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Name: __________________________ Date: _____________
Page 1
7. Which is a microeconomic question, rather than a macroeconomic question?
A) Will a decrease in the income tax rate lift the nation out of a recession?
B) Will an increase in consumer spending cause inflation?
C) Will a decrease in the income tax rate lead to a government budget deficit?
D) Will an increase in the cigarette tax reduce the number of packs sold?
8. How the actions of individuals and firms interact to produce a particular economy-wide
level of performance is the focus of:
A) macroeconomics.
B) fiscal policy.
C) monetary policy.
D) microeconomics.
Page 2
13. Promotion of employment and growth in the economy as a whole is the focus of:
A) macroeconomics.
B) fiscal policy.
C) monetary policy.
D) microeconomics.
14. If all of the households and businesses start saving more during economic hard times,
then aggregate income will fall, hurting everyone in the economy. This is known as the:
A) quantity theory.
B) crowding-out theory.
C) paradox of thrift.
D) permanent income hypothesis.
15. The concept that the whole is greater than the sum of its parts best characterizes:
A) microeconomics.
B) supply and demand.
C) macroeconomics.
D) business forecasting.
16. A key insight into macroeconomics is that in the short run the combined effect of
individual decisions:
A) is always the same as what one individual intended.
B) may be very different from what any one individual intended.
C) is always beneficial to the economy as a whole.
D) is always detrimental to the economy as a whole.
18. What do a rubber-necking traffic jam and the paradox of thrift have in common?
A) Individual behavior has large negative consequences for the whole of society.
B) Seemingly bad behavior ends up harming everyone.
C) Seemingly careless behavior leads to good times for all.
D) Government intervention can only make matters worse.
Page 3
19. In the paradox of thrift:
A) firms that are pessimistic about the future lay off the most saving-conscientious
workers.
B) when families and business are feeling pessimistic about the future, they spend
more.
C) increased saving by individuals increases their chances of becoming unemployed.
D) risky behavior during economic tough times has large negative consequences for
society.
20. In contrast to the conclusions drawn from microeconomics, many economists argue that
in macroeconomics, government:
A) control of rent prices increases overall economic activity.
B) intervention in markets usually leaves society as a whole worse off.
C) taxation of goods and services does not cause a deadweight loss of economic
welfare.
D) intervention in markets can prevent or reduce the effects of adverse events on the
macroeconomy.
21. The view that the government should take an active role in the macroeconomy dates to:
A) the Seven Years' War.
B) World War I.
C) the Great Depression.
D) the Vietnam War.
23. The modern macroeconomic tools used by the government are _____ policy and _____
policy.
A) tax; antitrust
B) fiscal; monetary
C) monetary; exchange rate
D) capital; labour
Page 4
24. Changing interest rates is an example of _____ policy.
A) fiscal
B) tax
C) monetary
D) exchange rate
25. Fiscal policy refers to changes in _____ to affect overall spending in the economy.
A) interest rates
B) government spending and taxation
C) the quantity of money
D) interest rates and of government spending
26. The economist whose writings in the 1930s argued that the cause of an economic
depression is inadequate spending was:
A) Herbert Hoover.
B) John Maynard Keynes.
C) Andrew Mellon.
D) Joseph Schumpeter.
29. In 1936 economic theory changed dramatically with the publication of:
A) The General Theory of Employment, Interest, and Money, by John Maynard
Keynes.
B) The Wealth of Nations, by Adam Smith.
C) The Road to Serfdom, by F. A. Hayek.
D) Principles of Economics, by Paul Samuelson.
Page 5
30. The central mission of modern macroeconomics is to prevent:
A) shortages.
B) surpluses.
C) high gas prices.
D) a deep recession like the Great Depression.
32. Fiscal policy attempts to affect the level of overall spending by making changes in:
A) the interest rate.
B) the money supply.
C) banking regulations.
D) taxes and spending.
33. Monetary policy attempts to affect the overall level of spending by making changes in:
A) taxes.
B) taxes and spending.
C) taxes and interest rates.
D) interest rates and the quantity of money.
