Question 1

A country has a trade deficit when
A)imports exceed exports.
B)imports equal exports.
C)exports exceed imports.
D)exports are zero.

Accepted Answer

A trade deficit occurs when a country imports more goods and services than it exports, resulting in negative net exports. Therefore, the correct choice is A, as imports exceed exports.

Question 2

The business cycle describes the
A)progression of an industry's structure from monopoly to perfect competition.
B)progression of an industry's structure from perfect competition to monopoly.
C)expansion and contraction of an individual industry within the economy.
D)expansion and contraction of economic activity in the economy as a whole.

Accepted Answer

The business cycle refers to the fluctuations in economic activity within the economy as a whole, including periods of expansion (economic growth), peak, contraction (economic downturn), and trough. It reflects the cyclical nature of the economy and its response to various factors such as fiscal and monetary policies, consumer and business sentiments, and global events.

Question 3

Average labour productivity is
A)the amount of workers per machine.
B)the amount of machines per worker.
C)the ratio of employed to unemployed workers.
D)the amount of output per worker.

Accepted Answer

Average labour productivity is the amount of output produced per worker, which means it is the measure of how efficient a workforce is in completing tasks or projects. Therefore, the best option is D: the amount of output per worker. A, B, and C are incorrect because they do not measure the efficiency of the workforce.

Question 4

During recessions,the unemployment rate ________ and output ________.
A)rises;falls
B)rises;rises
C)falls;rises
D)falls;falls

Accepted Answer

During recessions, businesses typically decrease production and lay off workers, leading to a rise in the unemployment rate. At the same time, with less consumer spending and lower business investment, the overall output of the economy also tends to fall.

Question 5

Canadian exports are goods and services
A)produced abroad and sold to Canadians.
B)produced in Canada and sold to Canadians.
C)produced abroad and sold to foreigners.
D)produced in Canada and sold to foreigners.

Accepted Answer

Canadian exports are goods and services produced in Canada and sold to foreigners.

Question 6

An open economy is a national economy that
A)has good relations with its neighbouring countries.
B)has a stock market that is open to traders from anywhere in the world.
C)has extensive trading and financial relationships with other national economies.
D)has established diplomatic relations with most other nations.

Accepted Answer

An open economy is a national economy that has extensive trading and financial relationships with other national economies. It means that the country is highly integrated with the global economy and participates in international trade and investment. Good relations with neighboring countries or diplomatic relations with most other nations do not necessarily make an economy open. While having an open stock market can be a characteristic of an open economy, it is not a defining feature.

Question 7

Canadian imports are goods and services
A)produced abroad and sold to Canadians.
B)produced in Canada and sold to Canadians.
C)produced abroad and sold to foreigners.
D)produced in Canada and sold to foreigners.

Accepted Answer

Canadian imports refer to goods and services purchased by Canadians from other countries. Therefore, they are produced abroad and sold to Canadians. Options B and D refer to domestic production, while option C refers to exports.

Question 8

The two major reasons for the tremendous growth in output in the Canadian economy over the last 125 years are
A)population growth and budget deficit.
B)population growth and increased productivity.
C)low unemployment and budget surplus.
D)low budget deficit and low trade deficits.

Accepted Answer

Population growth and increased productivity are the two major reasons for the tremendous growth in output in the Canadian economy over the last 125 years. As the population grew, there was an increase in demand for goods and services, leading to increased production. Additionally, advancements in technology and increased efficiency led to increased productivity, resulting in a larger output from the economy.

Question 9

A country is said to be experiencing inflation when
A)prices of most goods and services are rising over time.
B)prices of most goods and services are falling over time.
C)total output is rising over time.
D)total output is falling over time.

Accepted Answer

Inflation occurs when the general price level of goods and services in an economy is constantly rising over time. This leads to a decrease in the purchasing power of the currency in circulation. If the prices of most goods and services are falling over time, this is referred to as deflation. Total output and inflation are not directly related, as it is possible to have inflation with increasing or decreasing total output.

Question 10

A country has a trade surplus when
A)imports exceed exports.
B)imports equal exports.
C)exports exceed imports.
D)imports are zero.

Accepted Answer

A trade surplus occurs when a country's exports exceed its imports, meaning it is selling more goods and services to other countries than it is buying from them. This results in a positive balance of trade, as the country is earning more revenue from its exports than it is spending on imports.

Question 11

The highest and prolonged period of unemployment in Canada occurred during
A)the Great Depression of the 1930s.
B)the 1981-1982 recession.
C)the 1990-1991 recession.
D)the 2001 recession in the U.S.

Accepted Answer

The Great Depression of the 1930s is known as the highest and prolonged period of unemployment in Canada, where unemployment rates reached over 27%. This was a devastating economic crisis that affected not only Canada but many other countries around the world. The other options listed also resulted in periods of high unemployment, but they were not as severe or prolonged as the Great Depression.

