Question 1

From 2002 to 2008, the Canadian dollar ________ in value.

Accepted Answer

From 2002 to 2008, the Canadian dollar experienced a significant appreciation in value, increasing by approximately 50%. This was due to a variety of factors, including strong commodity prices and a robust Canadian economy.

Question 2

From 2002-2011, the dollar strengthened in value against other currencies. Who was helped and who was hurt by this strong dollar?

Accepted Answer

The answer of From 2002-2011, the dollar strengthened in value...

Question 3

If an economy has aggregate output of $2 trillion, then aggregate income is ________.

Accepted Answer

Aggregate output and aggregate income are the same thing in a closed economy, so aggregate income is also $2 trillion.

Question 4

Students studying money, banking, and financial markets will learn

Accepted Answer

Students studying money, banking, and financial markets will learn critical thinking skills that will be useful in all careers. They will have the ability to analyze and interpret various financial data, make informed decisions, and understand how the economy works. These are useful skills that apply to many different professions.

Question 5

GDP measured with constant prices is referred to as ________.

Accepted Answer

Real GDP is adjusted for inflation to reflect changes in the quantity of goods and services produced. It is measured using constant prices and provides a more accurate picture of economic growth over time. Nominal GDP, on the other hand, is measured using current market prices and does not account for changes in the price level. The GDP deflator is a measure of the overall level of prices in the economy, while industrial production measures the output of the industrial sector only.

Question 6

When the total value of final goods and services is calculated using current prices, the resulting measure is referred to as ________.

Accepted Answer

Nominal GDP is calculated using current prices, which includes the effects of inflation or deflation. It does not take into account the changes in the value of money over time.

Question 7

Using a unified analytic framework to present the information in the text keeps the knowledge

Accepted Answer

A unified analytic framework allows for the information in the text to be structured in a way that is not only theoretical but also applicable to real-life situations. By presenting the information in a structured and organized manner, it becomes easier to understand and apply the concepts, and it reduces the risk of the information becoming outdated or obsolete. Therefore, using a unified analytic framework keeps the knowledge from becoming obsolete.

Question 8

You buy a second hand car from a dealer. Which of the following items are counted in Canadian GDP?

Accepted Answer

The portion of the purchase price attributable to repairs, commissions, and profits to the dealer would be counted in Canadian GDP as it represents current economic activity. The purchase of a second-hand car alone does not contribute to GDP as it was already included in GDP in the year it was manufactured. The portion of the purchase price attributable only to repairs made by the dealer (Option B) and the portion attributable to both repairs and commissions to the salesman (Option C) do not include the profit made by the dealer and hence do not represent the full economic activity associated with the purchase.

Question 9

When in 1985 a British pound cost approximately C$1.30, a Shetland sweater that cost 100 British pounds would have cost $130. With a weaker Canadian dollar, the same Shetland sweater would have cost ________.

Accepted Answer

With a weaker Canadian dollar, it takes more Canadian dollars to buy the same amount of British pounds, making the sweater more expensive in Canadian dollars.

Question 10

If the Canadian dollar price of a euro increases from $1.00 to $1.10, then, everything else held constant, ________.

Accepted Answer

When the Canadian dollar price of a euro increases, it means that it takes more Canadian dollars to purchase one euro. Therefore, a European vacation becomes more expensive as Canadians need to spend more Canadian dollars to purchase the same amount of euros needed for their trip.

Question 11

Canadian farmers who sell beef to Europe benefit most from ________.

Accepted Answer

An increase in the Canadian dollar price of euros means that each euro is now worth more Canadian dollars, which makes it more profitable for Canadian farmers to sell their beef to Europe. They will receive more Canadian dollars for each euro they earn, increasing their revenue.

Question 12

Everything else held constant, Canadians who love French wine benefit most from ________.

Accepted Answer

A decrease in the dollar price of euros would make French wine cheaper for Canadians, leading to a greater benefit for those who love French wine. An increase in the dollar price of euros would make French wine more expensive, while a constant dollar price for euros would not affect the cost of French wine for Canadians. A ban on imports from Europe would prevent Canadians from accessing French wine altogether.

Question 13

The gross domestic product is the ________.

Accepted Answer

The gross domestic product (GDP) is the market value of all final goods and services produced within a country's borders in a given period of time, typically a year. It includes all goods and services produced by businesses within a country, regardless of the nationality of the owners, and it covers tangible goods like cars and food items, as well as intangible goods such as services like healthcare and education. GDP does not include the value of intermediate goods and services that are used in the production process.

Question 14

Everything else held constant, a decrease in the value of the Canadian dollar relative to all foreign currencies means that the price of foreign goods purchased by Canadians ________.

Accepted Answer

When the value of the Canadian dollar decreases relative to other foreign currencies, it means that each Canadian dollar can buy fewer units of the foreign currency. As a result, purchasing foreign goods becomes more expensive for Canadians, leading to a higher price of foreign goods. Therefore, the correct answer is A) increases.

Question 15

The most comprehensive measure of aggregate output is ________.

Accepted Answer

Gross domestic product (GDP) is the most comprehensive measure of aggregate output, as it measures the value of all final goods and services produced within a country's borders during a given time period. Net national product (NNP) measures the value of a country's output after accounting for depreciation, while national income measures the income earned by individuals and businesses within a country. The TSE Index is a stock market index in Canada and does not measure aggregate output.

Question 16

Everything else held constant, a stronger Canadian dollar benefits ________ and hurts ________.

Accepted Answer

A stronger Canadian dollar means that Canadian consumers can purchase foreign goods at a cheaper rate, benefiting them. However, it hurts Canadian businesses as their exports become more expensive for foreign buyers, and they may struggle to compete with foreign businesses. The other choices are incorrect as they do not account for the specific effects of a stronger Canadian dollar.

Question 17

The basic concepts used in the analytic framework of this text include all of the following EXCEPT

Accepted Answer

The text does not use the not-for-profit nature of financial institutions as a basic concept in its analytic framework.

Question 18

If your nominal income in 2002 is $50000, and prices increase by 50 percent between 2002 and 2013, then to have the same real income, your nominal income in 2013 must be ________.

Accepted Answer

If prices increase by 50 percent between 2002 and 2013, then the equivalent income in 2013 is 1.5*$50000 = $75000. Therefore, the nominal income in 2013 must be $75000 to have the same real income as in 2002.

Question 19

If your nominal income in 2013 was $30000, and prices doubled between 2002 and 2013, to have the same real income, your nominal income in 2002 must be ________.

Accepted Answer

If prices doubled from 2002 to 2013, it means the price level increased by 100%. To maintain the same purchasing power or real income, the nominal income in 2002 should be half of the nominal income in 2013, which is $15,000.

Question 20

Nominal GDP is output measured in ________ prices while real GDP is output measured in ________ prices.

Accepted Answer

Nominal GDP is measured with current prices, while real GDP is measured with fixed (usually base-year) prices in order to account for inflation or deflation. Therefore, the correct choice is B.

Quiz 1: Why Study Money, Banking, and Financial Markets