MULTIPLE CHOICE.    Choose the one alternative that best completes the statement or answers the question.

1)
A modern economy like Canada's is largely organized by

1)

_______
A)
the directions of international economic consortiums.
B)
governments at all levels coordinating the activities of firms and citizens.
C)
individuals forming cooperative enterprises and labour unions.
D)
benevolent individuals pursuing the public interest.
E)
individuals following their own self interest, doing what seems best for themselves.

2)
An insight first fully developed by Adam Smith is that

2)

_______
A)
self-interest undermines effective economic order.
B)
individual self-interest is the only necessary force for social order.
C)
benevolence in society is unimportant.
D)
without benevolence production would not occur.
E)
self-interest, not benevolence, is the foundation of economic order.

3)
Karl Marx argued that

3)

_______
A)
centrally planned economies could provide a more equitable distribution of total output than capitalist economies.
B)
the unfettered market system driven by self-interest leads to the best social outcome.
C)
benevolence, not self-interest, produced an effective economic order.
D)
technological change was not important in improving living standards.
E)
a free-market system would produce a low level of total output.
 4)
In the Canadian economy, most decisions regarding resource allocation are made by

4)

_______
A)
the various levels of government.
B)
legal contract.
C)
business firms only.
D)
negotiation between unions and firms.
E)
consumers and producers interacting in the price system.

5)
A basic underlying point in economics is that

5)

_______
A)
people have limited wants in the face of limited resources.
B)
people have unlimited wants in the face of limited resources.
C)
governments should never interfere in the workings of a market economy.
D)
there are unlimited resources.
E)
governments should satisfy the needs of the people.

6)
Economics is the study of

6)

_______
A)
how to best help the poor.
B)
the allocation of scarce resources among alternative uses.
C)
how to plan an economy.
D)
how to distribute income as equally as possible.
E)
why resources are scarce.
 7)
Economics is generally NOT concerned with

7)

_______
A)
the allocation of resources among alternative uses.
B)
the concept of opportunity cost.
C)
the rate of growth of productive capacity.
D)
restricting the level of human wants.
E)
the distribution of income among households.

8)
Economics can best be described as   

8)

_______
A)
the study of the use of scarce resources to satisfy unlimited human wants.
B)
the application of sophisticated mathematical models to address social problems.
C)
a normative science.
D)
the study of how a society ought to allocate its resources.
E)
the study of how to reduce inflation and unemployment.

9)
Scarcity is likely to be

9)

_______
A)
eliminated with a better understanding of economics.
B)
a problem that will always exist.
C)
unique to the twentieth century.
D)
a result of the work ethic.
E)
a problem that will be solved by the proper use of available resources.

10)
The concept of scarcity in economics usually refers to a condition

10)

______
A)
where people's wants can never be satisfied by the available resources.
B)
where society is not employing all of its available resources in an efficient manner.
C)
that afflicts only poor countries.
D)
where production is efficient, but distribution is inefficient.
E)
where too many frivolous goods and services are produced at the expense of socially desirable goods and services.

11)
Which of the following statements describe the underlying feature in most economic problems?

11)

______
A)
Our country is rich; we just don't realize it.
B)
Governments should never interfere in the workings of a market economy.
C)
There are unlimited resources.
D)
People have unlimited wants in the face of limited resources.
E)
People have limited wants in the face of limited resources.

12)
Because resources are scarce, individuals are required to

12)

______
A)
improve distribution but not production.
B)
improve production but not distribution.
C)
make choices among alternatives.
D)
sacrifice production but not consumption.
E)
use resources inefficiently.
 Figure 1-1

13)
Refer to Figure 1-1. For the government, the opportunity cost of one search and rescue helicopter is

13)

______
A)
100 kilometres of highway repair.
B)
150 kilometres of highway repair.
C)
200 kilometres of highway repair.
D)
50 kilometres of highway repair.
E)
0 kilometres of highway repair.

