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Chapter 10
Student: ___________________________________________________________________________
1. Exports have the same macroeconomic effect upon GDP as:
A. imports
B. investment
C. taxes
D. saving
E. unemployment
2. If equilibrium output in an open economy is $1000 billion, and consumption is $700 billion at
that level of real output, then:
A. positive unplanned investment must be occurring

B. net exports must be $300 billion
C. G + I + X must equal $300 billion
D. G + I + (X-M) must equal $300 billion
E. G + I must equal $300 billion
3. The aggregate demand curve:
A. is upward-sloping, because a higher price level makes production more profitable

B. is downward-sloping, because a higher price level makes production more profitable
C. shows the amount of real output that will be produced at each possible price level
D. shows the amount of real output that will be purchased at each possible price level
E. is upward-sloping, because a higher price level increases real expenditures
4. What do the wealth and foreign trade effects have in common? They both help to explain:
A. why the aggregate demand curve is downward-sloping

B. why the aggregate supply curve is upward-sloping
C. shifts in the aggregate demand curve
D. shifts in the aggregate supply curve
E. why the aggregate supply curve is downward-sloping
5. The factors that affect the amounts that consumers, businesses, government, and foreigners
wish to purchase at each price level are:
A. the sole determinants of personal income

B. aggregate supply factors
C. aggregate demand factors
D. the sole determinants of the equilibrium price level and equilibrium real output
E. the economy's injections and withdrawals
6. Ceteris paribus, the real interest rate and the level of planned investment are:
A. unrelated
B. related only when saving and investment are equal
C. inversely related
D. directly related
E. related only when saving and investment are unequal
7. The investment-demand curve will shift to the right as a result of:
A. a fall in the real interest rate

B. growing pessimism by business owners about future profits
C. a rise in the real interest rate
D. an increase in corporate taxes
E. a technological change that reduces production costs
8. An increase in investment spending caused by a decline in the real interest rate will:
A. shift the aggregate supply curve to the left

B. move the economy up along the existing aggregate demand curve
C. shift the aggregate demand curve to the left
D. shift the aggregate supply curve to the right
E. shift the aggregate demand curve to the right
9. An exchange rate:
A. is the ratio of the dollar volume of a nation's exports to the dollar volume of its imports
B. measures the interest rate ratios of any two nations
C. is the amount that one nation must export to obtain $1 worth of imports
D. is the price at which the currencies of any two nations exchange for one another
E. is the ratio of the price level in one country and the GDP level in another
10. If Canada wants to increase its net exports, it might take steps to:
A. increase its GDP

B. reduce existing tariffs and import quotas
C. decrease the price of the Canadian dollar in terms of foreign currencies
D. increase the price of the Canadian dollar in terms of foreign currencies
E. reduce the unemployment rate
11. Ceteris paribus, serious recessions in the economies of our major trading partners will tend
to:
A. have no perceptible impact upon our economy

B. cause inflation in our economy
C. depress real output and employment in our economy
D. stimulate real output and employment in our economy
E. stimulate our exports
12. Ceteris paribus, if the national incomes of Canada's major international trading partners were
to rise, Canada's:
A. aggregate demand curve would shift to the right

B. aggregate supply curve would shift to the left
C. aggregate supply curve would shift to the right
D. aggregate demand curve would shift to the left
E. aggregate demand and aggregate supply curves would both stay constant
13. Which one of the following would not shift the aggregate demand curve?
A. a change in the price level

B. a depreciation of the international value of the Canadian dollar
C. a decline in the interest rate at each possible price level
D. an increase in personal income tax rates
E. households' growing optimism about the future
Suppose that real output in an economy is 20 units, the quantity of inputs is 10, and the price
of each input is $4.
14. The level of productivity is:
A. 20
B. 10
C. 5
D. 4
E. 2
15. The per-unit cost of production in the economy described above is:
A. $0.50
B. $1.00
C. $10.00
D. $5.00
E. $2.00
16. Ceteris paribus, if the price of each input increased from $4 to $6, productivity would:
A. rise from 2.00 to 3.00

B. fall from 0.50 to 0.33
C. rise from 1.00 to 2.00
D. fall from 3.00 to 2.00
E. remain unchanged
17. Given an increase in the input price from $4 to $6, we would expect the aggregate:
A. supply curve to shift to the left, while potential output remains constant
B. supply curve to shift to the right, while potential output remains constant
C. supply curve to shift to the left, while potential output decreases
D. demand curve to shift to the right
E. demand curve to shift to the left
18. Ceteris paribus, if the international value of the dollar were to fall, the aggregate:
A. demand curve would not shift

B. demand curve would shift to the right
C. supply curve would shift to the right, and potential output would increase
D. demand curve would shift to the left
E. supply curve would shift to the right, and potential output would stay the same
Suppose that an economy is employing 2 units of capital, 5 units of raw materials, and 8 units
of labour to produce its total output of 640 units. Each unit of capital costs $10, each unit of
raw materials costs $4, and each unit of labour costs $3.
19. The per-unit cost of production in this economy is:
A. $0.05
B. $0.10
C. $0.50
D. $1.00
E. $10.00
20. Ceteris paribus, if the price of raw materials rises from $4 to $8 per unit, the per-unit cost of
production will rise by about:
A. 100 percent
B. 50 percent
C. 40 percent
D. 30 percent
E. 20 percent
21. As a result of the price of raw materials rising from $4 to $8 per unit, the aggregate:
A. supply curve would shift to the left, and potential output would remain constant
B. supply curve would shift to the right, and potential output would remain constant
C. supply curve would shift to the left, and potential output would decrease
D. demand curve would shift to the right
E. demand curve would shift to the left
22. Aggregate supply factors:
A. are consumption, investment, government, and net export spending

B. explain why real output and the price level are directly related
C. explain the shape of the aggregate supply curve
D. include input prices and productivity
E. do not include technological progress
23. Which of the following would not shift the aggregate supply curve?
A. an increase in labour productivity

B. a decline in the price of imported oil
C. a decline in business taxes
D. an increase in the price level
E. a rise in wages
24. Productivity measures:
A. real output per unit of input

B. per-unit production cost
C. the changes in real wealth caused by price level changes
D. the amount of capital goods used per worker
E. the changes in nominal GDP caused by inflation
25. Per-unit production cost is:
A. real output divided by inputs

B. total input cost divided by units of output
C. units of output divided by total input cost
D. an aggregate demand factor
E. nominal output divided by employment
26. The aggregate supply curve:
A. shows the various amounts of real output that businesses are willing and able to produce
at each price level
B. is downward-sloping, because real purchasing power increases as the price level falls
C. is downward-sloping, because real purchasing power decreases as the price level falls
D. is explained by the wealth and foreign trade effects
E. is vertical
27. Suppose that wages fall and productivity rises in a particular economy. Ceteris paribus, the
aggregate:
A. supply curve will shift leftward, and potential output will remain constant
B. supply curve will shift rightward, and potential output will increase
C. supply curve will shift leftward, and potential output will decrease
D. supply curve will shift rightward, and potential output will remain constant
E. demand curve necessarily shifts rightward
28. Ceteris paribus, a reduction in personal and business taxes can be expected to:
A. increase aggregate demand and decrease aggregate supply

B. increase both aggregate demand and aggregate supply
C. decrease both aggregate demand and aggregate supply
D. decrease aggregate demand and increase aggregate supply
E. increase aggregate supply but keep aggregate demand constant
29. Ceteris paribus, an improvement in productivity will shift the aggregate:
A. supply curve to the right, while potential output remains constant

B. supply curve to the left, while potential output remains constant
C. supply curve to the right, while potential output increases
D. demand curve to the left
E. supply to the left, while potential output decreases
Consider the following table:
30. The level of productivity in this economy is:
A. 2.0
B. 0.5
C. 4.0
D. 200.0
E. 150.0
31. If the price of each input is $5, the per-unit cost of production in this economy is:
A. $5.00
B. $2.75
C. $2.50
D. $0.40
E. $2.00
32. Suppose that the price of each input increased from $5 to $8. The per-unit cost of production
in this economy would:
A. rise by $1.50, and the aggregate supply curve would shift to the right
B. rise by 60 percent, and the aggregate supply curve would shift to the left
C. rise by 60 percent, and the aggregate demand curve would shift to the right
D. fall by $1.50, and the aggregate demand curve would shift to the right
E. rise by 35 percent, and the aggregate demand curve will shift to the left
33. The equilibrium price level will be:
A. 150
B. 100
C. 250
D. 300
E. 200
34. If the price level is 150, then:
A. a surplus of real output of $200 will occur

B. a shortage of real output of $100 will occur
C. a surplus of real output of $300 will occur
D. neither a shortage nor a surplus of real output will occur
E. a shortage of real output of $200 will occur
35. If the amount of real output demanded at each price level falls by $200, the equilibrium price
level and equilibrium level of real output will fall to:
A. 250 and $200, respectively

B. 200 and $300, respectively
C. 150 and $300, respectively
D. 150 and $200, respectively
E. 300 and $275, respectively
36. The change in aggregate demand indicated in the previous question might have been caused
by a(n):
A. increase in net exports

B. worsening of business expectations
C. increase in consumer wealth
D. decrease in personal income taxes
E. a rise in government purchases
37. The equilibrium price level and level of real output occur where:
A. real output is at its highest possible level

B. exports equal imports
C. the price level is at its lowest level
D. the aggregate demand and supply curves intersect
E. the price level is at its highest level
38. If equilibrium real output rises and the equilibrium price level falls, this would likely be due to
a:
A. rightward shift of the aggregate demand curve

B. leftward shift of the aggregate supply curve
C. rightward shift of the aggregate supply curve
D. leftward shift of the aggregate demand curve
E. a simultaneous rightward shift in aggregate demand and aggregate supply
39. The change in aggregate supply from AS1 to AS2 could be caused by:
A. a reduction in the price level

B. the increased availability of entrepreneurial talent
C. an increase in business taxes
D. the wealth effect
E. the foreign trade effect
40. The changes in aggregate demand and supply produce a(n):
A. higher price level

