Economics for Business Test Preparation
Course Introduction
Economics for Business provides students with a comprehensive understanding of key economic principles and how they apply to real-world business scenarios. The course explores fundamental microeconomic and macroeconomic concepts, such as supply and demand, market structures, pricing strategies, and government intervention. Students learn to analyze market trends, evaluate business decisions, and assess the broader economic environment affecting organizations. Practical case studies and current events are integrated to develop critical thinking and decision-making skills essential for effective management and business strategy.
Recommended Textbook
Macroeconomics 2nd Canadian Edition by Glenn Hubbard
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15 Chapters
4089 Verified Questions
4089 Flashcards
Source URL: https://quizplus.com/study-set/2832
Page 2
Chapter 1: Economics: Foundations and Models
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Which of the following statements about the economic decisions consumers,firms,and the government have to make is false?
A)Governments face the problem of scarcity in making economic decisions.
B)Only individuals face scarcity; firms and the government do not.
C)Both firms and individuals face scarcity.
D)Each faces the problem of scarcity which necessitates trade-offs in making economic decisions.
Answer: B
Q2) The extra cost associated with undertaking an activity is called A)net loss.
B)marginal cost.
C)opportunity cost.
D)foregone cost.
Answer: B
Q3) The relationship between consumer spending and disposable personal income is A)an inverse relationship.
B)a direct relationship.
C)a negative relationship.
D)independent.
Answer: B
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Chapter 2: Trade-Offs, Comparative Advantage, and the Market System
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311 Verified Questions
311 Flashcards
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Sample Questions
Q1) Refer to Figure 2.4.Consider the following events: a.a reduction in the patent protection period to no more than 2 years
B.a war that destroys a substantial portion of a nation's capital stock
C.the lack of secure and enforceable property rights system
Which of the events listed above could cause a movement from W to V?
A)a only
B)a and b only
C)a and c only
D)b and c only
E)a,b,and c
Answer: C
Q2) Firms
A)have no influence on the circular flow in a market economy.
B)purchase resources in the product market.
C)sell goods in the product market.
D)sell resources in the factor market.
Answer: C
Q3) List the four broad categories of factors of production.
Answer: labour,capital,natural resources,and entrepreneurship
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Chapter 3: Where Prices Come From: The Interaction of
Supply and Demand
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314 Verified Questions
314 Flashcards
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Sample Questions
Q1) Refer to Table 3.2.The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi)and the rest of the market.If the price of Kona coffee rises from $4 to $5,the market quantity demanded would
A)decrease by 35 kg.
B)increase by 115 kg.
C)increase by 35 kg.
D)decrease by 115 kg.
Answer: A
Q2) Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease?
A)a decrease in the price of tomatoes
B)an increase in the price of tomatoes
C)an increase in the price of mustard,a substitute for ketchup
D)an increase in the price of french fries,a complement for ketchup
Answer: B
Q3) What are the five most important variables that shift the market supply curve?
Answer: Prices of inputs; technological change; prices of substitutes in production; the number of firms in the market; expected future prices
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Chapter 4: GDP: Measuring Total Production and Income
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277 Verified Questions
277 Flashcards
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Sample Questions
Q1) Demographics and savings suggest that consumption's share of GDP is likely to ________ in the future.
A)rise
B)remain highly stable
C)increase and then level off
D)drop
Q2) If the GDP deflator is less than 100,which will be higher: nominal GDP or real GDP? Why?
Q3) Refer to Table 4.21.Given the information above,calculate the GDP deflator in 2017.
A)114
B)105
C)100
D)95
E)87
Q4) The size of the underground economy as a percent of GDP is larger in Canada as compared to poorer countries such as Zimbabwe.
A)True
B)False
Q5) Give two reasons why GDP does not reflect total production in an economy.
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Chapter 5: Unemployment and Inflation
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300 Verified Questions
300 Flashcards
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Sample Questions
Q1) There are no costs to inflation if it is fully anticipated.
A)True
B)False
Q2) The labour force equals the number of people
A)employed.
B)unemployed.
C)employed plus unemployed.
D)in the working-age population.
E)in the entire country.
Q3) The nominal interest rate plus the inflation rate equals the real interest rate. A)True
B)False
Q4) If the nominal interest rate is 6% and the inflation rate is 9%,then the real interest rate is
A)-3%.
B)3%.
C)6.67%.
D)15%.
E)25%.