14)
Refer to Figure 1-1. For the government, the opportunity cost of one kilometre of highway repair is

14)

______
A)
1 search and rescue helicopter.
B)
1/100 of a search and rescue helicopter.
C)
1/50 of a search and rescue helicopter.
D)
1/2 of a search and rescue helicopter.
E)
1/10 of a search and rescue helicopter.
 15)
Refer to Figure 1-1. If the government chooses to allocate all $200 million to highway repair, we can say that

15)

______
A)
the opportunity cost of the highway repair is uncertain.
B)
the opportunity cost of the highway repair is $0.
C)
there is no opportunity cost involved because the government has achieved its objectives.
D)
there is no opportunity cost involved because the government stayed within its budget.
E)
the opportunity cost of the highway repair is 4 search and rescue helicopters.

16)
Refer to Figure 1-1. The following combinations of kilometres of highway repair and helicopters are NOT available, given
the government's budget of $200 million.

16)

______
A)
D

B)

C)

D)

E)

The table below illustrates that, in one day, Tristan can produce either 12 fishing lures or mow 3 lawns, while Thomas can produce
either 6 fishing lures or mow 6 lawns.

Fishing lures                       Mowed lawns

Tristan                                   12                                                                    3
Thomas                                      6                                                                      6

TABLE 1-1
 17)
Refer to Table 1-1. What is Tristan's opportunity cost of producing one fishing lure?

17)

______
A)
one mowed lawn
B)
4 mowed lawns
C)
1/4 of a mowed lawn
D)
3 mowed lawns
E)
1/3 of a mowed lawn

18)
Refer to Table 1-1. What is Thomas's opportunity cost of producing one fishing lure?

18)

______
A)
there is no opportunity cost
B)
1 mowed lawn
C)
1/6 of a mowed lawn
D)
5 lures
E)
1/6 of a lure

19)
Refer to Table 1-1. What is Tristan's opportunity cost of producing one mowed lawn?

19)

______
A)
6 fishing lures
B)
one fishing lure
C)
12 fishing lures
D)
3 fishing lures
E)
4 fishing lures

20)
Refer to Table 1-1. What is Thomas's opportunity cost of producing one mowed lawn?

20)

______
A)
one fishing lure
B)
0 fishing lures
C)
12 fishing lures
D)
1/6 fishing lure
E)
6 fishing lures

21)
Refer to Table 1-1. If Tristan and Thomas want to maximize their joint output from one day of work, how should they
specialize their production?

21)

______
A)
Tristan produces 12 lures; Thomas produces 6 mowed lawns
B)
Tristan produces 3 mowed lawns; Thomas produces 6 mowed lawns
C)
Tristan produces nothing, Thomas produces 6 lures and 6 mowed lawns
D)
Tristan produces 6 lures; Thomas produces 6 lures
E)
Tristan produces 6 lures and 3 mowed lawns

22)
Refer to Table 1-1. Which of the following statements is correct?

22)

______
A)
Tristan has a higher opportunity cost of producing mowed lawns.
B)
Tristan has a higher opportunity cost of producing fishing lures.
C)
Thomas has a higher opportunity cost of producing mowed lawns.
D)
Thomas has a higher opportunity cost of producing fishing lures.
E)
Both A and D are correct.

23)
Scarcity arises from limited resources. For this reason, all economic choices involve

23)

______
A)
a value judgement.
B)
an opportunity cost.
C)
complementary ends.
D)
pride.
E)
greed.

24)
The opportunity cost of going to college or university for four years is

24)

______
A)
equal to the wage rate a person will earn after graduation.
B)
the cost of tuition, residence fees and books.
C)
the cost of tuition and books and four years of lost wages from employment.
D)
the least valued alternative one forfeits to attend.
E)
zero.

25)
Suppose there are three alternatives to attending a social event read a novel (you value this at $5), go to work (you could
earn $7), or watch videos with some friends (you value this at $10). The opportunity cost of attending the social event is

25)

______
A)
$7.

B)

$22.

C)

$5.

D)
$10.

E)

zero.

26)
The opportunity cost of producing good A is defined to be   

26)

______
A)
the retail price of good A.
B)
the money cost of the factors of production used in good A.
C)
the cheapest method of producing good A.
D)
what must be sacrificed of other goods to get an additional unit of good A.
E)
the cost of having to get by using something else in place of good A.

27)
Suppose that    one unit of labour can produce either 5 units of wool or 2 pineapples. What is the opportunity cost of
producing 1 pineapple?