B. expansion of real output and a stable price level
C. expansion of real output and a higher price level
D. decline in real output and a stable price level
E. decline real output and a higher price level
41. If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price level
and real output will be:
A. 0f and 0c, respectively

B. 0g and 0b, respectively
C. 0f and 0a, respectively
D. 0e and 0b, respectively
E. 0e and 0a, respectively
42. If the aggregate supply curve shifted from AS0 to AS1, we could say that:
A. aggregate supply has increased, equilibrium real output has decreased, and the
equilibrium price level has increased
B. aggregate supply has decreased, equilibrium real output has decreased, and the
C. an increase in the amount of real output supplied has occurred
D. aggregate supply has increased, and the equilibrium price level has risen to 0g
E. aggregate supply has decreased, equilibrium real output has increased, and the
equilibrium price level has decreased
43. If aggregate supply is AS1 and aggregate demand is AD0, then:
A. at any price level above 0g, a shortage of real output would occur
B. 0f represents a price level that would result in a surplus of real output of ac
C. a surplus of real output of gh would occur
D. 0f represents a price level that would result in a shortage of real output of ac
E. 0f represents a price level that would result in a surplus of real output of 0a
44. A shift in the aggregate demand curve from AD0 to AD1 might be caused by a(n):
A. decrease in aggregate supply

B. decrease in the amount of output supplied
C. increase in investment spending
D. decrease in net export spending
E. increase in government purchases
45. Ceteris paribus, a shift in the aggregate supply curve from AS0 to AS1 might be caused by
a(n):
A. increase in government regulation

B. increase in aggregate demand
C. increase in productivity
D. decline in wages
E. fall in natural resource prices
46. If aggregate demand increases and aggregate supply decreases, the price level:
A. will decrease, but real output may either increase or decrease

B. will increase, but real output may either increase or decrease
C. and real output will both increase
D. and real output will both decrease
E. will decrease, but real output will necessarily stay the same
47. We would expect a decrease in personal and corporate income taxes to:
A. shift the aggregate demand curve rightward

B. increase consumption spending
C. increase equilibrium real output
D. increase investment spending
E. shift AD rightward, increase consumption and investment spending, and increase
equilibrium real output
48. We would expect an increase in input productivity to:
A. shift the aggregate demand curve leftward

B. increase the equilibrium price level
C. reduce equilibrium real output
D. shift the aggregate demand curve rightward
E. shift the aggregate supply curve rightward
49. If personal taxes were lowered and input productivity rose simultaneously, we could predict
that the equilibrium:
A. real output would rise

B. real output would fall
C. price level would necessarily fall
D. price level would necessarily rise
E. price level would necessarily stay the same
50. In which of the following sets of circumstances can we confidently expect inflation?
A. aggregate supply and aggregate demand both increase

B. aggregate supply and aggregate demand both decrease
C. aggregate supply decreases and aggregate demand increases
D. aggregate supply increases and aggregate demand decreases
E. aggregate supply increases and aggregate demand stays constant
51. Which of the above diagrams best portrays the effects of an increase in resource
productivity?
A. A
B. B
C. C
D. D
E. both A and B
52. Which of the above diagrams best portrays the effects of a decrease in the availability of key
natural resources?
A. A
B. B
C. C
D. D
E. both A and B
53. Which of the above diagrams best portrays the effects of an increase in foreign spending on
Canadian products?
A. A
B. B
C. C
D. D
E. both A and D
54. Which of the above diagrams best portrays the effects of an increase in consumer spending?
A. A
B. B
C. C
D. D
E. both A and D
55. Which of the above diagrams best portrays an improvement in business profit expectations?
A. A
B. B
C. C
D. D
E. both C and D
56. Which of the above diagrams best portrays the effects of declines in the national incomes of
our major international trading partners?
A. A
B. B
C. C
D. D
E. both C and D
57. Which of the above diagrams best portrays the effects of a substantial reduction in
government spending?
A. A
B. B
C. C
D. D
E. both C and D
58. Which of the above diagrams best portrays the effects of a dramatic decrease in the amount
of capital resources available to the economy?
A. A
B. B
C. C
D. D
E. both C and D
In the following table for a hypothetical country, C is consumption, I is investment, G is

government purchases, X is exports, and M is imports. All figures in columns (2) to (6) are in
billions of dollars
59. Which of the following schedules constitutes aggregate demand in this country?
A. (A)
B. (B)
C. (C)
D. (D)
E. both (A) and (B)
60. If equilibrium real output is $32 billion in this country, the equilibrium price level will be:
A. 128
B. 122
C. 125
D. 119
E. 116
61. If this nation's potential output is at the $27 billion level of real GDP, the associated price
level will be:
A. 128
B. 119
C. 122
D. 125
E. 116
62. If this nation's equilibrium price level is 125, its net exports will be:
A. -$4 billion
B. -$2 billion
C. $0
D. $2 billion
E. $4 billion
63. If equilibrium real output is $42 billion in this country, the level of consumption will be:
A. $18 billion
B. $20 billion
C. $26 billion
D. $24 billion
E. $22 billion
64. If equilibrium real output is Q2, then:
A. aggregate demand is AD1

B. the equilibrium price level is P1
C. producers will supply output level Q1
D. the equilibrium price level is P2
E. there would be positive unplanned investment at P1
65. If the equilibrium price level is P1, then:

B. the equilibrium output level is Q3
C. the equilibrium output level is Q2
D. producers will supply output level Q1
E. there is negative unplanned investment at this price
66. Which of the following would shift the aggregate demand curve from AD 2 to AD1?
A. a decline in personal income tax rates

B. an increase in the international value of the dollar
C. a higher level of government purchases
D. an upward revision of profit expectations on investment projects
E. an increase in exports
67. Suppose that aggregate demand increased from AD1 to AD2. For the price level to stay
constant:
A. the aggregate supply curve would have to shift rightward

B. the aggregate supply curve would have to shift leftward
C. real output would have to remain constant
D. the aggregate supply curve would have to be vertical
E. the AS curve would have to be downward-sloping
68. What will be the effect of positive unplanned investment?
A. a decline in the rate of interest

B. an unintended reduction in inventories by businesses
C. a rise in the price level
D. a fall in the price level
E. a rise in the rate of interest
69. Which of the following statements is correct?
A. Unplanned investment is zero only at equilibrium.

B. All price levels where unplanned investment is positive are too low for equilibrium.
C. All price levels where unplanned investment is negative are too high for equilibrium.
D. Unplanned investment is zero at all possible price levels.
E. Unplanned investment is zero at all possible price levels below equilibrium.
70. In any economy:
A. government purchases and saving are injections, while investment and taxes are
withdrawals
B. taxes and government purchases are withdrawals, while investment and saving are
injections
C. taxes and saving are withdrawals, while investment and government purchases are
injections
D. taxes and investment are injections, while saving and government purchases are
withdrawals
E. government purchases and saving are withdrawals, while investment and taxes are
injections
71. What do investment and government purchases have in common?
A. Both represent injections to the income-spending stream.

B. Both represent withdrawals from the income-spending stream.
C. Neither affects aggregate demand.
D. Both are influenced by the wealth effect.
E. Both are influenced by the foreign trade effect.
72. Taxes represent a(n):
A. withdrawal of purchasing power, like saving

B. injection of purchasing power, like investment
C. injection of purchasing power, like saving
D. withdrawal of purchasing power, like investment
E. withdrawal and an injection of purchasing power, like both saving and investment
73. An inflationary gap can best be described as the amount by which:
A. equilibrium output exceeds potential output

B. real expenditures exceed any given level of real output
C. withdrawals exceed injections at the level of potential output
D. real expenditures fall short of potential output
E. withdrawals exceed injections at all levels of potential output
74. A recessionary gap can best be described as the amount by which:

B. equilibrium output falls short of potential output
C. injections exceed withdrawals at the level of potential output
D. real expenditures exceed potential output
E. withdrawals exceed injections at the level of potential output
75. Which of the following could be considered to be the best measure of an improvement in
living standards?
A. an increase in nominal GDP

B. an increase in real per capita GDP
C. an increase in gross investment
D. an increase in real GDP
E. an increase in government purchases
76. If population is expanding at the same rate as real output, we would expect:
A. real per capita output to increase

B. real per capita output to decrease
C. real per capita output to remain unchanged
D. real output to decrease
E. real output to stay the same
77. If the real output of a low-income country increases from $200 billion to $260 billion and its
population increases from 100 to 120 million, its real per capita output will have:
A. remained unchanged
B. increased by about $167
C. increased by about $55
D. decreased by about $20
E. increased by $60 billion
78. Muldrania's real output rose from $400 billion in year 1 to $428 billion in year 2. The growth
rate in real output for this period was:
A. 14 percent
B. 12 percent
C. 9 percent
D. 8 percent
E. 7 percent
79. If a nation's real output is growing by 8 percent per year, its real output will double in
approximately:
A. 22 years
B. 20 years
C. 8 years
D. 5 years
E. 9 years
80. If a nation's real GDP is growing by 5 percent per year, its real GDP will double in
approximately:
A. 22 years
B. 20 years
C. 14 years
D. 18 years
E. 5 years
81. Economic growth can be portrayed as a:
A. rightward shift of the production possibilities curve

B. leftward shift of the production possibilities curve
C. movement from a point on to a point inside a production possibilities curve
D. movement from one point to another point on a production possibilities curve
E. a clockwise rotation of the production possibilities curve
82. The achievement of full employment through time will:
A. diminish labour productivity

B. reduce the level of investment as a percentage of GDP
C. increase the rate of growth of real GDP
D. have no impact upon the rate of growth of real GDP
E. increase net exports
83. Ceteris paribus, if a full-employment economy reallocated a substantial quantity of its

resources to capital goods, we would expect:
A. present consumption to rise

B. future consumption to fall
C. a lower rate of growth of real GDP
D. labour productivity to fall
E. labour productivity to rise
84. Economic growth is best represented by a:
A. shift in the production possibilities curve from AB to CD

