Exam - test bank U · D) A local entrepreneur decides to open a Waffle House in the local Walmart...

Exam

Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1) The study of economics can help us:A) better understand the impacts of public policies.B) make the best choices around how to spend our time and money.C) be smarter voters.D) All of these are true.

1)

2) Economics is primarily the study of:A) why provincial and federal governments disagree.B) the government's decision making process.C) how society manages scarce resources.D) All of these are true.

2)

3) The principles of economics can explain:A) why a country might prosper.B) why people choose to work or go to college.C) why the value of money changes over time.D) Economics can explain all of these things.

3)

4) Decisions about how to allocate resources are made by:A) businesses.B) individuals.C) governments.D) Resource allocation decisions are made by all of these.

4)

5) Which of the following statements best describes the study of economics?A) Economics studies how people maximize returns in the stock market.B) Economics studies how governments determine appropriate tax rates.C) Economics studies how individuals and groups manage resources.D) Economics studies how the Bank of Canada handles fluctuation in business cycles.

5)

6) Alan could apply the principles of economic decision making to:A) deciding what to have for dinner.B) deciding which girl to marry.C) deciding how to spend his paycheque.D) All of these are true.

6)

7) Which of the following is not considered an economic resource?A) A personal relationship B) CashC) Real estate D) These are all examples of a resource.

7)

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8) The two broad fields that make up the subject of economics are:A) personal investments and business investments.B) imports and exports.C) fiscal policy and monetary policy.D) microeconomics and macroeconomics.

8)

9) Which of the following is considered a microeconomic issue?A) The unemployment rate in Greece is 22.8 percent.B) Zimbabwe has experienced a decline in inflation.C) The local university decides to raise tuition for online course offerings.D) The economic growth rate was reported at 2.4 percent in the first quarter of 2013

for the United States.

9)

10) Which of the following is considered a microeconomic issue?A) Coors Light packages alcohol in bottles that turn blue when cold.B) Apple releases a new version of the iPhone.C) A family decides to drive its child to school instead of relying on a school bus.D) All of these are examples of microeconomic issues.

10)

11) Canada’s Wonderland decides to charge local residents a lower price than other parkvisitors. This would fall under which field of economics?

A) Microeconomics B) Public policyC) Macroeconomics D) Customer service

11)

12) Which of the following is considered a microeconomic issue?A) India experiences a reduction in unemployment after opening its borders to trade.B) Chinese economic growth has declined.C) The Bank of Canada cuts key interest rates in order to stimulate lending.D) Walmart decides to add more self-checkout machines as the cost of labour rises.

12)

13) Which of the following is considered a microeconomic topic?A) A firm decides to purchase pay-per-click online advertisingB) The CPI reports a rise in inflation during JulyC) The review of quarterly national income accounting dataD) The Bank of Canada decides to increase the discount rate

13)

14) Which of the following could be an example of a question that would be studied inmicroeconomics?

A) Why did our economic growth rate slow down during the 2000s?B) How will the legalization of marijuana affect the market for cigarettes?C) When should Parliament raise taxes in order to tackle the debt crisis?D) How did the recession end in 2009 if unemployment continued to rise?

14)

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15) Which broad field of economics would most likely study how consumers respond to ahike in cigarette taxes?

A) Microeconomics B) Monetary economicsC) Macroeconomics D) Marginal economics

15)

16) The field of ________ would most likely study how all consumers respond to a hike incigarette taxes, and the field of ________ would most likely study how Bob responds tothe tax.

A) microeconomics; macroeconomics B) macroeconomics; macroeconomicsC) macroeconomics; microeconomics D) microeconomics; microeconomics

16)

17) Statistics Canada releases last quarter's growth rate in real GDP. This release wouldmost likely have been written by what kind of an economist?

A) A labour economist B) A monetary economistC) A microeconomist D) A macroeconomist

17)

18) Which of the following is considered a macroeconomic topic?A) iTunes raises the price of its pop artists music only.B) The labour force participation rate fell by 1 percentage point in 2010.C) iTunes raises the price of all its music.D) Jay-Z decides to sell his Brooklyn Nets minority ownership.

18)

19) Which of the following could be considered a macroeconomic issue?A) Twinkies goes bankrupt, and the entire snack industry experiences losses.B) The unemployment rate falls to 7.5 percent from 7.7 percent during the month of

June.C) Telus and Rogers finalize a merger.D) All of these are examples of macroeconomic issues.