27)

______
A)
2 units of wool
B)
5 units of wool
C)
zero
D)
5/2 units of wool
E)
2/5 unit of wool

28)
Katie and Hugh are producing pies and jars of pickles. Katie can produce either 200 jars of pickles or 100 pies per month.
Hugh can produce either 800 jars of pickles or 200 pies per month.   

28)

______
A)
Katie's opportunity cost of producing 1 jar of pickles is 2 pies.
B)
Hugh's opportunity cost of producing 1 jar of pickles is 4    pies.
C)
Katie's opportunity cost of producing 1 jar of pickles    is 1/2 of a pie.
D)
Hugh's and Katie's opportunity costs of producing are the same.
E)
Hugh's opportunity cost of producing 1 pie is 1/4 jar of pickles.

29)
Suppose Andrea has a job that pays her $25 000 per year (after taxes). She is considering quitting her job and going to
university full time for four years. Tuition fees and books will cost $12 000 per year. Living expenses will cost $5 000 per
year. What is the opportunity cost of Andrea's four-year university degree?

29)

______
A)
zero
B)
$100 000
C)
$120 000
D)
$148 000
E)
$168 000

30)
It has been observed that university enrollment in Canada is higher during periods of high unemployment. A possible
explanation for this is that

30)

______
A)
when prospects for getting a job are poor, the opportunity cost of getting a job is lower.
B)
during periods of high unemployment, professors teach better.
C)
when prospects for getting a job are poor, the opportunity cost of doing nothing is higher.
D)
when prospects for getting a job are poor, the opportunity cost of going to university is lower.
E)
during periods of high unemployment, tuition fees are reduced.

31)
A country's production possibilities boundary shows that   

31)

______
A)
some resources are always idle in a democratic society.
B)
all points inside the boundary are preferred to all points on the boundary.
C)
the supply for goods always exceeds the demand.
D)
when a society combines its resources efficiently, it cannot produce more of one good without producing less of the other
good.
E)
when a society combines its resources inefficiently, it cannot produce more of one good without producing less of the
other good.

32)
Consider a production possibilities boundary showing the possible combinations of military goods and civilian goods
that a country can produce. Suppose that the country is currently at a point on the boundary. If the production of military
goods is increased, the production of civilian goods will necessarily

32)

______
A)
increase at a increasing rate.
B)
decrease.
C)
increase.
D)
increase at a decreasing rate.
E)
remain the same.

33)
A point lying inside the production possibilities boundary is one at which

33)

______
A)
the opportunity cost of producing more output is negative.
B)
there is no scarcity.
C)
it is not possible to produce more output with existing resources.
D)
the economy has run out of resources.
E)
more output could be produced with existing resources.

34)
If a country's production possibilities boundary is drawn as a straight (downward-sloping) line it indicates

34)
______
A)
increasing opportunity cost of producing more of either good.
B)
the use of the scarce resources in an economy.
C)
constant opportunity cost of producing more of    either good.
D)
an unfair distribution of resources in an economy.
E)
decreasing opportunity cost of producing more of either good.

The diagram below shows two production possibilities boundaries for Country X.

FIGURE 1-2

35)
Refer to Figure 1-2. That the production possibilities boundaries are drawn concave to the origin reflects the

35)

______
A)
increasing opportunity cost of producing more of either good.
B)
decreasing opportunity cost of producing more of either good.
C)
unfair distribution of resources in the economy.
D)
constant opportunity cost of producing more of either good.
E)
scarcity of resources in the economy.

36)
Refer to Figure 1-2. If Country X, constrained by the production possibilities boundary PPB1, is producing the
combination of goods indicated at point F, it can produce more consumer goods by moving to one of the points

36)

______
A)
A, B, or C.
B)
D or E
C)
A or E.
D)
A, B, C, D, or E.
E)
A or B, but not C.

37)
Refer to Figure 1-2. If Country X is currently producing at point A, it could move to point B if

37)

______
A)
some resources were switched from the consumption goods industries to the capital goods industries.
B)
the cost of producing capital goods were to increase.
C)
some resources were switched from the capital goods industries to the consumption goods industries.
D)
the cost of producing consumer goods were to increase.
E)
Country X is no longer able to produce the quantity of capital goods at point A.

