Mega Deck Flashcards
B
Other things being equal, a rise in the domestic price level
B
Other things being equal, a fall in the domestic price level
D
Other things being equal, an exogenous rise in the domestic
B
Other things being equal, when the domestic price level fall
A
Other things being equal, when the domestic price level rise
B
Consider a simple macro model with a given price level and d
C
Other things being equal, when the price level rises, the re
B
An exogenous fall in the domestic price level causes an incr
D
Consider a simple macro-model with demand-determined output.
C
Consider a simple macro model with demand-determined output.
E
Consider a simple macro model with demand-determined output.
A
Suppose there is an exogenous increase in the domestic price
A
Other things being equal, a rise in the price level will imp
C
Other things being equal, an exogenous increase in the price
E
Which of the following events would cause the AE function to
A
Other things being equal, as the price level rises exogenous
D
Other things being equal, as the price level falls exogenous
C
The AD curve relates the price level to which of the followi
B
All points on an economys AD curveA) correspond to a partic
D
In a macro model with a constant price level, an increase in
E
In a macro model with a constant price level, an increase in
A
On a graph that shows the derivation of the AD curve, an exo
A
Which of the following would likely cause an upward parallel
E
Which of the following would likely cause a downward shift i
B
Which of the following would likely cause a downward paralle
B
Refer to Figure 23-1. Assume the economy is initially in equ
D
Refer to Figure 23-1. Assume the economy is initially in equ
C
Refer to Figure 23-1. Assume the economy is initially in equ
E
Refer to Figure 23-1. Assume the economy is initially in equ
A
Refer to Figure 23-1. Assume the economy is initially in equ
D
Refer to Figure 23-1. Assume the economy is initially in equ
A
Refer to Figure 23-1. Assume the economy is initially in equ
C
Refer to Figure 23-1. Assume the economy is initially in equ
D
Consider a simple macro model with a given price level and d
B
Consider the relationship between the AE curve and the AD cu
A
Consider the relationship between the AE curve and the AD cu
A
A leftward shift of the aggregate demand (AD) curve could re
E
A leftward shift in the aggregate demand (AD) curve could re
D
A leftward shift of the aggregate demand (AD) curve could re
B
A rightward shift in the aggregate demand (AD) curve could r
C
Consider the basic AD/AS macro model. The simple multiplier
C
Consider the basic AD/AS model in the short run. When there
B
One of the reasons why the aggregate demand (AD) curve slope
B
One of the reasons why the aggregate demand (AD) curve slope
A
The AD curve shows the relationship betweenA) the price leve
B
Consider the relationship between the AE curve and the AD cu
B
Consider the relationship between the AE curve and the AD cu
D
Consider the AD/AS model. Suppose there is an increase in au
A
Other things being equal, a higher marginal propensity to sp
B
Other things being equal, a closed economy will have a _____
A
Other things being equal, an economy with a higher net tax r
A
Consider two economies, A and B. Economy A has a marginal pr
B
Consider two economies, A and B. Economy A has a marginal pr
C
Consider two economies, A and B. Economy A has a marginal pr
B
Consider two economies, A and B. Economy A has a marginal pr
D
Consider two economies, A and B. Economy A has a marginal pr
D
Consider the simple multiplier when the price level is const
E
Aggregate supply refers to theA) decisions of firms to decre
D
The economys aggregate supply (AS) curve shows the relation
C
The economys aggregate supply (AS) curve shows the relation
C
The aggregate supply (AS) curve is drawn with which variable
A
The aggregate supply curve relates the price level to the qu
B
In the short run, the aggregate supply curve has a positive
E
In building a macro model with an AS curve, it is assumed th
C
The economys aggregate supply (AS) curve is assumed to slop
D
The economys aggregate supply curve is drawn under two main
A
A decrease in aggregate supply in the short run is A) shown
C
A decrease in aggregate supply in the short run isA) reflect
D
Consider the basic AD/AS model. If there is a decrease in th
D
Consider the basic AD/AS model. If major labour unions succe
C
A movement along the economys AS curve could be caused by a
E
The economys AS curve will shift upward in the short run if
A
Other things being equal, the economys AS curve will shift
B
Other things being equal, the economys AS curve will shift
B
A rightward shift in the economys AS curve implies thatA) a
A
A leftward shift in the economys AS curve implies thatA) at
C
The economys AS curve is often assumed to be relatively fla
C
Consider the economys aggregate supply curve. Other things
E
Consider the economys aggregate supply curve. Other things
B
Consider the basic AD/AS model. When wage rates rise faster
D
Suppose there is a drop in the price of an important factor
C
Consider the basic AD/AS model. Suppose that a rising percen
B
Consider the basic AD/AS model. Suppose that high-school gra
E
Consider the basic AD/AS model. If their unit costs rise as
D
The aggregate supply curve will shift as a result of a chang
C
The aggregate supply curve tends to be relatively steep when
C
The aggregate supply curve is usually assumed to get progres
D
Consider the basic AD/AS model. If firms unit costs remaine
C
The concept of demand-determined output requires ________
B
Refer to Figure 23-2. Which of the following events could ca
E
Refer to Figure 23-2. Which of the following events could ca
C
Refer to Figure 23-2. The shift from to shown in the dia
C
Macroeconomic equilibrium is described as the combination of
B
Consider the nature of macroeconomic equilibrium. If, at a p
B
Consider the nature of macroeconomic equilibrium. If, at a p
A
If the AS curve is vertical and there is a decrease in aggre
B
Consider the AD/AS model. An increase in government purchase
D
Consider the basic AD/AS model. Real GDP is demand determine
B
Over the horizontal range of the economys AS curve (assumin
E
If the economys AS curve is upward sloping, a negative shoc
E
Which of the following will cause a negative aggregate deman
C
Refer to Figure 23-3. Which of the following statements best
D
Refer to Figure 23-3. Which of the following statements best
C
Refer to Figure 23-3. Suppose the price level in Economy A i
C
Aggregate demand shocks have a large effect on real GDP and
C
If the economys AS curve is upward sloping, a positive aggr
B
Consider the basic AD/AS model with an upward-sloping AS cur
C
) If the economys AS curve is very steep and there is a neg
B
Consider the basic AD/AS model. Suppose firms are currently
A
Suppose firms are currently producing output at a level beyo
E
In the basic AD/AS model, the effect of an aggregate demand
A
Which of the following would cause a positive aggregate dema
C
