Deck 4: Short-Term Economic Fluctuations

Question 1

During the early 1930s,economies around the world were in a period of

A) inflation.
B) depression.
C) expansion.
D) boom.
E) aggregation.

Answer 1

depression.

Question 2

The process of steady increases in the quantity and quality of goods and services the economy can produce is called

A) macroeconomics.
B) globalization.
C) production.
D) economic growth.
E) aggregation.

Answer 2

economic growth.

Question 3

Among economists today,the most widely accepted cause of the Great Depression is

A) poor economic policymaking.
B) wild stock market speculation.
C) globalization.
D) the inherent instability of capitalist economies.
E) Adolf Hitler's election as Chancellor of Germany.

Answer 3

poor economic policymaking.

Question 4

The value of output was $100 billion in Northland and $200 billion in Southland.The population of Northland was 50 million and the population of Southland was 30 million.There were 30 million employed workers in Northland and 20 million employed workers in Southland.Average labour productivity was higher in _________ and the standard of living was _______.

A) Northland;the same in both countries
B) Northland;higher in Northland
C) Southland;higher in Northland
D) Southland;higher in Southland
E) Southland;the same in both countries

Question 5

The degree to which people have access to goods and services that make their lives easier,healthier,safer,and more enjoyable is called the

A) microeconomic standard.
B) macroeconomic standard.
C) standard of living.
D) global standard.
E) scarcity standard.

Question 6

The country of Southland produced $2,000 billion of output in one year.The population of Southland was 100 million,60 million of whom were employed.What was average labour productivity in Southland?

A) $20.
B) $33.
C) $20,000.
D) $33,333.
E) $50,000.

Question 7

Compared to 1926,total output in Canada today is nearly __________ times larger,and total output per person is about _________ times larger.

A) 7;25
B) 20;6
C) 2;10
D) 10;2
E) 100;50

Question 8

Average labour productivity equals

A) average production per year.
B) total output.
C) output per person.
D) output per employed worker.
E) production per person.

Question 9

Macroeconomics first developed as a new subfield of economics

A) when Adolph Hitler ordered economists to learn more about national economies.
B) following the oil price increases of the 1970s.
C) as a result of Adam Smith's publication of The Wealth of Nations in 1776.
D) in response to the severe economic hardships of the Great Depression.
E) when the Bank of Canada was established in 1921.

Question 10

People who enjoy high standards of living usually have all of the following EXCEPT

A) more,and better,consumer goods.
B) longer life expectancies.
C) better general health.
D) higher literacy rates.
E) freedom from scarcity.

Question 11

The country of Northland produced $1,000 billion of output in one year.The population of Northland was 50 million,30 million of whom were employed.What was average labour productivity in Northland?

A) $20.
B) $33.
C) $20,000.
D) $33,333.
E) $50,000.

Question 12

Because population grows over time,the best indicator of average living standards is

A) the unemployment rate.
B) total output.
C) output per person.
D) the inflation rate.
E) productivity.

Question 13

A key indicator of the hardship experienced during the Great Depression is the

A) high rate of inflation.
B) high rate of unemployment.
C) high rate of economic growth.
D) large budget deficits.
E) large trade deficits.

Question 14

The Great Depression

A) occurred only in Canada and the United States.
B) was a mass psychological reaction to the "roaring twenties."
C) was a period of low production and high unemployment.
D) ended a few months after the stock market crash of 1929.
E) resulted in the development of microeconomics.

Question 15

Compared to 1926,total output per person in Canada today is about ________ times larger.

A) 2
B) 6
C) 25
D) 50
E) 100

Question 16

Macroeconomic policies are government policies designed to affect

A) the legal system of the whole country.
B) the performance of the economy as a whole.
C) particular sectors of the economy.
D) the environmental impact of all industries.
E) the economic activity of the government.

Question 17

Compared to 1926,total output in Canada today is _________ times larger.

A) 5
B) 7
C) 20
D) 50
E) 100

Question 18

Government actions designed to affect the performance of the economy as a whole are called _______ policies.

