Macroeconomics 9th Canadian Edition – Andrew B. Abel, Ben S. Bernanke, Dean Croushore, Ronald D. Kneebone (9780136727408) – Complete Test Bank

TEST BANK

MACROECONOMICS
9TH CANADIAN EDITION

CHAPTER NO. 01: INTRODUCTION TO MACROECONOMICS

1.1 MULTIPLE-CHOICE QUESTIONS

1) Which of the following is a topic of macroeconomics?
A) why nations have different rates of growth
B) what causes inflation and what can be done about it
C) why unemployment periodically reaches very high levels
D) all of the above
Answer: D
Diff: 1 Type: MC Page Ref: 1


2) The two major reasons for the tremendous growth in output in the Canadian economy over the
last 125 years are
A) population growth and budget deficit.
B) population growth and increased productivity.
C) low unemployment and budget surplus.
D) low budget deficit and low trade deficits.
Answer: B
Diff: 1 Type: MC Page Ref: 2


3) The main reason Canada has such a high standard of living is
A) low unemployment.
B) high average labour productivity.
C) low inflation.
D) low government budget deficits.
Answer: B
Diff: 1 Type: MC Page Ref: 2

,4) Average labour productivity is
A) the amount of workers per machine.
B) the amount of machines per worker.
C) the ratio of employed to unemployed workers.
D) the amount of output per worker.
Answer: D
Diff: 1 Type: MC Page Ref: 2


5) In analyzing macroeconomic data during the past year, you have discovered that average
labour productivity fell, but total output increased. What was most likely to have caused this?
A) Government deficit was reduced.
B) The capital/output ratio probably rose.
C) There was an increase in labour input.
D) Unemployment probably increased.
Answer: C
Diff: 3 Type: MC Page Ref: 2


6) The business cycle describes the
A) progression of an industry's structure from monopoly to perfect competition.
B) progression of an industry's structure from perfect competition to monopoly.
C) expansion and contraction of an individual industry within the economy.
D) expansion and contraction of economic activity in the economy as a whole.
Answer: D
Diff: 1 Type: MC Page Ref: 3


7) The short-run, but sometimes sharp, contractions and expansions in economic activity are
called
A) recession.
B) stagnation.
C) inflation.
D) business cycles.
Answer: D
Diff: 1 Type: MC Page Ref: 3

,8) When national output declines, the economy is said to be in
A) an expansion.
B) a deflation.
C) a recovery.
D) a recession.
Answer: D
Diff: 1 Type: MC Page Ref: 3


9) During recessions, the unemployment rate ________ and output ________.
A) rises; falls
B) rises; rises
C) falls; rises
D) falls; falls
Answer: A
Diff: 1 Type: MC Page Ref: 3


10) The unemployment rate is the
A) number of unemployed divided by the number of employed.
B) number of employed divided by the number of unemployed.
C) number of unemployed divided by the labour force.
D) labour force divided by the number of unemployed.
Answer: C
Diff: 1 Type: MC Page Ref: 4


11) The highest and prolonged period of unemployment in Canada occurred during
A) the Great Depression of the 1930s.
B) the 1981-1982 recession.
C) the 1990-1991 recession.
D) the 2001 recession in the U.S.
Answer: A
Diff: 1 Type: MC Page Ref: 5

, 12) A country is said to be experiencing inflation when
A) prices of most goods and services are rising over time.
B) prices of most goods and services are falling over time.
C) total output is rising over time.
D) total output is falling over time.
Answer: A
Diff: 1 Type: MC Page Ref: 4


13) A country is said to be experiencing deflation when
A) prices of most goods and services are rising over time.
B) prices of most goods and services are falling over time.
C) total output is rising over time.
D) total output is falling over time.
Answer: B
Diff: 1 Type: MC Page Ref: 4


14) An open economy is a national economy that
A) has good relations with its neighbouring countries.
B) has a stock market that is open to traders from anywhere in the world.
C) has extensive trading and financial relationships with other national economies.
D) has established diplomatic relations with most other nations.
Answer: C
Diff: 1 Type: MC Page Ref: 4


15) A closed economy is a national economy that
A) doesn't interact economically with the rest of the world.
B) has a stock market that is not open to traders from outside the country.
C) has extensive trading and financial relationships with other national economies.
D) has not established diplomatic relations with other national economies.
Answer: A
Diff: 1 Type: MC Page Ref: 4