If the economy is in macroeconomic equilibrium with a vertic
E
If the economy is in macroeconomic equilibrium with a vertic
A
Aggregate demand (AD) shocks have a smaller effect on real G
D
Which of the following represents a positive aggregate suppl
D
Which of the following will cause a positive aggregate suppl
D
Aggregate supply shocks cause the price level and real GDP t
E
Consider the basic AD/AS macro model. A rise in an input pri
B
Consider the basic AD/AS model. A rise in an input price lik
D
Consider the AD/AS macro model. Suppose there is an increase
E
Consider the AD/AS model. Suppose there is a decrease in agg
E
Consider the following news headline: World commodity price
B
Consider the following news headline: Governments plan mass
D
Consider the following news headline: Information technolog
A
Consider the following news headline: Threat of widespread
E
Consider the following two headlines appearing in the same d
C
Suppose the economy is hit by a shock and we observe that th
E
Refer to Figure 23-4. Suppose the Canadian economy is initia
B
If the economys AS curve is completely horizontal, the mult
D
When the economys AS curve is positively sloped, the multip
D
If the economys AS curve is vertical, the multiplier in the
A
Suppose the government embarks on an infrastructure program,
B
Consider the AD/AS model in which the price level varies. In
C
Refer to Figure 23-5. Suppose that an increase in government
B
Refer to Figure 23-5. Suppose that an increase in government
A
Refer to Figure 23-5. Suppose that an increase in government
D
Refer to Figure 23-5. Suppose that an increase in autonomous
C
Refer to Figure 23-5. Suppose that an increase in autonomous
B
Refer to Figure 23-5. Suppose that an increase in autonomous
E
49) Refer to Figure 23-3. Which of the two economies, A or B
B
Refer to Figure 23-3. Which of the following statements corr
C
Which of the following are the defining assumptions of the s
D
Which of the following are the defining assumptions of the l
D
In macroeconomic analysis, the assumption that potential out
D
Which of the following is a defining assumption of the AD/AS
D
In the basic AD/AS model, which of the following is a defini
E
Which of the following is a defining assumption of the AD/AS
D
When we study the adjustment process in macroeconomics, what
C
When we study the adjustment process in macroeconomics, we a
A
The economys output gap is defined as theA) difference betw
A
Which of the following best describes the concept of potenti
A
An inflationary output gap occurs whenA) actual GDP exceeds
C
An inflationary output gap implies thatA) the demand for all
A
A recessionary output gap implies that A) the demand for all
B
An inflationary output gap would generate which of the follo
D
An inflationary output gap is characterized byA) falling pri
E
A recessionary output gap is characterized byA) rising price
D
Which of the following will occur as part of the automatic a
E
Which of the following would occur as part of the automatic
B
If the short-run macroeconomic equilibrium occurs with real
C
If the short-run macroeconomic equilibrium occurs with real
C
If wages rise faster than increases in labour productivity,
A
A common assumption among macroeconomists is that when real
B
A common assumption among macroeconomists is that when real
C
If the economy is experiencing an inflationary output gap, t
D
If an economy is experiencing neither a recessionary gap nor
A
Refer to Figure 24-1. If the economy is currently in a short
A
Refer to Figure 24-1. If the economy is currently producing
B
Refer to Figure 24-1. If the economy is currently producing
D
Refer to Figure 24-2. If the economy is currently in a short
A
Refer to Figure 24-2. Suppose the economy is in equilibrium
C
The Phillips curve describes the relationship betweenA) aggr
D
The Phillips curve provides a theoretical link betweenA) the
C
Which of the following describes the distinction between the
C
If the economy in the short run is experiencing a recessiona
E
Which of the following statements about output gaps is true?
B
Consider the basic AD/AS diagram. The vertical line at Y* sh
A
As the macro economy adjusts from the short run to the long
B
Following any AD or AS shock, economists typically assume th
C
Refer to Table 24-1. Which of the economies is operating at
D
Refer to Table 24-1. Which of the economies are experiencing
C
Refer to Table 24-1. Which of the following statements best
C
Refer to Table 24-1. Consider Economy E. Which of the follow
D
Refer to Table 24-1. How is the adjustment asymmetry demonst
B
Refer to Table 24-1. Which of the following statements expla
A
Refer to Table 24-1. In which economy is there the most unus
D
Suppose the economy is initially in a long-run macroeconomic
C
Suppose that the economy is initially in a long-run macroeco
A
Suppose that the economy is initially in a long-run macroeco
B
Suppose that the economy is initially in a long-run macroeco
D
Suppose the following conditions are present in the economy:
C
Suppose the following conditions are present in the economy:
C
Consider the AD/AS macro model. An important asymmetry in th
E
Consider the AD/AS macro model. The wage-adjustment process
E
Consider the AD/AS macro model. An important asymmetry in th
B
An economy may not quickly and automatically eliminate a rec
C
An adjustment asymmetry in aggregate supply is A) the conc
C
Consider the AD/AS macro model. A permanent demand shock tha
C
Consider an AD/AS model in long-run equilibrium. An output g
C
Consider an economy with a relatively steep AS curve. If the
E
Consider an economy with a relatively steep AS curve. If the
C
Suppose Canadas economy is in a long-run equilibrium with r
A
Suppose Canadas economy is in a long-run equilibrium with r
E
Consider the basic AD/AS macro model in long-run equilibrium
A
Consider the basic AD/AS macro model in long-run equilibrium
C
Consider the basic AD/AS macro model in long-run equilibrium
E
Suppose Canadas economy is in a long-run equilibrium with r
D
Suppose Canadas economy is in a long-run equilibrium with r
A
Refer to Figure 24-3. A negative shock to the economy shifts
A
Refer to Figure 24-3. A negative shock to the economy shifts
D
Refer to Figure 24-3. Which of the following events could ha
B
Refer to Figure 24-3. After the negative aggregate demand sh
B
Refer to Figure 24-3. Following the negative AD shock shown
C
Consider the AD/AS model, and suppose that the economy begin
A
Consider the AD/AS model and suppose the economy begins at p
A
What is meant by the term stagflation?A) the combination o
D
In the basic AD/AS macro model, which of the following event
D
In the basic AD/AS macro model, which of the following event
C
Consider the basic AD/AS macro model in long-run equilibrium
C
Refer to Figure 24-4. The initial effect of the positive AS
D
Refer to Figure 24-4. The positive aggregate supply shock sh
E
Refer to Figure 24-4. After the positive aggregate supply sh
E
Refer to Figure 24-4. Following the positive AS shock shown
C
