48) Which of the following is NOT an issue addressed by macroeconomists?
A) What determines the price of gasoline
B) What causes prices to rise
C) What causes the unemployment rate to rise
D) Why a nation's economic activity fluctuates
Answer: A
Diff: 1 Type: MC Page Ref: 1
49) 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 Page Ref: 2
50) Which of the following is considered as a fiscal policy?
A) Fixing the exchange rate.
B) Lowering interest rates.
C) Removing energy subsidies.
D) Increasing mortgage rates.
Answer: C
Diff: 2 Type: MC Page Ref: 5
51) Macroeconomists cannot conduct experiments in the manner of physicists or chemists, because
A) macroeconomic subjects such as business cycles are very complex.
B) macroeconomists are not allowed to run experiments on human and firm subjects.
C) macroeconomists do not have access to the labs used in physics and chemistry.
D) results of macroeconomic experiments are not reliable.
Answer: B
Diff: 2 Type: MC Page Ref: 9
52) Which of the following event is NOT considered as a shock?
A) Hurricane Harvey in Texas and the Caribbean Islands.
B) An anticipated change in the interest rate.
C) A fall in the price of oil.
D) A fall in stock prices.
Answer: B
Diff: 2 Type: MC Page Ref: 10
1.2 Essay Questions
1) Macroeconomic information for the economy of Anchovy is given below:
2000
2001
Output (pizzas)
8000
9000
Employment (workers)
700
800
Unemployed (workers)
70
100
Labour force (workers)
770
900
Price per pizza
$8.00
$9.00
a. What was the growth rate of average labour productivity in Anchovy between 2000 and 2001?
b. What was the inflation rate in Anchovy between 2000 and 2001?
c. What was the unemployment rate in 2000? In 2001?
Answer:
a. Average labour productivity: 2000: 8000/700 = 80/7; 2001: 9000/800 = 90/8;
growth rate = [(90/8)/(80/7)] - 1 = -.016 = -1.6%
b. Inflation rate: (9/8) - 1 = .125 = 12.5%
c. Unemployment rates: 2000: 70/770 = .091 = 9.1%; 2001: 100/900 = .111 = 11.1%
Diff: 3 Type: ES Page Ref: Sec. 1.1
2) What are the four major areas in which macroeconomists work? Give an example of a job in each.
Answer: Forecasting, analysis, research, and data development.
Forecasting: forecasting the stock market on Bay Street
Analysis: analyzing the economy for the Bank of Canada
Research: investigating the link between the trade deficit and the government budget deficit as a university professor
Data development: working at Statistics Canada to develop better ways to measure unemployment.
Diff: 2 Type: ES Page Ref: Sec. 1.2
3) Match each of the following jobs to its major area: forecasting, analysis, research, or data development. Explain your answers.
a. economist at university, testing theories about the efficient allocation of resources in the foreign exchange market
b. economist at Bay Street firm trying to predict the rate of inflation next year using past data
c. economist at auto firm looking at demand for new automobiles
d. economist at the Department of Finance trying to determine whether foreign firms are dumping goods in Canada
e. economist at Statistics Canada developing new methods for calculating price indexes
f. economist consulting in Eastern Europe about how to set up free-market financial systems
Answer:
a. research
b. forecasting
c. analysis
d. analysis
e. data development
f. analysis
Diff: 2 Type: ES Page Ref: Sec. 1.2