Question 1

In the 2008-09 recession, the government deficit

Accepted Answer

A)  stayed roughly constant.
B)  decreased.
C)  would have increased if the government had intervened.
D)  increased.
E)  was reduced by the Bank of Canada.F) A) and C)
G) B) and C)

Question 2

Monetary policy in Canada is determined by

Accepted Answer

A)  the Bank of Canada.
B)  the Royal Canadian Mint.
C)  the Prime Minister of Canada.
D)  the Finance Minister.
E)  the Bank of Montreal.F) C) and E)
G) A) and E)

Question 3

The business cycle component of the log of real per capita GDP is equal to

Accepted Answer

A)  log of trend per capita GDP - log of actual real per capita GDP.
B)  log of trend GDP divided by log of actual real GDP.
C)  log of trend GDP - log of actual real GDP.
D)  log of actual real per capita GDP - log of trend per capita GDP.
E)  log of actual real GDP divided by log of trend GDP.F) All of the above
G) A) and C)

Question 4

During the 2008 2009 recession in Canada

Accepted Answer

A)  unemployment decreased.
B)  inflation increased.
C)  exports increased.
D)  exports decreased.
E)  the real interest rate increased.F) C) and D)
G) All of the above D

Question 5

Canada has become a more open economy because

Accepted Answer

A)  greater trade restrictions elsewhere in the world make trade with Canada attractive.
B)  of the European Union.
C)  the United States has a fragile financial sector.
D)  it is cheaper to ship goods between countries, and there are fewer trade restrictions.
E)  the Bank of Canada promotes international trade.F) A) and D)
G) A) and C) D

Question 6

When a country has a current account surplus, the country

Accepted Answer

A)  is always borrowing from domestic residents.
B)  always has a large government budget deficit.
C)  is always lending abroad.
D)  always has a large government budget surplus.
E)  is always borrowing from abroad.F) A) and C)
G) All of the above

Question 7

In the long run, inflation is caused by

Accepted Answer

A)  greedy monopolists.
B)  global warming.
C)  aggressive labour unions.
D)  growth in the money supply.
E)  the tradeoff between aggregate output and inflation.F) A) and D)
G) D) and E)

Question 8

Business cycles

Accepted Answer

A)  occur every five years in Canada.
B)  are always caused by the central bank.
C)  have a single cause, and unpredictable comovements.
D)  cannot be prevented, according to the consensus among macroeconomists.
E)  have potentially many causes, but regular comovements.F) A) and D)
G) A) and C)

Question 9

To be useful, macroeconomic models

Accepted Answer

A)  never generate testable hypothesis.
B)  must be extremely realistic.
C)  must be complete, accurate descriptions of the world.
D)  provides a lot of intricate details.
E)  must be simple.F) A) and B)
G) All of the above

Question 10

A trade-off between aggregate output and inflation

Accepted Answer

A)  is the basis for fiscal policy.
B)  sometimes exists, and is stable.
C)  is not theoretically possible, and is not observed in practice.
D)  is theoretically possible, but has never been observed in practice.
E)  sometimes exists, but is unstable.F) A) and E)
G) C) and E)

Question 11

Sometimes it is useful to separate economic movements into

Accepted Answer

A)  short-run growth and business cycle fluctuations.
B)  long-run growth and business cycle fluctuations.
C)  short-run growth and income movements.
D)  long-run growth and income movements.
E)  employment growth and business cycle fluctuations.F) A) and E)
G) A) and D)

Question 12

The basic structure of a macroeconomic model includes the description of this feature

Accepted Answer

A)  a herd of cows.
B)  the density of cities.
C)  isotherms.
D)  consumers' preferences over goods.
E)  average annual rainfall.F) A) and C)
G) B) and E)

Question 13

According to the Lucas critique, the effects of changes in economic policy

Accepted Answer

A)  do not require macroeconomic theory.
B)  cannot always be predicted by looking at historical macroeconomic relationships.
C)  are easy to predict.
D)  are known to the government.
E)  can be determined by looking at macroeconomic data.F) B) and E)
G) B) and D) B

Question 14

What do we assume about households and firms?