34. Monetary policy attempts to affect the overall level of spending through:
A) changes in the inflation rate.
B) changes in the quantity of money and the interest rate.
C) changes in tax policy or government spending.
D) discretionary regulation of profits and wages.
35. Fiscal policy attempts to affect the overall level of spending through:
A) changes in the inflation rate.
B) changes in the quantity of money or the interest rate.
C) changes in tax policy or government spending.
D) discretionary regulation of profits and wages.
Page 6
36. If macroeconomic policy has been successful over time, it is likely that the economy has
NOT seen:
A) any inflation.
B) any severe recessions.
C) any unemployment.
D) a business cycle.
39. When the Great Depression reached its trough in 1933, the unemployment rate was
approximately _____%.
A) 5
B) 10
C) 20
D) 50
Page 7
41. The General Theory of Employment, Interest, and Money, written by _____ and
published in _____, transformed the way economists thought about macroeconomics.
A) Milton Friedman; 1946
B) Paul Samuelson; 1940
C) John Maynard Keynes; 1936
D) Paul Lucas; 1966
42. The General Theory of Employment, Interest, and Money was written by:
A) Robert Lucas.
B) David Ricardo.
C) John Maynard Keynes.
D) Thomas Malthus.
44. In recent times, the Canadian government has been trying to help the economy through
one of the worst economic slumps ever. The policies used are based on _____ theory.
A) Keynesian
B) classical
C) supply-side
D) trickle-down
46. A change in the level of overall spending in the economy due to a change in the interest
rate, brought about by a change in the quantity of money, is an example of _____
policy.
A) monetary
B) fiscal
C) free-market
D) trickle-down
Page 8
47. Changing government spending and taxes to affect overall spending is use of _____
policy.
A) tax-and-spend
B) monetary
C) fiscal
D) free-trade
49. Periods in which output and employment are falling in many industries are called:
A) recessions.
B) booms.
C) expansions.
D) deflations.
52. The short-run alternation between economic downturns and recessions, then economic
upturns and expansions is known as the _____ cycle.
A) business
B) contractionary
C) expansionary
D) disequilibrium
Page 9
53. If during several quarters, the economy is simultaneously increasing its levels of output
and employment, then the economy is in a(n):
A) depression.
B) expansion.
C) recession.
D) turning point between a recovery and a downturn.
Page 10
59. Economists have identified several consecutive quarters of falling employment, and
forecasts for the next few months suggest more of the same. The economy is at the
_____ stage of the business cycle.
A) recession
B) expansion
C) peak
D) trough
60. For the past several months, per capita output has increased at a slower and slower rate.
Over the same period, the unemployment rate has been falling, but it appears that both
have leveled off. Where in the business cycle is the economy?
A) peak
B) recession
C) trough
D) expansion
61. The point at which a recession ends and the expansion begins is called the:
A) trough.
B) downturn.
C) peak.
D) lag.
Page 11
65. A pattern of expansion, then recession, then expansion again is a(n):
A) annual trend.
B) secular trend.
C) business cycle.
D) consumer cycle.
66. The point on a business cycle when real GDP stops rising and begins falling is a(n):
A) peak.
B) trough.
C) expansion.
D) recession.
67. The point on a business cycle when real GDP stops falling and begins rising is a(n):
A) peak.
B) expansion.
C) trough.
D) recession.
69. Rising total output accompanied by increasing employment is generally known as a(n):
A) stagflation.
B) recession.
C) inflation.
D) expansion.
70. A country's real gross domestic product (GDP) undergoes periodic fluctuations called
a(n):
A) recession.
B) business cycle.
C) expansion.
D) trough.
Page 12
Use the following to answer questions 71-72:
71. (Figure: The Business Cycle) Point B on this graph shows a(n):
A) peak.
B) trough.
C) expansion.
D) recession.
72. (Figure: The Business Cycle) The movement from point B to C is called a(n):
A) trough.
B) expansion.
C) depression.
D) peak.
Page 13
75. The most painful effect of a recession is:
A) inflation.
