Question

Question 1

Why are government purchases assumed to be autonomous?

	a.	because they are independent of the price level
	b.	because they are independent of investment
	c.	because they are independent of the level of real GDP
	d.	because they are independent of consumption

Question 2

hich term refers to workers who are overqualified for their current jobs or can find only part-time work?

	a.	discouraged workers
	b.	unemployed
	c.	NOT in the labour force
	d.	underemployed

Question 3

Which of the following would shift the long-run aggregate supply curve to the left?

	a.	a reduction in the quality of the labour force
	b.	an increase in the size of the labour force
	c.	a decrease in the price level
	d.	a reduction in the cost of using computers

Question 4

Which of the following would result from an increase in planned investment?

	a.	an outward shift in the aggregate demand curve
	b.	an inward shift in the aggregate demand curve
	c.	an outward shift in the aggregate supply curve
	d.	an inward shift in the aggregate supply curve

Question 5

Which of the following would directly reduce GDP?

	a.	The switch from home-cooked meals to restaurant meals lowers the nutritional value of the average diet.
	b.	An unscrupulous disposal company dumps barrels of toxic waste near a suburban water supply.
	c.	Pollution of international waters increases.
	d.	The town of Council Bluffs decides to fire the lifeguards at the local swimming pool.

Question 6

Which of the following would NOT occur if the price level changes?

	a.	a shift in the aggregate expenditure curve
	b.	a change in the real value of dollar-denominated assets
	c.	a new value for equilibrium real GDP demanded
	d.	a shift in the aggregate demand curve

Question 7

Which of the following would NOT increase Canadian GDP?

	a.	increased shipments of Ghanaian cocoa to Canada on Greek vessels
	b.	increased demand in Alberta for Canadian-made personal computers
	c.	increased shipments of computers from Canada to the United States
	d.	increased demand in Costa Rica for Canadian-made personal computers

Question 8

Which of the following will allow monetary policy to be most effective in changing aggregate demand?

	a.	Interest rates do NOT need to be responsive to changes in the money supply, and investment does NOT need to be sensitive to changes in interest rates.
	b.	Interest rates need to be responsive to changes in the money supply, but investment does NOT need to be sensitive to changes in interest rates.
	c.	Interest rates do NOT need to be responsive to changes in the money supply, but investment does need to be sensitive to changes in interest rates.
	d.	Interest rates need to be responsive to changes in the money supply, and investment needs to be sensitive to changes in interest rates.

Question 9

Which of the following transactions is NOT included in GDP?

	a.	Someone sells drugs in a vacant lot.
	b.	A drug addict spends two months in a drug rehabilitation centre.
	c.	A doctor treats a patient for drug addiction.
	d.	A pharmacist sells drugs in a pharmacy.

Question 10

Which of the following occurs simultaneously with a higher price level and leads to stagflation?

	a.	higher aggregate output
	b.	lower employment
	c.	federal budget surpluses
	d.	federal budget deficits

Answer 1

Ans 1

c.	because they are independent of the level of real GDP

Ans 2:

d.	underemployed

Ans 3:

a.	a reduction in the quality of the labour force

Ans 4:

a.	an outward shift in the aggregate demand curve

Ans 5:

b.	An unscrupulous disposal company dumps barrels of toxic waste near a suburban water supply.

As the water is used both for domestic and production purposes.

Ans 6:

d.	a shift in the aggregate demand curve

(A change in price level would cause movement along the aggregate demand curve and not causes shift)

Ans 7:

a.	increased shipments of Ghanaian cocoa to Canada on Greek vessels

(It increases imports of Canada which decreases net exports and GDP of canada)

Ans 8:

d.	Interest rates need to be responsive to changes in the money supply, and investment needs to be sensitive to changes in interest rates.

(A change in money supply causes a change in interest rates which affects investment spending and aggregate demand)

Ans 9:

a.	Someone sells drugs in a vacant lot.

(Illegal activity not included in GDP)

Ans 10:

b.	lower employment