Question 12

The unemployment rate is the
A)number of unemployed divided by the number of employed.
B)number of employed divided by the number of unemployed.
C)number of unemployed divided by the labour force.
D)labour force divided by the number of unemployed.

Accepted Answer

The unemployment rate is defined as the number of unemployed individuals divided by the labour force. Therefore, choice C is the correct answer. Choices A, B, and D are incorrect as they do not accurately reflect the relationship between the number of unemployed individuals and the labour force.

Question 13

When national output declines,the economy is said to be in
A)an expansion.
B)a deflation.
C)a recovery.
D)a recession.

Accepted Answer

When there is a decline in national output, it signifies a slowdown in economic activity. This is generally referred to as a recession. Therefore, option D - a recession - is the correct answer. Options A - an expansion, B - a deflation, and C - a recovery, all signify an increase in economic activity, which would not be the case when there is a decline in national output.

Question 14

In analyzing macroeconomic data during the past year,you have discovered that average labour productivity fell,but total output increased.What was most likely to have caused this?
A)Government deficit was reduced.
B)The capital/output ratio probably rose.
C)There was an increase in labour input.
D)Unemployment probably increased.

Accepted Answer

An increase in labor input, such as more workers or longer working hours, can lead to a rise in total output even if average labor productivity falls.

Question 15

A country is said to be experiencing deflation when
A)prices of most goods and services are rising over time.
B)prices of most goods and services are falling over time.
C)total output is rising over time.
D)total output is falling over time.

Accepted Answer

Deflation is a sustained decline in the overall level of prices of goods and services in an economy. This means that prices of most goods and services are falling over time.

Question 16

Which of the following is a topic of macroeconomics?
A)why nations have different rates of growth
B)what causes inflation and what can be done about it
C)why unemployment periodically reaches very high levels
D)all of the above

Accepted Answer

All three options are topics of macroeconomics as they study the economy at a national level rather than focusing on individual markets or companies. The growth rates of nations, inflation, and unemployment rates are all interrelated and impact each other, making them important topics of study in macroeconomics.

Question 17

The short-run,but sometimes sharp,contractions and expansions in economic activity are called
A)recession.
B)stagnation.
C)inflation.
D)business cycles.

Accepted Answer

Business cycles refer to the short-run fluctuations in economic activity, including both expansions and contractions. Recession is a part of the business cycle marked by a significant contraction in economic activity, but it is not the only component of the business cycle. Stagnation refers to a prolonged period of slow or stagnant economic growth, while inflation refers to a sustained increase in the general level of prices over time.

Question 18

A closed economy is a national economy that
A)doesn't interact economically with the rest of the world.
B)has a stock market that is not open to traders from outside the country.
C)has extensive trading and financial relationships with other national economies.
D)has not established diplomatic relations with other national economies.

Accepted Answer

A closed economy is one that does not interact economically with the rest of the world, meaning it does not engage in international trade or financial flows with other countries.

Question 19

In 2001 Anchovy had imports of $50 billion,exports of $60 billion,and Anchovy's GDP was equal to $300 billion.The trade surplus was what percent of GDP in 2001?
A)3.3%
B)10.0%
C)16.7%
D)20.0%

Accepted Answer

The trade surplus is the difference between exports and imports, which is $60 billion - $50 billion = $10 billion. To find the percentage of GDP, divide the trade surplus by the GDP and multiply by 100: ($10 billion / $300 billion) * 100 = 3.3%.

Question 20

The main reason Canada has such a high standard of living is
A)low unemployment.
B)high average labour productivity.
C)low inflation.
D)low government budget deficits.

Accepted Answer

High average labour productivity is a major contributor to Canada's high standard of living, as it means the economy generates more output with less input, leading to more goods and services available to citizens.

Note: The other options (A, C, and D) may also contribute to a high standard of living, but they are not the main reason for it in Canada.

Quiz 1: Introduction to Macroeconomics

A country has a trade deficit when

The business cycle describes the

Average labour productivity is

During recessions,the unemployment rate and output .

Canadian exports are goods and services

An open economy is a national economy that

Canadian imports are goods and services

The two major reasons for the tremendous growth in output in the Canadian economy over the last 125 years are

A country is said to be experiencing inflation when

A country has a trade surplus when

The highest and prolonged period of unemployment in Canada occurred during

The unemployment rate is the

When national output declines,the economy is said to be in

In analyzing macroeconomic data during the past year,you have discovered that average labour productivity fell,but total output increased.What was most likely to have caused this?

A country is said to be experiencing deflation when

Which of the following is a topic of macroeconomics?

The short-run,but sometimes sharp,contractions and expansions in economic activity are called

A closed economy is a national economy that

In 2001 Anchovy had imports of $50 billion,exports of $60 billion,and Anchovy's GDP was equal to $300 billion.The trade surplus was what percent of GDP in 2001?

The main reason Canada has such a high standard of living is