Question 1

The two key business cycle events in Canadian economic history were

Accepted Answer

A) the productivity slowdown and the Great Depression. 
B) government budget deficits and World War II. 
C) the Great Depression and stagflation. 
D) World War II and the Great Depression. 
E) the Great Depression and government budget deficits. 
A) the productivity slowdown and the Great Depression. 
B) government budget deficits and World War II. 
C) the Great Depression and stagflation. 
D) World War II and the Great Depression. 
E) the Great Depression and government budget deficits.

Question 2

New Keynesian Theory

Accepted Answer

A) includes microeconomic foundations and does not rely on sticky wages or prices. 
B) specifies financial markets as the primary cause of business cycles. 
C) relies on sticky wages and prices but does not include microeconomic foundations. 
D) uses the same microeconomic foundations as other macro models. 
E) specifies shocks to technology cause business cycles. 
A) includes microeconomic foundations and does not rely on sticky wages or prices. 
B) specifies financial markets as the primary cause of business cycles. 
C) relies on sticky wages and prices but does not include microeconomic foundations. 
D) uses the same microeconomic foundations as other macro models. 
E) specifies shocks to technology cause business cycles.

Question 3

Tax cuts

Accepted Answer

A) cause unemployment. 
B) will surely make the government default on its debts. 
C) may have no effect, if people take account of future taxes. 
D) always stimulate economic activity. 
E) cause the government to borrow less. 
A) cause unemployment. 
B) will surely make the government default on its debts. 
C) may have no effect, if people take account of future taxes. 
D) always stimulate economic activity. 
E) cause the government to borrow less.

Question 4

The unemployment rate in 2018

Accepted Answer

A) was higher than in 2009. 
B) was at its peak for the period 2008-2018. 
C) was higher than the unemployment rate in the United States. 
D) was at about the average peak in the previous three recessions. 
E) was lower than the unemployment rate in the United States. 
A) was higher than in 2009. 
B) was at its peak for the period 2008-2018. 
C) was higher than the unemployment rate in the United States. 
D) was at about the average peak in the previous three recessions. 
E) was lower than the unemployment rate in the United States.

Question 5

Since 1980, the real interest rate

Accepted Answer

A) has increased worldwide. 
B) has declined only in Canada. 
C) has decreased only in Canada. 
D) has decreased worldwide. 
E) has been roughly constant. 
A) has increased worldwide. 
B) has declined only in Canada. 
C) has decreased only in Canada. 
D) has decreased worldwide. 
E) has been roughly constant.

Question 6

Which of the following is a fundamental question of macroeconomics?

Accepted Answer

A) What mechanism could force people to pollute less? 
B) Where is the stock market heading? 
C) Should governments act to smooth business cycles? 
D) What is the impact of government provided health care? 
E) How should governments be elected? 
A) What mechanism could force people to pollute less? 
B) Where is the stock market heading? 
C) Should governments act to smooth business cycles? 
D) What is the impact of government provided health care? 
E) How should governments be elected?

Question 7

Which of the following best describes the unemployment rate in Canada compared to the United States?

Accepted Answer

A) It was lower in Canada before the 2008-2009 recession, then higher after. 
B) They were equal before the 2008-2009 recession, then higher in Canada after. 
C) It was higher in Canada before the 2008-2009 recession, then lower after. 
D) They are generally equal. 
E) It has been consistently lower in the United States, before and after the 2008-2009 recession. 
A) It was lower in Canada before the 2008-2009 recession, then higher after. 
B) They were equal before the 2008-2009 recession, then higher in Canada after. 
C) It was higher in Canada before the 2008-2009 recession, then lower after. 
D) They are generally equal. 
E) It has been consistently lower in the United States, before and after the 2008-2009 recession.

Question 8

What explains the trends in nominal interest rates?

Accepted Answer

A) standards of living 
B) wages 
C) consumer incomes 
D) aggregate economic activity 
E) inflation rates 
A) standards of living 
B) wages 
C) consumer incomes 
D) aggregate economic activity 
E) inflation rates

Question 9

When a country has a current account deficit, the country

Accepted Answer

A) is always borrowing from domestic residents. 
B) is always lending abroad. 
C) always has a large government budget surplus. 
D) always has a large government budget deficit. 
E) is always borrowing from abroad. 
A) is always borrowing from domestic residents. 
B) is always lending abroad. 
C) always has a large government budget surplus. 
D) always has a large government budget deficit. 
E) is always borrowing from abroad.

Question 10

Persistent current account deficits make sense if

Accepted Answer

A) personal income taxes are reduced. 
B) government interest rates go down accordingly. 
C) the associated foreign borrowing is used to finance increased productive capacity. 
D) the capital account surplus is reduced. 
E) the government budgetary debt is not growing. 
A) personal income taxes are reduced. 
B) government interest rates go down accordingly. 
C) the associated foreign borrowing is used to finance increased productive capacity. 
D) the capital account surplus is reduced. 
E) the government budgetary debt is not growing.

Question 11

Explain why macroeconomists tend to use models to understand how economies work, rather than doing
experiments.

Accepted Answer

In contrast to what occurs in some of th

Question 12

Money is differentiated from other assets due to

Accepted Answer

A) its value as smoothing out business cycles. 
B) its value as a unit of account. 
C) its value as a medium of exchange. 
D) its invulnerability to inflation. 
E) its value of facilitating government spending. 
A) its value as smoothing out business cycles. 
B) its value as a unit of account. 
C) its value as a medium of exchange. 
D) its invulnerability to inflation. 
E) its value of facilitating government spending.