B. move from y on CD to x on AB
C. shift in the production possibilities curve from CD to AB
D. move from z to x along AB
E. a move from x to z along AB
85. The most likely cause of a shift from AB to CD would be a(n):
A. decrease in labour productivity

B. increase in the price level
C. decrease in the size of the labour force
D. recession
E. increase in labour productivity
86. In a full-employment economy, added capital formation requires:
A. more spending on R&D

B. that the economy reduce consumption
C. that saving be reduced
D. technological innovation
E. more net exports
87. Labour productivity is measured by:
A. the ratio of capital to labour

B. real output per worker hour
C. real output per capita
D. the ratio of worker hours to real GDP
E. real GDP
88. Labour productivity may be defined as:
A. real output divided by worker hours

B. nominal GDP minus real GDP
C. the ratio of real capital to worker hours
D. the annual increase in nominal GDP per worker
E. workers hours divided by nominal output
89. Which of the following would not be expected to increase labour productivity?
A. technological progress
B. the acquisition of more education and training by the labour force
C. an increase in the size of the labour force
D. the realization of greater efficiency in production through increasing returns to scale
E. a greater quantity of capital per worker
90. The recent switch of labour from manufacturing to the service sector has:
A. been inflationary
B. had no effect upon labour productivity
C. increased the growth of labour productivity
D. dampened the growth of labour productivity
E. increased the value of the Canadian dollar
91. Increasing returns to scale refers to:
A. the notion that proprietorships are less bureaucratic and, therefore, more efficient than
corporations
B. public investment in highways, schools, utilities, etc.
C. the fact that large producers may be able to use more efficient production techniques
D. the reallocation of labour from less productive to more productive uses
E. the fact that corporations have a more streamlined, efficient form of organization than do
proprietorships
92. Which of the following has made the largest contribution to the growth of labour productivity
in Canada?
A. the increase in the quantity of capital

B. the discovery of new natural resources
C. Canadian expenditures on R&D
D. the increase in the quantity of labour
E. increasing returns to scale
93. Ceteris paribus, in which of the following instances would the increase in labour productivity
be the largest?
A. Inputs of labour and the stock of capital goods increase proportionately.

B. The increase in the stock of capital goods exceeds the increase in inputs of labour.
C. The increase in inputs of labour exceeds the increase in the stock of capital goods.
D. Inputs of labour increase and the stock of capital goods remains constant.
E. Inputs of labour and the stock of capital goods decrease proportionately.
94. Those in favour of economic growth indicate that pollution:
A. invariably diminishes as a country becomes more industrialized

B. occurs, not because of growth, but because of flaws in private markets
C. is always a negligible cost as compared to the benefits from growth-oriented activities
D. is an inevitable by-product of growth
E. is a minor problem that does not need to be addressed
95. Critics of economic growth:
A. contend that growth and industrialization cause pollution

B. argue that economic growth leads to social upheaval through the disintegration of
traditional lifestyles
C. feel that growth results in obsolete job skills and economic insecurity for some workers
D. contend that growth causes pollution, that it leads to the disruptive disintegration of
traditional lifestyles and results in economic insecurity for some workers
E. argue that growth can create a sense of dynamism and optimism in an economy
96. Which of the following is a major cost of economic growth?
A. unemployment
B. inflation
C. lower living standards
D. a reduction in current savings
E. pollution
97. Which of the following arguments would not be made by those in favour of economic
growth?
A. Growth is the basic means of improving living standards.

B. It is easier to reduce poverty when the economy is growing than when it is not.
C. There is a close direct relationship between a growing real GDP and pollution.
D. Growth provides an economic environment conducive to a mood of optimism and a sense
of expanding opportunities.
E. After a certain point, growing real GDP is associated with declines in pollution.
98. Which of the following was not a major factor in spurring growth in Canadian per capita
output between 1890 and 1914?
A. John A. Macdonald's National Policy

B. free trade with the United States
C. the growth in European prosperity during these decades
D. the rapid expansion of Canadian exports in products such as wheat
E. the growth in American prosperity during these decades
99. In the time since World War II, in which periods was the growth in per capita Canadian GDP
the highest?
A. 1945 to 1973
B. 1973 to 1983
C. 1989 to 1995
D. 1996 to 2008
E. 2008 and thereafter
100.The long-run trend of potential output refers to:
A. the long-run increase in the relative importance of durable goods in the Canadian
economy
B. the long-run expansion or contraction of economic activity which occurs over a series of
business cycles
C. fluctuations in economic activity that average 40 months in duration
D. fluctuations in economic activity that occur around holiday seasons
E. fluctuations in economic activity that average 8 or 9 years in duration
101.Economies such as Canada are characterized by:
A. instability of employment and price levels

B. uninterrupted economic growth
C. persistent full employment
D. economic stability
E. zero inflation
102.A recession is defined as a six-month period over which:
A. nominal GDP increases

B. the price level falls
C. inflation is present
D. nominal GDP decreases
E. real GDP decreases
103.During an economic expansion:
A. the aggregate demand curve shifts leftward

B. households and businesses spend less due to growing pessimism about the future
C. households and businesses spend more due to growing optimism about the future
D. exports tend to decrease
E. imports tend to decrease
104.According to New Growth Theory, the factor that traditional theories of economic growth
tended to downplay was:
A. capital
B. labour
C. knowledge
D. natural resources other than land
E. land
105.According to New Growth Theory, economic efficiency is maximized if:
A. new ideas are priced in such a way that incorporates all the fixed costs, but not the
variable costs, that were incurred in developing the idea
B. new ideas are priced at zero
C. new ideas are priced in such a way that incorporates all variable costs, but not the fixed
costs, that were incurred in developing the idea
D. new ideas are priced in the same way as any other commodity
E. the prices of new ideas gradually rise after these ideas have been made commercially
available
Chapter 10 Key
1. Exports have the same macroeconomic effect upon GDP as:
A. imports
B. investment
C. taxes
D. saving
E. unemployment
Accessibility: Keyboard Navigation

Difficulty: Medium
Learning Objective: 10-01 Identify aggregate demand and the factors that affect it
Lovewell - Chapter 10 #1
Topic: 10-02 The Aggregate Demand Curve
Type: Definition
2. If equilibrium output in an open economy is $1000 billion, and consumption is $700 billion
at that level of real output, then:
A. positive unplanned investment must be occurring

B. net exports must be $300 billion
C. G + I + X must equal $300 billion
D. G + I + (X-M) must equal $300 billion
E. G + I must equal $300 billion

Difficulty: Medium
Type: Application
3. The aggregate demand curve:
A. is upward-sloping, because a higher price level makes production more profitable

B. is downward-sloping, because a higher price level makes production more profitable
C. shows the amount of real output that will be produced at each possible price level
D. shows the amount of real output that will be purchased at each possible price level
E. is upward-sloping, because a higher price level increases real expenditures

Difficulty: Easy
Type: Definition
4. What do the wealth and foreign trade effects have in common? They both help to explain:
A. why the aggregate demand curve is downward-sloping

B. why the aggregate supply curve is upward-sloping
C. shifts in the aggregate demand curve
D. shifts in the aggregate supply curve
E. why the aggregate supply curve is downward-sloping

Difficulty: Medium
Type: Definition
5. The factors that affect the amounts that consumers, businesses, government, and
foreigners wish to purchase at each price level are:
A. the sole determinants of personal income

B. aggregate supply factors
C. aggregate demand factors
D. the sole determinants of the equilibrium price level and equilibrium real output
E. the economy's injections and withdrawals

Difficulty: Easy
Topic: 10-03 Changes in Aggregate Demand
Type: Definition
6. Ceteris paribus, the real interest rate and the level of planned investment are:
A. unrelated
B. related only when saving and investment are equal
C. inversely related
D. directly related
E. related only when saving and investment are unequal

Difficulty: Easy
Type: Definition
7. The investment-demand curve will shift to the right as a result of:
A. a fall in the real interest rate

B. growing pessimism by business owners about future profits
C. a rise in the real interest rate
D. an increase in corporate taxes
E. a technological change that reduces production costs

Difficulty: Medium
Type: Application
8. An increase in investment spending caused by a decline in the real interest rate will:
A. shift the aggregate supply curve to the left

B. move the economy up along the existing aggregate demand curve
C. shift the aggregate demand curve to the left
D. shift the aggregate supply curve to the right
E. shift the aggregate demand curve to the right

Difficulty: Easy
Type: Application
9. An exchange rate:
A. is the ratio of the dollar volume of a nation's exports to the dollar volume of its imports
B. measures the interest rate ratios of any two nations
C. is the amount that one nation must export to obtain $1 worth of imports
D. is the price at which the currencies of any two nations exchange for one another
E. is the ratio of the price level in one country and the GDP level in another

Difficulty: Easy
Type: Definition
10. If Canada wants to increase its net exports, it might take steps to:
A. increase its GDP

B. reduce existing tariffs and import quotas
C. decrease the price of the Canadian dollar in terms of foreign currencies
D. increase the price of the Canadian dollar in terms of foreign currencies
E. reduce the unemployment rate

Difficulty: Medium
Type: Application
11. Ceteris paribus, serious recessions in the economies of our major trading partners will
tend to:
A. have no perceptible impact upon our economy

B. cause inflation in our economy
C. depress real output and employment in our economy
D. stimulate real output and employment in our economy
E. stimulate our exports

Difficulty: Easy
Type: Definition
12. Ceteris paribus, if the national incomes of Canada's major international trading partners
were to rise, Canada's:
A. aggregate demand curve would shift to the right

B. aggregate supply curve would shift to the left
C. aggregate supply curve would shift to the right
D. aggregate demand curve would shift to the left
E. aggregate demand and aggregate supply curves would both stay constant

Difficulty: Easy
Type: Application
13. Which one of the following would not shift the aggregate demand curve?
A. a change in the price level

B. a depreciation of the international value of the Canadian dollar
C. a decline in the interest rate at each possible price level
D. an increase in personal income tax rates
E. households' growing optimism about the future

Difficulty: Easy
Type: Application
Suppose that real output in an economy is 20 units, the quantity of inputs is 10, and the
price of each input is $4.
Lovewell - Chapter 10
14. The level of productivity is:
A. 20
B. 10
C. 5
D. 4
E. 2

