Question

Question 1

Which of the following is demand-pull inflation associated with?

	a.	decreasing aggregate demand and lower unemployment
	b.	increasing aggregate demand and lower unemployment
	c.	decreasing aggregate demand and greater unemployment
	d.	increasing aggregate demand and greater unemployment

Question 2

Which of the following is a strategy a bank might use in order to meet a deficiency of excess reserves?

	a.	deposit vault cash with the Bank of Canada
	b.	convert some of its deposit at the Bank of Canada into cash
	c.	buy securities
	d.	borrow from another bank in the overnight money market

Question 3

Which of the following describes a stock variable?

	a.	You buy $10 worth of gasoline each week.
	b.	You save $100 each week.
	c.	You own $5,000 worth of government bonds.
	d.	You earn $500 per week at your job.

Question 4

Which of the following could be a leading economic indicator?

	a.	the unemployment rate
	b.	personal income
	c.	interest rates
	d.	unsold goods

Question 5

Which of the following contributed to the collapse of the Bretton Woods system?

	a.	The United States had chronic trade surpluses.
	b.	The supply of gold was insufficient.
	c.	Exchange rates were fixed.
	d.	West Germany allowed the U.S. dollar to float against the mark.

Question 6

When is money considered to be legal tender?

	a.	if the government says it is
	b.	if it is backed by gold or silver
	c.	if it is in a bank account
	d.	if it is commodity money

Question 7

What is one reason that international specialization in production would occur?

	a.	because of differing national tastes
	b.	because resources are plentiful in all nations
	c.	because the world price for a good is high
	d.	because of diseconomies of scale

Question 8

What activity does the Bank of Canada undertake when it carries out open-market operations?

	a.	It buys and sells the bonds, but NOT the notes, of leading Canadian corporations.
	b.	It changes the overnight loans rate, which generally increases the amount of available credit.
	c.	It deals in the purchase and sale of government securities.
	d.	It provides funds so that healthy depository institutions can purchase weaker ones on the open market.

Question 9

Under which of the following circumstances will velocity of money be higher?

	a.	when workers are paid less frequently
	b.	when fewer transactions are made
	c.	when money is less effective as a store of value
	d.	when fewer people use credit cards to make purchases

Question 10

Under what conditions can firms in a high-wage nation such as Canada compete effectively with imports from low-wage nations?

	a.	if skill levels are identical in the nations
	b.	if labour productivity is higher in the low-wage nations
	c.	if Canada reduces tariffs on imports
	d.	if labour productivity is higher in Canada

Question 11

Under a narrow definition of money, which one of the following is NOT money in the Canadian economy?

	a.	a $100 Government of Canada bond
	b.	a $20 Bank of Canada note
	c.	a 25-cent Bank of Canada coin
	d.	a chequing account at a bank in Canada

Answer 1

1 - Option B

Increasing aggregate demand and lower unemployment

This is the cause of the demand pull inflation

Decreased AD will cause recession and not inflation.

2 - Option D

Borrow from another bank in overnight money market

This helps to maintain the level of excess reserves of the banks

3 - Option C

You own $ 5000 worth of government bonds.

All the other options are the example of flow and not stock.

4 - Option A

The unemployment rate

The rise or the fall in the unemployment rate tells us about the state of the economy.