19)

20) Which of the following questions would a macroeconomist most likely try to answer?A) What stage of the business cycle is our economy currently in?B) How much would marijuana consumption change if the market became legal?C) Should an energy firm increase its distribution from national to international?D) Why do Broadway musicals and airlines have different price discrimination

strategies?

20)

21) Which of the following is a topic studied in macroeconomics?A) Consumer participation in FacebookB) Gasoline price changesC) Unemployment rates over timeD) Taxation strategies of major corporations

21)

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22) Macroeconomics includes the study of:A) how the increase in the labour force participation rate by females impacts childhood

obesity.B) how grocery cart rental fees impact parking lot accident rates.C) how rent ceilings impact the construction rates of new apartments.D) how the economy works on a regional, national, or international scale.

22)

23) Justin Trudeau argued in a debate with Prime Minister Harper that the economy hadgrown more slowly in each year of the Prime Minister’s term than in the year prior toHarper’s government. This claim is most related to the field of:

A) macroeconomics. B) public policy.C) microeconomics. D) financial economics.

23)

24) Which of the following economic decisions would most likely be studied by amacroeconomist?

A) Prices for train fares rise as labour unions negotiate higher wage rates.B) Domino's Pizza decides to provide quantity discounts in order to increase revenue.C) The government of Estonia implements a flat rate personal income tax for all

citizens.D) A local entrepreneur decides to open a Waffle House in the local Walmart parking

lot.

24)

25) The assumption of rational behavior:A) explains why people voluntarily engage in decisions for which costs exceed

benefits.B) helps economists explain a lot about the real world by assuming that people behave

in the way that will best achieve their goals.C) offers a perfect framework for how people actually behave.D) is best applied to psychology and should not be used in the science of economics.

25)

26) A rational choice is one that:A) is usually optimized when decision makers are poorly informed about alternatives.B) does not involve self-interested behavior.C) involves the use of strategic decision making in an effort to reach a goal.D) allows individuals to reach their goals.

26)

27) When we believe the best result will come from the decision we have made, we arebeing:

A) considerate. B) short-sighted. C) gullible. D) rational.

27)

28) When we assume that consumers want to pay the lowest price possible, we assume thatconsumers are:

A) informed. B) deceitful. C) cheap. D) rational.

28)

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29) Which is not one of the four basic questions used by economists to break downproblems?

A) Why isn't everyone already doing it? B) What do others think?C) What are the trade-offs? D) How will others respond?

29)

30) Which of the following is one of the basic questions used by economists to break downproblems?

A) How will individuals feel about the change?B) Why has the market failed?C) What are the wants and constraints of those involved?D) Economists don't ask any of these questions.

30)

31) Which of the following is a question that an economist would use to break down aproblem?

A) Is there a scarce resource that must be allocated?B) Will the average income per person for the society increase?C) Does the decision maker have a track record of being rational?D) None of these.

31)

32) Scarcity can best be defined as a situation in which:A) consumers look for bargains.B) people respond to incentives.C) producers are selfish with resources.D) all wants cannot be satisfied due to resource constraints.

32)

33) Scarcity reflects our inability to satisfy wants due to:A) unlimited resources. B) inefficient political systems.C) limited resources. D) unemployed workers.

33)

34) The economic concept of scarcity refers to the fact that:A) income must be redistributed through taxation in order to address income disparity.B) limited resources require economies to make choices among production

alternatives.C) Canada will always have a battle to fight hunger.D) resources are often wasted and shortages are often the result.

34)

35) Which of the following is a direct result of scarcity?A) Due to high gas prices, Shana decides to trade her Chevy Tahoe for a Honda

Accord.B) A college student misses a test review in order to sleep in.C) Buildings in Toronto are taller than buildings in Hamilton due to fewer acres of

land per person.D) All of these.

35)

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36) Which of the following describes a problem created by scarcity?A) The course you need to take in the fall is offered at times that conflict with your

work schedule.B) Your cell phone battery is low and you decide to screen a phone call from your

friend just in case that special someone calls later.C) Parliament eliminates tours due to budget constraints.D) All of these.

36)

37) Individuals, firms, and societies are limited in the amount of goods and services that theycan produce. This is a direct result of:

A) irrational behavior. B) scarcity.C) waste. D) unemployment.

37)

38) The problem created by "scarcity":A) applies to everyone because it is a fact of life.B) could be solved if more people worked overtime.C) is an individual concern but not a concern on a macro level.D) is not a concern for the top income earners.