38)
Refer to Figure 1-2. If Country X were producing at point C,

38)

______
A)
this is the maximum output possible from given resources.
B)
the opportunity cost of moving to point A is zero.
C)
the opportunity cost of moving to point B is to give up some consumption goods.
D)
the opportunity cost of moving to point A is to give up some capital goods.
E)
it is not possible to move to any point on PPB1 or PPB2 without technological progress.

39)
Refer to Figure 1-2. At point B,   

39)

______
A)
the opportunity cost of producing an extra unit of consumption goods is higher than at point A.
B)
the price of capital goods is higher than the price of consumption goods.
C)
the opportunity cost of producing an extra unit of capital goods is higher than at point A.
D)
Country X is producing too many consumption goods and too few capital goods.
E)
the price of consumption goods is equal to the price of capital goods.

40)
Refer to Figure 1-2. If Country X, constrained by the production possibilities boundary PPB1, is currently producing at
point A, it can produce more capital goods by moving to point

40)

______
A)
B.

B)

F.

C)

D.

D)

E.

E)

C.

41)
Refer to Figure 1-2.    Suppose that Country X is currently producing at point E. Country X could achieve production at
point D if

41)

______
A)
sufficient improvements in technology occurred in either the capital goods industry or the consumer goods industries.   
B)
the given resources were fully employed.
C)
firms reduced output of capital goods.
D)
the prices of capital goods and consumption goods fell.
E)
the given resources were more efficiently employed.

42)
Refer to Figure 1-2. A shift of the production possibilities boundary from PPB1 to PPB2 implies

42)

______
A)
that technology in the consumption goods industry has improved.
B)
an inevitable decrease in total output.
C)
that if point E is the new choice of outputs, productivity has increased in the consumption goods industry.
D)
that technology in the capital goods industries has improved.
E)
a movement from full employment to some unemployment.

43)
Refer to Figure 1-2. Growth in the country's productive capacity is illustrated by   

43)

______
A)
a single point such as A on the boundary.
B)
a point like D outside the boundary.
C)
a movement from a point inside the boundary such as C to the boundary.
D)
the movement between points on a given boundary.
E)
an outward shift of the boundary, for example from PPB1 to PPB2.
 FIGURE 1-3

44)
Refer to Figure 1-3.    Suppose that the relevant production possibilities boundary is the one labelled B. This boundary
implies that

44)

______
A)
capital goods are preferred to consumer goods.
B)
the opportunity cost of producing either capital goods or consumer goods does not depend on how much of each good is
produced.
C)
the concept of opportunity cost is not at work in this economy.
D)
in this society the resources are not efficiently employed.
E)
consumer goods are preferred to capital goods.

45)
Refer to Figure 1-3.    Which production possibilities boundaries are consistent with increasing opportunity costs?

45)

______
A)
boundaries A and B
B)
boundaries A, B, and C
C)
boundary C only
D)
boundaries B and C
E)
boundary A only

46)
Refer to Figure 1-3.    Which production possibilities boundaries exhibit decreasing opportunity costs?

46)

______
A)
boundary B only
B)
boundaries A and C
C)
boundary C only
D)
boundaries A and B
E)
boundary A only

47)
If there is always a three-for-one trade-off between the production of goods X and Y, then the production possibilities
boundary for X and Y is

47)

______
A)
a downward-sloping straight line.
B)
a downward-sloping curve convex to the origin.
C)
a downward-sloping curve concave to the origin.
D)
a downward-sloping straight line that is broken at one point.
E)
semi-circular.

48)
On a diagram of a production possibilities boundary, the concept of scarcity is illustrated by the

48)

______
A)
points on the boundary.
B)
unattainable points outside the boundary.
C)
distance from the origin to the boundary.
D)
negative slope of the boundary.
E)
area within the boundary.

49)
On a diagram of a production possibilities boundary, the concept of opportunity cost is illustrated by the

49)

______
A)
distance from the origin to the boundary.
B)
area bounded by the two axes and the boundary.
C)
negative slope of the boundary.
D)
boundary being concave to the origin.
E)
unattainable points outside the boundary.

50)
A straight-line production possibilities boundary differs from a concave boundary in which of the following ways?