B) unemployment.
C) money neutrality.
D) liquidity trap.
77. In many countries, economists adopt the rule that a recession is a period of at least
_____ during which aggregate output falls.
A) one quarter
B) two consecutive quarters
C) three consecutive quarters
D) a full year
78. The most widely used indicator of the conditions in the labour market is the:
A) unemployment rate.
B) population growth rate.
C) inflation rate.
D) trade deficit.
79. The _________ is the most widely used indicator of the conditions in the labour market.
A) trade deficit
B) population growth rate
C) inflation rate
D) unemployment rate
Page 14
81. According to official statistics for Canada, since the Great Depression:
A) economists are confident that the business cycle has been tamed.
B) the economy has constantly had positive real GDP growth rates.
C) the economy had longer recessions than expansions only during the 1960s and
1990s.
D) the economy has not had another severe and prolonged economic downturn
comparable to it.
86. Historical evidence shows that for determining a country's living standards, over:
A) an extended period, long-run growth is just as important as the business cycle.
B) short periods, long-run growth is less important than the business cycle.
C) an extended period, long-run growth is much more important than the business
cycle.
D) long periods, it is difficult to determine whether the business cycle or long-run
growth is more important.
Page 15
87. An increase in the nation's _____ is generally accepted as a long-run indicator of a
rising standard of living.
A) output per person
B) unemployment rate
C) inflation rate
D) trade deficit
Page 16
93. Which statement is TRUE?
A) In the past century, the population of Canada has grown faster than output.
B) Long-run growth models and business cycle models are the same.
C) Since World War II, the economy of Argentina has grown faster than the economy
of Canada.
D) The level of saving is important for long-run growth.
95. Inflation:
A) is a movement of the economy toward economic growth.
B) can be thought of as an increase in a nation's standard of living.
C) is a sustained fall in the overall level of prices.
D) is an increase in the overall level of prices.
96. If the economy grew at 3% this year and average prices increased _____, people would
be better off this year than the last year.
A) by 3%
B) faster than 3%
C) less than 3%
D) faster than 10%
97. If wages grew at 5% last year and average prices grew at 3%, then the average worker:
A) is better off.
B) is worse off.
C) has lost purchasing power.
D) is unaffected.
Page 17
98. If workers' nominal wages have risen by 50% over a 10 years and prices have increased
by 40% in that same period, then we can safely conclude that the amount of goods and
services workers can buy has:
A) fallen.
B) increased.
C) not changed.
D) decreased in quality.
101. The annual percentage change in the aggregate price level is negative when there is:
A) deflation.
B) disinflation.
C) inflation.
D) spiraling inflation.
103. Inflation:
A) raises the cost of making purchases.
B) can result in a decrease in barter transactions.
C) encourages people to hold cash.
D) makes borrowers worse off.
Page 18
104. Deflation:
A) raises the cost of making purchases.
B) makes borrowers better off.
C) encourages people to hold cash rather than invest.
D) is caused only by changes in interest rates.
105. With regard to the aggregate price level, economists generally believe that:
A) price stability is desirable.
B) inflation is worse than deflation.
C) deflation is worse than inflation.
D) inflation benefits most retired people.
Page 19
110. If a country sells more goods and services to the rest of the world than it purchases from
the other countries, then the country has a:
A) trade deficit.
B) budget deficit.
C) trade surplus.
D) budget surplus.
111. If a country has a trade deficit, does it indicate that the country has a serious problem?
A) No. Trade deficits occur when a country's investment spending is higher than its
level of saving.
B) Yes. Trade deficits occur when a country has low productivity.
C) Yes. Trade deficits occur when a country does not have a comparative advantage in
production.
D) Yes. Trade deficits occur when a country has a high budget surplus.
112. Goods and services that are produced in a foreign country but consumed domestically
are called:
A) exports.
B) imports.
C) investment goods.
D) consumer durables.
114. A nation whose value of imports exceeds its value of exports is said to have:
A) hyperinflation.
B) a trade deficit.
C) price stability.
D) a trade surplus.