38)

39) Scarcity is:A) not a problem for Bill Gates because he is a billionaire.B) can be eliminated by rational decision making.C) is a problem studied in microeconomics but is not a macroeconomic concern.D) a fact of life.

39)

40) Scarcity requires that we:A) change our fiscal policy until the situation of scarcity is eliminated.B) make sure we only want things that we are capable of consuming and producing.C) make decisions in order to arrange our resources rationally.D) adopt economic policies that will lead to unlimited resources.

40)

41) The problem of having unlimited wants under the constraint of limited resources candescribe the problem of:

A) scarcity. B) sunk costs.C) the marginal principle. D) opportunity cost.

41)

42) The greatest constraint faced by banks considering the alternative of lending toBangladeshi villagers is:

A) not having qualified loan officers.B) counterfeit Carfax reports that make it difficult to properly assess collateral.C) not being able to determine appropriate currency exchange rates.D) having limited funds available for loans.

42)

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43) The only rental house available at your favorite lake on July 1st is out of your pricerange. This is an example of:

A) why everyone isn't already doing it.B) a constraint.C) an infringement upon your freedoms enjoyed as a Canadian citizen.D) why you should have a yard sale.

43)

44) "There is no such thing as a free lunch." This is an example of which economic concept?A) Income effect B) MaximizationC) Basic necessities D) Trade-offs

44)

45) Purchasing a smart phone data plan, premium movie channels, and football seasontickets results in you having to drop your car insurance plan. This can be described as:

A) home field advantage B) a trade-offC) healthy living D) irrational decision making

45)

46) Trade-offs are:A) always result in market-failure.B) associated with every decision.C) do not exist if we receive something for free.D) can be avoided through economic planning.

46)

47) When making a decision, it is easier to identify and evaluate which of the following?A) Costs associated with the decision.B) Costs and benefits are equally easy to identify and evaluate.C) Neither of these is often easy to identify and evaluate.D) Benefits associated with the decision.

47)

48) People choose to do something:A) when they believe it won't harm anyone and will better themselves.B) when they believe the benefits outweigh the costs of the decision.C) when they believe the costs outweigh the benefits of the decision.D) when they believe equilibrium will be reached.

48)

49) Opportunity Cost:A) only includes explicit, out of pocket expenses.B) would not include the wages lost from working when deciding to take a vacation.C) is never provided in dollar values.D) is the value of your next best alternative.

49)

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50) You decide to drive your car on a long road trip of 1,500 kilometers. The opportunitycost of driving your car:

A) is the amount of money spent on gas.B) includes lost wages that you could have earned instead of driving.C) is zero because the car is paid for.D) None of these.

50)

51) If Johnny weren't in economics class this morning, he'd be sleeping. The value Johnnyplaces on sleeping represents his:

A) marginal benefit. B) opportunity cost.C) sunk cost. D) incentives.

51)

52) Your sister always brags about how savvy of a grocery shopper she is. She believes thatshe saves lots of money by paying with coupons and making her grocery purchases atmultiple stores to get the lowest prices on all goods. She may overestimate her savingsbecause:

A) she does not count the value of the extra time it takes to stand in multiple lines atmultiple stores and use multiple coupons compared to a trip to one store with nocoupons.

B) she does not count the value of the time it took to sort and clip coupons as a cost.C) she does not count the cost of the gas used driving extra kilometers to multiple

grocery stores.D) All of these.

52)

53) In the early 1990s, before pay at the pump was an option, a gas station decides to forcepeople to pre-pay due to drive-offs. The opportunity cost of this decision may include:

A) not having to look outside for people waving at you to turn on the pump.B) the value of the gas that is no longer stolen.C) an increase in snack sales because people are coming into the store to pay for gas

before pumping versus after pumping.D) the revenue lost because people will "low ball" how much they think their tanks

will hold in an effort to avoid having to come back into the store to get change fromoverpayment.

53)

54) The Ministry of Health passes a regulation that slows the pace at which helpfulmedications reach the marketplace. The alternative of having the medication available toconsumers earlier is an example of:

A) promoting consumer health.B) the opportunity cost of the Ministry's regulation.C) how easy it is to identify and evaluate costs.D) the marginal benefit of the Ministry’s regulation.

54)

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55) Saturday afternoon you can either attend a street festival, work and earn $100, or studyfor your midterm exam. You flip a coin between the street festival and studying, but didnot really consider working. The coin flip determined that you would stay home andstudy. The opportunity cost of the time spent studying includes:

A) the loss of $100 worth of wages and going to the street festival.B) the benefit that could have been received at the street festival.C) earning a high score on your midterm.D) None of these.

55)

56) Jimmy is very excited about the costume party with a 1990s theme. He is planning todress up as MC Hammer but is also considering going as a lifeguard from Baywatch. Hisopportunity cost of arriving dressed like MC Hammer is:

A) the cost of parachute pants.B) giving up the alternative of dressing like a lifeguard.C) the savings from not purchasing red swimming trunks.D) there is no opportunity cost because he attended the party either way.

56)

57) A local fast-food restaurant mails out coupons for a free sandwich to every home in thecommunity. The opportunity cost of redeeming the sandwich may include:

A) lost wages due to spending time in a long line instead of eating a Healthy Choicemeal in your office.

B) eating a "Tough Man's Burger," which is one of your favorite fast food options.C) not eating because you are on a "get fit for the summer" diet plan.D) Any of these could be an opportunity cost, depending on which alternative would

have been taken if you did not have a coupon for a free sandwich.

57)

58) You are shopping at the local mall with an $80 gift certificate. Only three items catchyour attention. The items include a Justin Bieber sheet set, a remote control helicopter,and an "Amazing Ab Belt." You would be willing to give up $60 for the sheets, $70 forthe belt, and $80 for the helicopter. Knowing this, you decide to purchase the helicopter.The opportunity cost of the helicopter was:

A) $80, the amount of the gift certificate spent.B) $60, the value of the sheets.C) $70, the value of the ab belt.D) $130, the combined value of the alternatives forgone.

58)

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59) Cameron can spend the afternoon playing golf, driving his boat, or cleaning his house.Although he enjoys golf, he sometimes becomes frustrated when playing. He decides toenjoy a more relaxing afternoon on his boat. Cameron never thought about cleaning thehouse but did give golf some serious consideration. Cameron's opportunity cost of takinghis boat out was:

A) the enjoyment he would have received from playing golf.B) a dirty house and not playing golf.C) enjoying a relaxing day on the lake.D) a dirty house.

59)

60) Making a decision "on the margin" involves comparing:A) total benefits against total costs, which include benefits and costs from past

decisions.B) sunk costs against opportunity costs.C) additional benefits against additional costs.D) All of these are true.

60)

61) After purchasing a coffee cup from your local gas station for $5.00, you can always refill

your cup for $0.50. The marginal cost of your 10th cup of coffee purchased at the gasstation is:

A) $5.00. B) $10.00. C) $5.50. D) $0.50.

61)

62) After purchasing a coffee cup from your local gas station for $5.00, you can always refillyour cup for $0.50. The sunk cost of the coffee purchased at the gas station is:

A) $0.50. B) $5.50. C) $10.00. D) $5.00.

62)

63) A local street festival that previously sold bracelets in exchange for unlimited beer isnow concerned about the overconsumption of alcohol. If they switch to selling ticketsper beer, will overall consumption at next year's festival decrease?

A) No, because the marginal cost per extra beer will decrease for consumers.B) Yes, because the marginal benefit per extra beer will increase for consumers.C) No, because the marginal cost per extra beer will increase for consumers.D) Yes, because the marginal cost per extra beer will increase for consumers.

63)

64) A college student decides to spend the afternoon watching three movies rented from RedBox. The cost of each movie is $1. The student was willing to pay $4 to rent each of thefirst two movies and $2 to rent the third movie. What was the marginal benefit received

by the student when renting the 2nd movie?A) $2 B) $1 C) $8 D) $4

64)

65) The extra cost associated with producing or consuming the next unit is called the:A) utility cost. B) sunk cost. C) marginal cost. D) variable cost.

65)

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66) Many theaters sell empty seats at a deep discount just before show time. What economicconcept is displayed by this behavior?

A) Thinking at the margin B) Sunk costsC) Consumer demand D) Price optimization

66)

67) The extra benefit associated with producing or consuming the next unit is called the:A) marginal benefit. B) economic benefit.C) revenue product. D) spillover.

67)

68) The deadline for your research paper is tomorrow and you still need a day of work tocomplete the paper. Unfortunately, you are scheduled to work all day in the cafeteria.You can turn the paper in one day late for a 10 percent penalty or take the day off ofwork and turn the paper in by the deadline. Losing a day of wages will cost you $90. Themarginal cost of turning the paper in on time is:

A) not getting to lounge around all day.B) $90 in forgone wages.C) 10 percent deducted from your final score.D) None of these represent the marginal cost.

68)

69) A movie costs you and your friend $15 each. After one hour of watching the movie, youhave struggled to stay awake while your friend has been on Facebook and is also boredwith the movie. You suggest that you and your friend leave the movie and go to the park.Your friend responds by stating that he is not going to waste his $15 that was previouslyspent on the movie. Your friend is considering:

A) depreciation. B) the marginal benefit.C) an opportunity cost of the movie. D) a sunk cost.

69)

70) You have paid all expenses to travel to your favorite beach for a vacation. You madethese payments early in order to receive a discount and all payments are non-refundable.Unfortunately, a hurricane is likely to crash into the coast during your vacation dates.What should not be considered as you make a decision to take your trip or not?

A) The best alternative use of your time if you do not take the tripB) The money that has already been spent on the tripC) The satisfaction you are likely to receive at the beach during a hurricaneD) All of these should be considered.

70)

71) You decided to take a college accounting course to brush up on your knowledge of thelanguage of business. The tuition expense was $500. After the date has expired toreceive a refund for the course, you are offered a job that would conflict with your classtime. In making the decision to accept or decline the offer, the $500 is:

A) the expected gain in pay from taking the accounting course.B) a sunk cost.C) the opportunity cost of the job.D) a sunk benefit.

71)

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72) Your favorite team has a commanding lead toward the end of the ballgame. You suggestto your friend that you leave early to beat traffic. Your friend does not like the ideabecause he paid $50 to see the game. The $50 already spent on the game is an exampleof a(n):

A) sunk cost. B) normal cost. C) variable cost. D) implicit cost.

72)

73) An incentive is a concept that addresses which question used by economists?A) What are the trade-offs?B) How will others respond?C) Why isn't everyone already doing it?D) What are the wants and constraints of those involved?

73)

74) The price of pizza falls relative to the price of spaghetti, so people buy more pizzainstead of spaghetti. This is an example of responding to:

A) marginal science. B) disincentives.C) incentives. D) sunk benefit.

74)

75) To provide an incentive for villagers to repay loans, Muhammad Yunus:A) made loans using group responsibility.B) threatened to call the borrower's mothers.C) forced villagers to offer collateral for loans.D) would increase interest rates by 1 percentage point after each late payment.

75)

76) Entrepreneurs tend to take greater risks if low tax rates offer greater after-tax profitpotentials. The government's decision to offer low tax rates to entrepreneurs is:

A) providing room for an economic expansion.B) providing a disincentive, in the hopes that entrepreneurs will not get into tax default

after assuming too much risk.C) providing a disincentive, in the hopes that more entrepreneurs will avoid risk and

not grow.D) providing an incentive, in the hopes that more entrepreneurs will take risk and

create economic growth.

76)

77) Harvey's announces "buy one get one free" breakfast sandwiches. This is an example of:A) a macroeconomic decision.B) hoarding scarce resources.C) the use of incentives.D) this is not an example of any of these concepts.

77)

78) A car dealer advertises free satellite radio for one year with the purchase of a new car.This is an example of:

A) voluntary exchange. B) bait and switch.C) an incentive. D) marginal sales.

78)

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79) Applying for a loan in five-person groups is called:A) party-of-five lending. B) pooling.C) group responsibility. D) family and friends lending.

79)

80) Late registration will result in an additional $30 fee." This is an example of:A) price gauging. B) limited time pricing.C) a disincentive. D) marginal cost.

80)

81) Muhammad Yunus was highly successful in his use of applying social incentivesthrough group responsibility in order to maximize loan repayment rates. This successcreated an incentive for other banks to:

A) offer similar loans to the poor.B) seek government action to ban group responsibility lending.C) go out of business.D) All of these.

81)

82) Which of the following is a positive incentive?A) McDonalds decides to offer a white chocolate mocha.B) A business decides to leave the industry.C) Discover credit cards offer 0 percent balance transfer rates for someone to open an

account.D) A school teacher decides to retire and focus on gardening.

82)

83) An incentive is:A) something that causes people to behave in a certain way by changing the trade-offs

they face.B) rational behavior that involves thinking on the margin.C) the marginal cost of engaging in a course of action.D) the marginal benefit of engaging in a course of action.

83)

84) Which of the following is a positive incentive?A) making a donation to the Red CrossB) offering a reward to anyone who can find your missing petC) deciding not to play golf due to rainD) hiring 10 new workers as you decide to expand your operations

84)

85) Which of the following is an example of a disincentive?A) A local gym offers a weight loss competition and the winner earns a free trip to

Bermuda.B) Your professor offers to edit your paper before it's graded if you turn it in early.C) Law enforcement creates a "Mug Shots" section to post all recent arrests online in

order to discourage potential law breakers.D) You offer workers a bonus if they sell 100 widgets per month.

85)

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86) The idea of efficiency is used to address which of the following questions?A) What are the wants and constraints of those involved?B) What are the trade-offs?C) Why isn't everyone already doing it?D) How will others respond?

86)

87) Something is valuable if:A) it is a good or a service.B) a reasonable number of people want it.C) someone wants it.D) it was made using resources.

87)

88) A resource is anything that:A) can be touched and can be used to produce something of value.B) can be used to make something of value.C) has been used to create a good or service.D) is a natural gift from nature, excluding human talents.

88)

89) The use of resources in the most productive way possible to produce the goods andservices that have the greatest total economic value to society is called:

A) efficiency. B) sustainability.C) economic quantity. D) allocation optimization.

89)

90) If people have never implemented an idea that you believe offers substantialopportunity:

A) you should conclude that it can't be profitable.B) you might be missing something in your evaluation. You should carefully revisit

the first three economists' questions.C) you should seek a low interest loan immediately in order to launch your product.D) it is likely that you are being irrational.

90)

91) You may incorrectly conclude that an idea no other person has implemented is highlyprofitable because:

A) you misunderstood how people would respond to incentives.B) you misjudged people's wants and constraints.C) you miscalculated the trade-offs people face.D) All of these.

91)

92) Which of the following is an assumption that economists make about people?A) People are very good at assessing the costs of decisions accurately.B) Individuals usually fail to optimize the use of their resources because they think on

the margin.C) Individuals and firms will act to provide the things they want.D) Most people possess entrepreneurial talent.

92)

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93) Which of the following interrupts or changes a market and prevents it from acting"normally"?

A) Market failureB) InterventionC) InnovationD) All of these are reasons for the market to veer from its normal path.

93)

94) If your idea has not been implemented yet, but actually does offer a profitableopportunity, it is likely an example of:

A) market failure. B) intervention.C) a goal other than profit. D) innovation.

94)

95) If an idea has not been implemented because a monopoly producer has placed a barrierto entry, the circumstances are not normal due to:

A) innovation. B) goals other than profit.C) intervention. D) market failure.

95)

96) After investigating an idea to open a rooftop restaurant in the downtown area of yourcommunity, you discover that any rooftop restaurant would violate city regulations.These circumstances would not be considered normal due to:

A) goals other than profit. B) market failure.C) innovation. D) intervention.

96)

97) Having a goal that does not include making a profit can often explain why thenonprofitable idea has not been implemented. These types of ideas may include:

A) making great art. B) promoting social justice.C) helping the poor. D) All of these.

97)

98) Why wasn't everyone else already implementing group responsibility to lend to thepoor?

A) It was not profitable.B) Governments of poor countries had regulations against group responsibility.C) It was easy for groups to provide false social security numbers for members that did

not exist.D) The idea was genuinely new.

98)

99) Economic analysis requires us to combine:A) developed and developing nations.B) theory with observations.C) liberals and conservatives.D) unlimited resources with limited wants.

99)

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100) When two variables have been observed to have a tendency to occur at the same time,we can say there is ________ but not necessarily ________.

A) causation; correlation B) normality; correlationC) correlation; causation D) positivity; causation

100)

101) "More people purchase chap stick when the weather man announces that we are in for avery windy week." This statement implies that:

A) the weather man is getting a kickback from the makers of chap stick.B) buying chap stick causes it to be windy.C) buying chap stick is correlated with the announcement of a windy week.D) people plan on kissing more on windy days.

101)

102) The Widgetville County Woolfpack has won 90 percent of their last 20 games playedunder a full moon. This means:

A) there is a correlation between their play and the occurrence of a full moon.B) that full moons cause the team to play better.C) the weather affects how they play.D) that causation can be found between the two events.

102)

103) If out of the two cities that send teams to the Super Bowl, the city with the lowestunemployment rate wins 70 percent of the time, there would be:

A) evidence to conclude that richer cities have better super bowl teams.B) a positive correlation between Super Bowl wins and low unemployment rates.C) the condition of ceteris paribus present in the winning cities.D) None of these statements is necessarily true.