50)

______
A)
The straight-line boundary does not show scarcity, whereas the concave boundary does.
B)
A straight-line boundary is associated with a command economy, whereas a concave boundary is associated with a free-
market economy.
C)
The straight-line boundary shows opportunity cost, whereas the concave boundary does not.
D)
The concave boundary illustrates constant opportunity costs, whereas the straight-line boundary illustrates decreasing
opportunity costs.
E)
The straight-line boundary illustrates constant opportunity costs, whereas the concave boundary illustrates increasing
opportunity costs.

51)
Suppose a scientific breakthrough leads to a lower-cost method of producing battery-operated cars in Canada. The likely
effect would be to move Canada's current production

51)

______
A)
possibilities boundary inward.
B)
to a point inside its new production possibilities boundary.
C)
to a point beyond its new production possibilities boundary.
 D)
above the level of U.S. production.
E)
possibilities boundary outward.

52)
Suppose fires destroy many millions of hectares of valuable Canadian forest. The effect on the Canadian economy would
be best illustrated by ________ the production possibilities boundary.

52)

______
A)
a movement along
B)
a shift outward of
C)
a movement to a point beyond   
D)
a movement inside
E)
an inward shift of

53)
During the nineteenth and early twentieth centuries, millions of people immigrated to western Canada. The effect on the
Canadian economy was to

53)

______
A)
shift its production possibilities boundary inward.
B)
shift its production possibilities boundary outward.
C)
move it inside its new production possibilities boundary.
D)
move it along an unchanged production possibilities boundary.
E)
move it beyond its new production possibilities boundary.

54)
A move from inside the production possibilities boundary to the boundary itself could be caused by

54)

______
A)
an increase in the labour supply.
B)
the employment of previously idle resources.
C)
technological progress.
D)
an improvement in the government's ability to control its spending.
E)
a reallocation of resources from military to civilian goods.

55)
Consider a production possibilities boundary showing the quantity of military goods and the quantity of civilian goods
on the two axes. A movement along the production possibilities boundary could be caused by

55)

______
A)
an increase in the labour supply.
B)
the growth of productive capacity.
C)
the reallocation of resources between military and civilian goods.
D)
the employment of previously idle resources.
E)
technological progress.

The downward-sloping line in the diagram below shows the combinations of health care and education expenditures that the
government can afford with a given amount of tax revenue.

FIGURE 1-4

56)
Refer to Figure 1-4. The levels of health and education expenditures at point C

56)

______
A)
are equal to those of point A and point B.
 B)
are not attainable with the government's current budget.
C)
could be achieved if the prices of health and/or education increased.
D)
are less than at point D.
E)
are more cost-effective than those at points A, B, and D.

57)
Refer to Figure 1-4. If the government's spending on health and education is given by point B, a move to point A must
involve

57)

______
A)
more spending on education.
B)
less spending on health.
C)
zero opportunity cost.
D)
less spending in total.
E)
less spending on education.

58)
Refer to Figure 1-4. Suppose the government's current spending is shown by point D. In this case,

58)

______
A)
the government should spend its total budget so as to get to point B, since more health spending and more education
spending are both clearly desirable.
B)
more education expenditures can be achieved only by sacrificing some health expenditures.
C)
the prices of education and health care have increased beyond the government's ability to pay.
D)
the government is not spending its total budget.
E)
more health expenditures can be achieved only by sacrificing some education expenditures.

59)
Economic growth is illustrated by

59)

______
A)
an outward shift of the economy's production possibilities boundary.
B)
the movement to a point outside of the production possibilities boundary.
C)
a movement onto the economy's production possibilities boundary.
D)
a movement along the economy's production possibilities boundary.
E)
a reduction in the unemployment of resources.

60)
The production possibilities boundary demonstrates that

60)

______
A)
when a society combines its resources inefficiently, it cannot produce more of one good without producing less of the
other good.
B)
some resources are always idle in a democratic society.
C)
when a society combines its resources efficiently, it cannot produce more of one good without producing less of the other
good.
D)
the demand for goods always exceeds the supply.
E)
all points inside the boundary are preferred to all points on the boundary.