Difficulty: Medium
Learning Objective: 10-02 Describe aggregate supply and identify the factors that influence it
Topic: 10-06 Changes in Aggregate Supply
Type: Numerical
15. The per-unit cost of production in the economy described above is:
A. $0.50
B. $1.00
C. $10.00
D. $5.00
E. $2.00

Difficulty: Medium
Type: Numerical
16. Ceteris paribus, if the price of each input increased from $4 to $6, productivity would:
A. rise from 2.00 to 3.00

B. fall from 0.50 to 0.33
C. rise from 1.00 to 2.00
D. fall from 3.00 to 2.00
E. remain unchanged

Difficulty: Medium
Type: Numerical
17. Given an increase in the input price from $4 to $6, we would expect the aggregate:
A. supply curve to shift to the left, while potential output remains constant
B. supply curve to shift to the right, while potential output remains constant
C. supply curve to shift to the left, while potential output decreases
D. demand curve to shift to the right
E. demand curve to shift to the left

Difficulty: Medium
Type: Numerical
18. Ceteris paribus, if the international value of the dollar were to fall, the aggregate:
A. demand curve would not shift

B. demand curve would shift to the right
C. supply curve would shift to the right, and potential output would increase
D. demand curve would shift to the left
E. supply curve would shift to the right, and potential output would stay the same

Difficulty: Hard
Type: Application
Suppose that an economy is employing 2 units of capital, 5 units of raw materials, and 8
units of labour to produce its total output of 640 units. Each unit of capital costs $10, each
unit of raw materials costs $4, and each unit of labour costs $3.
19. The per-unit cost of production in this economy is:
A. $0.05
B. $0.10
C. $0.50
D. $1.00
E. $10.00

Difficulty: Medium
Type: Numerical
20. Ceteris paribus, if the price of raw materials rises from $4 to $8 per unit, the per-unit cost
of production will rise by about:
A. 100 percent
B. 50 percent
C. 40 percent
D. 30 percent
E. 20 percent

Difficulty: Medium
Type: Numerical
21. As a result of the price of raw materials rising from $4 to $8 per unit, the aggregate:
A. supply curve would shift to the left, and potential output would remain constant
B. supply curve would shift to the right, and potential output would remain constant
C. supply curve would shift to the left, and potential output would decrease
D. demand curve would shift to the right
E. demand curve would shift to the left

Difficulty: Medium
Type: Numerical
22. Aggregate supply factors:
A. are consumption, investment, government, and net export spending

B. explain why real output and the price level are directly related
C. explain the shape of the aggregate supply curve
D. include input prices and productivity
E. do not include technological progress

Difficulty: Medium
Type: Definition
23. Which of the following would not shift the aggregate supply curve?
A. an increase in labour productivity

B. a decline in the price of imported oil
C. a decline in business taxes
D. an increase in the price level
E. a rise in wages

Difficulty: Easy
Type: Definition
24. Productivity measures:
A. real output per unit of input

B. per-unit production cost
C. the changes in real wealth caused by price level changes
D. the amount of capital goods used per worker
E. the changes in nominal GDP caused by inflation

Difficulty: Easy
Type: Definition
25. Per-unit production cost is:
A. real output divided by inputs

B. total input cost divided by units of output
C. units of output divided by total input cost
D. an aggregate demand factor
E. nominal output divided by employment

Difficulty: Medium
Type: Definition
26. The aggregate supply curve:
A. shows the various amounts of real output that businesses are willing and able to
produce at each price level
B. is downward-sloping, because real purchasing power increases as the price level falls
C. is downward-sloping, because real purchasing power decreases as the price level falls
D. is explained by the wealth and foreign trade effects
E. is vertical

Difficulty: Easy
Type: Definition
27. Suppose that wages fall and productivity rises in a particular economy. Ceteris paribus,
the aggregate:
A. supply curve will shift leftward, and potential output will remain constant
B. supply curve will shift rightward, and potential output will increase
C. supply curve will shift leftward, and potential output will decrease
D. supply curve will shift rightward, and potential output will remain constant
E. demand curve necessarily shifts rightward

Difficulty: Medium
Type: Application
28. Ceteris paribus, a reduction in personal and business taxes can be expected to:
A. increase aggregate demand and decrease aggregate supply

B. increase both aggregate demand and aggregate supply
C. decrease both aggregate demand and aggregate supply
D. decrease aggregate demand and increase aggregate supply
E. increase aggregate supply but keep aggregate demand constant

Difficulty: Medium
Type: Application
29. Ceteris paribus, an improvement in productivity will shift the aggregate:
A. supply curve to the right, while potential output remains constant

B. supply curve to the left, while potential output remains constant
C. supply curve to the right, while potential output increases
D. demand curve to the left
E. supply to the left, while potential output decreases

Difficulty: Medium
Type: Definition
Consider the following table:
30. The level of productivity in this economy is:
A. 2.0
B. 0.5
C. 4.0
D. 200.0
E. 150.0
Difficulty: Medium
Type: Numerical
31. If the price of each input is $5, the per-unit cost of production in this economy is:
A. $5.00
B. $2.75
C. $2.50
D. $0.40
E. $2.00
Difficulty: Medium
Type: Numerical
32. Suppose that the price of each input increased from $5 to $8. The per-unit cost of
production in this economy would:
A. rise by $1.50, and the aggregate supply curve would shift to the right
B. rise by 60 percent, and the aggregate supply curve would shift to the left
C. rise by 60 percent, and the aggregate demand curve would shift to the right
D. fall by $1.50, and the aggregate demand curve would shift to the right
E. rise by 35 percent, and the aggregate demand curve will shift to the left
Difficulty: Medium
Type: Numerical
33. The equilibrium price level will be:
A. 150
B. 100
C. 250
D. 300
E. 200
Difficulty: Medium
Learning Objective: 10-03 Identify the economys equilibrium and how it differs from its potential
Topic: 10-08 Aggregate Demand and Supply
Type: Numerical
34. If the price level is 150, then:
A. a surplus of real output of $200 will occur

B. a shortage of real output of $100 will occur
C. a surplus of real output of $300 will occur
D. neither a shortage nor a surplus of real output will occur
E. a shortage of real output of $200 will occur
Difficulty: Medium
Type: Numerical
35. If the amount of real output demanded at each price level falls by $200, the equilibrium
price level and equilibrium level of real output will fall to:
A. 250 and $200, respectively

B. 200 and $300, respectively
C. 150 and $300, respectively
D. 150 and $200, respectively
E. 300 and $275, respectively
Difficulty: Medium
Type: Numerical
36. The change in aggregate demand indicated in the previous question might have been
caused by a(n):
A. increase in net exports

B. worsening of business expectations
C. increase in consumer wealth
D. decrease in personal income taxes
E. a rise in government purchases
Difficulty: Medium
Type: Application
37. The equilibrium price level and level of real output occur where:
A. real output is at its highest possible level

B. exports equal imports
C. the price level is at its lowest level
D. the aggregate demand and supply curves intersect
E. the price level is at its highest level

Difficulty: Easy
Type: Application
38. If equilibrium real output rises and the equilibrium price level falls, this would likely be due
to a:
A. rightward shift of the aggregate demand curve

B. leftward shift of the aggregate supply curve
C. rightward shift of the aggregate supply curve
D. leftward shift of the aggregate demand curve
E. a simultaneous rightward shift in aggregate demand and aggregate supply

Difficulty: Medium
Type: Application
39. The change in aggregate supply from AS1 to AS2 could be caused by:
A. a reduction in the price level

B. the increased availability of entrepreneurial talent
C. an increase in business taxes
D. the wealth effect
E. the foreign trade effect
Difficulty: Medium
Type: Graphical
40. The changes in aggregate demand and supply produce a(n):
A. higher price level

B. expansion of real output and a stable price level
C. expansion of real output and a higher price level
D. decline in real output and a stable price level
E. decline real output and a higher price level
Difficulty: Medium
Type: Graphical
41. If the initial aggregate demand and supply curves are AD0 and AS0, the equilibrium price
level and real output will be:
A. 0f and 0c, respectively

B. 0g and 0b, respectively
C. 0f and 0a, respectively
D. 0e and 0b, respectively
E. 0e and 0a, respectively
Difficulty: Medium
Type: Graphical
42. If the aggregate supply curve shifted from AS0 to AS1, we could say that:
A. aggregate supply has increased, equilibrium real output has decreased, and the
B. aggregate supply has decreased, equilibrium real output has decreased, and the
C. an increase in the amount of real output supplied has occurred
D. aggregate supply has increased, and the equilibrium price level has risen to 0g
E. aggregate supply has decreased, equilibrium real output has increased, and the
equilibrium price level has decreased
Difficulty: Medium
Type: Graphical
43. If aggregate supply is AS1 and aggregate demand is AD0, then:
A. at any price level above 0g, a shortage of real output would occur
B. 0f represents a price level that would result in a surplus of real output of ac
C. a surplus of real output of gh would occur
D. 0f represents a price level that would result in a shortage of real output of ac
E. 0f represents a price level that would result in a surplus of real output of 0a
Difficulty: Medium
Type: Graphical
44. A shift in the aggregate demand curve from AD0 to AD1 might be caused by a(n):
A. decrease in aggregate supply

B. decrease in the amount of output supplied
C. increase in investment spending
D. decrease in net export spending
E. increase in government purchases
Difficulty: Medium
Type: Graphical
45. Ceteris paribus, a shift in the aggregate supply curve from AS0 to AS1 might be caused by
a(n):
A. increase in government regulation

B. increase in aggregate demand
C. increase in productivity
D. decline in wages
E. fall in natural resource prices
Difficulty: Medium
Type: Graphical
46. If aggregate demand increases and aggregate supply decreases, the price level:
A. will decrease, but real output may either increase or decrease

B. will increase, but real output may either increase or decrease
C. and real output will both increase
D. and real output will both decrease
E. will decrease, but real output will necessarily stay the same

