Question

Suppose the Canadian price level increased relative to price levels in foreign countries. How would domestic aggregate supply and aggregate demand curves be affected?

a)	The aggregate demand curve would shift outward, and the aggregate supply curve would remain unchanged.

b)	The aggregate supply curve would shift outward, and the aggregate demand curve would remain unchanged.

c)	The aggregate supply curve would shift inward, and the aggregate demand curve would remain unchanged.

d)	The aggregate demand curve would shift inward, and the aggregate supply curve would remain unchanged.

Suppose U = the number of adults who are unemployed, E = the number of adults who are employed, and NLF = the number of adults NOT in the labour force. Which expression would equal the unemployment rate?

a)

U/(U + E)

b)	U/(E + NLF)

c)

U/E

d)	U/(E + NLF)

How is double counting in the value-added approach to GDP statistics avoided?

a)	by correct accounting of the values of exports and imports

b)	by counting the value of final and intermediate goods and services

c)	by choosing only one method to calculate GDP

d)	by counting only the value added at each stage of a good’s production process

Answer 1

1> The price level in Canada has increased more than foreign countries. Due to higher price of the product, the demand will increase for foreign products through import and the demand for domestic products will fall.

So, the aggregate demand curve will shift to the left but there won't be any change in the AS curve.

Thus, the correct option is d

2> A

The unemployment rate is defined to be the ratio of the number of unemployed and number of employed+unemployed.

3> D By choosing only the value added

Since value added is only considered at each step of the production, the value added is not counted more than once, thus there is no possibility of double counting in the value-added approach.