in the banking system.
B) A worker quits her current job to search for a better one.
C) An ironworker cannot find a job in Ottawa because all job vacancies are in Alberta.
D) A worker is laid off because his firm has to reduce production due to reduced demand.
E) Inflationary pressures have led to higher wages for all jobs.
B) A worker quits her current job to search for a better one.
If nominal national income increased by 20% over a certain period of time while real national income increased by 10%, then
A) the price level has declined by about 10%.
B) the labour force increased by 10%.
C) everybody in the economy became worse off.
D) inflation has decreased during this time period.
E) the price level has increased by approximately 10%.
E) the price level has increased by approximately 10%.
Consider a small economy with 3 individuals. Individual A produces 100 chickens that sell for $8 each. Individual B produces 50 bags of corn that sell for $10 each. Individual C produces 40 bushels of apples that sell for $20 each. National product in this economy is
A) $2470.
B) $2100.
C) 100 chickens plus 50 bags of corn plus 40 bushels of apples.
D) 190 units of goods produced.
E) Not determinable from the information provided.
B) $2100.
A change in the Consumer Price Index measures
A) a change in a broad average price over some particular time span.
B) the change in gross domestic product.
C) a change in a specific absolute price.
D) a change in relative prices.
E) a change in quantities of commodities sold.
A) a change in a broad average price over some particular time span.
An output gap with Y < Y*
A) represents a loss of output due to unemployed resources.
B) occurs when there is excess demand.
C) tends to force prices up.
D) is known as an inflationary boom.
E) is desirable because it keeps wage costs low.
A) represents a loss of output due to unemployed resources.
It is important for policy makers to recognize that most macroeconomic variables are characterized by
A) short-run fluctuations that need to be smoothed for a well-functioning economy.
B) long-run trends and short-run fluctuations.
C) long-run economic growth.
D) gradual increases over long periods of time.
E) the impacts of the business cycle.
B) long-run trends and short-run fluctuations.
Economic theory argues that there will be fewer real effects from inflation as long as the
A) inflation is fully anticipated and no one changes their behaviour.
B) anticipated rate of inflation is more than the actual rate of inflation.
C) whole private sector is unaware that it is happening.
D) actual rate of inflation is less than 5%.
E) anticipated rate of inflation is less than the actual rate of inflation.
A) inflation is fully anticipated and no one changes their behaviour.
Suppose an employer and its employees enter into a wage contract specifying a wage increase of 2%. But suppose that the price level rises by 3% over the course of the contract. In this case,
A) the employees’ purchasing power will rise.
B) the employer will experience a greater fall in purchasing power than would have occurred if the price level had held steady.
C) the employees’ purchasing power will fall.
D) both employer and employees will benefit from increased purchasing power.
E) both employer and employees will experience a loss of purchasing power.
C) the employees’ purchasing power will fall.
If the price index is P1 in one year and P2 in the next year, the inflation rate from one year to the next is calculated as
A) (P2/P1) × 100. B) [(P1 - P2)/P2] × 100. C) (P2 - P1) × 100. D) (P1/P2) × 100. E) [(P2 - P1)/P1] × 100.
E) [(P2 - P1)/P1] × 100.
Suppose that in 2016 Canada’s automobile manufacturers produced 2 million cars priced at $20 000 each. And in 2017 they produced 1 million cars priced at $40 000 each. Ceteris paribus, the change in nominal national income is
A) no change in nominal national income.
B) insufficient information to know.
C) a decrease because fewer cars were produced.
D) an increase because the price of each car increased.
E) an increase because of inflation.
A) no change in nominal national income.
If the Consumer Price Index changes from 120 in year one to 122 in year two, the rate of inflation in the intervening year is
A) 2.0%. B) 22%. C) 1.67%. D) 20%. E) 0%.
C) 1.67%
In some macroeconomic analyses, it is common to treat the level of productivity as roughly constant. This is a justifiable assumption in
A) the long run.
B) the short run.
C) both the long run and the short run.
D) macroeconomics but not microeconomics.
E) neither the long run nor the short run.
B) the short run.
Refer to Table 19-1.
In the year 2012, it is probably the case that workers are ________ and factories are ________.
A) working longer than normal hours; operating beyond their normal capacity
B) experiencing zero unemployment; operating beyond their normal capacity
C) experiencing zero unemployment; operating extra shifts
D) working longer than normal hours; facing temporary shutdowns
E) facing cyclical unemployment; facing temporary shut downs
A) working longer than normal hours; operating beyond their normal capacity