61)
Suppose drought destroys many millions of acres of valuable Canadian farmland. The effect on the Canadian economy
would be to move

61)

______
A)
its production possibilities boundary inward.
B)
it beyond its production possibilities boundary.
C)
it along its production possibilities boundary.
D)
its production possibilities boundary outward.
E)
none of the above. There would be no change in Canada's production possibilities boundary.

62)
Suppose there are only two goods produced in our economysnowplows and helicopters. If there is always a two-for-one
tradeoff between the production of these two goods (in terms of opportunity cost), then the production possibilities
boundary between snowplows and helicopters is
62)

______
A)
a downwardsloping curve convex to the origin.
B)
circular.
C)
a downwardsloping curve concave to the origin.
D)
a downwardsloping straight line with slope equal to -1.
E)
a downwardsloping straight line.

63)
Labour services are bought and sold in a

63)

______
A)
foreign exchange market.
B)
mixed market.
C)
factor market.
D)
goods market.
E)
product market.

64)
In the circular flow of income, the allocation of resources is largely decided by

64)

______
A)
individuals only.
B)
central authorities and firms only.
C)
central authorities only.
D)
firms and households acting independently.
E)
political parties and firms only.

65)
The key decision makers in a market economy are

65)
______
A)
individual citizens, non-profit organizations, and the Bank of Canada.
B)
households, firms, and government.
C)
governments and all institutions under government control.
D)
corporations and governments.
E)
large corporations and labour organizations.

66)
Economists usually assume that households and firms, respectively, maximize

66)

______
A)
savings and profits.
B)
income and sales.
C)
wages and revenues.
D)
expenditures and profits.
E)
utility and profits.

67)
Economists usually assume that households

67)

______
A)
make consistent decisions, maximize profits, and are the principal users of the factors of production.
B)
make consistent decisions, maximize utility, and are the principal owners of the factors of production.
C)
make consistent decisions, maximize savings, and are the principal users of the factors of production.
D)
do not make consistent decisions, maximize satisfaction, and are the principal owners of the factors of production.
E)
do not make consistent decisions, maximize profits, and are the principal users of the factors of production.

68)
The circular flow of income illustrates

68)
______
A)
that firms own the factors of production.
B)
the interaction of households and firms through the factors and goods markets.
C)
that there is no relationship between goods markets and factor markets.
D)
the flows of expenditures and income in a household.
E)
that the flow of payments    moves in the same direction as the flow of goods.

69)
One of the "real" flows in the circular flow of income is

69)

______
A)
factor services going from producers to consumers.
B)
goods going from consumers to producers.
C)
money payments going from consumers to producers.
D)
goods going from producers to consumers.
E)
money payments going from producers to consumers.

70)
If some income earned by households is not spent on output, or if some income earned by firms is not spent on factor
services,    the circular flow of income will

70)

______
A)
expand.
B)
explode.
C)
contract.
D)
run over.
E)
stop.

71)
The famous economist who developed the idea of the division of labour was

71)
______
A)
Milton Friedman.
B)
David Ricardo.
C)
Adam Smith.
D)
John Maynard Keynes.
E)
Karl Marx.

72)
Specialization and trade

72)

______
A)
occur only in the private sector.
B)
developed only in the twentieth century.
C)
arose as humans changed from nomadic and self-sufficient food gatherers to    settled food producers.
D)
has been solved by the use of machinery.
E)
exists only in capitalist economies.

73)
Specialization of labour means that

73)

______
A)
different individuals produce different products.
B)
each worker is self-sufficient.
C)
job security is ensured.
D)
different individuals perform different tasks in the production process of any given product.
E)
a barter economy is not necessary.

74)
A barter system of exchange

74)

______
 A)
involves the trading of goods directly for other goods
B)
developed late in history.
C)
requires the use of money.
D)
is the most efficient form of exchange.
E)
does not involve the double coincidence of wants.

75)
Katie and Hugh are producing pies and jars of pickles. Katie can produce either 200 jars of pickles or 100 pies per month.
Hugh can produce either 800 jars of pickles or 200 pies per month. Currently, each divide their time equally between
production of the two goods per month -- Katie produces 100 jars of pickles and 50 pies while Hugh produces 400 jars of
pickles and 100 pies. In order for Katie and Hugh to jointly gain from specialization, which of the following changes
should take place?

