Applied Macroeconomics
Exam Bank
Course Introduction
Applied Macroeconomics focuses on the practical application of macroeconomic theories, models, and principles to analyze and address real-world economic issues. The course explores topics such as economic growth, inflation, unemployment, fiscal and monetary policy, and international trade, emphasizing how these factors impact national and global economies. Students will learn to interpret macroeconomic data, evaluate policy decisions, and utilize contemporary economic tools to examine and solve problems faced by businesses, governments, and financial institutions. Through case studies and empirical analysis, the course equips students with the skills necessary to apply macroeconomic concepts in professional and policy-making contexts.
Recommended Textbook
Macroeconomics Canada in the Global Environment 9th Edition by Michael Parkin
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15 Chapters
2051 Verified Questions
2051 Flashcards
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Chapter 1: What Is Economics
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212 Verified Questions
212 Flashcards
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Sample Questions
Q1) The scientific purpose of simplifying assumptions in an economic model is to
A)avoid confronting difficult issues.
B)eliminate the need for further testing of the implications of the model.
C)abstract from the complexities of the real world those issues that are not important for the issues under examination.
D)eliminate the possibility of personal bias in the model.
E)add necessary hypotheses to the problem.
Answer: C
Q2) What choices are best for the entire society?
A)self-interest choices
B)minority group choices
C)social interest choices
D)ethnic group choices
E)regional interest choices
Answer: C
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Chapter 2: The Economic Problem
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159 Verified Questions
159 Flashcards
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Sample Questions
Q1) Refer to Table 2.1.3. In moving from combination C to combination B, the opportunity cost of producing one additional hockey stick is
A)2 maple leaves.
B)1/2 maple leaves.
C)6 maple leaves.
D)1/6 maple leaves.
E)3 maple leaves.
Answer: E
Q2) The principal reason that production possibilities have grown more rapidly in Hong Kong than in Canada over the last 50 years is because
A)of cheap Hong Kong labour.
B)of foreign aid to Hong Kong.
C)Hong Kong has fewer workers.
D)Hong Kong has more natural resources.
E)Hong Kong has devoted a larger proportion of its resources to capital accumulation.
Answer: E
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Chapter 3: Demand and Supply
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198 Verified Questions
198 Flashcards
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Sample Questions
Q1) If we observe an increase in the equilibrium quantity of good A, we know that
A)either the demand for A has increased or the supply of A has decreased or both.
B)either the demand for A has increased or the supply of A has increased or both.
C)either the demand for A has decreased or the supply of A has increased or both.
D)either the demand for A has decreased or the supply of A has decreased or both.
E)the price of A has risen.
Answer: B
Q2) In Table 3.4.1, the equilibrium price is
A)$7 a unit.
B)$5 a unit.
C)$4 a unit.
D)$3 a unit.
E)$1 a unit.
Answer: C
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Chapter 20: Measuring Gdp and Economic Growth
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133 Flashcards
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Sample Questions
Q1) The existence of which one of the following is not a reason for the fact that GDP gives an incorrect estimate of the value of total output in the economy?
A)social justice
B)political freedom
C)health and life expectancy
D)taxes
E)leisure time
Q2) Refer to Fact 20.1.1. Peter's net investment in 2014 is
A)$2,000.
B)$3,800.
C)$1,800.
D)$7,800.
E)$1,500.
Q3) The largest component of GDP using the expenditure approach is A)investment.
B)consumption expenditure.
C)exports.
D)government expenditure.
E)imports.
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Page 6
Chapter 21: Monitoring Jobs and Inflation
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121 Verified Questions
121 Flashcards
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Sample Questions
Q1) The unemployment rate is defined as the number of
A)unemployed people divided by the number of employed people.
B)employed people divided by the number of people in the country.
C)unemployed people divided by the number of people in the country.
D)unemployed people divided by the sum of the people employed and the people unemployed.
E)unemployed people divided by the number of people in the country who are employed.