Q5) Why would a firm pay efficiency wages?
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Chapter 6: Economic Growth, the Financial System, and Business Cycles
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262 Verified Questions
262 Flashcards
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Sample Questions
Q1) When the economy reaches a trough in a business cycle,which of the following will occur?
A)Income,production,and employment will continue to fall.
B)Income,production,and employment will begin to rise.
C)Income and production will rise,but employment will continue to fall.
D)Employment rises,but income and production will continue to fall.
E)Unemployment,the price level,and output will all rise.
Q2) According to the commonly used definition,Canada has experienced ________ recession(s)since 1980.
A)1
B)2
C)3
D)4
E)5
Q3) What is "human capital," and how does human capital affect labour productivity and economic growth?
Q4) The commonly accepted definition of a recession is at least two consecutive quarters of falling real GDP.
A)True
B)False
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Chapter 7: Long-Run Economic Growth: Sources and Policies
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280 Verified Questions
280 Flashcards
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Sample Questions
Q1) The period of time from 1 000 000 BCE to 1300 CE was a period of A)no sustained economic growth.
B)slow and steady economic growth.
C)moderate economic growth.
D)rapid and sustained economic growth.
E)rapidly accelerating economic growth.
Q2) Technological improvements are more likely to occur if A)the economy is centrally planned.
B)entrepreneurs are compensated with higher profits for taking risks.
C)economic decisions are made by politicians rather than entrepreneurs.
D)companies face little competition in their markets.
E)governments directly control research and development.
Q3) GDP in a country grew from $10 billion to $14 billion over the span of 5 years.The average annual growth rate of GDP was A)2%.
B)4%.
C)7%.
D)10%.
E)40%.
Q4) How do economic growth rates affect a nation's standard of living?
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Chapter 8: Aggregate Expenditure and Output in the Short Run
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309 Verified Questions
309 Flashcards
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Sample Questions
Q1) In 2007-2008,exports from Canada to the United States fell dramatically.Based on the multiplier effect,we would expect
A)the economy to shrink by less than the drop in exports.
B)the economy to grow by less than the drop in exports.
C)the economy to grow by more than the drop in exports.
D)the economy to shrink by more than the drop in exports.
E)the economy to be unaffected due to a corresponding drop in imports.
Q2) An increase in taxes will ________ consumption spending,and a decrease in transfer payments will ________ consumption spending.
A)increase; increase
B)decrease; increase
C)increase; decrease
D)decrease; decrease
Q3) An increase in transfer payments will
A)increase consumption spending.
B)increase investment spending.
C)increase government spending.
D)increase export spending.
E)increase unemployment.
Page 10
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Chapter 9: Aggregate Demand and Aggregate Supply Analysis
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246 Verified Questions
246 Flashcards
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Sample Questions
Q1) Ceteris paribus,in the long run,a negative supply shock causes
A)the long-run aggregate supply curve to shift to the left.
B)the price level to rise initially,and then return to its lower level.
C)unemployment to fall below its short-run level.
D)equilibrium real GDP to fall.
E)higher labour force participation.
Q2) Why does the short-run aggregate supply curve shift to the right in the long run,following a decrease in aggregate demand?
A)Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices.
B)Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices.
C)Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices.
D)Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.
E)Workers and firms adjust their expectations of output and price levels upward and they thus accept lower output as normal.
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Chapter 10: Money, Banks, and the Bank of Canada
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285 Verified Questions
285 Flashcards
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Sample Questions
Q1) Money market mutual funds sell shares to investors and use the money to buy
A)mortgage-backed securities.
B)foreign currency.
C)short-term securities.
D)overseas assets through foreign direct investment.
E)real estate assets that generate income.
Q2) Typically,a bank's largest asset is its A)reserves.
B)holdings of securities.
C)deposits of its customers.
D)loans.
E)the buildings that house its branches.
Q3) Why does the holding of excess reserves by banks and the holding of currency by households and firms cause the real-world deposit multiplier to be less than the simple deposit multiplier?
Q4) If the rate of growth in real GDP exceeds the rate of growth in the money supply,the quantity theory of money predicts inflation.
A)True
B)False
Q5) What is the principle monetary policy tool used by the Bank of Canada.Why?
Page 12
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Chapter 11: Monetary Policy
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281 Verified Questions
281 Flashcards
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Sample Questions
Q1) If the Bank of Canada pursues expansionary monetary policy,
A)aggregate demand will rise and the price level will rise.