Question 13

Business cycles are

Accepted Answer

A) similar, and all are created from external forces. 
B) similar, but they can have many causes. 
C) each unique, and they can have many causes. 
D) similar, and they all have a single cause. 
E) each unique, but all have a single cause. 
A) similar, and all are created from external forces. 
B) similar, but they can have many causes. 
C) each unique, and they can have many causes. 
D) similar, and they all have a single cause. 
E) each unique, but all have a single cause.

Question 14

More government spending

Accepted Answer

A) can compete with private spending and cause crowding out. 
B) increases the government surplus. 
C) is always beneficial. 
D) reduces the current account deficit. 
E) lowers the government deficit. 
A) can compete with private spending and cause crowding out. 
B) increases the government surplus. 
C) is always beneficial. 
D) reduces the current account deficit. 
E) lowers the government deficit.

Question 15

What is produced and consumed in the economy is determined jointly by

Accepted Answer

A) the behaviour of business managers and government policies. 
B) the preferences of consumers and the behaviour of business managers. 
C) the economy's productive capacity and the preferences of consumers. 
D) standards of living and business cycles. 
E) government policies and the economy's productive capacity. 
A) the behaviour of business managers and government policies. 
B) the preferences of consumers and the behaviour of business managers. 
C) the economy's productive capacity and the preferences of consumers. 
D) standards of living and business cycles. 
E) government policies and the economy's productive capacity.

Question 16

The inflation rate has been low in Canada since 1991 because

Accepted Answer

A) Canada is trading more with the rest of the world. 
B) oil prices have been low. 
C) the government's budget deficit was brought under control. 
D) the Bank of Canada has a 2% inflation target. 
E) employment insurance became less generous. 
A) Canada is trading more with the rest of the world. 
B) oil prices have been low. 
C) the government's budget deficit was brought under control. 
D) the Bank of Canada has a 2% inflation target. 
E) employment insurance became less generous.

Question 17

Since 1870 in Canada, there has been

Accepted Answer

A) too many business cycles to sustain economic growth. 
B) sustained economic growth. 
C) only small growth in average incomes. 
D) sustained economic growth until the Great Depression followed by little growth since. 
E) GDP measured in 2012 dollars is largely unchanged. 
A) too many business cycles to sustain economic growth. 
B) sustained economic growth. 
C) only small growth in average incomes. 
D) sustained economic growth until the Great Depression followed by little growth since. 
E) GDP measured in 2012 dollars is largely unchanged.

Question 18

The development most responsible for the wide-spread introduction of macroeconomic models built upon solid microeconomic foundations was the

Accepted Answer

A) development of the Keynesian coordination failure model. 
B) the work of Milton Friedman. 
C) rational expectations revolution. 
D) popularization of the Solow growth model. 
E) work of John Maynard Keynes. 
A) development of the Keynesian coordination failure model. 
B) the work of Milton Friedman. 
C) rational expectations revolution. 
D) popularization of the Solow growth model. 
E) work of John Maynard Keynes.

Question 19

The Canadian recession of 1981-82

Accepted Answer

A) was likely caused by the problems in the mortgage industry in the United States. 
B) had nothing to do with the Bank of Canada. 
C) was the most-severe of the 1961-2018 period. 
D) was the last recession in Canada during the 20th century. 
E) was the least-severe of the 1961-2018 period. 
A) was likely caused by the problems in the mortgage industry in the United States. 
B) had nothing to do with the Bank of Canada. 
C) was the most-severe of the 1961-2018 period. 
D) was the last recession in Canada during the 20th century. 
E) was the least-severe of the 1961-2018 period.

Question 20

Business cycles in macroeconomics are

Accepted Answer

A) the economic interrelationships among nations. 
B) profits and losses of firms. 
C) short-run ups and downs in aggregate economic activity. 
D) the increase in a nation's productive capacity over a long period of time. 
E) changes in the average standard of living over time. 
A) the economic interrelationships among nations. 
B) profits and losses of firms. 
C) short-run ups and downs in aggregate economic activity. 
D) the increase in a nation's productive capacity over a long period of time. 
E) changes in the average standard of living over time.

The two key business cycle events in Canadian economic history were

New Keynesian Theory

Tax cuts

The unemployment rate in 2018

Since 1980, the real interest rate

Which of the following is a fundamental question of macroeconomics?

Which of the following best describes the unemployment rate in Canada compared to the United States?

What explains the trends in nominal interest rates?

When a country has a current account deficit, the country

Persistent current account deficits make sense if

Explain why macroeconomists tend to use models to understand how economies work, rather than doing experiments.

Money is differentiated from other assets due to

Business cycles are

More government spending

What is produced and consumed in the economy is determined jointly by

The inflation rate has been low in Canada since 1991 because

Since 1870 in Canada, there has been

The development most responsible for the wide-spread introduction of macroeconomic models built upon solid microeconomic foundations was the

The Canadian recession of 1981-82

Business cycles in macroeconomics are

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters

Exam 1: Introduction

The two key business cycle events in Canadian economic history were

New Keynesian Theory

Tax cuts

The unemployment rate in 2018

Since 1980, the real interest rate

Which of the following is a fundamental question of macroeconomics?

Which of the following best describes the unemployment rate in Canada compared to the United States?

What explains the trends in nominal interest rates?

When a country has a current account deficit, the country

Persistent current account deficits make sense if

Explain why macroeconomists tend to use models to understand how economies work, rather than doing experiments.

Money is differentiated from other assets due to

Business cycles are

More government spending

What is produced and consumed in the economy is determined jointly by

The inflation rate has been low in Canada since 1991 because

Since 1870 in Canada, there has been

The development most responsible for the wide-spread introduction of macroeconomic models built upon solid microeconomic foundations was the

The Canadian recession of 1981-82

Business cycles in macroeconomics are

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters