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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
Q

Which of the following represents national saving in a closed economy?

A
  • Y-C-G
26
Q

In a closed economy, public saving is the

A
  • amount of ta revenue that the government has left after paying for its spending
27
Q

If the tax revenue of the federal government exceeds spending, then the government

A
  • runs a budget surplus
28
Q

If there is a surplus of loanable funds, then

A
  • neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium
29
Q

Suppose parliament institutes an investment tax credit. What would happen in the market for loanable funds?

A
  • the interest rate and investment would rise
30
Q

The ratio of debt to GDP in Canada tends to fall

A
  • during the late 1990s
31
Q

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 ____.

A
  • Prince Edward Island, Alberta
32
Q

The Canadian province with the highest per capital market income levels over rate last 40 years has been

A
  • Ontario
33
Q

Staple dependent economies tend to be

A
  • unstable
34
Q

What is the future value of $750 one year from today if the interest rate is 3 per cent?

A
  • 772.50
35
Q

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?

A
  • 6 years
36
Q

The natural rate of unemployment is the

A
  • amount of unemployment that the economy normally experiences
37
Q

The labour force equals the

A
  • number of people employed plus the number of people unemployed
38
Q

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?

A
  • about 78 per cent and about 2.9 per cent
39
Q

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.

A
  • Tom is structurally unemployed, and Simon is frictionally unemployed
40
Q

When Arnold uses dollars to record his income and expenses, he is using money as a

A
  • unit of account
41
Q

Fiat money

A
  • has no intrinsic value
42
Q

Savings deposits are included in

A
  • M2 but not M1
43
Q

The federal reserve is the

A
  • U.S. central bank
44
Q

When Bank of Canada wants to change the money supply, it most frequently

A
  • conducts open market operations
45
Q

Bank of Canada can increase the money supply by conducting open market

A
  • purchases and lowering the bank rate
46
Q

Suppose that the reserve ratio is 5 per cent and that a bank has $1,000 in deposits. Its required reserves are

A
  • $50
47
Q

If the reserve ratio is 10 per cent, the money multiplier is

A
  • 10
48
Q

Which list contains actions that decrease the money supply

A
  • raise the bank rate, raise the reserve requirement ratio
49
Q

Which of the following is not a tool of monetary policy

A
  • increasing the deficit
50
Q

The bank rate is

A
  • the interest rate Bank of Canada charges banks
51
Q

According to the classical dichotomy, which of the following is influenced by monetary factors?

A
  • nominal interest rates
52
Q

The velocity of money is

A
  • the average number o timers per year a dollar is spent
53
Q

If Y and V are constant, and M doubles, the quantity equation implies that the price level

A
  • doubles
54
Q

Menu costs refer to

A
  • the cost of more frequent price changes due to higher inflation
55
Q

A short period of falling incomes and rising unemployment is called a

A
  • recession
56
Q

During a recession the economy experiences

A
  • falling employment and income
57
Q

Business cycles

A
  • are fluctuations in real GDP and related variables over time

ECON 203 (18 decks)

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