Test Bank For
Macroeconomics, Canadian Edition, 10th edition Andrew B. Abel Ben S. Bernanke Dean
Croushore Ronald D. Kneebone Trevor Tombe
Chapter 1-14
Chapter 1 Introduction to Macroeconomics
1.1 What Macroeconomics Is About
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
2) The two major reasons for the tremendous growth in output in the Canadian economy over the
last 150 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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
1
Copyright © 2026 Pearson Canada Inc.
,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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
7) Which of the following best describes the potential impact of economic growth on different
groups in society?
A) Economic growth ensures that every group benefits equally.
B) Economic growth can improve living standards, but some groups may experience negative
consequences.
C) Economic growth is driven by equal resource distribution among all groups.
D) Economic growth is only beneficial to those directly involved in production.
Answer: B
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
2
Copyright © 2026 Pearson Canada Inc.
,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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
11) Which of the following is a potential consequence of barriers to interprovincial trade within a
country?
A) They can reduce overall economic productivity.
B) They have no significant impact on productivity.
C) They increase opportunities for international trade.
D) They improve internal market efficiency by limiting competition.
Answer: A
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
3
Copyright © 2026 Pearson Canada Inc.
,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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
16) Canadian exports are goods and services
A) produced abroad and sold to Canadians.
B) produced in Canada and sold to Canadians.
C) produced abroad and sold to foreigners.
D) produced in Canada and sold to foreigners.
Answer: D
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
17) Canadian imports are goods and services
A) produced abroad and sold to Canadians.
B) produced in Canada and sold to Canadians.
C) produced abroad and sold to foreigners.
D) produced in Canada and sold to foreigners.
Answer: A
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
18) A country has a trade surplus when
A) imports exceed exports.
B) imports equal exports.
C) exports exceed imports.
D) imports are zero.
Answer: C
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
19) A country has a trade deficit when
A) imports exceed exports.
B) imports equal exports.
C) exports exceed imports.
D) exports are zero.
Answer: A
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
4
Copyright © 2026 Pearson Canada Inc.
,20) In 2025, Anchovy had imports of $50 billion, exports of $60 billion, and Anchovy's GDP was
equal to $300 billion. The trade surplus was what percent of GDP in 2025?
A) 3.3%
B) 10.0%
C) 16.7%
D) 20.0%
Answer: A
Diff: 2 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
21) In 2025, DAMA's exports were $30 billion, imports $40 billion, and real GDP $200 billion.
DAMA had a trade ________ equal to ________ of GDP in 2025.
A) surplus; 5 percent
B) deficit; 5 percent
C) surplus; 10 percent
D) deficit; 10 percent
Answer: B
Diff: 2 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
22) The exchange rate is
A) the rate of return in the stock market.
B) the price index for goods and services.
C) the price of Canadian dollar in terms of foreign currencies.
D) the rate of return on investment in foreign countries.
Answer: C
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
23) Fiscal policy determines ________ while monetary policy determines ________.
A) government spending and taxation; the growth of the money supply
B) government's capital; government's investment
C) the rate of growth of the economy; the rate of growth of prices
D) the inflation rate; the rate of growth of prices
Answer: A
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
24) In Canada, monetary policy is determined by
A) the Bank of Canada.
B) the prime minister.
C) private citizens.
D) the Department of Finance.
Answer: A
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
5
Copyright © 2026 Pearson Canada Inc.
, 25) The difference between microeconomics and macroeconomics is that
A) microeconomics looks at supply and demand for goods, while macroeconomics looks at supply
and demand for services.
B) microeconomics looks at prices, while macroeconomics looks at inflation.
C) microeconomics looks at individual consumers and firms, while macroeconomics looks at
national totals.
D) microeconomics looks at national issues, while macroeconomics looks at global issues.
Answer: C
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
26) The process of adding together individual economic variables to obtain economywide totals is
called
A) macroeconomics.
B) aggregation.
C) agglomeration.
D) data development.
Answer: B
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
27) How can differences across individuals and groups create broader risks for the
macroeconomy?
A) Differences in age, gender, or income level are generally unrelated to macroeconomic stability.
B) Vulnerable groups with more debt and less job security face greater risks during downturns,
which can affect the broader financial system and economy.
C) Individual differences only affect microeconomic outcomes and are not considered in
macroeconomic analysis.
D) Barriers to economic participation increase consumption and investment, boosting aggregate
productivity.
Answer: B
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
28) Which of the following is NOT true?
A) The average labour productivity in Canada has risen by a factor of six since 1921.
B) Canadian workers are working fewer hours but their real wages are higher, on average, than in
the past.
C) Canadian workers are, on average, much more productive than 60 years ago.
D) Today, a typical Canadian is working longer and getting paid less in real terms.
Answer: D
Diff: 2 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
6
Copyright © 2026 Pearson Canada Inc.