A) global
B) microeconomic
C) macroeconomic
D) domestic
E) social

Question 19

Output per employed worker is called

A) total output.
B) the average standard of living.
C) economic growth.
D) output per person.
E) average labour productivity.

Question 20

The value of output was $1,000 billion in Northland and $2,000 billion in Southland.The population of Northland was 50 million and the population of Southland was 120 million.There were 30 million employed workers in Northland and 75 million employed workers in Southland.Average labour productivity was higher in _________ and the standard of living was _______.

A) Northland;the same in both countries
B) Northland;higher in Northland
C) Southland;higher in Northland
D) Southland;higher in Southland
E) Southland;the same in both countries

Question 21

Major macroeconomic questions include all of the following EXCEPT

A) are free trade agreements beneficial?
B) can inflation be reduced without generating additional unemployment?
C) what causes slowdowns in productivity growth?
D) why do economic growth rates vary across countries?
E) how do monopoly firms set prices and determine quantities to produce?

Question 22

When jobs are hard to find,profits are low,few wage increases are given,and many companies go out of business,the economy is most likely in a(n)

A) expansion.
B) boom.
C) recession.
D) surplus.
E) shortagE.

Question 23

The percentage of the labour force without jobs is called the

A) inflation rate.
B) average labour productivity rate.
C) labour market.
D) unemployment rate.
E) average standard of living.

Question 24

If a country's exports are greater than its imports,then the country has a

A) government budget deficit.
B) government budget surplus.
C) trade balance.
D) trade surplus.
E) trade deficit.

Question 25

The rate at which prices in general are increasing is called

A) the inflation rate.
B) the unemployment rate.
C) average labour productivity.
D) the standard of living.
E) the trade balancE.

Question 26

Unemployment typically _______ the onset of a recession.

A) increases before
B) increases after
C) remains constant after
D) decreases before
E) decreases after

Question 27

Output per person is closely linked to average _______ and output per worker measures average _______.

A) consumption;production
B) production;consumption
C) consumption;employment
D) aggregation;production
E) consumption;aggregation

Question 28

Average labour productivity in Canada has _______ since 1950,and the rate of change has ________ since 1973.

A) increased;slowed
B) increased;accelerated
C) increased;remained constant
D) decreased;accelerated
E) decreased;slowed

Question 29

A trade deficit occurs when

A) government spending exceeds government revenue.
B) government revenue exceeds government spending.
C) exports equal imports.
D) exports exceed imports.
E) exports are less than imports.

Question 30

The unemployment rate in Canada at the peak of the Great Depression was

A) 5%.
B) 10%.
C) 15%.
D) 20%.
E) 50%.

Question 31

A particularly strong expansion is called a(n)

A) output excess.
B) boom.
C) growth recession.
D) bonanza.
E) production surplus.

Question 32

The unemployment rate is the

A) number of workers unemployed.
B) number of workers in the labour force.
C) number of workers minus those without a job.
D) percentage of the labour force that is out of work.
E) percentage of the population that is out of work.

Question 33

A particularly severe recession is called a

A) super recession.
B) lull.
C) growth recession.
D) depression.
E) output skid.

Question 34

If a country's exports are less than its imports,then the country has a

A) government budget deficit.
B) government budget surplus.
C) trade balance.
D) trade surplus.
E) trade deficit.

Question 35

A trade surplus occurs when

A) government spending exceeds government revenue.
B) government revenue exceeds government spending.
C) exports equal imports.
D) exports exceed imports.
E) exports are less than imports.

Question 36

Macroeconomic issues include all of the following EXCEPT

A) productivity.
B) economic growth.
C) recessions and expansions.
D) inflation.
E) energy reserves.

Question 37

Inflation is the increase in

A) total output.
B) total output per worker.
C) the number of workers employed.
D) imports relative to exports.
E) the general level of prices.

