Question 1

Which of the following is associated with macroeconomics?

Accepted Answer

A)  an examination of the incomes of the University of Toronto Business School graduates
B)  an empirical investigation of the general price level and unemployment rates in the 2000s
C)  a study of the trend of pecan prices since World War II
D)  a case study of pricing and production in the textbook industryE) B) and D)
F) A) and B)

Question 2

Normative statements are concerned with:

Accepted Answer

A)  facts and theories.
B)  what ought to be.
C)  what is.
D)  rational choice involving costs and benefits.E) A) and B)
F) B) and C)

Question 3

If the output of product X is such that marginal benefit equals marginal cost:

Accepted Answer

A)  the correct amount of resources is being allocated to X's production.
B)  the value of producing X and the value of producing alternative products with available resources is the same.
C)  there can be no net gain to society by allocating either more or less resources to producing X.
D)  all of the above are true.E) A) and B)
F) B) and C)

Question 4

The law of increasing opportunity costs states that:

Accepted Answer

A)  if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so.
B)  the sum of the costs of producing a particular good cannot rise above the current market price of that good.
C)  if the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount.
D)  if the prices of all the resources devoted to the production of goods increase, the cost of producing any particular good will increase at the same rate.E) A) and B)
F) None of the above

Question 5

The global financial crisis that spread to Canada in late 2008 has been dubbed:

Accepted Answer

A)  The housing bubble crash.
B)  The great financial crisis.
C)  The great recession.
D)  The great depression.E) B) and C)
F) B) and D)

Question 6

Suppose an economist says that "Other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that:

Accepted Answer

A)  the quantity of bananas purchased determines the price of bananas.
B)  all factors other than the price of bananas (for example, consumer tastes and incomes)  are assumed to be constant.
C)  economists can conduct controlled laboratory experiments.
D)  one cannot generalize about the relationship between the price of bananas and the quantity purchased.E) A) and B)
F) A) and C)

Question 7

Marginal analysis means that decision-makers compare the extra benefits with the extra costs of a specific choice.

Accepted Answer

A) True 
 B)False

Question 8

Answer on the basis of the relationships shown in the above four figures.The amount of Y is directly related to the amount of X in:

Accepted Answer

A)  both 1 and 3.
B)  both 1 and 2.
C)  2 only.
D)  l only.E) A) and C)
F) B) and C)

Question 9

If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that:

Accepted Answer

A)  it is impossible to produce more consumer goods.
B)  resources cannot be reallocated between the two goods.
C)  it is impossible to produce more capital goods.
D)  more consumer goods can only be produced at the cost of fewer capital goods.E) A) and D)
F) B) and D)

Question 10

Which of the following is a normative statement?

Accepted Answer

A)  The temperature is high today.
B)  The humidity is high today.
C)  It is too hot to play tennis today.
D)  It will cool off later this evening.E) A) and B)
F) B) and C)

Question 11

Scarcity in relation to wants means you face trade-offs; therefore, having to make choices is which of the ten key concepts to retain for a lifetime?

Accepted Answer

A)  Facing trade-offs
B)  Opportunity cost
C)  Choosing a little more or a little less
D)  The influence of incentivesE) None of the above
F) B) and D)

Question 12

A normative statement is one which:

Accepted Answer

A)  is based on the law of averages.
B)  pertains only to microeconomics.
C)  pertains only to macroeconomics.
D)  is based upon value judgments.E) A) and B)
F) A) and C)

Question 13

Which of the following is a macroeconomic statement?

Accepted Answer

A)  The gross profits of all Canadian businesses were $70 billion last year.
B)  The price of beef declined by 3 percent last year.
C)  General Motors' profits increased in 2012.
D)  The productivity of steelworkers increased by 1 percent in 2012.E) A) and D)
F) A) and C)

Question 14

Refer to the diagram below.The concave shape of each production possibilities curve indicates that:

Accepted Answer

A)  resources are perfectly substitutable.
B)  wants are virtually unlimited.
C)  prices are constant.
D)  resources are not equally suited for alternative uses.E) A) and C)
F) A) and D)

Question 15

Concern about the general level of prices in an economy is primarily a concern about the economic goal of:

Accepted Answer

A)  economic efficiency.
B)  economic security.
C)  price-level stability.
D)  equity.E) A) and B)
F) A) and C)

Question 16

The attainable area for the budget line, per Figure 1.1, includes:

Accepted Answer

A)  the area below the line but not the budget line itself.
B)  the area below the budget line and the budget line.
C)  the area above the budget line but no the budget line itself.
D)  the area above the budget line and the budget line.E) A) and B)
F) All of the above

Question 17

A positive statement is one which is:

Accepted Answer

A)  derived by an abstract generalization.
B)  suggestive of what should be done.
C)  subjective and is based on a value judgment.
D)  objective and is also based on facts.E) B) and C)
F) All of the above

Question 18

1/8, 1/6, 1/4, and ½ units of tractors. D) 1/2, 1/4, 1/6, and 1/8 units of tractors." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.Starting at point E, the production of successive units of bread will cost:

Accepted Answer

A)  a constant 8 units of tractors.
B)  a constant 6 units of tractors.
C)  1/8, 1/6, 1/4, and ½ units of tractors.
D)  1/2, 1/4, 1/6, and 1/8 units of tractors.E) C) and D)
F) B) and C)

Question 19

Refer to the above production possibilities curves.The movement from curve (a) to curve (b) implies an increase in the quantity and/or quality of society's productive resources.

Accepted Answer

A) True 
 B)False

Question 20

Economics involves "marginal analysis" because:

Accepted Answer

A)  most decisions involve changes in the status quo.
B)  marginal benefits always exceed marginal costs.
C)  marginal costs always exceed marginal benefits.
D)  much economic behaviour is irrational.E) All of the above
F) A) and B)

Exam 1: Part B: Limits, Alternatives, and Choices

Suppose an economist says that "Other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that:

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Refer to the above production possibilities curves.The movement from curve (a) to curve (b) implies an increase in the quantity and/or quality of society's productive resources.

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If the output of product X is such that marginal benefit equals marginal cost:

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Refer to the above diagram.Starting at point E, the production of successive units of bread will cost:

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A positive statement is one which is:

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Scarcity in relation to wants means you face trade-offs; therefore, having to make choices is which of the ten key concepts to retain for a lifetime?

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A normative statement is one which:

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Which of the following is a normative statement?

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Marginal analysis means that decision-makers compare the extra benefits with the extra costs of a specific choice.

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The law of increasing opportunity costs states that:

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Answer on the basis of the relationships shown in the above four figures.The amount of Y is directly related to the amount of X in:

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If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that:

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Which of the following is a macroeconomic statement?

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Refer to the diagram below.The concave shape of each production possibilities curve indicates that:

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Which of the following is associated with macroeconomics?

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Concern about the general level of prices in an economy is primarily a concern about the economic goal of:

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Normative statements are concerned with:

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The global financial crisis that spread to Canada in late 2008 has been dubbed:

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The attainable area for the budget line, per Figure 1.1, includes:

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Economics involves "marginal analysis" because:

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