Consider the basic AD/AS macro model, initially in a long-ru
E
The curve that is sometimes called the long-run aggregate s
A
What economists sometimes call the long-run aggregate suppl
B
What is sometimes called the long-run aggregate supply curv
C
The long-run aggregate supply curve, vertical at Y*, shows
D
Consider the AD/AS model. In the long run, after factor pric
A
Consider the AD/AS model. Since output in the long run is de
D
Consider the AD/AS model after factor prices have fully adju
D
Consider the AD/AS model after factor prices have fully adju
C
Refer to Figure 24-5. The economy is not in long-run equilib
E
Refer to Figure 24-5. Following a positive demand shock that
C
Refer to Figure 24-5. If the economy is currently in equilib
B
Consider the AD/AS macro model. The study of short-run cycli
C
In the long run in the AD/AS macro model we can say thatA) b
C
Suppose the economy begins in a long-run equilibrium with Y
D
Consider the AD/AS macro model. The main source of increases
A
In the basic AD/AS macro model, permanent increases in real
C
The study of the long run in macroeconomics focuses A) on ch
C
When an economy experiences sustained growth in real GDP,A)
A
Which of the following provides the best explanation for why
E
Refer to Figure 24-1. If the economy is currently producing
D
Refer to Figure 24-1. Suppose the economy is currently in a
B
Refer to Figure 24-2. Suppose the economy is in a short-run
A
Refer to Figure 24-2. Suppose the economy is in a short-run
E
Refer to Figure 24-2. Suppose the economy is in a short-run
D
One advantage of using expansionary fiscal policy rather tha
D
Consider the basic AD/AS model, and suppose there is a negat
A
Consider the basic AD/AS model, and suppose there is a negat
E
Suppose the economy has a high level of unemployment and a l
D
) Refer to Figure 24-6. If the government takes no action to
B
Refer to Figure 24-6. The government could close the existin
D
Consider Figure 24-7. At the initial short-run equilibrium,
C
Refer to Figure 24-7. If the government takes no action to c
A
Refer to Figure 24-7. The government could close the existin
A
Suppose the economy is experiencing an inflationary gap in t
D
As a global recession began in late 2008, the governments of
B
Consider the global recession that began in late 2008. In te
A
Income taxes in Canada can be considered to be automatic sta
D
An important automatic fiscal stabilizer in Canada is A) the
E
Automatic fiscal stabilizers are most helpful inA) making di
C
Automatic fiscal stabilization in the economy refers toA) t
D
Net tax revenues that rise with national income act as an au
E
Consider the simplest macro model with demand-determined out
C
Consider a simple macro model with demand-determined output.
E
Consider a simple macro model with demand-determined output.
C
Automatic fiscal stabilizers ________ the impact of demand o
E
Suppose the government implements a permanent reduction in t
C
The paradox of thrift refers to the understandable tendenc
B
In the long run, aggregate demand is ________ for determinin
D
The paradox of thrift does not exist in the long run because
B
In the basic AD/AS macro model, the paradox of thrift is o
E
Many economists think discretionary fiscal policy is of limi
B
Given current limitations, fiscal policy as a macroeconomic
D
Suppose the economy is experiencing a significant recessiona
A
Which of the following statements about fiscal policy is the
B
Which of the following statements about fiscal policy is the
E
Suppose the government had made a decision to change fiscal
E
An expansionary fiscal policy that takes the form of an incr
A
Suppose the economy is in macroeconomic equilibrium with rea
E
In any decision about stimulating the economy with a fiscal
C
The growth rate of potential output might be decreased by an
B
A reduction in the net tax rate might lead to an increase in
C
The use of government purchases (G) as a fiscal policy tool
D
In our macro model, the level of aggregate output is determi
E
Fiscal policies typically affect the short-run level of GDP
D
Over a long period of time, perhaps many years, changes in r
D
Between the years 1960 and 2014, the Canadian economy experi
C
In the long run, changes in average material living standard
B
The compounding of economic growth rates means thatA) a larg
A
If per capita GDP in a richer country grows at a faster annu
C
If GDP in a richer country grows at the same annual rate as
D
A common measure of a countrys level of productivity is A)
D
A common measure of a countrys rate of economic growth is A
A
Over the long term, by far the most potent force for raising
D
If real income grows at approximately 2% per year, the numbe
C
If real income grows at approximately 4% per year, the numbe
C
Of the variables listed below, the best measure of a nation
E
The theory of economic growth concentrates on the ________ o
A
Which of the following is the best example of the acquisitio
D
The four major determinants of economic growth include all o
C
Refer to Table 25-1. If this economy is growing at an annual
D
Refer to Table 25-1. If this economy is growing at an annual
C
Refer to Table 25-1. What is real GDP in this economy in Yea
A
Refer to Table 25-1. What is real GDP in this economy in Yea
E
Refer to Figure 25-1. Which of the following statements best
C
Refer to Figure 25-1. Which of the following statements abou
D
Refer to Figure 25-1. The area marked Area 1 representsA) th
B
Refer to Figure 25-1. Suppose Economy A jumps to the path of
A
Refer to Figure 25-1. Which of the following costs of econom
A
If a country transfers resources from the production of cons
C
One of the benefits of long-run economic growth is A) growth
B
The costs of long-run economic growth include: 1) declining
B
For a given level of technology, a more rapid rate of econom
D
The costs of economic growth include A) declining future liv
B
Long-run economic growth can help alleviate the problems of
C
Long-term economic growthA) is achieved only by changes in f
A
Consuming fewer goods today in order to invest resources in
D
Alleviation of poverty is more achievable in a growing econo
E
An important social cost of economic growth is A) the increa
D
Economic growth is often associated with structural change i
B
Consider the long-run theory of investment, saving and growt
B
If government policies are to be successful in enhancing a c
B
Consider a closed economy with real GDP in the long run of $
A
Which of the following equations is a correct expression for
D
Refer to Table 25-2. What is the level of private saving for
B
Refer to Table 25-2. What is the level of public saving for
E
Refer to Table 25-2. What is the level of national saving fo
C
Refer to Table 25-3. What is the level of private saving for
A
Refer to Table 25-3. What is the level of public saving for
E
Refer to Table 25-3. What is the level of national saving fo
D
Refer to Table 25-3. What is the level of combined budget su
D
Suppose the government has a budget deficit of $400. If the
E
Suppose the government has a budget surplus of $2 billion. I