103)

104) When toilet paper sales increase, quarterly economic growth tends to rise. This is anexample of:

A) correlation without causation.B) a consumer price indicator.C) two variables that are negatively correlated.D) the presence of ceteris paribus.

104)

105) When the price of milk rises, there is no change in the amount of dog food purchased.This is an example of:

A) consumer indifference between the two goods.B) the interaction between one normal good and one inferior good.C) the value people place on dogs versus milk.D) two items that are uncorrelated.

105)

106) As corn prices rise, salsa sales tend to fall. This an example of:A) a negative correlation. B) two uncorrelated events.C) ingredients for an Italian dinner. D) inferior goods.

106)

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107) When the unemployment rate rises, college enrollment increases because workers seekto expand training. This is an example of:

A) macroeconomics. B) normative economics.C) a negative correlation. D) correlation and causation.

107)

108) As monthly rain levels rise, golf course revenue falls because casual golfers prefer tostay dry. This is an example of:

A) sunk costs. B) price elasticity.C) correlation and causation. D) natural experiments.

108)

109) Correlation and causation can be confused in which of the following ways?A) Reverse causality B) Correlation without causationC) Omitted variables D) All of these

109)

110) A relationship between two events in which one brings about the other is:A) causation. B) a pattern. C) a trend. D) correlation.

110)

111) When speed boat sales rise, the city of Las Vegas takes in more revenue. The omittedcommon variable between these outcomes is likely to be:

A) life jacket sales. B) increased disposable income.C) childhood obesity. D) prices of Las Vegas flights.

111)

112) In the past, there was a strong correlation between ice cream consumption by childrenand polio cases for children. There was not a causal relationship due to:

A) accounting fraud practiced by Baskin Robbins.B) an infection present in cherries.C) an omitted variable.D) reverse causality.

112)

113) "Which came first, the chicken or the egg?" This question seeks to address whichcommon source of confusion between correlation and causation?

A) Linear relationships B) Reverse causalityC) Comparative analysis D) Omitted variables

113)

114) Both minivan sales and birth rates are on the rise. The conclusion that minivans causepeople to have children would likely be a result of making the mistake of:

A) reverse causality. B) omitted variables.C) extrapolation. D) correlation without causation.

114)

115) Models should:A) attempt to describe a situation with perfect accuracy.B) not be applied to microeconomics.C) attempt to include every detail of the situation being studied.D) None of these.

115)

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116) A simplified representation of the important parts of a complicated situation is:A) cutting corners. B) econometrics.C) useless without adding fine details. D) a model.

116)

117) Which is not a characteristic of a good economic model?A) Builds vague assumptions B) Focuses on important detailsC) Describes the world accurately D) Predicts cause and effect

117)

118) One of the most basic models of an economy is:A) the current population survey. B) the circular flow model.C) the consumer expenditure model. D) real GDP per capita.

118)

119) The two most important actors of the economy are:A) land and capital. B) firms and government.C) exports and imports. D) households and firms.

119)

120) Households are vital to the circular flow model in what two ways?A) They facilitate exchange between consumers and firms.B) They vote for political officers and pay taxes.C) They supply factors of production and purchase goods and services.D) They export goods and services and import goods and services.

120)

121) Which actor in the circular flow model buys or rents land, labour, and capital?A) Firms B) Markets for factors of productionC) Government D) Households

121)

122) Which actor in the circular flow model is on the supply side of the goods market?A) Government B) HouseholdsC) Firms D) Markets for factors of production

122)

123) Which actor in the circular flow model is on the supply side of the factor market?A) Market for goods and services B) FirmsC) Government D) Households

123)

124) The two flows, or things being exchanged, in the circular flow model are:A) land and labour. B) inputs and outputs.C) imports and exports. D) inputs/outputs and money.

124)

125) An economic model:A) exactly explains what happens in the real economy.B) does not make clear assumptions.C) approximates all facets of what happens in the real economy.D) cuts away unnecessary details to clearly demonstrate the principles at work.

125)

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126) In order to understand when a model may not be accurate, it is important to:A) identify what details were omitted when developing a model.B) test the model.C) make sure assumptions made in the model are clear.D) All of these.

126)

127) An economic model:A) should accurately predict cause and effect.B) should make clear assumptions.C) should describe the real world accurately.D) All of these are true.