Macroeconomics, Canadian Edition, 10th edition Andrew B. Abel Ben S. Bernanke Dean
Croushore Ronald D. Kneebone Trevor Tombe
Chapter 1-14
Chapter 1 Introduction to Macroeconomics
1.1 What Macroeconomics Is About
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
2) The two major reasons for the tremendous growth in output in the Canadian economy over the
last 150 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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
1
Copyright © 2026 Pearson Canada Inc.
,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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
7) Which of the following best describes the potential impact of economic growth on different
groups in society?
A) Economic growth ensures that every group benefits equally.
B) Economic growth can improve living standards, but some groups may experience negative
consequences.
C) Economic growth is driven by equal resource distribution among all groups.
D) Economic growth is only beneficial to those directly involved in production.
Answer: B
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
2
Copyright © 2026 Pearson Canada Inc.
,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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
11) Which of the following is a potential consequence of barriers to interprovincial trade within a
country?
A) They can reduce overall economic productivity.
B) They have no significant impact on productivity.
C) They increase opportunities for international trade.
D) They improve internal market efficiency by limiting competition.
Answer: A
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
3
Copyright © 2026 Pearson Canada Inc.
,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
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
16) Canadian exports are goods and services
A) produced abroad and sold to Canadians.
B) produced in Canada and sold to Canadians.
C) produced abroad and sold to foreigners.
D) produced in Canada and sold to foreigners.
Answer: D
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
17) Canadian imports are goods and services
A) produced abroad and sold to Canadians.
B) produced in Canada and sold to Canadians.
C) produced abroad and sold to foreigners.
D) produced in Canada and sold to foreigners.
Answer: A
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
18) A country has a trade surplus when
A) imports exceed exports.
B) imports equal exports.
C) exports exceed imports.
D) imports are zero.
Answer: C
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
19) A country has a trade deficit when
A) imports exceed exports.
B) imports equal exports.
C) exports exceed imports.
D) exports are zero.
Answer: A
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
4
Copyright © 2026 Pearson Canada Inc.
,20) In 2025, Anchovy had imports of $50 billion, exports of $60 billion, and Anchovy's GDP was
equal to $300 billion. The trade surplus was what percent of GDP in 2025?
A) 3.3%
B) 10.0%
C) 16.7%
D) 20.0%
Answer: A
Diff: 2 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
21) In 2025, DAMA's exports were $30 billion, imports $40 billion, and real GDP $200 billion.
DAMA had a trade ________ equal to ________ of GDP in 2025.
A) surplus; 5 percent
B) deficit; 5 percent
C) surplus; 10 percent
D) deficit; 10 percent
Answer: B
Diff: 2 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
22) The exchange rate is
A) the rate of return in the stock market.
B) the price index for goods and services.
C) the price of Canadian dollar in terms of foreign currencies.
D) the rate of return on investment in foreign countries.
Answer: C
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
23) Fiscal policy determines ________ while monetary policy determines ________.
A) government spending and taxation; the growth of the money supply
B) government's capital; government's investment
C) the rate of growth of the economy; the rate of growth of prices
D) the inflation rate; the rate of growth of prices
Answer: A
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
24) In Canada, monetary policy is determined by
A) the Bank of Canada.
B) the prime minister.
C) private citizens.
D) the Department of Finance.
Answer: A
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
5
Copyright © 2026 Pearson Canada Inc.
, 25) The difference between microeconomics and macroeconomics is that
A) microeconomics looks at supply and demand for goods, while macroeconomics looks at supply
and demand for services.
B) microeconomics looks at prices, while macroeconomics looks at inflation.
C) microeconomics looks at individual consumers and firms, while macroeconomics looks at
national totals.
D) microeconomics looks at national issues, while macroeconomics looks at global issues.
Answer: C
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
26) The process of adding together individual economic variables to obtain economywide totals is
called
A) macroeconomics.
B) aggregation.
C) agglomeration.
D) data development.
Answer: B
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
27) How can differences across individuals and groups create broader risks for the
macroeconomy?
A) Differences in age, gender, or income level are generally unrelated to macroeconomic stability.
B) Vulnerable groups with more debt and less job security face greater risks during downturns,
which can affect the broader financial system and economy.
C) Individual differences only affect microeconomic outcomes and are not considered in
macroeconomic analysis.
D) Barriers to economic participation increase consumption and investment, boosting aggregate
productivity.
Answer: B
Diff: 1 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
28) Which of the following is NOT true?
A) The average labour productivity in Canada has risen by a factor of six since 1921.
B) Canadian workers are working fewer hours but their real wages are higher, on average, than in
the past.
C) Canadian workers are, on average, much more productive than 60 years ago.
D) Today, a typical Canadian is working longer and getting paid less in real terms.
Answer: D
Diff: 2 Type: MC
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
6
Copyright © 2026 Pearson Canada Inc.