75)

______
A)
Hugh should produce more pies and fewer jars of pickles.
B)
Katie and Hugh should both produce more pies and fewer jars of pickles.
C)
Katie and Hugh should both produce more jars of pickles and fewer pies.
D)
Katie should produce more jars of pickles and fewer pies.
E)
Katie should produce more pies and fewer jars of pickles.

76)
Specialization of labour led to greater efficiency in the allocation of resources because of

76)

______
A)
an increase in total work effort.
B)
the principle of comparative advantage.
C)
the use of barter.
D)
the opportunity cost of labour increased.
E)
greater reliance on self-sufficiency.

77)
One of the major results of the greater specialization of labour is that   
77)

______
A)
the circular flow of income contracts.
B)
there is an increased need for government to intervene in the marketplace.
C)
each worker must become more self-sufficient.
D)
there is a greater need for trade.
E)
the overall output of the economy declines.

78)
Which of the following has most contributed to the globalization of the economy?

78)

______
A)
the decline in the relative importance of manufacturing
B)
reductions in transportation and communication costs
C)
tariffs and trade barriers
D)
the decreased importance of agriculture
E)
the shift toward market economies in Eastern Europe

79)
The use of money for transactions

79)

______
A)
increases the use of barter.
B)
makes specialization of labour more difficult.
C)
fosters self-sufficiency.
D)
makes exchange easier and thus promotes the specialization of labour.
E)
enables humanity to satisfy all wants.

80)
The barter system of exchange is inefficient because

80)
______
A)
"fair" values cannot be defined without the use of money.
B)
the double coincidence of wants may not exist.
C)
bargaining power is unequal between rich and poor.
D)
exchange partners need to know each other.
E)
markets do not exist.

81)
Which of the point(s) below is (are) true of money?
i)    Money eliminated the need for barter.
ii) Money allowed for specialization of labour and expansion of trade.
iii) Money allowed for the development of a market economy.
iv) Money allowed one to save current production for future use.
81)

______
A)
Only i).
B)
Only i) and ii).
C)
Only i) and iv).
D)
Only i), ii), and iv).
E)
All of the points are true.

82)
Money facilitates trade and specialization by

82)

______
A)
providing employment for coin makers.
B)
increasing investment.
C)
eliminating the need for barter.
D)
reducing the shift of resources between uses.
E)
increasing the value of gold.

83)
An economic system that relies primarily upon custom and habit in economic decision making is a
83)

______
A)
market system.
B)
traditional system.
C)
command system.
D)
communist system.
E)
mixed system.

84)
In practice, the term "centrally planned economy" refers to an economy in which

84)

______
A)
the mix of market and command principles is heavily weighted towards the latter.
B)
all commodities are rationed.
C)
the military is in control of the government.
D)
economic decisions are made in the geographic center of the country.
E)
the government makes all production and consumption decisions.

85)
The Canadian economy is best described as   

85)

______
A)
a command economy.
B)
a mixed economic system.
C)
primarily free-market decision making.
D)
traditional.
E)
primarily a public ownership economy.

86)
Most economists agree that
86)

______
A)
command economies have been very successful in distributing income in socially just ways.
B)
the optimal mix of market and command systems remains constant over time.
C)
government intervention in the economy is only justified in time of war.
D)
most production and consumption decisions are more efficiently coordinated by markets than through central planning.
E)
the mix of market and command principles that exists in Canada is the best.

87)
Which countries have mostly public ownership of resources?

87)

______
A)
Cuba and North Korea
B)
Brazil and Argentina
C)
United States and Canada
D)
Sweden and Norway
E)
France and Germany

88)
Behaviour in free-market economies is   

88)

______
A)
random and unpredictable.
B)
determined by a central authority.
C)
based primarily on custom and habit.
D)
mostly directed by self interest.
E)
mostly affected by elements of tradition and government command.

89)
In command economies, economic behaviour is   

89)
______
A)
based primarily on custom and habit.
B)
directed by individual self interest.
C)
largely determined by a central authority.
D)
random and unpredictable.
E)
largely affected by elements of tradition and market incentives.

90)
In mixed economies, economic behaviour is   

90)

______
A)
affected by elements of tradition, government command, and market incentives.
B)
largely determined by a central authority.
C)
random and unpredictable.
D)
based primarily on custom and habit.
E)
directed only by self interest.