Question 38

When jobs are easy to find,wage increases are frequently given,and businesses are doing well,the economy is most likely in a(n)

A) expansion.
B) depression.
C) recession.
D) surplus.
E) shortagE.

Question 39

Macroeconomic issues include all of the following EXCEPT

A) economic interdependence among nations.
B) inflation.
C) economic growth and living standards.
D) regulation of natural monopolies.
E) recessions and expansions.

Question 40

Major macroeconomic questions include all of the following EXCEPT

A) what causes economic growth?
B) what causes differences in wages between men and women?
C) why does inflation vary over time and across countries?
D) what are the effects of trade imbalances?
E) what are the causes of unemployment?

Question 41

In Econland,population increased from 1 million to 1.1 million,the number of employed workers increased from 500,000 to 600,000,but average labour productivity decreased from $20,000 per worker per year to $19,000 per worker per year.Total output in Econland _________ and the average standard of living _________.

A) decreased;decreased
B) decreased;increased
C) increased;remained constant
D) increased;increased
E) increased;decreased

Question 42

A trade imbalance occurs when

A) exports from and imports to a country suddenly decline.
B) the quantity of imports equals the quantity of exports,but is large relative to total output.
C) a country does not import or export any goods or services.
D) the quantity of a country's exports differs significantly from the quantity of imports.
E) a country trades a great quantity with one country,but a significantly smaller amount with other countries.

Question 43

If average labour productivity increases while the population and the number of employed workers remain constant,then total output

A) increases.
B) decreases.
C) remains constant.
D) may increase or decrease.
E) cannot be determined.

Question 44

In Econland,population and average labour productivity are constant.If a larger proportion of the population becomes employed workers,then total output will _________ and output per person will ______.

A) increase;increase
B) decrease;decrease
C) remain constant;remain constant
D) decrease;remain constant
E) remain constant;decrease

Question 45

If average labour productivity increases,then the same number of employed workers will produce

A) more total output.
B) less total output.
C) the same amount of total output.
D) the same output per person.
E) less output per person.

Question 46

Macroeconomists are concerned with each of the following issues EXCEPT

A) why does inflation vary over time?
B) why does inflation vary across countries?
C) must a reduction in inflation be accompanied by an increase in unemployment?
D) why do the prices of computers increase more slowly than the price of gasoline?
E) what are the costs of inflation?

Question 47

In Econland,exports equal 15% of total output,while imports equal 20% of total output.Econland has

A) a budget surplus.
B) a budget deficit.
C) a trade surplus.
D) a trade deficit.
E) balanced tradE.

Question 48

In both Gamma and Delta,average labour productivity is $20,000 per worker per year.The population of Gamma is 200,000 and the population of Delta is 400,000.60% of the population in each country is employed.Total output in Gamma is _________ and total output in Delta is _________.

A) $12,000;$12,000
B) $120,000;$800,000
C) $0.24 billion;$0.48 billion
D) $4 million;$8 million
E) $4 billion;$8 billion

Question 49

All of the following statements are correct EXCEPT

A) economies grow steadily over time.
B) inflation rates differ between countries.
C) unemployment increases during recessions.
D) a trade surplus exists when a country exports more than it imports.
E) there are unemployed people even during expansions.

Question 50

In Econland,population increased from 1 million to 1.1 million,the number of employed workers increased from 500,000 to 600,000,but average labour productivity decreased from $20,000 per worker per year to $18,000 per worker per year.Total output in Econland _________ and the average standard of living _________.

A) decreased;decreased
B) decreased;increased
C) increased;remained constant
D) increased;increased
E) increased;decreased

Question 51

In Econland,exports equal 25% of total output,while imports equal 20% of total output.Econland has

A) a budget surplus.
B) a budget deficit.
C) a trade surplus.
D) a trade deficit.
E) balanced tradE.

Question 52

In Econland,total output is $6 billion,population equals 250,000 people,and,of these,200,000 are employed workers.Output per person in Econland equals _______ and average labour productivity equals ______.