Page 20
116. In an open economy:
A) the exchange rate is determined by the government.
B) specialization in activities with a comparative advantage is not possible.
C) trade is beneficial only to the larger economy.
D) there is trade in goods, services, and/or assets with other countries.
117. The trade balance is the difference between the values of:
A) the trade deficit and the budget deficit.
B) exports and imports.
C) the exchange rates of two countries that are engaged in international trade.
D) the national debt and the foreign debt.
118. The additional profit earned by Microsoft Corporation by marketing and using a
proprietary method of coding software is a microeconomic issue.
A) True
B) False
119. Fiscal policy entails changes in the quantity of money or the interest rate.
A) True
B) False
120. Monetary and fiscal policy are tools to reduce the severity of recessions.
A) True
B) False
123. The business cycle is the long-run alternation between downturns and upturns.
A) True
B) False
Page 21
124. Expansions are periods when real GDP and employment are growing.
A) True
B) False
125. Recessions are periods in which output and employment are falling.
A) True
B) False
126. Business cycles are defined by the expansion, contraction, then expansion again of
nominal GDP.
A) True
B) False
128. The peak of the business cycle provides evidence that the recession is over.
A) True
B) False
129. Between 1980 and 2017, inflation wiped out most of the wage gains of the typical
worker.
A) True
B) False
130. A newspaper article documents the closing of a factory and the many jobs that are lost.
A separate article describes the rising Canadian unemployment rate. Why is the first
article a microeconomic issue and the second article a macroeconomic issue?
131. The economy is in a recession and the federal government passes legislation to reduce
income taxes. Tom, seeing an increase in his take-home pay, goes to Best Buy and
purchases a new television. Why is the tax cut a macroeconomic issue, while Tom's new
TV is a microeconomic issue?
Page 22
133. What are Keynesian policies?
134. Suppose the business cycle is expanding. Predict how the economic indicators of real
gross domestic product, the unemployment rate, and the inflation rate are moving.
135. You read a newspaper article that says the unemployment rate rose this month. Are we
in a recession? Explain.
136. What is long-run economic growth, and why is it so important for a nation's economy?
137. Your boss is impressed with your performance over the past year and has decided to
give you a 5% increase in your salary. Are you clearly better off with your increased
salary? What factors must be considered?
138. In a typical business cycle recession, the unemployment rate rises and the inflation rate
falls. Explain these two trends.
139. Canada imports coffee from Brazil and exports cars to Brazil. Is this a macroeconomic
or microeconomic issue?
141. In macroeconomics:
A) aggregate data such as real GDP, the price level, and unemployment are analyzed.
B) individual and firm decisions regarding utility and profit maximization are studied.
C) long-term growth is not considered to be important.
D) market intervention from the government is not considered important.
Page 23
142. The paradox of thrift highlights:
A) the role of investment in the macroeconomy.
B) how individual decisions to save more may worsen a recession.
C) how an increase in spending occurs during recessions.
D) irrational behavior on the part of households.
146. Setting interest rates and the money supply in an effort to change overall spending in an
economy is called:
A) fiscal policy.
B) monetary policy.
C) investment.
D) the stock market.
147. Setting government spending and taxes in an effort to change overall spending in an
economy called:
A) fiscal policy.
B) monetary policy.
C) investment.
D) the stock market.
Page 24
148. During the Great Depression, unemployment rates reached as high as _____%.
A) 20
B) 50
C) 10
D) 60
152. One normally expects that unemployment increases while aggregate output and
aggregate incomes decrease during:
A) an expansion.
B) government intervention.
C) a recession.
D) the peak of the business cycle.
Page 25
154. When an economy is operating between a trough and a peak of the business cycle, it is
in:
A) an expansion.
B) a contraction.
C) a short-run condition.
D) the beginning of a fall in aggregate spending.
156. When an economy is expanding, unemployment tends to _____ and overall prices tend
to _____.
A) fall; rise
B) fall; fall
C) rise; fall
D) rise; rise
157. When an economy's overall production grows faster than its population, it is
undergoing:
A) long-run growth per capita.