Q2) Suppose the economy is experiencing frictional unemployment of 1 percent, structural unemployment of 3 percent and cyclical unemployment of 4 percent. What is the natural unemployment rate?
A)3 percent
B)4 percent
C)5 percent
D)7 percent
E)8 percent
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Chapter 22: Economic Growth
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98 Flashcards
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Sample Questions
Q1) Which of the following is a suggestion for increasing Canadian economic growth rates?
A)Stimulate saving by taxing consumption.
B)Reduce the time period for patent protection to increase replication.
C)Put less public research funds into universities.
D)Protect our industries from foreign competition.
E)Tax education
Q2) The Industrial Revolution in England was largely the result of A)growth in human capital.
B)population growth.
C)technological innovations that were financed mainly by government spending.
D)technological innovations encouraged by the patent system.
E)the elimination of the patent system.
Q3) Growth eventually stops in neoclassical growth theory when A)technology stops advancing.
B)saving increases.
C)discoveries are replicated.
D)the return on capital increases.
E)population growth lowers the real wage rate.
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Page 8
Chapter 23: Finance, Saving, and Investment
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) The quantity of loanable funds demanded increases when A)expected profit decreases.
B)the real interest rate rises.
C)the real interest rate falls.
D)the supply of loanable funds decreases.
E)wealth increases.
Q2) A decrease in the government budget deficit decreases the ________ loanable funds and an increase in the government budget surplus increases the ________ loanable funds.
A)demand for; demand for B)demand for; supply of C)supply of; demand for D)supply of; supply of E)demand for loanable funds and the supply of; supply of loanable funds and the demand for
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9
Chapter 24: Money, the Price Level, and Inflation
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) If people decide to transfer their currency into their bank deposits then, all else constant, their decisions will
A)cause the quantity of money to decrease.
B)cause lower inflation.
C)cause higher real interest rates.
D)cause the quantity of money to increase immediately.
E)increase the actual reserves of banks.
Q2) When the nominal interest rate rises, the opportunity cost of holding money
A)rises and people hold more money.
B)falls and people hold more money.
C)falls and people hold less money.
D)rises and people hold less money.
E)does not change.
Q3) Which one of the following is considered to be money?
A)a chequable deposit
B)a blank cheque
C)a credit card
D)a debit card
E)a Canada Savings Bond
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Chapter 25: The Exchange Rate and the Balance of Payments
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126 Flashcards
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Sample Questions
Q1) Suppose initially Canada has all its international payments accounts in balance (no surplus or deficit). Then Canadian firms increase the amount they import from Japan, financing that increase by borrowing from Japan. Everything else remaining the same, there will now be a current and financial account
A)surplus and a capital account surplus.
B)surplus and a capital account deficit.
C)deficit and a capital account surplus.
D)deficit and a capital account deficit.
E)surplus and a capital account balance.
Q2) Arbitrage is
A)profit made in the money market.
B)rent seeking in a monopoly market.
C)the practice of seeking to profit by buying in one market and selling for a higher price in another related market.
D)illegal.
E)a means of making round-trip profit.
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Chapter 26: Aggregate Supply and Aggregate Demand
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136 Flashcards
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Sample Questions
Q1) Which one of the following variables can change without creating a shift of the aggregate demand curve?
A)the interest rate
B)price level
C)the tax rate
D)expectations about inflation
E)monetary policy
Q2) Everything else remaining the same, the short-run aggregate supply curve shifts rightward if
A)the money wage rate increases.
B)aggregate demand increases.
C)the full-employment quantity of labour increases.
D)factor prices increase.
E)the quantity of capital decreases.
Q3) Refer to Table 26.3.1. As this economy moves to long-run equilibrium, the
A)SAS curve shifts leftward.
B)SAS curve shifts rightward.
C)AD curve shifts rightward.
D)AD curve shifts leftward.
E)LAS curve shifts leftward.