A) $24;$30
B) $24,000;$30,000
C) $24,000;$24,000
D) $30,000;$24,000
E) $30,000;$30,000

Question 53

In Econland,population and average labour productivity are constant.If a larger proportion of the population than usual retires,then total output will _________ and output per person will ______.

A) increase;increase
B) decrease;decrease
C) remain constant;remain constant
D) decrease;remain constant
E) remain constant;decrease

Question 54

Compared to the 1950-1973 period,output per worker in Canada __________ in the 1973-2010 period.

A) increased more rapidly
B) increased more slowly
C) increased at the same rate as
D) decreased more rapidly
E) decreased more slowly

Question 55

If average labour productivity decreases while the population and the number of employed workers remain constant,then output per person

A) increases.
B) decreases.
C) remains constant.
D) may increase or decrease.
E) cannot be determined.

Question 56

In both Gamma and Delta,average labour productivity is $40,000 per worker per year.The population of Gamma is 200,000 and the population of Delta is 400,000.50% of the population in each country is employed.Total output in Gamma is _________ and total output in Delta is _________.

A) $20,000;$20,000
B) $100,000;$200,000
C) $2.4 billion;$4.8 billion
D) $4 million;$8 million
E) $8 billion;$16 billion

Question 57

If average labour productivity decreases,then the same number of employed workers will produce

A) more total output.
B) less total output.
C) the same amount of total output.
D) more output per person.
E) the same output per person.

Question 58

If average labour productivity decreases while the population and the number of employed workers remain constant,then total output

A) increases.
B) decreases.
C) remains constant.
D) may increase or decrease.
E) cannot be determined.

Question 59

In Econland,total output is $8 billion,population equals 500,000 people,and,of these,400,000 are employed workers.Output per person in Econland equals _______ and average labour productivity equals ______.

A) $16;$20
B) $16,000;$20,000
C) $16,000;$16,000
D) $20,000;$16,000
E) $20,000;$20,000

Question 60

If average labour productivity increases while the population and the number of employed workers remain constant,then output per person

A) increases.
B) decreases.
C) remains constant.
D) may increase or decrease.
E) cannot be determined.

Question 61

The unemployment rate increases during

A) expansions and booms.
B) expansions and recessions.
C) booms and recessions.
D) recessions and depressions.
E) booms and depressions.

Question 62

Average labour productivity is defined as

A) output per person.
B) output per employed worker.
C) per-capita output.
D) output per skilled worker.
E) output per unskilled worker.

Question 63

The table below provides data about the Canadian and the U.S.economies for the year 2000.All data are expressed in Canadian dollars.
Suppose,in addition,that in 2000,Canada's population was 30 million and the U.S.population was 276 million.
Total output in Canada and in the United States in 2000 were,respectively,

A) $974 billion and $11,825 billion.
B) $2,013 billion and $24,088 billion.
C) $974 billion and $30,055 billion.
D) $4,454 billion and $45,323 billion.
E) $4,055 billion and $11,825 billion.

Question 64

The table below provides data about the Canadian and the U.S.economies for the year 2000.All data are expressed in Canadian dollars.
Suppose,in addition,that in 2000,Canada's population was 30 million and the U.S.population was 276 million.
In 2000,U.S.total output was much larger than Canadian total output because the U.S.had

A) a much larger population than did Canada.
B) many more employed workers than did Canada.
C) a much larger population and,also,a much higher output per person than did Canada.
D) many more employed workers and,also,a much higher output per worker than did Canada.
E) a much bigger private sector than did Canada.

Question 65

Microland has a population of 50 people;40 of them worked last year,with a total output of $200,000.Output per person of Microland was

A) $200,000.
B) $200.
C) $4,000.
D) $40,000.
E) $5,000.

Question 66

If the unemployment rate increases from 4% to 10%,then the economy is most likely in a(n)

A) expansion.
B) boom.
C) recession.
D) depression.
E) aggregation.

Question 67

When a country imports more than it exports,this results in a

A) trade balance.
B) trade deficit.
C) trade surplus.
D) recession.
E) inflation.