Difficulty: Medium
Type: Application
47. We would expect a decrease in personal and corporate income taxes to:
A. shift the aggregate demand curve rightward

B. increase consumption spending
C. increase equilibrium real output
D. increase investment spending
E. shift AD rightward, increase consumption and investment spending, and increase
equilibrium real output

Difficulty: Medium
Type: Application
48. We would expect an increase in input productivity to:
A. shift the aggregate demand curve leftward

B. increase the equilibrium price level
C. reduce equilibrium real output
D. shift the aggregate demand curve rightward
E. shift the aggregate supply curve rightward

Difficulty: Medium
Type: Definition
49. If personal taxes were lowered and input productivity rose simultaneously, we could
predict that the equilibrium:
A. real output would rise

B. real output would fall
C. price level would necessarily fall
D. price level would necessarily rise
E. price level would necessarily stay the same

Difficulty: Medium
Type: Application
50. In which of the following sets of circumstances can we confidently expect inflation?
A. aggregate supply and aggregate demand both increase

B. aggregate supply and aggregate demand both decrease
C. aggregate supply decreases and aggregate demand increases
D. aggregate supply increases and aggregate demand decreases
E. aggregate supply increases and aggregate demand stays constant

Difficulty: Medium
Type: Application
51. Which of the above diagrams best portrays the effects of an increase in resource
productivity?
A. A
B. B
C. C
D. D
E. both A and B
Difficulty: Medium
Type: Graphical
52. Which of the above diagrams best portrays the effects of a decrease in the availability of
key natural resources?
A. A
B. B
C. C
D. D
E. both A and B
Difficulty: Medium
Type: Graphical
53. Which of the above diagrams best portrays the effects of an increase in foreign spending
on Canadian products?
A. A
B. B
C. C
D. D
E. both A and D
Difficulty: Medium
Type: Graphical
54. Which of the above diagrams best portrays the effects of an increase in consumer
spending?
A. A
B. B
C. C
D. D
E. both A and D
Difficulty: Medium
Type: Graphical
55. Which of the above diagrams best portrays an improvement in business profit
expectations?
A. A
B. B
C. C
D. D
E. both C and D
Difficulty: Medium
Type: Graphical
56. Which of the above diagrams best portrays the effects of declines in the national incomes
of our major international trading partners?
A. A
B. B
C. C
D. D
E. both C and D
Difficulty: Medium
Type: Graphical
57. Which of the above diagrams best portrays the effects of a substantial reduction in
government spending?
A. A
B. B
C. C
D. D
E. both C and D
Difficulty: Medium
Type: Graphical
58. Which of the above diagrams best portrays the effects of a dramatic decrease in the
amount of capital resources available to the economy?
A. A
B. B
C. C
D. D
E. both C and D
Difficulty: Medium
Type: Numerical
In the following table for a hypothetical country, C is consumption, I is investment, G is
government purchases, X is exports, and M is imports. All figures in columns (2) to (6) are
in billions of dollars
59. Which of the following schedules constitutes aggregate demand in this country?
A. (A)
B. (B)
C. (C)
D. (D)
E. both (A) and (B)
Difficulty: Medium
Type: Numerical
60. If equilibrium real output is $32 billion in this country, the equilibrium price level will be:
A. 128
B. 122
C. 125
D. 119
E. 116
Difficulty: Medium
Type: Numerical
61. If this nation's potential output is at the $27 billion level of real GDP, the associated price
level will be:
A. 128
B. 119
C. 122
D. 125
E. 116
Difficulty: Medium
Type: Numerical
62. If this nation's equilibrium price level is 125, its net exports will be:
A. -$4 billion
B. -$2 billion
C. $0
D. $2 billion
E. $4 billion
Difficulty: Medium
Type: Numerical
63. If equilibrium real output is $42 billion in this country, the level of consumption will be:
A. $18 billion
B. $20 billion
C. $26 billion
D. $24 billion
E. $22 billion
Difficulty: Medium
Type: Numerical
64. If equilibrium real output is Q2, then:

B. the equilibrium price level is P1
C. producers will supply output level Q1
D. the equilibrium price level is P2
E. there would be positive unplanned investment at P1
Difficulty: Medium
Type: Graphical
65. If the equilibrium price level is P1, then:

B. the equilibrium output level is Q3
C. the equilibrium output level is Q2
D. producers will supply output level Q1
E. there is negative unplanned investment at this price
Difficulty: Medium
Type: Graphical
66. Which of the following would shift the aggregate demand curve from AD 2 to AD1?
A. a decline in personal income tax rates

B. an increase in the international value of the dollar
C. a higher level of government purchases
D. an upward revision of profit expectations on investment projects
E. an increase in exports
Difficulty: Medium
Type: Graphical
67. Suppose that aggregate demand increased from AD1 to AD2. For the price level to stay
constant:
A. the aggregate supply curve would have to shift rightward

B. the aggregate supply curve would have to shift leftward
C. real output would have to remain constant
D. the aggregate supply curve would have to be vertical
E. the AS curve would have to be downward-sloping
Difficulty: Medium
Type: Graphical
68. What will be the effect of positive unplanned investment?
A. a decline in the rate of interest

B. an unintended reduction in inventories by businesses
C. a rise in the price level
D. a fall in the price level
E. a rise in the rate of interest

Difficulty: Medium
Type: Definition
69. Which of the following statements is correct?
A. Unplanned investment is zero only at equilibrium.

B. All price levels where unplanned investment is positive are too low for equilibrium.
C. All price levels where unplanned investment is negative are too high for equilibrium.
D. Unplanned investment is zero at all possible price levels.
E. Unplanned investment is zero at all possible price levels below equilibrium.

Difficulty: Medium
Type: Definition
70. In any economy:
A. government purchases and saving are injections, while investment and taxes are
withdrawals
B. taxes and government purchases are withdrawals, while investment and saving are
injections
C. taxes and saving are withdrawals, while investment and government purchases are
injections
D. taxes and investment are injections, while saving and government purchases are
withdrawals
E. government purchases and saving are withdrawals, while investment and taxes are
injections

Difficulty: Easy
Type: Definition
71. What do investment and government purchases have in common?
A. Both represent injections to the income-spending stream.

B. Both represent withdrawals from the income-spending stream.
C. Neither affects aggregate demand.
D. Both are influenced by the wealth effect.
E. Both are influenced by the foreign trade effect.

Difficulty: Easy
Type: Definition
72. Taxes represent a(n):
A. withdrawal of purchasing power, like saving

B. injection of purchasing power, like investment
C. injection of purchasing power, like saving
D. withdrawal of purchasing power, like investment
E. withdrawal and an injection of purchasing power, like both saving and investment

Difficulty: Easy
Type: Definition
73. An inflationary gap can best be described as the amount by which:

B. real expenditures exceed any given level of real output
C. withdrawals exceed injections at the level of potential output
D. real expenditures fall short of potential output
E. withdrawals exceed injections at all levels of potential output

Difficulty: Easy
Topic: 10-09 Injections and Withdrawals
Type: Definition
74. A recessionary gap can best be described as the amount by which:

B. equilibrium output falls short of potential output
C. injections exceed withdrawals at the level of potential output
D. real expenditures exceed potential output
E. withdrawals exceed injections at the level of potential output

Difficulty: Easy
Topic: 10-09 Injections and Withdrawals
Type: Definition
75. Which of the following could be considered to be the best measure of an improvement in
living standards?
A. an increase in nominal GDP

B. an increase in real per capita GDP
C. an increase in gross investment
D. an increase in real GDP
E. an increase in government purchases

Difficulty: Easy
Learning Objective: 10-04 Define economic growth and explain its sources and its impact
Topic: 10-11 Economic Growth
Type: Definition
76. If population is expanding at the same rate as real output, we would expect:
A. real per capita output to increase

B. real per capita output to decrease
C. real per capita output to remain unchanged
D. real output to decrease
E. real output to stay the same

Difficulty: Easy
Type: Application
77. If the real output of a low-income country increases from $200 billion to $260 billion and
its population increases from 100 to 120 million, its real per capita output will have:
A. remained unchanged
B. increased by about $167
C. increased by about $55
D. decreased by about $20
E. increased by $60 billion

Difficulty: Medium
Type: Numerical
78. Muldrania's real output rose from $400 billion in year 1 to $428 billion in year 2. The
growth rate in real output for this period was:
A. 14 percent
B. 12 percent
C. 9 percent
D. 8 percent
E. 7 percent

Difficulty: Easy
Type: Numerical
79. If a nation's real output is growing by 8 percent per year, its real output will double in
approximately:
A. 22 years
B. 20 years
C. 8 years
D. 5 years
E. 9 years

Difficulty: Easy
Type: Numerical
80. If a nation's real GDP is growing by 5 percent per year, its real GDP will double in
approximately:
A. 22 years
B. 20 years
C. 14 years
D. 18 years
E. 5 years

Difficulty: Easy
Type: Numerical
81. Economic growth can be portrayed as a:
A. rightward shift of the production possibilities curve

B. leftward shift of the production possibilities curve
C. movement from a point on to a point inside a production possibilities curve
D. movement from one point to another point on a production possibilities curve
E. a clockwise rotation of the production possibilities curve

Difficulty: Easy
Type: Definition
82. The achievement of full employment through time will:
A. diminish labour productivity

B. reduce the level of investment as a percentage of GDP
C. increase the rate of growth of real GDP
D. have no impact upon the rate of growth of real GDP
E. increase net exports

Difficulty: Medium
Type: Definition
83. Ceteris paribus, if a full-employment economy reallocated a substantial quantity of its

resources to capital goods, we would expect:
A. present consumption to rise

B. future consumption to fall
C. a lower rate of growth of real GDP
D. labour productivity to fall
E. labour productivity to rise

Difficulty: Medium
Type: Definition
84. Economic growth is best represented by a:
A. shift in the production possibilities curve from AB to CD

B. move from y on CD to x on AB
C. shift in the production possibilities curve from CD to AB
D. move from z to x along AB
E. a move from x to z along AB
Difficulty: Easy
Type: Graphical
85. The most likely cause of a shift from AB to CD would be a(n):
A. decrease in labour productivity