127)

128) Thomas Malthus was an early nineteenth-century economist that created a modeldescribing the relationship between:

A) population growth and food production.B) population growth and birth control.C) population growth and war.D) population growth and crime.

128)

129) Thomas Malthus's model made the mistake of failing to consider:A) scarcity. B) comparative advantage.C) inflation. D) technological progress.

129)

130) Which type of statement is most likely to include the word "should"?A) Fair statement B) Factual statementC) Normative statement D) Positive statement

130)

131) A normative statement is generally based upon:A) a factual claim. B) data that can be tested.C) moral beliefs. D) scientific fact.

131)

132) A factual claim about how the world actually works is a ________ statement.A) irrational B) normative C) marginal D) positive

132)

133) Economies that adopt more open trade policies have historically enjoyed fastereconomic growth rates as a result. This is an example of what kind of statement?

A) Positive B) Biased C) Normative D) Marginal

133)

134) "Canada should adopt more open trade policies because they historically have causedincreased economic growth." This is an example of what kind of statement?

A) Positive B) Unequivocally trueC) Normative D) Unequivocally false

134)

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135) People frequently confuse facts with judgments that are based on beliefs. This meansthat people have trouble making the distinction between:

A) political statements and non-political statements.B) positive statements and normative statements.C) macroeconomics and microeconomics.D) rational statements and irrational statements.

135)

136) A positive statement:A) must always be true.B) provides an opinion with a positive outlook.C) can actually be false.D) None of these is true.

136)

137) Which of the following is an example positive statement?A) The provincial government should allocate more funds toward education.B) Individuals with a bachelor's degree earn higher average incomes than those with

only a high school diploma.C) The consumption of marijuana is unacceptable and should never be legally allowed

in a society.D) Teachers should be paid higher salaries.

137)

138) Which of the following is an example of a normative statement?A) No person should have to live without basic health insurance.B) These are all normative statements.C) Tom is willing to give up no more than 4 traps for each bomb.D) Immigration should be limited in the United States.

138)

139) Which of the following is an example of a positive statement?A) Cats are better pets than dogs.B) Football should have adopted a playoff system 10 years ago.C) Teachers should be allowed to carry guns into the classroom.D) An increase in minimum wage results in higher teenage unemployment.

139)

140) Which of the following is an example of a normative statement?A) The Economic Action Plan should not have been passed during the Great

Recession.B) Great Britain has fewer hospital beds per capita today than they did in 1948.C) Unemployment soared to 25 percent during the Great Depression.D) An increase in alcohol taxes will reduce the number of drunk driving accidents.

140)

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141) Which of the following is a normative statement?A) 28 percent of Canadian adults have a bachelor's degree.B) University tuition rates are rising.C) Provincial governments should pay for the first two years of university at public

institutions.D) The average income of a University graduate exceeds that of the average high

school graduate.

141)

142) Which of the following is an example of a normative statement?A) The average price of a Whopper Jr. is $1.69.B) A higher percentage of sex-trade workers incarcerated in Vancouver test positive

for AIDS when compared to registered prostitutes in Montreal.C) Canada ought to adopt a flat rate personal income tax.D) Average growth in real GDP per year was 1.84 percent between 2000 and 2010.

142)

143) A statement that "a hair stylist should not have to obtain a cosmetology licence" is anexample of what kind of statement?

A) Biased B) Normative C) Uninformed D) Positive

143)

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Answer KeyTestname: UNTITLED1

1) D2) C3) D4) D5) C6) D7) D8) D9) C

10) D11) A12) D13) A14) B15) A16) D17) D18) B19) B20) A21) C22) D23) A24) C25) B26) D27) D28) D29) B30) C31) D32) D33) C34) B35) D36) D37) B38) A39) D40) C41) A42) D43) B44) D45) B46) B47) D48) B49) D50) B

22





51) B52) D53) D54) B55) B56) B57) D58) C59) A60) C61) D62) D63) D64) D65) C66) A67) A68) B69) D70) B71) B72) A73) B74) C75) A76) D77) C78) C79) C80) C81) A82) C83) A84) B85) C86) C87) C88) B89) A90) B91) D92) C93) D94) D95) D96) D97) D98) D99) B

100) C23





101) C102) A103) B104) A105) D106) A107) D108) C109) D110) A111) B112) C113) B114) A115) D116) D117) A118) B119) D120) C121) A122) C123) D124) D125) D126) D127) D128) A129) D130) C131) C132) D133) A134) C135) B136) C137) B138) C139) D140) A141) C142) C143) B

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