B)aggregate demand will fall and the price level will fall.
C)aggregate demand will rise and the price level will fall.
D)aggregate demand will fall and the price level will rise.
E)aggregate demand will be unchanged but the price level will fall.
Q2) Refer to Figure 11.17.In the figure above,suppose the economy in Year 1 is at point A and is expected in Year 2 to be at point B.Which of the following policies could the Bank of Canada use to move the economy to point C?
A)decrease income taxes
B)increase the desired reserve ratio
C)buy government securities
D)sell government securities
E)buy Canadian dollars on the foreign exchange market
Q3) The Bank of Canada can use contractionary monetary policy in an attempt to keep inflation from increasing.
A)True
B)False
Q4) List the Bank of Canada's four main monetary goals.
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Chapter 12: Fiscal Policy
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303 Verified Questions
303 Flashcards
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Sample Questions
Q1) The aggregate demand curve will shift to the right ________ the initial decrease in taxes.
A)by less than
B)by more than
C)by the same amount
D)sometimes by more than and other times by less than
Q2) The federal budget deficit acts as an automatic stabilizer because
A)government tax revenues decrease during a recession.
B)employment insurance payments decrease during a recession.
C)employment insurance payments increase during expansionary periods.
D)health care spending increases during expansionary periods.
E)governments are required to balance their budgets during expansions.
Q3) If the economy is growing beyond potential real GDP,which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply?
A)an increase in the money supply and a decrease in interest rates
B)an increase in government purchases
C)an increase in oil prices
D)an increase in taxes
E)an increase transfers people
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Page 14
Chapter 13: Inflation, Unemployment, and Bank of Canada Policy
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265 Verified Questions
265 Flashcards
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Sample Questions
Q1) An increase in the expected inflation rate will
A)shift the short-run Phillips curve to the right.
B)shift the short-run Phillips curve to the left.
C)cause the short-run Phillips curve to become flatter.
D)reduce the natural rate of unemployment.
E)cause the long-run Phillips curve to shift to the right.
Q2) Refer to Figure 13.11.A follower of the new classical macroeconomics would argue that a contractionary monetary policy to lower inflation after a supply shock,like that pursued by the Bank of Canada in 1989,would result in a movement from ________.
A)A to D to C
B)A to B
C)C to D to A
D)C to A
E)A to C
Q3) The natural rate of unemployment is fixed and unchanging.
A)True
B)False
Q4) When will an increase in aggregate demand not result in lower unemployment rates in the short run?
Page 15
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Chapter 14: Macroeconomics in an Open Economy
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280 Verified Questions
280 Flashcards
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Sample Questions
Q1) Use the saving and investment equation to explain why Canada experienced large current account deficits in the late 1990s.
Q2) Which of the following will shift the demand for the euro to the right?
A)an increase in interest rates in the European Union
B)an increase in incomes in countries that buy goods from the European Union
C)expectations among speculators that the price of the euro will rise in the future
D)the issue of new shares in BMW to Canadians
E)All of the above will shift the demand for the euro to the right.
Q3) Expansionary fiscal policy should raise the exchange rate of the dollar.
A)True
B)False
Q4) The current account balance equals the value of net exports. A)True
B)False
Q5) Contractionary monetary policy and expansionary fiscal policy both reduce net exports in an open economy.
A)True
B)False
Q6) Why is the balance of payments always zero?
Page 16
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Chapter 15: The International Financial System
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228 Verified Questions
228 Flashcards
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Sample Questions
Q1) If,at the current exchange rate between the Canadian dollar and the South African rand of 6.92 rand per Canadian dollar,the rand is "undervalued," how do you expect demand and supply in the foreign exchange markets to respond?
A)The demand for the Canadian dollar will fall,while the supply of the rand will rise.
B)The demand for the Canadian dollar will rise,while the supply of the rand will fall.
C)The supply of the Canadian dollar will rise,while the demand for the rand will rise.
D)The supply of the Canadian dollar will rise,while the demand for the rand will fall.
E)The supply of both the Canadian dollar and the rand will rise.
Q2) Why do countries peg their currencies,and what problems can result from pegging?
Q3) If a country's currency ________ a major currency,its exchange rate is fixed.
A)is exchanged in currency markets for B)depreciates against C)is pegged to D)has a floating exchange rate value that is equal to E)appropriately valued relative to
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