B. increase in the price level
C. decrease in the size of the labour force
D. recession
E. increase in labour productivity
Difficulty: Medium
Topic: 10-13 Sources of Economic Growth
Type: Graphical
86. In a full-employment economy, added capital formation requires:
A. more spending on R&D

B. that the economy reduce consumption
C. that saving be reduced
D. technological innovation
E. more net exports

Difficulty: Medium
Type: Definition
87. Labour productivity is measured by:
A. the ratio of capital to labour

B. real output per worker hour
C. real output per capita
D. the ratio of worker hours to real GDP
E. real GDP

Difficulty: Easy
Type: Definition
88. Labour productivity may be defined as:
A. real output divided by worker hours

B. nominal GDP minus real GDP
C. the ratio of real capital to worker hours
D. the annual increase in nominal GDP per worker
E. workers hours divided by nominal output

Difficulty: Easy
Type: Definition
89. Which of the following would not be expected to increase labour productivity?
A. technological progress
B. the acquisition of more education and training by the labour force
C. an increase in the size of the labour force
D. the realization of greater efficiency in production through increasing returns to scale
E. a greater quantity of capital per worker

Difficulty: Easy
Type: Definition
90. The recent switch of labour from manufacturing to the service sector has:
A. been inflationary
B. had no effect upon labour productivity
C. increased the growth of labour productivity
D. dampened the growth of labour productivity
E. increased the value of the Canadian dollar

Difficulty: Medium
Type: Factual
91. Increasing returns to scale refers to:
A. the notion that proprietorships are less bureaucratic and, therefore, more efficient than
corporations
B. public investment in highways, schools, utilities, etc.
C. the fact that large producers may be able to use more efficient production techniques
D. the reallocation of labour from less productive to more productive uses
E. the fact that corporations have a more streamlined, efficient form of organization than
do proprietorships

Difficulty: Easy
Type: Definition
92. Which of the following has made the largest contribution to the growth of labour
productivity in Canada?
A. the increase in the quantity of capital

B. the discovery of new natural resources
C. Canadian expenditures on R&D
D. the increase in the quantity of labour
E. increasing returns to scale

Difficulty: Medium
Type: Factual
93. Ceteris paribus, in which of the following instances would the increase in labour
productivity be the largest?
A. Inputs of labour and the stock of capital goods increase proportionately.

B. The increase in the stock of capital goods exceeds the increase in inputs of labour.
C. The increase in inputs of labour exceeds the increase in the stock of capital goods.
D. Inputs of labour increase and the stock of capital goods remains constant.
E. Inputs of labour and the stock of capital goods decrease proportionately.

Difficulty: Medium
Type: Definition
94. Those in favour of economic growth indicate that pollution:
A. invariably diminishes as a country becomes more industrialized

B. occurs, not because of growth, but because of flaws in private markets
C. is always a negligible cost as compared to the benefits from growth-oriented activities
D. is an inevitable by-product of growth
E. is a minor problem that does not need to be addressed

Difficulty: Hard
Topic: 10-14 Economic Growth and Productivity
Type: Definition
95. Critics of economic growth:
A. contend that growth and industrialization cause pollution

B. argue that economic growth leads to social upheaval through the disintegration of
traditional lifestyles
C. feel that growth results in obsolete job skills and economic insecurity for some workers
D. contend that growth causes pollution, that it leads to the disruptive disintegration of
traditional lifestyles and results in economic insecurity for some workers
E. argue that growth can create a sense of dynamism and optimism in an economy

Difficulty: Medium
Type: Definition
96. Which of the following is a major cost of economic growth?
A. unemployment
B. inflation
C. lower living standards
D. a reduction in current savings
E. pollution

Difficulty: Easy
Type: Definition
97. Which of the following arguments would not be made by those in favour of economic
growth?
A. Growth is the basic means of improving living standards.

B. It is easier to reduce poverty when the economy is growing than when it is not.
C. There is a close direct relationship between a growing real GDP and pollution.
D. Growth provides an economic environment conducive to a mood of optimism and a
sense of expanding opportunities.
E. After a certain point, growing real GDP is associated with declines in pollution.

Difficulty: Medium
Type: Definition
98. Which of the following was not a major factor in spurring growth in Canadian per capita
output between 1890 and 1914?
A. John A. Macdonald's National Policy

B. free trade with the United States
C. the growth in European prosperity during these decades
D. the rapid expansion of Canadian exports in products such as wheat
E. the growth in American prosperity during these decades

Difficulty: Medium
Learning Objective: 10-05 Summarize Canadas historical record of economic growth
Topic: 10-16 Economic Growth and Business Cycles
Type: Factual
99. In the time since World War II, in which periods was the growth in per capita Canadian
GDP the highest?
A. 1945 to 1973
B. 1973 to 1983
C. 1989 to 1995
D. 1996 to 2008
E. 2008 and thereafter

Difficulty: Medium
Topic: 10-16 Economic Growth and Business Cycles
Type: Factual
100. The long-run trend of potential output refers to:
A. the long-run increase in the relative importance of durable goods in the Canadian
economy
B. the long-run expansion or contraction of economic activity which occurs over a series of
business cycles
C. fluctuations in economic activity that average 40 months in duration
D. fluctuations in economic activity that occur around holiday seasons
E. fluctuations in economic activity that average 8 or 9 years in duration

Difficulty: Easy
Topic: 10-17 Economic Growth in Canada
Type: Definition
101. Economies such as Canada are characterized by:
A. instability of employment and price levels

B. uninterrupted economic growth
C. persistent full employment
D. economic stability
E. zero inflation

Difficulty: Easy
Topic: 10-17 Economic Growth in Canada
Type: Factual
102. A recession is defined as a six-month period over which:
A. nominal GDP increases

B. the price level falls
C. inflation is present
D. nominal GDP decreases
E. real GDP decreases

Difficulty: Easy
Topic: 10-18 Business Cycles
Type: Definition
103. During an economic expansion:
A. the aggregate demand curve shifts leftward

B. households and businesses spend less due to growing pessimism about the future
C. households and businesses spend more due to growing optimism about the future
D. exports tend to decrease
E. imports tend to decrease

Difficulty: Medium
Topic: 10-19 Contraction
Type: Definition
104. According to New Growth Theory, the factor that traditional theories of economic growth
tended to downplay was:
A. capital
B. labour
C. knowledge
D. natural resources other than land
E. land

Difficulty: Easy
Topic: 10-20 Expansion
Type: Factual
105. According to New Growth Theory, economic efficiency is maximized if:
A. new ideas are priced in such a way that incorporates all the fixed costs, but not the
variable costs, that were incurred in developing the idea
B. new ideas are priced at zero
C. new ideas are priced in such a way that incorporates all variable costs, but not the fixed
costs, that were incurred in developing the idea
D. new ideas are priced in the same way as any other commodity
E. the prices of new ideas gradually rise after these ideas have been made commercially
available