B) an increase in nominal GDP.
C) deflation.
D) the paradox of thrift.
159. When overall price levels rise over time, it is referred to as:
A) deflation.
B) inflation.
C) an increase in purchasing power.
D) the consumer price index.
Page 26
160. If an economy is open:
A) anyone can immigrate to the country.
B) trading with other countries makes up a portion of its economy.
C) it does not trade with other countries.
D) its real GDP will drop.
162. If the value of a country's exports is GREATER than the value of its imports, it is:
A) running a trade surplus.
B) running a trade deficit.
C) in an economic contraction.
D) likely to find its investment spending greater than its level of saving.
Page 27
Answer Key
1. D
2. A
3. A
4. A
5. C
6. A
7. D
8. A
9. A
10. D
11. C
12. A
13. A
14. C
15. C
16. B
17. B
18. A
19. C
20. D
21. C
22. A
23. B
24. C
25. B
26. B
27. B
28. A
29. A
30. D
31. A
32. D
33. D
34. B
35. C
36. B
37. C
38. B
39. C
40. C
41. C
42. C
43. A
44. A
Page 28
45. B
46. A
47. C
48. A
49. A
50. C
51. D
52. A
53. B
54. D
55. C
56. D
57. A
58. C
59. A
60. A
61. A
62. D
63. C
64. D
65. C
66. A
67. C
68. C
69. D
70. B
71. B
72. B
73. D
74. C
75. B
76. A
77. B
78. A
79. D
80. D
81. D
82. B
83. A
84. A
85. A
86. C
87. A
88. A
89. C
90. B
Page 29
91. B
92. A
93. D
94. A
95. D
96. C
97. A
98. B
99. C
100. B
101. A
102. A
103. A
104. C
105. A
106. D
107. D
108. D
109. C
110. C
111. A
112. B
113. A
114. B
115. D
116. D
117. B
118. A
119. B
120. A
121. B
122. A
123. B
124. A
125. A
126. B
127. A
128. B
129. B
130.
131.
132.
133.
134.
135.
136.
Page 30
137.
138.
139.
140. C
141. A
142. B
143. D
144. B
145. B
146. B
147. A
148. A
149. C
150. B
151. D
152. C
153. B
154. A
155. D
156. A
157. A
158. B
159. B
160. B
161. C
162. A
163. A
164. A
Page 31
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Limnaea stagnalis, about 15,000 in Helix aspersa (that is, about
400,000 to the square inch), about 30,000 in Limax maximus, and as
many as 40,000 in Helix Ghiesbreghti, a large species from Mexico;
they are very numerous also in Nanina, Vitrina, Gadinia, and
Actaeon. But Umbrella stands far and away the first, as far as
number of teeth is concerned. In both U. mediterranea and U. indica
they entirely baffle calculation, possibly 750,000 may be somewhere
near the truth.
The teeth on the radula are almost invariably disposed in a kind of
pattern, exactly like the longitudinal rows of colour in a piece of
ribbon, down the centre of which runs a narrow stripe, and every
band of colour on one side is repeated in the same relative position
on the other side. The middle tooth of each row—the rows being
counted across the radula, not longitudinally—is called the central or
rachidian tooth; the teeth next adjacent on each side are known as
the laterals, while the outermost are styled uncini or marginals. As a
rule, the distinction between the laterals and marginals is fairly well
indicated, but in the Helicidae and some of the Nudibranchiata it is
not easy to perceive, and in these cases there is a very gradual
passage from one set to the other.
The central tooth is nearly always present. It is wanting in certain
groups of Opisthobranchiata, some of the carnivorous Pulmonata,
and in the Conidae and Terebridae, which have lost the laterals as
well. Voluta has lost both laterals and marginals in most of the
species, and the same is the case with Harpa. In Aeolis, Elysia, and
some other Nudibranchiata the radula consists of a single central
row. Other peculiarities will be described below in their proper order.