91)
In traditional economies, economic behaviour is   

91)

______
A)
based primarily on custom and habit.
B)
directed only by self interest.
C)
largely determined by a central authority.
D)
affected by elements of tradition, government command, and market incentives.
E)
random and unpredictable.

92)
The Canadian economic system can best be described as

92)
______
A)
command.
B)
pure free market.
C)
mixed capitalism.
D)
traditional.
E)
mixed socialism.

93)
Complex economic plans for many economic sectors are most associated with a

93)

______
A)
traditional economy.
B)
mixed market system..
C)
free-market system.
D)
command economy.
E)
feudal system.

94)
Most modern economies in the world today   

94)

______
A)
have a mix of traditional, command and market elements.
B)
are similar to feudal systems.
C)
have pure market exchange.
D)
are mostly run by government decree.
E)
are complex systems that defy description and analysis.

95)
In the current Canadian economy, the majority of choices on how resources are allocated are made by

95)

______
 A)
business firms only.
B)
the various levels of government.
C)
consumers and firms through the price system.
D)
legal contracts.
E)
negotiation between unions and firms.

96)
Comparison of economic systems indicates that

96)

______
A)
most nations have either a purely socialist economy or a purely capitalist economy.
B)
most countries have mixed economies.
C)
capitalist economies are clearly superior in distributing income.
D)
all countries have largely traditional economies.
E)
socialist economies are clearly superior in producing consumer goods.

97)
Many economies in central and Eastern Europe, including the countries of the former Soviet Union, are still in the process
of moving from a command economy to a market economy. In the first years of this transition, most of these countries
experienced sharp drops in output and reductions in living standards. Economists generally see this as

97)

______
A)
an indication of the extreme difficulty of transition from one type of economic system to another.
B)
the difficulty of corruption in non-market economies.
C)
the failure of the market system.
D)
the triumph of capitalism over communism.
E)
an indication that these economies should return to being command economies.

98)
In a pure market economy, the role of government is limited to provision of
i) a basic legal and institutional structure.
ii) intervention in the allocation of resources in some areas of the economy.
ii)    redistribution of income.
iv) stabilization of economic conditions generally.
Which of the above points is true?
98)

______
A)
Only i).
B)
Only i) and ii).
C)
Only i) and iv).
D)
Only i), ii), and iv).
E)
All of the points are provided by government in a pure market economy.

99)
Income redistribution in a mixed economy

99)

______
A)
risks reducing individual incentives to work and produce.
B)
rarely occurs.
C)
is supported by all individuals.
D)
is only accomplished through government intervention.
E)
is not allowed.

100)
For an economist the term "government" refers to

100)

_____
A)
the federal and provincial governments.
B)
any organization designed to influence the free operation of any market.
C)
any public organization that has political and legal power to exert control over individual decision makers and over
markets.
D)
the prime minister and the Bank of Canada.
E)
the federal government only.

1)
E
2)
E
3)
A
4)
E
5)
B
6)
B
7)
D
8)
A
9)
B
10)
A
11)
D
12)
C
13)
D
14)
C
15)
E
16)
D
17)
C
18)
B
19)
E
20)
A
21)
A
22)
E
23)
B
24)
C
25)
D
26)
D
 27)
D
28)
C
29)
D
30)
D
31)
D
32)
B
33)
E
34)
C
35)
A
36)
A
37)
C
38)
B
39)
A
40)
B
41)
A
42)
D
43)
E
44)
B
45)
C
46)
E
47)
A
48)
B
49)
C
50)
E
51)
E
52)
E
 53)
B
54)
B
55)
C
56)
B
57)
E
58)
D
59)
A
60)
C
61)
A
62)
E
63)
C
64)
D
65)
B
66)
E
67)
B
68)
B
69)
D
70)
C
71)
C
72)
C
73)
A
74)
A
75)
E
76)
B
77)
D
78)
B
 79)
D
80)
B
81)
E
82)
C
83)
B
84)
A
85)
B
86)
D
87)
A
88)
D
89)
C
90)
A
91)
A
92)
C
93)
D
94)
A
95)
C
96)
B
97)
A
98)
A
99)
A
100)
C