Question 68

If tax revenues equal 20% of total output and government expenditures equal 25% of total output,then there is a

A) budget deficit.
B) budget surplus.
C) trade imbalance.
D) trade deficit.
E) trade surplus.

Question 69

The chart shows the annual unemployment rates in Canada and the United States over the period 1968-2000.Use this information for the following question.
The two most striking aspects of the chart are ________ between the Canada-U.S.unemployment rates over the entire period and ________ between the Canada-U.S.unemployment rates after 1982.

A) a strong positive correlation;a large and persistent gap
B) a weak positive correlation;a large and persistent gap
C) a strong negative correlation;a large and persistent gap
D) a weak negative correlation;a large and persistent gap
E) a zero correlation;a large and persistent gap

Question 70

The inflation rate

A) was higher in the 1990s than during the 1970s.
B) increases the standard of living for people on fixed incomes.
C) is the rate at which prices in general are increasing over time.
D) is roughly equal in most countries.
E) rises during recessions,along with the unemployment ratE.

Question 71

While Canada has tended to run trade surpluses,the United Stated has historically run large _________,raising concerns in some quarters that this will eventually lead to a ________ of the U.S.dollar.

A) trade deficits;weakening
B) trade deficits;strengthening
C) trade surpluses;weakening
D) trade surpluses;strengthening
E) trade balances;weakening

Question 72

The table below provides data about the Canadian and the U.S.economies for the year 2000.All data are expressed in Canadian dollars.
Suppose,in addition,that in 2000,Canada's population was 30 million and the U.S.population was 276 million.
Of the following measures,the best gauge of the relative living standards of Canadians and Americans in 2000 was

A) Canada's total output in 2000.
B) U.S.total output in 2000.
C) Canada's output per person in 2000.
D) the ratio of Canadian to U.S.total output in 2000.
E) the ratio of Canadian to U.S.output per person in 2000.

Question 73

Fiscal policy refers to

A) decisions to determine the government's budget.
B) policies directed toward increasing exports and reducing imports.
C) the determination of the nation's money supply.
D) policies to reduce the power of unions and monopolies.
E) government policies aimed at changing the underlying structure or institutions of the economy.

Question 74

The standard of living is directly tied to economic growth because

A) everyone in society shares equally in the benefits of economic growth.
B) the two terms are synonymous.
C) in most cases,economic growth brings an improvement in the average person's standard of living.
D) the government can only improve the standard of living if the economy is growing.
E) a higher standard of living causes an increase in economic growth.

Question 75

A slowdown in average labour productivity growth leads to

A) falling living standards.
B) lower life expectancy.
C) less rapid improvement in living standards.
D) declining total production.
E) rising inflation.

Question 76

If Macroland sells more goods to foreign buyers than it purchases from them,it will have a

A) trade balance.
B) trade deficit.
C) trade surplus.
D) budget deficit.
E) budget surplus.

Question 77

If tax revenues equal 25% of total output and government expenditures equal 20% of total output,then there is a

A) budget deficit.
B) budget surplus.
C) trade imbalance.
D) trade deficit.
E) trade surplus.

Question 78

Microland has a population of 50 people;40 of them worked last year,with a total output of $200,000.The average labour productivity of Microland was equal to

A) $200,000.
B) $200.
C) $4,000.
D) $40,000.
E) $5,000.

Question 79

The unemployment rate is the

A) percentage of the labour force who would like to be employed but cannot find work.
B) number of people who would like to be employed but cannot find work.
C) percentage of the population who are not working.
D) number of people who are not working.
E) the number of unemployed peoplE.

Question 80

Economic growth is defined as a process of

A) steady increase in the price of goods and services produced in the economy.
B) steady increase in the quantity and quality of goods and services the economy can produce.
C) constant increase in the quantity and quality of goods and services the economy can produce.
D) constant increase in the price and quality of goods and services the economy can produce.
E) constant increase in the number of jobs needed to produce the goods and service in the economy.