The extreme importance of a study of the radula depends upon
the fact, that in each species, and a fortiori in each genus and family,
the radula is characteristic. In closely allied species the differences
exhibited are naturally but slight, but in well-marked species the
differences are considerable. The radula, therefore, serves as a test
for the distinction of genera and species. For instance, in the four
known recent genera of the family Strombidae, viz. Strombus,
Pteroceras, Rostellaria, and Terebellum, the radula is of the same
general type throughout, but with distinct modifications for each
genus; and the same is true, though to a lesser extent, for all the
species hitherto examined in each of the genera. These facts are
true for all known genera, differences of the radula corresponding to
and emphasising those other differences which have caused genera
to be constituted. The radula therefore forms a basis of classification,
and it is found especially useful in this respect in dealing with the
largest class of all, the Gasteropoda, and particularly with the chief
section of this order, the Prosobranchiata. Thus we have—
Prosobranchiata Monotocardia (a) Toxoglossa
(b) Rachiglossa
(c) Taenioglossa
(d) Ptenoglossa
(e) Gymnoglossa
Fig. 124.—Three rows of the radula of Sistrum spectrum Reeve, Tonga, × 80.
The laterals to the right are not drawn in.
Several remarkable peculiarities occur. Harpa loses the radula
altogether in the adult. In the young it has lost only the laterals, and
consists of nothing but the central tooth. Marginella has no laterals;
the central tooth is small and comb-shaped, with blunt cusps. In
Voluta the laterals are generally lost, but in Volutomitra and one
species of Voluta[325] they are retained. The central tooth usually
has three strong cusps, and is very thick and coloured a deep red or
orange (Fig. 122); in the sub-genus Amoria it is unicuspid, in shape
rather like a spear-head with broadened wings; in Volutolyria it is of a
different type, with numerous unequal denticulations, something like
the laterals of Mitra or Fasciolaria. Of the Mitridae, Cylindromitra has
lost the laterals. Among the Buccinidae, Buccinopsis possesses a
curiously degraded radula, the central tooth having no cusps, but
being reduced to a thin basal plate, while the laterals are also
weakened. This degradation from the type is a remarkable feature
among radulae, and appears to be characteristic, sometimes of a
whole family, e.g. the Columbellidae (Fig. 123, B), sometimes of a
genus, sometimes again of a single species. Thus in Cantharus (a
sub-genus of Buccinum) the radula is typical in the great majority of
species, but in C. pagodus Reeve, a large and well-grown species, it
is most remarkably degraded, both in the central and lateral teeth
(Fig. 123, A). This circumstance is the more singular since C.
pagodus lives at Panama side by side with C. ringeus and C.
insignis, both of which have perfectly typical radulae. It is probable
that the nature of the food has something to do with the
phenomenon. Thus Sistrum spectrum Reeve was found to possess
a very aberrant radula, not of the common muricoid type, but with
very long reed-like laterals. This singularity was a standing puzzle to
the present writer, until he was fortunate enough to discover that S.
spectrum, unlike all other species of Sistrum, lives exclusively on a
branching coral.
The dental formula for the Rachiglossa is thus 1.1.1, except in
those cases where the laterals are absent, when it is 0.1.0.
Fig. 125.—Portion of the radula of Cassis sulcosa Born., × 40. The marginals to
the right are not fully drawn.
(c) The Taenioglossa comprise 46 families in all, of which the
most important are Tritonidae, Cassididae, Cypraeidae, Strombidae,
Cerithiidae, Turritellidae, Melaniidae, Littorinidae, Rissoidae,
Paludinidae, Ampullariidae, Cyclophoridae, Cyclostomatidae, and
Naticidae. The radula is characterised by a central tooth of very
variable form, the prevailing type being multicuspid, the central cusp
the largest, on a rather broad base; a single lateral, which is often a
broad plate, more or less cusped, and two uncini, rather narrow, with
single hooks, or slightly cusped. The accompanying figures of
Cassis, Vermetus, and Cypraea, and those of Littorina and
Cyclophorus given on pp. 20, 21, are good examples of typical
taenioglossate radulae.
Fig. 135.—Radula of
Elysia viridis Mont. ×
40. Type (a).