Accepted Answer

A)  They optimize.
B)  They look after each other.
C)  They act irrationally.
D)  Their interests are rarely aligned.
E)  They do what the government tells them to do.F) B) and C)
G) C) and D)

Question 15

Gross Domestic Product is

Accepted Answer

A)  the quantity of goods produced within a country's borders during some specific period of time.
B)  the quantity of goods and services produced by Canadian residents domestically and abroad during some specific period of time.
C)  the quantity of goods and services produced within a country's borders during some specified period of time.
D)  the aggregate quantity of income earned by consumers who have jobs during some specified period of time.
E)  the quantity of goods produced by Canadian residents domestically and abroad during some specific period of time.F) B) and D)
G) C) and E)

Question 16

Primarily, macroeconomists use microeconomic principles to study

Accepted Answer

A)  long-run economic growth and employment policies.
B)  short-run and long-run economic growth.
C)  long-run economic growth and business cycles.
D)  business cycles and trends in the stock market.
E)  trends in the stock market and long-term economic growth.F) C) and E)
G) A) and E)

Question 17

When there is high inflation

Accepted Answer

A)  the nominal interest rate is always greater than the real interest rate.
B)  interest rates fall due to government policy.
C)  the real interest rate is always negative.
D)  the nominal interest rate is approximately equal to the real interest rate.
E)  the real interest rate is always greater than the nominal interest rate.F) None of the above
G) A) and E)

Question 18

The 1981-82 recession in Canada

Accepted Answer

A)  was caused by an increase in oil prices.
B)  was a side effect of tight monetary policy.
C)  was coincident with the global financial crisis.
D)  was the least-severe recession in the 1961 2018 period.
E)  was caused by fiscal policy.F) B) and C)
G) A) and B)

Question 19

Reductions in the real interest rate caused by monetary policy

Accepted Answer

A)  are always harmful.
B)  are permanent.
C)  do not occur during recessions.
D)  never happen.
E)  are temporary.F) A) and B)
G) D) and E)

Question 20

Since 1870, the typical Canadian

Accepted Answer

A)  became twice as rich.
B)  became more than sixteen-times as rich.
C)  became ten-times as rich.
D)  remained as rich as the typical American.
E)  remained equally as rich.F) B) and D)
G) C) and E)

Exam 1: Introduction

In the 2008-09 recession, the government deficit

Correct AnswerverifiedShow Answer

Monetary policy in Canada is determined by

Correct AnswerverifiedShow Answer

The business cycle component of the log of real per capita GDP is equal to

Correct AnswerverifiedShow Answer

During the 2008 2009 recession in Canada

Correct AnswerverifiedD

Canada has become a more open economy because

Correct AnswerverifiedD

When a country has a current account surplus, the country

Correct AnswerverifiedShow Answer

In the long run, inflation is caused by

Correct AnswerverifiedShow Answer

Business cycles

Correct AnswerverifiedShow Answer

To be useful, macroeconomic models

Correct AnswerverifiedShow Answer

A trade-off between aggregate output and inflation

Correct AnswerverifiedShow Answer

Sometimes it is useful to separate economic movements into

Correct AnswerverifiedShow Answer

The basic structure of a macroeconomic model includes the description of this feature

Correct AnswerverifiedShow Answer

According to the Lucas critique, the effects of changes in economic policy

Correct AnswerverifiedB

What do we assume about households and firms?

Correct AnswerverifiedShow Answer

Gross Domestic Product is

Correct AnswerverifiedShow Answer

Primarily, macroeconomists use microeconomic principles to study

Correct AnswerverifiedShow Answer

When there is high inflation

Correct AnswerverifiedShow Answer

The 1981-82 recession in Canada

Correct AnswerverifiedShow Answer

Reductions in the real interest rate caused by monetary policy

Correct AnswerverifiedShow Answer

Since 1870, the typical Canadian

Correct AnswerverifiedShow Answer

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D

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D

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B

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