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Chapter 27: Expenditure Multipliers
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171 Flashcards
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Sample Questions
Q1) You are given the following information about the Canadian economy. Autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. The marginal propensity to consume is 0.7 and net taxes are $250 billion. Net taxes are assumed to be constant and not vary with income. Exports are $500 billion and imports are $450 billion. The consumption function in billions of dollars is
A)C = 50 + 0.7Y.
B)C = 0.7(Y - 250).
C)C = 50 + 0.7(Y - 250).
D)C = 50 + 0.7(YD - 250).
E)C = 50 + 0.7Y - 250.
Q2) If the marginal propensity to consume is 0.85, what change in consumption expenditure would you expect if disposable income increases by $200 million?
A)$20 million
B)$170 million
C)$180 million
D)$1,800 million
E)$18 million
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Page 13
Chapter 28: The Business Cycle, Inflation, and Deflation
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) A forecast that is based on all the relevant information available is
A)usually no better than a random guess given that the future bears many uncertainties.
B)usually accurate.
C)called a rational expectation.
D)useful only in the prediction of cost-push inflation.
E)useful only in the prediction of demand-pull inflation.
Q2) When the price level is rising and, simultaneously, real GDP is decreasing,
A)the natural unemployment rate is rising.
B)the natural unemployment rate is falling.
C)stagflation is occurring.
D)the economy is experiencing an expansionary gap.
E)potential GDP is decreasing.
Q3) ________ states that the main source of economic fluctuations is fluctuations in business confidence.
A)Real business cycle theory
B)New classical cycle theory
C)Keynesian cycle theory
D)Monetarist cycle theory
E)None of the above
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Page 14
Chapter 29: Fiscal Policy
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97 Flashcards
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Sample Questions
Q1) Consider all the effects on fiscal policy. A cut in the tax on capital income
A)shifts the AD curve rightward.
B)shifts the SAS curve rightward.
C)shifts the LAS curve rightward.
D)all of the above
E)only B and C
Q2) All of the following statements are true except
A)the three components of government outlays are transfer payments, expenditures on goods and services, and debt interest.
B)debt interest has been steadily increasing since 1960.
C)expenditures on goods and services have a downward trend.
D)outlays increased steadily from 1971 through 1985.
E)transfer payments decreased sharply during the 1990s.
Q3) Everything else remaining the same, as the economy enters a recession,
A)tax revenues rise and interest payments on the debt rise.
B)tax revenues and transfer payments rise.
C)government outlays rise and tax revenues fall.
D)government outlays tend to fall and tax revenues fall.
E)interest payments on the debt rise and tax revenues fall.
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Page 15
Chapter 30: Monetary Policy
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97 Flashcards
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Sample Questions
Q1) When the Bank of Canada fights recession by lowering the overnight loans rate, the supply of reserves curve shifts ________ and the supply of money curve shifts
A)leftward; leftward
B)leftward; rightward
C)rightward; leftward
D)rightward; rightward
E)rightward; rightward, and the demand for loanable funds increases
Q2) Which of the following quotations correctly describes the impact of monetary policy on the economy?
A)"House sales are down lots, due to the higher money growth."
B)"The extra money pumped into the economy by the central bank is creating less exports."
C)"The tightening of money growth is helping sell goods abroad."
D)"Businesses are investing more, now that monetary policy has become less expansionary."
E)"The extra money pumped into the economy by the central bank is creating more jobs."
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16
Chapter 31: International Trade Policy
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126 Flashcards
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Sample Questions
Q1) Refer to Fact 31.3.1. When Canadian tariffs are removed from a good, Canadian consumers of the good ________ and Canadian producers of the good ________. A)gain; lose B)gain; gain C)lose; gain D)lose; lose E)and the Canadian government gain; lose
Q2) If a country imposes a tariff on an imported good, the tariff ________ the price in the importing country and ________ the quantity of imports. A)raises; increases B)raises; does not change C)lowers; does not change D)lowers; increases E)raises; decreases
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Page 17