Difficulty: Medium
Topic: 10-20 Expansion
Type: Factual
Chapter 10 Summary
Category # of Questions
Accessibility: Keyboard Navigation 72
Difficulty: Easy 33
Difficulty: Hard 2
Difficulty: Medium 70
Learning Objective: 10-01 Identify aggregate demand and the factors that affect it 13
Learning Objective: 10-02 Describe aggregate supply and identify the factors that influence it 19
Learning Objective: 10-03 Identify the economys equilibrium and how it differs from its potential 42
Learning Objective: 10-04 Define economic growth and explain its sources and its impact 25
Learning Objective: 10-05 Summarize Canadas historical record of economic growth 6
Lovewell - Chapter 10 115
Topic: 10-02 The Aggregate Demand Curve 4
Topic: 10-03 Changes in Aggregate Demand 10
Topic: 10-06 Changes in Aggregate Supply 19
Topic: 10-08 Aggregate Demand and Supply 39
Topic: 10-09 Injections and Withdrawals 2
Topic: 10-11 Economic Growth 10
Topic: 10-13 Sources of Economic Growth 9
Topic: 10-14 Economic Growth and Productivity 4
Topic: 10-16 Economic Growth and Business Cycles 2
Topic: 10-17 Economic Growth in Canada 2
Topic: 10-18 Business Cycles 1
Topic: 10-19 Contraction 1
Topic: 10-20 Expansion 2
Type: Application 17
Type: Definition 38
Type: Factual 7
Type: Graphical 20
Type: Numerical 23
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In the more severe cases with already existing impaction of the
colon, purgatives and copious injections will be demanded as advised
under that disease.
In dogs the first object is the unloading of the rectum and colon
and this usually demands direct mechanical intervention. (See
Intestinal Indigestion with Constipation.) In case of hypertrophied
prostate this may be rendered somewhat difficult, yet with a free use
of oily, soapy or mucilaginous injections it can usually be
accomplished.
The further treatment is on the same line as for the soliped. An
abundance of exercise in the open air is a prime essential, together
with a free access to fresh water. House dogs must be taken out for
urination and defecation at regular times that are not too far apart.
The food must be of a laxative nature. At first fresh whey or
buttermilk only may be allowed, but as some action of the bowels is
obtained well salted beef tea, pulped or scraped red muscle seasoned
with salt, or milk treated in the same way is permissible. If the
bowels fail to respond when the dog is taken out at the regular times
an injection of cold water may be given. Sulphate of eserine (⅕ gr.)
may be given daily by the mouth or hypodermically, or castor oil (½
to 1 oz.) may be administered at one dose to be followed by careful
dietary and hygienic measures. Or sweet oil, calomel and jalap,
podophyllin, or colocynth may be substituted. When the bowels have
been freely opened a daily morning dose of a drop of the fluid extract
of belladonna and ½ gr. of nux vomica will often materially improve
the peristalsis. Active manipulation of the abdomen may be
employed, or, if available, a current of electricity through the torpid
bowels for 10 or 15 minutes daily.
CONSTIPATION IN BIRDS.
Causes: Matted feathers, impacted cloaca, arrest of eggs, debility, catarrh,
parasites, nervous disorder. Symptoms: swelling of anus, pendent abdomen,
waddling gait, straining without effect. Treatment: remove obstruction by
mechanical means, cut off matted feathers, egg matter may demand laparotomy,
castor oil, tincture of rhubarb, enemata, green food, ensilage, roots, onions.
In birds torpid and obstructed bowels may come from the effects
of a previous diarrhœa, which has led to the matting together of the
feathers over the anus at once obstructing defecation and rendering
it painful. It may result in and be aggravated by a slow accumulation
of indigestible matters in the intestine or cloaca (pebbles, feathers,
etc.), and the arrest of eggs in the oviduct, pressing upon and
obstructing the bowel. In a recent case the author removed 18 ozs. of
impacted egg matter from the oviduct of a hen, which when divested
of this load weighed barely 2 lbs. Debility of the general system and
particularly of the walls of the bowels, and its various causes (old
age, exhausting disease, intestinal catarrh, parasites, nervous
diseases, etc.) retard defecation and favor impaction as in the
mammal.
The symptoms may be; hard dry droppings, matting of the
feathers over the anus with feculent matters, a firm swelling
surrounding the sphincter, a pendent condition of the abdomen
which when manipulated is felt to be firm and resistant, ruffling of
the feathers, drooping of the head, wings and tail, walking sluggishly
with legs half bent and a waddling gait, and ineffectual attempts to
defecate.
Treatment. As in dogs remove the obstructing mass by mechanical
means. Matted feathers may be clipped off, and feculent
accumulations may be dislodged by the aid of the finger, or in small
birds of a blunt prob. This may be favored by manipulation through
the abdominal walls, and the injection of soapy or oily enemata.
Accumulations of impacted egg matter may be similarly removed, or,
failing this, by an incision made through the abdominal walls and
oviduct. As a purgative give one or two teaspoonfuls castor oil
according to the size of the hen, or a few drops to a small cage bird.
For the latter Friedberger and Fröhner advise a few drops of tincture
of rhubarb in the drinking water. Injections of warm or cold
soapsuds or water may be continued as symptoms demand. Green
food, ensilage, roots, worms, snails and insects are indicated to
correct the tendency to costiveness and may be continued until the
bowels have acquired their proper tone. A moderate allowance of
onions is often of great value.
HAIR BALLS IN THE INTESTINES—HORSE.
EGAGROPILES.
Seat, colon, cæcum; hair of oat seed, clover leaf, vine tendrils, hair of horse,
nucleus, calcic admixture, straw, in horses on dry food, with depraved appetite, or
with skin disease. Symptoms: none, or torpid bowels, colics, recurring,
fermentations, tympany, obstruction, rupture, peritonitis, rectal exploration.
Lesions: impacted ball, with excess of liquid and gas in front, rupture, ragged
bloody edges. Treatment: extraction, enemata, eserine, barium chloride.
Hair balls, received the name of egagropiles because of their
discovery in the alimentary canal of the wild goat, but they are found
in various forms in all the domestic animals. In horses they occupy
the cæcum and colon and are most frequently composed of the fine
vegetable hairs that surround the grain of the oat, or the leaf of
clover, of the woody tendrils of vines, and of the hairs of themselves
and their fellows taken in at the period of moulting. They sometimes
contain a nucleus of leather or other foreign body which has been
swallowed but in many cases no such object can be found, the hair
having become rolled and felted by the vermicular movements of the
stomach and intestines. An admixture of mucus assists materially in
the felting, and calcareous and magnesian salts may make up the
greater part of the mass, rendering it virtually a calculus. They may
further have a large admixture of straw and vegetable fibres of larger
size than oat or clover hairs. They are most frequent in horses kept
on dry food, (sweepings of oatmeal mills) and at hard work, and
which show depraved appetite and lick each other. Omnibus horses
suffer more than army horses. Skin diseases, by encouraging licking,
contribute to their production.
Symptoms. In the great majority of cases hair balls do not
seriously incommode the horse. They do not attain a large size, and
being light do not drag injuriously on the intestine and mesentery.
They do, however, retard the movement of the ingesta, and when
grown to a considerable size they may block the intestine, more
particularly the pelvic flexure, the floating colon or rectum. Under
such conditions they produce colics which may be slight, transient,
and recurrent, or severe and even fatal, having all the characteristics
of complete obstruction from other causes. Fermentations,
tympanies, and straining without defecation are common features.
When the obstruction takes place in the pelvic flexure, the floating
colon or rectum, it may often be detected by rectal exploration. When
complete obstruction occurs all the violent symptoms of that
condition are present, and these may pass into those of rupture
(Peuch, Leblanc, Neyraud), and shock or peritonitis. If the animal
has passed hair balls even months before, the colics may with
considerable confidence be attributed to other balls of the same kind.
Lesions. In case of death there are the usual lesions of gaseous
indigestion, with or without enteritis, but with the accumulation of a
great quantity of liquid contents, above the ball, which is felt as a
firm body impacted in the gut. In other cases the distended bowel
has given way and the liquid contents and often the hair ball as well
are found free in the abdominal cavity. In such a case the edges of the
laceration are covered with blood clots and thickened with
inflammatory exudation, and there is more or less peritonitis.
Treatment. Relief may sometimes be obtained by the extraction of
a hair ball lodged in the rectum or adjacent part of the floating colon.
In other cases abundant soapy or oily enemata, and the employment
of eserine or barium chloride subcutem are indicated.
HAIR AND BRISTLE BALLS IN DOG AND
PIG.
From licking in skin disease. Symptoms: of obstruction. Treatment:
manipulation, enemata, oil, antispasmodics, eserine, barium chloride, laparotomy,
diet in convalescence.
The hair balls of dogs come mainly from licking themselves when
affected with skin diseases or parasites. In pigs they are mostly
attributed to depraved appetite.
The hair balls of the dog are small, open in texture, and easily
disintegrated, having little mucus and no earthy salts in their
composition.
The bristle balls of pigs take the form of straight or curved rods of
firm consistency, but without earthy salts. The projecting ends of the
bristles render them particularly irritating.
The symptoms are those of obstruction of the bowels, and the
treatment consists in efforts to dislodge them. If situated near the
anus they may sometimes be reached with the finger, or copious oily
injections may facilitate their passage. Manipulations through the
abdominal walls may be helpful in the dog. Oleaginous laxatives and
antispasmodics may be tried, or these failing, eserine or barium
chloride. As a last resort laparotomy may be performed, the ball
abstracted and the intestine and abdominal wall carefully sutured
(Siedamgrotzky). In such a case the diet should be restricted for a
week to beef soups, buttermilk, and well boiled gruels, especially
flaxseed.
INTESTINAL CALCULI. ENTEROLITHS.
BEZOARS.
Earthy basis, nucleus, stratification, in cæcum or colon, multiple, size, number

up to 1000. Composition, phosphates of lime, magnesia, and ammonia, silica,
mucus, epithelium, organic matter. Ammonio-magnesian tend to crystalline form,
common phosphate of lime to smooth forms. Concretions. Source in food.
Ammonia from bacteridian fermentation, action of colloids, varied nuclei, rapid
growth. Lesions: catarrh, dilation, obstruction, rupture, peritonitis. Symptoms:
intermittent colics with obstruction, tympany, bowel distension, liquid and
gaseous, before obstruction. Diagnosis: by hand in rectum, hard obstruction with
distension in front. Treatment: purgative dangerous, but exceptionally successful,
extraction, oleaginous enemata, laparotomy.
Horse. Intestinal calculi have an earthy basis (ammonio-

magnesian phosphate, or oxalate of lime, and more or less silica)
glued together by mucus and having a central nucleus usually of
some foreign body, (a particle of sand, pebble, morsel of hair, lead,
cloth, nail, coin, blood clot, or inspissated mucus) around which the
earthy salts have been deposited layer after layer. They are usually
formed in the cæcum or double colon and may be multiple and
moulded upon each other, so that they become discoid, angular or
otherwise altered from the globular shape. The worn, flattened
surface in such cases shows concentric rings representing the layers
as deposited in succession.
The size of the masses may be from a pea or smaller, up to calculi
of six inches in diameter.
In number there may be a single calculus or there may be an
indefinite quantity. Zundel counted 400 in a single colon, and Gurlt
1,000.
Composition. They are usually composed of phosphate of lime and
of magnesia, of ammonio-magnesian phosphate, with a little silica,
mucus, epithelium, and organic matters from the ingesta. Traces of
sodium chloride, and iron oxide may also be present.
The phosphates of lime, magnesia, and of ammonia and magnesia
usually constitute the main part of the calculus. Fürstenberg found
specimens in which the ammonio-magnesian phosphate amounted
to 72 to 94 per cent.
The calculi containing an excess of ammonio-magnesian
phosphate tend to assume a crystalline or coralline form which
causes them to be specially irritating to the mucosa. When broken
they show a radiated structure from the centre to the circumference
in addition to the concentric rings. These are usually of a yellowish
brown or a gray color and have a specific gravity of 1694 to 1706.
Calculi in which the common phosphate of lime abounds are likely
to be smooth on the surface and on section show the concentric rings
more distinctly and the radiating lines less so. The brownish calculi
of this variety are much more compact, and harder than the
crystalline or mulberry calculi, and have a higher specific gravity—
(1823).
Bluish calculi with a smooth glistening surface and lower specific
gravity—1681—, have been found of small size and in great numbers
in the colon (1000 in the colon, Gurlt).
In some calculi there is a large admixture of alimentary matters,
and a low specific gravity (1605 to 1674). These were designated as
pseudo calculi, by Fürstenberg.
In still other cases a calculous looking mass, when broken into, is
found to be composed of a mass of dried alimentary matter enclosed
in a thin layer of lime salts. These have a low specific gravity (1446 to
1566) and have been named concretions by Fürstenberg.
Causes. As a large proportion of the calculus is phosphate of lime
or ammonio-magnesian phosphate, we must look for the source of
these in the food and then at the conditions which determine their
precipitation.
The percentage of ash and of phosphoric acid in the common foods
of horses may be seen in the following table:
Ash. PO5 in the Ash. PO5 in the entire food.
Per cent. Per cent. Per cent.
Wheat bran 7.3 50 3.65
Wheat grain 3.0 46.38 1.3914
Oats grain 2.50 26.5 0.6625
Barley grain 3.10 39.9 1.2276
Bean grain 3.10 31.6 0.9864
Pea grain 2.75 34.8 0.957
Tare grain 3.00 36.2 1.086
Indian corn grain 1.5
Rye grain 1.6 39.9 1.0384
The source of the magnesia may be found to a large extent in the

grains represented in the following table:
Ash. Mg. in Ash.