A
Consider the long-run theory of investment, saving, and grow
E
For a given level of national income, an increase in private
B
An increase in the government budget surplus, everything els
E
Consider a closed economy in the long run. A country with a
B
Consider the market for financial capital for a closed econo
E
Which of the following statements concerning national saving
A
For a given level of national income, a decrease in governme
D
Consider the long-run theory of investment, saving, and grow
E
Consider the long-run theory of investment, saving and growt
D
Consider the market for financial capital in the long run. T
B
Consider the market for financial capital in the long run. T
C
Refer to Figure 25-2. Suppose national saving is reflected b
A
Refer to Figure 25-2. Suppose national saving is reflected b
B
Refer to Figure 25-2. Suppose national saving is reflected b
A
Refer to Figure 25-2. Suppose national saving is reflected b
E
Refer to Figure 25-2. Suppose national saving is reflected b
C
Refer to Figure 25-2. Suppose national saving is reflected b
D
Refer to Figure 25-3. Suppose the interest rate in this mark
C
Refer to Figure 25-3. The equilibrium interest rate in this
A
Refer to Figure 25-3. Suppose the interest rate in this mark
D
) In the long run, an increase in the demand for investment
C
Data from most industrialized countries show that countries
C
Consider the Neoclassical growth model. The effect of an inc
C
One important assumption of the Neoclassical growth model is
B
The main properties of a Neoclassical aggregate production f
B
The Neoclassical growth model assumes that, with a given sta
B
The Neoclassical growth model assumes that, with a given sta
C
A central assumption of the Neoclassical growth model is tha
C
In the Neoclassical growth model, whenever diminishing retur
B
In the Neoclassical growth model, decreases in the populatio
D
In the Neoclassical growth model, increases in the stock of
B
In the Neoclassical growth model, if capital and labour grow
C
According to the Neoclassical growth model, it is most likel
C
In Neoclassical growth theory, an increase in the labour for
B
In Neoclassical growth theory, average material living stand
A
In Neoclassical growth theory, increasing the amount of capi
E
The Neoclassical theory of economic growth led economics to
C
In the Neoclassical growth model, the law of diminishing mar
C
According to the Neoclassical growth model, which of the fol
C
According to the Neoclassical growth model, which of the fol
C
Real GDP is not a good measure of average material living st
B
Balanced growth of labour and capital in the Neoclassical gr
E
According to the Neoclassical growth theory, sustained risin
D
The aggregate production function shows the ________ for giv
A
Neoclassical growth theory is based on the assumption of ___
C
An aggregate production function exhibits constant returns t
E
An aggregate production function exhibits increasing returns
B
Consider the aggregate production function Y = F(K, L). If t
C
Consider the aggregate production function Y = F(K, L). If t
A
Consider an aggregate production function Y = F(K, L) that d
E
Refer to Table 25-4. The production function that applies to
A
Refer to Table 25-4. Diminishing marginal returns to labour
B
Refer to Table 25-4. Consider the changes shown for L, K, an
C
Refer to Table 25-4. Consider the changes shown for L, K, an
B
Refer to Table 25-4. Consider the changes shown for L, K, an
A
Embodied technical change is said to occur when A) older c
C
Consider the Neoclassical growth model. Sustained economic g
D
When a new personal computer is purchased to replace an old
C
If a country experiences growth in total factor productivit
C
The growth of total factor productivity, or the Solow res
E
An example of embodied technical change is A) education th
E
The Solow residual is an estimate of changes inA) economic g
E
Modern or new theories of long-run economic growth are bas
B
The new theories of economic growth emphasize that the pac
B
According to the new theories of economic growth, increasi
E
New theories of economic growth based on the idea that growt
C
With respect to long-run economic growth, one rationale for
B
According to some modern theories of long-run economic growt
E
In new theories of endogenous growth, increasing marginal
E
Compared to Neoclassical growth theory, newer endogenous gr
B
Consider the newer theories of economic growth. Given the ra
B
Modern growth theories are more optimistic than Neoclassical
B
Which of the following statements is true of new growth theo
D
One reason that investment in innovation is often considered
D
Consider the competing products made by Apple (iPhone) and S
C
Consider the significant costs to the innovators and develop
A
Suppose that most of the worlds population would like to ac
D
In 1950, when the worlds population was 2.5 billion, it was
B
In the early 1970s, a group called the Club of Rome publis
A
Economic growth allows increasing numbers of people around t
D
The function of money in an economy is to serve as 1) a unit
A
Money is commonly defined asA) a generally accepted medium o
E
In order to be considered money, paper currency must beA)
B
Doug is saving money in order to purchase a new snowboard ne
B
Other things being equal, a rise in the price level willA) i
B
Other things being equal, the purchasing power of money isA)
C
When you are estimating your monthly income and expenses, mo
C
Doug compares the unit price of chocolate bars in order to g
E
The major advantage of using money rather than barter is tha
D
The biggest disadvantage of a barter system compared to one
D
Which of the following is an example of the use of money as
A
If a majority of Canadian households and businesses refused
E
In order for money to be successfully used as a medium of ex
D
The use of money in an economy does which of the following?A
C
When metal coins, such as gold and silver, were used as mone
B
Historically, when gold and silver coins were used as money,
C
Greshams law predicts thatA) good money drives out bad mone
E
Which of the following is consistent with the predictions of
B
Which of the following was the most important initial step i
D
Suppose an economy has two types of money - gold and silver
A
What do we mean in our current banking system when we say th
C
The major problem of a currency that is fractionally backed
A
Most Canadians accept Canadian dollars in payment for goods
E
Fiat money has value because itA) can be manufactured at wil
D
For a country to be on a gold standard, it mustA) use gold
B
If most individuals accept paper currency in transactions, a
E
The currency that is in circulation in Canada today isA) ful
A
Which of the following illustrates the use of fiat money?A)
B
Debit cards that are issued by commercial banks can be chara
D
In recent years, the use of debit cards issued by commercial
E
Which of the following statements about deposit money is tru
C
The largest element of the Canadian money supply today isA)
B
The functions of the Bank of Canada includeA) acting as the
D
Basic functions of the Bank of Canada include1) acting as le
A
The largest component of the assets of the Bank of Canada is
C
The largest component of the liabilities of the Bank of Cana
B
In the event of a sudden loss in confidence in the ability o
E
Suppose the rare event occurs that a major Canadian commerci
B
Which of the following statements best describes the relatio
D
Which of the following entries would appear on the liabiliti
B
Commercial banks in Canada are prohibited by law fromA) acce
C
The financial crisis that occurred in 2007 and 2008 highligh
B
An example of interbank activities in the Canadian banking
C
The Canada Deposit Insurance Corporation (CDIC) was set up t
B
Which of the following entries would appear on the liabiliti
A
Which of the following entries would appear on the assets si
E
Which of the following entries would appear on the liabiliti
D
Refer to Table 26-1. What are the total assets on the balanc
D
Refer to Table 26-1. What are the total liabilities on the b
A
A bank run is unlikely to occur in Canada today becauseA) if
B
What is a bank run? A) A situation where a commercial bank i
C
Why is the possibility of a bank run extremely small in Cana
A
Canadian commercial banks maintain their reserves in the for
E
A commercial banks actual reserve ratio is theA) fraction o
C
Excess reserves for a commercial bank refer toA) any surplu
D
Consider a new deposit of $10 000 to the Canadian banking sy
A
A commercial banks target reserve ratio is theA) fraction o
D
If all the commercial banks in the banking system collective
D
Which of the following statements about reserve ratios at Ca
C
Without a central bank, commercial banks in Canada would pro
D
Commercial banks hold a fraction of their deposits in cash i
B
The Canadian banking system is a A) gold-reserve system.B) f
C
Suppose a commercial bank has a level of target reserves of
B
Suppose a commercial bank has a target reserve ratio of 1%,
C
Suppose Bank ABC has a target reserve ratio of 10%. If Bank
D
Suppose Bank ABC has a target reserve ratio of 2%. If Bank A
D
Suppose the Canadian banking system jointly has $20 million
E
A central bank can create money byA) selling some of its f
B
Which of the following examples constitutes a new deposit to
D
Which of the following examples constitutes a new deposit to
C
Refer to Table 26-2. Assume that Bank North is operating wit
B
Refer to Table 26-2. What are the income-earning assets for
D
Refer to Table 26-2. If Bank North receives a new deposit of
C
Refer to Table 26-2. Assume that Bank North is operating at
B
Refer to Table 26-2. Assume that Bank North is operating at
C
Refer to Table 26-3. What are the reserves held by Bank Wes
D
Refer to Table 26-3. Assume that Bank West is operating wit
D
Refer to Table 26-3. If Bank West receives a new deposit of
B
Refer to Table 26-3. Assume that Bank West is operating at i
A
Refer to Table 26-3. Assume that Bank West is operating at i
B
Refer to Table 26-4. Bank XYZ is immediately in a position t
D
Refer to Table 26-4. If Bank XYZ increases its loans to the
C
Refer to Table 26-4. The maximum creation of new deposits by
A
Refer to Table 26-4. Suppose the public decides to hold 5% o
B
Refer to Table 26-4. Suppose the public decides to hold 15%
C
Refer to Table 26-5. Bank XYZ is immediately in a position t
B
Refer to Table 26-5. Assume that Bank XYZ has decreased its
A
Refer to Table 26-5. As a result of this withdrawal from the
E
Consider the creation of deposit money in the banking system
C
Suppose you found a $100 bill that was lost for many years u
D
Suppose you found a $100 bill that was lost for many years u
E
If all the banks in the banking system collectively have $20
E
If all the banks in the banking system collectively have $50
C
Assume that Bank ABC has a target reserve ratio of 10%. If B
D
Suppose the excess reserves in Toronto Dominion Bank increas
E
Suppose the excess reserves in Toronto Dominion Bank increas
D
A desire by ________ has no effect on the ability of the ban
C
Refer to Table 26-6. Assume that Northern Banks target rese
B
Refer to Table 26-6. Northern Bank extends credit to its cus
E
Refer to Table 26-6. Owners of Northern Bank contributed mon
B
Refer to Table 26-6. Assume that Northern Banks target rese
D
Refer to Table 26-6. Assume that Northern Banks target rese
A
Refer to Table 26-6. Northern Bank holds cash in its vault a
D
Consider a new deposit of $10 000 to the Canadian banking sy
C
Consider a new deposit of $10 000 to the Canadian banking sy
E
Consider a new deposit of $100 000 to the Canadian banking s
E
If the Bank of Canada enters the open market and purchases $
A
) If the Bank of Canada enters the open market and sells $10
B
If the Bank of Canada enters the open market and sells $1000
D
If the target reserve ratio in the banking system is 20%, th
D
If the target reserve ratio in the banking system is 10%, th
E
If the target reserve ratio in the banking system is 1%, the
B
Suppose Bank ABC has a target reserve ratio of 10%, no exces
D
The expansion of deposits resulting from an injection of new
A
Suppose that the cash drain in the banking system increases
B
When discussing the banking system, a cash drain of 5% means
B
In reality, the reserve ratio for Canadian commercial banks
B
The money supply in Canada is measured using M1, M2, M2+, an
A
Until recently, and for many years, the common definition of
B
As a measure of the Canadian money supply, M2+ is defined as
E
The main distinction between M2 and M2+ is that M2+ also inc
D
The concept of near money refers toA) money substitutes su
D
Credit cards are considered to be money substitutes instea
C
Which of the following is an example of near money?A) Scot
D
When you pay for your $74 purchase at the grocery store with
C
The M2 and M2+ definitions of the money supply concentrate o
A
The M2++ and M3 definitions of the money supply include fina
D
Developments in the financial industry in recent years have
D
Other things being equal, bond prices A) are unaffected by c
B
The present value of a financial asset is A) the most someon
D
The present value of a bond is determined by theA) face valu
A
If Robert expects interest rates to fall in the near future,
C
When Janet expects interest rates to rise in the near future
B
What is the present value of a bond that pays $121.00 one ye
E
When i is the annual interest rate, the formula for calculat
D
If the annual market rate of interest is 5%, an asset that p
B
If the annual interest rate is 8%, an asset that promises to
D
If the annual interest rate is 10%, $5.00 received today has
E
If the annual interest rate is 3%, $10 000 received today ha
A
Consider a bond with a face value of $10 000, a three-year t
A
In a competitive financial market, the equilibrium price of
E
Consider a bond that promises to make coupon payments of $10
E
Consider a bond that promises to make coupon payments of $10
A
When considering the present value of any financial asset th
E
Consider a Government of Canada bond with a face value of $1
C
Consider a Hydro Quebec bond with a face value of $1000, and
C
If the current market price of a bond is less than the prese
D
An analyst is considering the purchase of a Government of Ca
B
An analyst is considering the purchase of a Government of Ca
C
In order to calculate the present value of the sum of future
C
When the market price of a bond falls, ceteris paribus, then
B
Suppose the market interest rate rises from 3% to 4%. This w
C
Suppose the market interest rate falls from 3% to 2%. This w
D
Suppose the market interest rate is stable at 4% and we see
D
Suppose a Government of Canada bond is being offered in fina
C
Suppose a Government of Canada bond is being offered in fina
B
Consider two bonds, Bond A and Bond B, offered for sale in t
C
Consider two bonds, Bond A and Bond B, offered for sale in t
D
Consider two bonds, Bond A and Bond B, offered for sale in t
A
The term demand for money usually refers to theA) aggregat
A
The opportunity cost of holding money rather than bonds isA)
C
If a person is holding money for the purchase of goods and s
D
The transactions demand for money arises from the fact tha
D
The precautionary demand for money arises from theA) fear
C
Other things being equal, the transactions demand for money
C
Consider the demand for money. If real GDP falls, other thin
C
Suppose an economic analyst suggests that investors should n
B
A firm that holds cash to avoid penalties associated with th
E
Among other things, people hold cash balances for which of t
B
Speculative demand for money arises from the desire by indiv
E
In the basic AD/AS macro model, it is assumed that, for any
E
The demand for money (MD) function defines the relationship
A
Refer to Figure 27-1. A rightward shift of the money demand
D
Refer to Figure 27-1. A leftward shift in the money demand c
E
Refer to Figure 27-1. Given the money demand curve, , an in
D
Refer to Figure 27-1. Given the money demand curve, , a dec
A
If there are just two assets, bonds and money, then an exces
B
Assume there are just two assets, money and bonds. We can ex
D
According to the liquidity preference theory of the rate o
C
If the general price level were to increase, other things be
C
If the annual market interest rate is 20%, the annual opport
E
Suppose that at a given interest rate and money supply, all
D
Suppose that at a given interest rate and money supply, all
B
Consider the demand for money curve. As we move up and to th
E
Ceteris paribus, a rightward shift of the money demand curve
C
When there is an excess demand for money balances, monetary
B
Consider a money market in which there is an excess supply o
E
Consider a money market in which there is an excess demand f
D
When there is an excess supply of money, monetary equilibriu
B
Monetary equilibrium occurs when theA) growth in the money s
E
If the economy is currently in monetary equilibrium, an incr
E
Refer to Figure 27-2. Starting at equilibrium E0, an increas
B
Refer to Figure 27-2. Starting at equilibrium E0, an increas
D
Refer to Figure 27-2. If the interest rate is i2, the subseq
A
Refer to Figure 27-2. If the interest rate is i1, the subseq
A
Refer to Figure 27-2. Suppose the market interest rate is .
D
Refer to Figure 27-2. Suppose the market interest rate is .
E
When the price level increases, ceteris paribus, it causes h
C
If there are just two assets, bonds and money, then an equil
D
How does monetary equilibrium re-establish itself when there
A
The linkage between changes in monetary equilibrium and chan
D
Other things being equal, a reduction in the money supply wi
E
The economys investment demand function describes theA) pos
A
Refer to Figure 27-3. The increase in the money supply from
B
Refer to Figure 27-3. The increase in desired investment exp
E
Refer to Figure 27-3. Part (i) of the figure shows the money
A
The monetary transmission mechanism can be set in motion whe
C
The monetary transmission mechanism describes the process by
D
Which one of the following statements best describes the mon
B
Consider monetary equilibrium and the monetary transmission
C
An increase in the money supply sets the monetary transmissi
E
A decrease in the money supply sets the monetary transmissio
B
Consider the monetary transmission mechanism. A disturbance
B
Consider monetary equilibrium and the monetary transmission
C
Consider monetary equilibrium and the monetary transmission
B
A decrease in the money supply is most likely toA) raise int
A
If the Bank of Canada were to increase the money supply, oth
D
) If the Bank of Canada were to reduce the money supply, oth
C
If real GDP is greater than potential GDP, the output gap co
A
Which of the following explanations for the negative slope o
D
The monetary transmission mechanism in an OPEN economy is mo
C
Consider the monetary transmission mechanism in an open econ
A
Consider the monetary transmission mechanism in an open econ
B
Which of the following correctly describes the way in which
A
Changes in the money supply in an open economy, as compared
E
Which of the following phenomena add a second channel to the
C
Consider the monetary transmission mechanism. In an open eco
D
Consider the monetary transmission mechanism. In an open eco
B
Other things being equal, a decrease in the money supply wil
C
If the economy is experiencing an undesired inflationary gap
C
The monetary transmission mechanism provides a partial expla
B
Which of the following is partly responsible for the negativ
A
Refer to Figure 27-4. The economy begins in equilibrium at E
B
Refer to Figure 27-4. The economy begins in equilibrium at E
A
Refer to Figure 27-4. The economy begins in equilibrium at E
C
Refer to Figure 27-5. This economy begins in equilibrium wit
D
Refer to Figure 27-5. This economy begins in equilibrium wit
A
Refer to Figure 27-5. This economy begins in equilibrium wit
C
Refer to Figure 27-5. This economy begins in equilibrium wit
C
) Refer to Figure 27-6. The famous debate from the the 1950s
B
Refer to Figure 27-6. The famous debate from the 1950s and 1
D
The view of the Classical economists regarding the neutrali
C
Which of the following best represents the view of the Class
A
According to the views of the Classical economists, if the m
E
Classical economists belief in the neutrality of money le
D
Which of the following statements best describes the differe
C
The long-run neutrality of money implies thatA) changes to t
E
The hypothesis in economics known as hysteresis is thatA) th
D
Suppose changes in the money supply only affected the price
E
Refer to Figure 27-5. This economy begins in equilibrium wit
B
Refer to Figure 27-5. This economy begins in equilibrium wit
D
Refer to Figure 27-5. This economy begins in equilibrium wit
E
The proposition of long-run neutrality of money is supported
C
Other things being equal, the steeper the AS curve for the e
E
Other things being equal, the flatter the AS curve for the e
B
Consider the monetary transmission mechanism. Other things b
A
Consider the monetary transmission mechanism. Other things b
