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ECON 203 > Practice Midterm > Flashcards

Practice Midterm Flashcards

1
Q

If the average income of an Australian is higher than the average of a Russia, it is most likely because

A
  • productivity is higher in Australia than in Russia
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2
Q

If the government wanted to enact a policy to increase living standards in the country, it might

A
  • increase educational opportunities for workers
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3
Q

When the German government increased the quantity of money in the German economy in the 1920s

A
  • Germany experiences hyperinflation
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4
Q

Since the early 1990s, inflation in Canada

A
  • has been about 2 per cent per year
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5
Q

Macroeconomists study

A
  • economy wide phenomena
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6
Q

If Susan decides to change the oil in her car herself instead of having speedy lube change the oil for her, GDP

A
  • necessarily falls
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7
Q

GDP

A
  • excludes the value of intermediate goods because their value is already counted in the value of final goods
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8
Q

A movie company makes 50,000 DVDs of one of its latest releases. It sells 300,000 of them before the end of the second quarter, and holds the other in its warehouse.

A
  • the DVDs will be counted as a change in inventory in the second quarter and so will be included in second-quarter GDP
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9
Q

An American company owns a fast food restaurant in Romania. The value of goods and services it produces is included in

A
  • in Romania GDP, but not in U.S. GDP
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10
Q

Transfer payments are

A
  • not included in GDP because they are not payments for currently produced goods or services
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11
Q

In 2015, Canadian GDP was about

A
  • $2 trillion
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12
Q

If in a given year an economy has consumption of $3000, investment of $2000, government purchases of $1500, exports of $500, imports of $600, taxes of $1200, transfer payments of $400, and depreciation of $300, ten GDP will equal

A
  • $6400
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13
Q

Suppose GDP consists of wheat and rice. In 2002, 20 bushels of wheat are sold at $4/bushel, and 10 bushels of rice are sold at $2/bushel. If the price of wheat was $2/bushel and the price of rice was $1/bushel in 200, the base year, nominal 2002 GDP is

A
  • $100, real 2002 GDP is $50, and the GDP deflator is 200
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14
Q

If a small country has current nominal GDP of $20 billion and a GDP deflator of 50, what is its real GDP

A
  • $40 billion
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15
Q

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

A
  • longer life expectancy and a higher percentage of the population that is literate
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16
Q

The CPI is a measure of the overall cost of

A
  • goods and services bought by a typical consumer
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17
Q

The price index is 320 in one year and 360 in the next. What was the inflation rate?

A
  • 12.5 per cent
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18
Q

When the relative price of a good increases, consumers will respond by buying

A
  • less of it and more of its substitutes
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19
Q

Ethel purchased a bag of groceries in 1970 for $8. She purchased the same bag of groceries in 2003 for $25. If the price index was 38.8 and is 180 in 2003, what’s the price of a 1970 bag of groceries in 2003 prices

A
  • $37.11
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20
Q

If the nominal interest rate is 8 per cent and rate of inflation is 2 per cent, the real interest rate is

A
  • 6 per cent
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21
Q

The average amount of goods and services produced from each hour of a worker’s time is called

A
  • productivity
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22
Q

The equipment and structures available to produce goods and services are called

A
  • physical capital
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23
Q

Examples of human capital

A
  • knowledge acquired from early childhood education programs
  • knowledge acquired from grade school
  • knowledge acquired from the on-the-job training
24
Q

The catch-up effect refers to the idea that

A
  • it is easier for a country to grow fast if it starts out relatively poor
25
Which of the following represents national saving in a closed economy?
- Y-C-G
26
In a closed economy, public saving is the
- amount of ta revenue that the government has left after paying for its spending
27
If the tax revenue of the federal government exceeds spending, then the government
- runs a budget surplus
28
If there is a surplus of loanable funds, then
- neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium
29
Suppose parliament institutes an investment tax credit. What would happen in the market for loanable funds?
- the interest rate and investment would rise
30
The ratio of debt to GDP in Canada tends to fall
- during the late 1990s
31
Federal government fiscal policies have redistributed large amounts of money across regions in the last 40 years. In per capita terms, the primary recipient has been the province of ___ while the primary contributor has been the province of ____.
- Prince Edward Island, Alberta
32
The Canadian province with the highest per capital market income levels over rate last 40 years has been
- Ontario
33
Staple dependent economies tend to be
- unstable
34
What is the future value of $750 one year from today if the interest rate is 3 per cent?
- 772.50
35
Jackie puts $400 into an account where the interest rate is 10 per cent. Later she checks her balance and finds it's worth about $708.62. How many years did she wait to check her balance?
- 6 years
36
The natural rate of unemployment is the
- amount of unemployment that the economy normally experiences
37
The labour force equals the
- number of people employed plus the number of people unemployed
38
The U.S. Bureau of Labour Statistics recently reported that there were 48.6 million people over age 25 who at least had a bachelor's degree. Of this number, 38.0 million were in the labour force and 36.9 million were employed. What were the labour-force participation rate and the unemployment rate fro this group?
- about 78 per cent and about 2.9 per cent
39
Tom is looking for work after school, but everywhere he fills out an application he is told that so have lots of others. Simon has a law degree. Several firms have made him offers, but he think she might be able to find a firm where his talents could be put to better use.
- Tom is structurally unemployed, and Simon is frictionally unemployed
40
When Arnold uses dollars to record his income and expenses, he is using money as a
- unit of account
41
Fiat money
- has no intrinsic value
42
Savings deposits are included in
- M2 but not M1
43
The federal reserve is the
- U.S. central bank
44
When Bank of Canada wants to change the money supply, it most frequently
- conducts open market operations
45
Bank of Canada can increase the money supply by conducting open market
- purchases and lowering the bank rate
46
Suppose that the reserve ratio is 5 per cent and that a bank has $1,000 in deposits. Its required reserves are
- $50
47
If the reserve ratio is 10 per cent, the money multiplier is
- 10
48
Which list contains actions that decrease the money supply
- raise the bank rate, raise the reserve requirement ratio
49
Which of the following is not a tool of monetary policy
- increasing the deficit
50
The bank rate is
- the interest rate Bank of Canada charges banks
51
According to the classical dichotomy, which of the following is influenced by monetary factors?
- nominal interest rates
52
The velocity of money is
- the average number o timers per year a dollar is spent
53
If Y and V are constant, and M doubles, the quantity equation implies that the price level
- doubles
54
Menu costs refer to
- the cost of more frequent price changes due to higher inflation
55
A short period of falling incomes and rising unemployment is called a
- recession
56
During a recession the economy experiences
- falling employment and income
57
Business cycles
- are fluctuations in real GDP and related variables over time

ECON 203 (18 decks)

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