1. Microeconomics studies
a. the
aggregate effects of the decisions individuals, businesses, and governments
make.
b. the
choices individuals and businesses make.
c. changes
in the cost of living.
d. Canada’s
business cycle.
e. all of
the above
2. Economists agree that
a. overly
strong expansions are desirable.
b. recessions
can be avoided.
c. the
business cycle can’t be eliminated, but it can be smoothed.
d. the
business cycle is necessary and good for the economy.
e. the
business cycle is more common in developed countries.
3. Economics
a. teaches
skills that are likely to be in low demand during in the next decade.
b. prepares
students by developing memorizing skills.
c. prepares
students by developing problem-solving skills.
d. has a low
opportunity cost of time.
e. is not
very challenging.
4. A study of the effects of an increase in the Canadian
government’s expenditure by 5 percent falls in the domain of
a. microeconomics.
b. scarcity.
c. macroeconomics.
d. rational
economics.
e. the
government cycle.
5. A statement that presents an opinion and cannot be tested
is called a
a. positive
statement.
b. ceteris
paribus statement.
c. direct
statement.
d. negative
statement.
e. normative
statement.
6. The usefulness of an economic model depends on
a. its
assumptions.
b. its
ability to predict.
c. how well
it corresponds to real-world events.
d. both b.
and c.
e. all of
the above
7. For Bill Gates, a founder of Microsoft, scarcity is
a. a concern
because there are a limited number of computer customers.
b. not a
concern because he has many employees working for his company.
c. not a
concern because he has so much money.
d. not a
problem because of his work habits.
e. a concern
because time is a limited resource.
8. To finance government payments, the
a. federal,
provincial, and local governments combine all revenue and evenly divide the
revenue by population size.
b. federal
government taxes provincial and local government revenue earnings.
c. provincial
and local governments receive transfer payments from the federal government.
d. federal
government receives transfer payments from the provincial and local
governments.
e. federal
government prints money and distributes it to the provincial and local
governments.
9. Macroeconomics divides the goods and services that we
produce into four large groups. One of these groups is
a. government
goods and services.
b. labour.
c. stocks
and bonds.
d. income.
e. entrepreneurship.
10. Compared to the world, the rate of Canadian population
growth is
a. about the
same as in the world as a whole.
b. a little
faster than in the world as a whole.
c. incomparable
because we do not have accurate world population statistics.
d. much
faster than in the world as a whole.
e. slower
than in the world as a whole.
11. When looking at the average unemployment rates over the
past 10 years for the advanced economies, we see that
a. the
European Union has a lower rate than the United States.
b. Japan has
had one of the highest rates.
c. the United
States has the lowest rate.
d. the newly
industrial nations of Asia have had the lowest rates.
e. Canada
has the lowest rate.
12. The standard of living depends on the
a. quantity
of goods and services produced per person.
b. standards
people set for their lives.
c. standards
that the government sets for people.
d. amount of
money people saved.
e. quantity
of goods and services sold.
13. A country produces health care and education, and is
producing at a point on its production possibilities frontier. To produce more
health care, the country must
a. sacrifice
no units of education.
b. increase
its production of education.
c. use
unemployed resources to produce health care.
d. increase
its production of both health care and education.
e. decrease
its production of education.
14. Using the production possibilities frontier in the table
below, the opportunity cost of producing 6 robots rather than 4 robots is ___
tonnes of hot dogs.
Production point Robots
(number)
Hot dogs (tonnes)
A 10
and 0
B 8
and 8
C 6
and 14
D 4
and 18
E 2
and 21
F 0
and 23
a. 2
b. 6
c. 4
d. 14
e. 18
15. Production point B in the figure below indicates a
production point that is
a. attainable
but has unemployment of some resources.
b. unattainable.
c. attainable
and has full employment of resources.
d. all of
the above
e. none of
the above
16. Based on the table below, if Peter and Paul specialize
in producing the good in which they each have a comparative advantage, how many
kilograms of apples and how many loaves of bread will they produce in total?