D
Consider the monetary transmission mechanism. If the Bank of
D
The effectiveness of monetary policy in bringing about chang
D
Monetary policy can have the largest impact on desired aggre
C
Monetary policy will be least effective in changing aggregat
C
Consider the monetary transmission mechanism. A relatively s
C
Any central bank, including the Bank of Canada, can implemen
A
In general, if a central bank chooses to target the money su
E
In general, if a central bank chooses to target the interest
D
Consider the implementation of monetary policy. One difficul
E
If the Bank of Canada chooses to expand M2 by exactly $1 mil
B
In practice, it is not possible for the Bank of Canada to co
C
Suppose the Bank of Canada were to implement an expansionary
E
One reason that the Bank of Canada does not try to influence
B
Most central banks, including the Bank of Canada, implement
E
The Bank of Canada chooses to influence interest rates direc
B
Refer to Figure 28-1. If the Bank of Canada raises the targe
B
Refer to Figure 28-1. If the Bank of Canada pursues a(n) ___
E
Refer to Figure 28-1. If the Bank of Canadas goal is to inc
D
Refer to Figure 28-1. The Bank of Canada must be able to eas
C
Refer to Figure 28-1. One advantage of implementing monetary
C
In practice, the Bank of Canada uses monetary policy to redu
B
What is the bank rate?A) The interest rate at which the Ba
B
Loans from the Bank of Canada areA) made only to the Canadia
A
To reduce short-term market interest rates, the Bank of Cana
B
The Bank of Canada determines the bank rate by setting it
B
To raise short-term market interest rates, the Bank of Canad
A
In practice, the Bank of Canada implements its monetary poli
E
The term structure of interest rates refers toA) the general
C
The interest rate that commercial banks charge each other fo
D
The interest rate that the Bank of Canada charges commercial
D
Suppose the Bank of Canada announces its target for the over
E
The Bank of Canada establishes a rate at which they will len
C
Suppose the Bank of Canada lowers its target for the overnig
B
Suppose the Bank of Canada lowers its target for the overnig
D
Suppose the actual overnight interest rate is 3.5%. If the B
A
Suppose the actual overnight interest rate is 4%. If the Ban
B
The overnight interest rate is crucial to the Bank of Canada
C
Suppose the Bank of Canada announces its target for the over
B
Suppose the Bank of Canadas announced target for the overni
C
How does the Bank of Canada communicate its target for the o
E
In Canada, open-market operations areA) government actions a
C
The Bank of Canadas purchases and sales of government secur
D
If the Bank of Canada chooses to expand the money supply dir
E
When the Bank of Canada enters the open market and buys or s
E
The Bank of Canada conducts its open-market operations direc
C
The amount of currency in circulation in the Canadian econom
A
Suppose the Bank of Canada reduces its target for the overni
D
Suppose the Bank of Canada increases its target for the over
D
An expansionary monetary policy by the Bank of Canada could
A
An expansionary monetary policy would ________ and would eve
D
Suppose the Canadian economy had an inflationary gap. To dec
E
Suppose the Canadian economy had a recessionary gap. To incr
B
The best description of the cause-and-effect chain of a cont
A
The best description of the cause-and-effect chain of an exp
C
To remove an inflationary gap, the Bank of Canada would prob
C
To remove a recessionary gap, the Bank of Canada would proba
D
If there were a large and persistent recessionary gap, an ap
D
Changes in monetary aggregates such as M2 and M2+ can be a p
A
If desired investment spending is relatively sensitive to ch
B
If we observe that the bank rate has increased, we can concl
D
If we observe that the bank rate has fallen, we can conclude
E
If we observe a small increase in the actual overnight inter
E
If we observe a small decrease in the actual overnight inter
E
If we observe that the actual rate of CPI inflation has fall
E
If we observe that the actual rate of CPI inflation has incr
E
If we observe that short-term market interest rates have fal
E
The monetary transmission mechanism describes how changes in
D
The Bank of Canada initially implements an expansionary mone
B
The Bank of Canada initially implements a contractionary mon
E
Suppose the economy is experiencing an inflationary gap. Whi
A
How does the Bank of Canada set in motion the monetary trans
C
When the Bank of Canada reduces the interest rate we call th
D
When the Bank of Canada increases the interest rate we call
B
Most central banks accept that, in the long run, monetary po
D
Many central banks have established formal targets for the r
E
High inflation is costly to firms and individuals. Of the fo
C
Which of the following describes the cause of a sustained in
C
Given its existing policy regime of inflation targeting, t
D
Given its existing policy regime of inflation targeting, t
E
The long-run target currently used by the Bank of Canada is
C
Consider the following statement about inflation targeting:
A
Because of the volatility of food and energy prices, the Ban
A
One problem with focusing on the CPI when conducting monetar
C
Most central banks in the developed countries focus their at
E
High and uncertain inflation is damaging to the economy beca
D
It is widely accepted by economists that monetary policy is
C
As of 2015, the Bank of Canadas policy objective is to main
D
The Bank of Canadas formal policy target is ________. Its
B
In an effort to maintain inflation at its targeted level the
B
An example of how inflation targeting by the Bank of Canada
B
In the short run the Bank of Canada aims to ________, in an
B
The economic variables that the Bank of Canada tries to infl
C
20) Inflation targetingA) is irrelevant to the stability of
C
Suppose output is at its potential level and then there is a
D
Inflation that is fully anticipated by workers, firms, and c
B
Which of the following goods are included in Canadas measur
B
Consider a central bank that chooses to implement its moneta
E
Most economists now accept the proposition thatA) an ideal m
D
Suppose Canadian real GDP is currently equal to potential GD
B
Suppose Canadian real GDP is currently equal to potential GD
E
Which of the following events would justify the Bank of Cana
E
Suppose Canadian real GDP is equal to potential GDP. An appr
C
Suppose Canadian real GDP is equal to potential GDP. A signi
C
Suppose Canadian real GDP is equal to potential GDP. A signi
B
Suppose Canadian real GDP is equal to potential GDP. A signi
D
Time lags in the conduct of monetary policy can causeA) mone
C
Economists at the Bank of Canada estimate that time lags in
C
If an economist supports targeting inflation as opposed to m
B
If the Bank of Canada were required to gain approval for all
B
It might take a while before the effects of changes in monet
E
Suppose the Bank of Canada is criticized for implementing a
A
In 1980, the annual inflation rate in Canada wasA) over 12%.
A
In the early 1980s, the Bank of Canada contracted the rate o
C
During a period of renewed inflation fears in 1988, the gove
A
During the period of economic recovery between 1983 and 1987
A
The decision by the Bank of Canada and many other central ba
A
In the early 1980s, when the Bank of Canada was focusing its
A
In 1994, Gordon Thiessen was appointed as the new governor o
E
What is the policy response by the Bank of Canada to an infl
C
In 2007 and 2008, Canada was affected by the global financia
B
In 2007 and 2008, Canada was affected by the global financia
E
In 2007 and 2008, Canada was affected by the global financia
A
In 2007 and 2008, Canada was affected by the global financia
B
During the financial crisis that began in 2008 the Bank of C
A.
f Canadian exports of goods and services were $36 billion,
B.
Consider the balance-of-payments accounting information for
E.
Suppose that a countrys private saving is $7 million, it
C.
Given the information presented in the table below (billion
A.
If Canada has a large persistent current account surplus, t
D.
Consider the balance-of-payments accounting information for
A.
A negative value for the line item Changes in official int
E.
When Canada has a balance of payments deficit, this means t
C.
If Canadian demand for French wine increases, the supply of
increase; decrease; E
When the Canadian dollar appreciates, the euro price of Can
E.
A Canadian traveling to the United States converts $100 Can
A.
Suppose that a laptop computer sells in China for 4070 yuan
fewer; fallen; 1.25; 1.25demand and supply; supply of; demand for; fall; appreciate; an increase; appreciate; an increase; a decrease; rise; depreciate
An appreciation of the Canadian dollar means that it takes ▼
D.
If German demand for Canadian lumber increases, the supply
flexible; fixed; supply of; purchase; demand for; sell
a. If the exchange rate is determined by the equality of sup
a. Bb. Dis not
Many commentators are perplexed when they observe a deprecia
D.
In the European Union, until the introduction of the euro,
D.
Assume that a government begins to run a large budget surplu
b. 1. undervalued2. overvalued3. undervalued4. overvaluedc.Traded; lowd. are not; is not; computer RAM chips
Every few months, The Economist publishes its Big Mac In
not consistent; government; no
A former Canadian prime minister once suggested that Canada
a. Bb. Bwould
In 2015, a letter to a Canadian national newspaper argued t
B
Purchasing power parity theory would suggest that if the Can
autonomous
In our macro model, government purchases (G) is ▼ with re
government transfer payments; total transfer payments
G does not include ▼ government purchases of goods and servi
$1
The net tax rate, t, indicates the increase in tax revenues
disposable income
T enters the AE function only indirectly through its effect
budget deficit; budget surplus; G = T
If G is larger than T, there is a ▼ budget deficitbalanced
C.3071
Consider the governments budget balance. Suppose G = 430 a
A.Net tax revenues enter the AE function indirectly through its effect on disposable income.
Which of the following is correct regarding the role of gove
E.
Consider the governments budget balance. Suppose G=425 and
D.government spending and taxation.
In the 2009 and 2010 Canadian federal budgets in the midst o
A.directly to aggregate demand by this amount and cause an eventual change in national income equal to more than $ 5 billion.
b. Explain the effect on GDP from an increase in spending by
A.directly to disposable income comma only a fraction of which (determined by the MPC) will than be spent.
c. Explain the effect on GDP from a tax rebate equal in valu
C.increases in government spending as far as their eventual effect on national income will be larger.
d. Did the minister of finance choose to emphasize increases
autonomous; foreign income and international relative prices
a. In our macro model, exports (X) are ▼ dependentautonomo
imports; $1
The marginal propensity to import (m) indicates the increas
NX = X minus mY; rise; positively
The equation for the net export function (NX) is ▼ NX = X m
rise; downward; fall; upward
If Canadian prices rise relative to those in other countrie
D.a=$180, b=$60, c=-$60, d=-$180
The table below shows national income and imports. The level
B.at $3 comma 300
The table below shows national income and imports. The level
C.0.69
Consider an aggregate consumption function in a simple macro
D.1 comma 025
Consider a simple macro model with a constant price level an
B.2.78
he diagram below shows desired aggregate expenditure for a h
D.2.174
In a macro model where the marginal propensity to consume ou
C.decrease; $1.75 billion
Consider a model in which output is demand-determined. If t
C.the national income is demand determined.
In the aggregate expenditure model, the assumption of a con
A.firms are price setters.
We can expect the national income to be demand-determined w
D
A companys wages and salaries are part of its value added.
F
A companys wages and salaries are part of its value added.
E
In Shoetown, a rancher takes $60 worth of inputs and produ
B
Jodies Bakery generates a yearly revenue of $6200. Throug
B
The expenditure approach to measuring GDP shows that Is thi
B
The expenditure approach to measuring GDP shows that It is c
C
Which of the following transactions would not be included in
A
The table below includes data for a one-year period require
E
Suppose a government collects $12.8 billion in various tax
C
In 2015, the United Nations ranked Norway first on thE Huma
E
The table below shows the total output and prices for an eco
C
The table below shows total output for an economy over 2 yea
D
The table below shows total output for an economy over 3 yea
31.87%, 29.46%
Consider the following data for a hypothetical economythat p
4500
Max is a carpenter and his shop generates a yearly revenue o
7200, 10000, 4500
Aminerminerminesminesiron oreiron ore,which he sells to abl