Peter’s Production Possibilities Paul’s Production
Possibilities
Production point Apples
(kilograms)
Bread (loaves) Production
point Apples (kilograms)
Bread (loaves)
A 0 and 20
A 0 and 30
B 1 and 16
B 1 and 24
C 2 and 12
C 2 and 18
D 3 and 8
D 3 and 12
E 4 and 4
E 4 and 6
F 5 and 0
F 5 and 0
a. 30 loaves
of bread and 5 kilograms of apples
b. 5 loaves
of bread and 30 kilograms of apples
c. 50
loaves of bread and 0 kilograms of apples
d. 20 loaves
of bread and 5 kilograms of apples
e. 50
kilograms of apples and 0 loaves of bread
17. If the number of farmers growing roses increases, the
supply of roses ________ and the supply curve of roses shifts ________.
a. decreases
/ leftward
b. increases
/ rightward
c. decreases
/ rightward
d. increases
/ leftward
e. increases
/ upward
18. The demand curve shows the relationship between
a. price and
quantity demanded.
b. consumer
wealth and quantity demanded.
c. price
and production costs.
d. consumer
money income and quantity demanded.
e. consumer
preferences and the quantity demanded.
19. An effective minimum wage will ________ the wage rate
paid workers and ________ employment.
a. raise /
decrease
b. lower /
increase
c. improve
/ increase
d. lower /
decrease
e. raise /
increase
20. When Mick Jagger chose to join a rock band, he
a. gave up
studying ancient sculpture.
b. incurred
no opportunity cost because he made a lot money.
c. made a
rational choice.
d. made an
irrational choice.
e. never
understood opportunity cost and incentives.
21. A study that describes the possible economic policies to
deal with inflation falls under
a. positive
economics.
b. positive
assumption.
c. pure
economics.
d. normative
economics.
e. abstract
economics.
22. The approximate number of people who live in the
transition economies is
a. 5
billion.
b. 1
billion.
c. 5
million.
d. 200
million.
e. 6
billion.
23. Most of the people around the world live in countries
with an average income of ________ per day.
a. less than
$32
b. less than
$5
c. between
$50 and $60
d. more than
$95
e. more than
$32
24. Based on the table below, Paul’s opportunity cost of
producing one kilogram of apples is _______.
Peter’s Production Possibilities Paul’s Production
Possibilities
Production point Apples
(kilograms)
Bread (loaves) Production
point Apples (kilograms)
Bread (loaves)
A 0 and 20
A 0 and 30
B 1 and 16
B 1 and 24
C 2 and 12
C 2 and 18
D 3 and 8
D 3 and 12
E 4 and 4
E 4 and 6
F 5 and 0
F 5 and 0
a. 6 loaves
of bread
b. 4 loaves
of bread
c. 1/6 of a
loaf of bread
d. 2 loaves
of bread
e. 3 loaves
of bread
25. Other things remaining the same, if the price of Pepsi
increases, the
a. demand
for Pepsi decreases.
b. quantity
demanded of Pepsi increases.
c. supply
of Pepsi decreases.
d. quantity
supplied of Pepsi increases.
e. supply of
Pepsi increases.
26. Over time, the cost of living in Canada has ________ and
the standard of living has ________.
a. fallen /
decreased
b. risen /
increased
c. remained
constant / decreased
d. risen /
decreased
e. fallen /
increased
27. An example of a good supplied by a provincial or local
government is
a. national
defense.
b. Environment
Canada’s weather forecasts.
c. pensions
to retired people.
d. employment
insurance payments.
e. public
schools.
28. Currently, Hong Kong and Canada have similar production
possibilities frontiers. If Hong Kong continues to devote more resources to
capital accumulation than Canada, in the future
a. Hong
Kong’s PPF will shift outward more rapidly than the Canadian PPF.
b. Hong
Kong’s PPF and Canada’s PPF will shift outward at the same rate.
c. Hong
Kong will no longer trade with Canada.
d. the
Canadian PPF will shift outward more rapidly than Hong Kong’s PPF.
e. Hong
Kong’s and Canada’s PPFs will remain the same because the population of Hong
Kong is less than the population of Canada.
29. If buyers and sellers both expect the price of a car to
rise within the next six months, the demand for cars today will
a. decrease,
the supply of cars will increase, and the price of a car will fall.
b. increase,
the supply of cars will decrease, and the price of a car will rise.
c. decrease,
the supply of cars will decrease, and the price of a car might rise or fall.
d. increase,
the supply of cars will increase, and the price of a car might rise or fall.
e. increase,
the supply of cars will decrease, and the price of a car will fall.
30. Economists use economic experiments to study the real
world by
a. polling
people about the conclusions of economic theories.
b. studying
people placed in decision-making situations.
c. gathering
facts from a controlled experiment.
d. statistically
analyzing real-world data.
e. studying
real-world economic situations that naturally arise.