Per cent. Per cent.
Oat, grain 2.50 7.3
Barley, grain 3.10 8.5
Rye, grain 1.6 2.4
Wheat, grain 2.12 9.98
Wheat, bran 7.3 11.2
Bean 3.1 6.6
Pea 2.7 5.6
The amount of magnesia in each of these grains is amply sufficient

to furnish the material for the constant growth of a calculus. Wheat
bran is preëminent in the amount of its magnesia and therefore
wheat bran has been charged with predisposing to calculi. In the
perisperm as a whole, Fürstenberg found 1 per cent. of phosphate of
magnesia, and in coarse bran not less than 2.5 per cent.
The ammonia which is essential to the precipitation of the
phosphate of magnesia in the form of the compound salt (ammonio-
magnesian) can be found wherever proteids are in process of septic
fermentation. The slightest failure to peptonize every particle of such
proteids, implies septic change and the evolution of ammonia, which
on coming in contact with magnesia phosphate instantly precipitates
the insoluble salt.
This fully agrees with the doctrine of the formation of urinary
calculi through the agency of bacteria, since the ammonia is
essentially a fermentation or bacterial product.
It may also be noted that the experiments of Rainey and Ord
showed that in the presence of colloids (mucus, epithelium, pus,
blood) the earthy salts are precipitated as minute globular bodies
which by further accretions become calculi. In the absence of colloids
the salts tend to precipitate in angular crystalline forms, so that the
mulberry and coralline calculi may possibly have been precipitated in
the absence of such bodies. From the solvent quality of ammonia,
however, the contents may easily pass from a fermenting liquid
containing colloids to a non-fermenting and noncolloid mixture.
The presence of a solid body which may act as a nucleus is an
essential element, and the condition of the food or drink will often
supply this. It has been noticed that army horses in the field, feeding
from the ground and taking in sand and pebbles, are unusually liable
to intestinal calculus. Horses which lick earth in connection with
acidity of the stomach or other dyspepsia are specially subject to it.
Horses watered from shallow streams with sandy bottoms, where
they take in sand with the water, have been similarly affected.
Millers’ horses, in the days of old process milling, suffered not alone
because of the abundance of oat hairs in the feed but also on account
of the grit from the millstones. Hay and other fodders that have lain
on the ground and which contain earth and sand furnish other
sources of such nuclei. Shingle nails and other small nails, pins,
needles, coins, etc., which have mixed with the feed are common
causes of trouble, and indeed any foreign body may become the
centre and starting point of a calculus.
Catarrhal affections and other lesions of the mucosa, which furnish
excess of mucus, beside pus, lymph and even blood as nuclei, are
invoked as starting points of the calculi, but however true this may
be in particular cases, irritation and catarrh appear to be much more
frequently the result than the cause of the calculus.
Attempts have been made to estimate the time taken in the
formation of a calculus by allowing a ring for each feed and
successive deposit therefrom (Fürstenberg, Colin). Thus a calculus of
14 pounds with 720 layers, it was estimated could be formed in one
year at two feeds per day. More definite evidence was found in the
case of Pastore in which a coin with the mint mark of 1847 was found
as the nucleus of a calculus the size of the fist in 1848.
Lesions. Formed in the most spacious parts of the colon and
cæcum, calculi usually rest there for a length of time without visible
injury, and it is only when they are moved onward and get arrested at
a narrow part of the gut (pelvic flexure, floating colon, rectum) that
they cause appreciable trouble. Yet it is claimed that by their weight
they drag upon the yielding walls of the bowel, causing dilatation and
attenuation, weakening the peristalsis and predisposing to rupture.
The compression of the vessels also tends to anæmia and atrophy. In
the case of rough crystalline calculi the mucosa is subjected to
attrition, irritation, and inflammation. The more serious and urgent
trouble is that of obstruction of the narrower portions of the colon
and rectum, which may be absolute and persistent, leading to
rupture and death or a fatal inflammation on the one hand, or may
end in recovery on the other, in connection with a displacement
onward or backward of the calculus as the result of peristalsis or
anti-peristalsis.
Symptoms. These are intermittent colics, each reaching a climax
and followed by a sudden recovery as the calculus is displaced into a
more spacious part of the colon. A significant feature is the complete
obstruction, fæces being passed for a short time at first and then
suddenly and absolutely stopped. Coincident with this are tympany,
violent colics, straining, rolling, sitting on the haunches,
perspirations, anxious countenance, and all the symptoms of
obstruction.
Diagnosis is never quite certain unless the practitioner with his
oiled hand in the rectum can detect a hard stony mass obstructing
the pelvic flexure of the double colon with a tense elastic distended
bowel immediately in front of it, or a similar hard obstruction of the
terminal part of the floating colon with a similar distension in front
of it. The pelvic flexure may usually be felt below and to the right at
the entrance to the pelvis, and the floating colon above, under the
right, or more commonly the left kidney. Calculi in the more spacious
parts of the double colon or in the cæcum are inaccessible to
manipulation. The feed (bran, ground feed) will be suggestive, as will
the occupation of the proprietor (miller, baker).
Treatment. This is rather a hopeless undertaking. No effective
solvent of the calculus can be given, and purgatives usually increase
the danger by increasing the peristalsis and dangerously distending
the bowel above the point of obstruction. It is true that this is
sometimes followed by a temporary recovery the calculus being
loosened and falling back into the dilated portion of the bowel. Less
frequently the increase in the peristalsis forces on a moderately sized
calculus to complete expulsion. It is a desperate though sometimes
successful resort. A more rational course of treatment is the dilation
of the bowel back of the obstruction by copious mucilaginous, soapy
or oleaginous enemata. Trasbot suggests CO2 produced by injecting
sodium bicarbonate and tartaric acid. This may be seconded by the
hypodermic injection of barium chloride or of atropia. When the
calculus is lodged in the floating colon or rectum it may be possible
to reach it with the hand and extract it at once. The last resort, is by
laparotomy for the removal of the calculus. One such successful case
is on record in which Filizet removed a calculus as large as an
infant’s head. In other cases the horses failed to survive. Desperate as
the resort may be it is not to be neglected in a case of undoubted
calculus, solidly impacted and of such a size that its passage is
impossible. A fatal result is imminent, and even if the present attack
should pass off it can only be looked on in the light of an
intermission, so that there is practically nothing to lose in case the
result should prove fatal. Anæsthesia and rigid antiseptic measures
should of course be adopted.
FOREIGN BODIES IN THE INTESTINES OF
SOLIPEDS.
Sand, pebbles, earth, lime, nails, pins, needles, coins, shot, cloth, leather, rubber,
sponge, tooth, bone, wood, twine. Symptoms: as in intestinal indigestion or calculi,
or sand or pebbles in fæces; peritonitis, phlegmon. Lesions: congestion, catarrh,
ulceration, abscess, needles may travel to other organs. Treatment: laxative,
enemata, or as for calculi.
All sorts of foreign bodies are taken in with food and water and
find their way to the intestines. Sand from drinking from shallow
streams with sandy bottoms, from browsing on sandy pastures where
the vegetation is easily torn up, or from feeding grain from sandy
earth will sometimes load the intestines to an extraordinary extent so
that such horses will pass sand for some weeks after leaving the
locality. Small stones and gravel are taken in in the same way or from
the habit of eating earth or licking crumbling lime walls. Nails, pins,
needles, coins, shot, pieces of cloth, leather, caouchouc, sponge, and
even a molar tooth and a piece of a dorsal vertebra have been thus
taken. Recently the author saw a small twig of hard wood transfixing
the pylorus and duodenum with fatal effect. In another case were
balls of binding twine which had been taken in with the fodder on
which it had been used.
The symptoms are usually those of intestinal indigestion or calculi.
In some cases, however, they are peculiar, thus there may be a
constant passage of sand, there may be indications of peritonitis, or
there may form a phlegmonous swelling of the abdominal walls in
the abscess of which the foreign body is found.
Lesions. Pechoux found 56 lbs. of a brownish earth in the cæcum
and colon. Congestion and ulceration of the intestines are common,
with occasionally abscess. All the lesions that attend on or follow
obstruction may be met with. Boullon saw a remarkable case of the
ingestion of needles in which these bodies were found in the small
intestine, liver, pancreas, diaphragm, kidney and lung.
Treatment varies with the character of the bodies ingested, sand
and gravel may be passed on by a laxative diet and even by the use of
mild laxatives. Bernard gave 10 quarts of water and 4 oz. Glauber
salts every hour for eight days, and the same amount by enema. For
the larger solid bodies which obstruct the intestines the treatment is
the same as for calculus. For sharp pointed bodies causing abscess
and fistulæ, we must follow the indications, ever aiming at the
discovery of the whereabouts of the offending object and its removal.
RUMINANTS.
Foreign bodies are usually arrested in the rumen of cattle and
unless sharp, pointed or rough so as to cause mechanical trouble or
caustic so as to act chemically, rarely do much harm. The most
extraordinary objects that have found their way into the intestine are
snakes. Gherardi claims that he found in the intestines a snake of 25
inches long; Jager found one of 21 inches in length, in an advanced
state of decomposition, in the rectum of a calf. It is supposed that
both had been taken in with the food. In each case there was
obstruction of the intestine with severe colicy symptoms.
CARNIVORA.
Small bodies, especially playthings, feathers, hair, bristles, bones of prey.

Lesions: congestion, inflammation, hemorrhage, ulceration, perforation,
invagination. Symptoms: colic, vomiting, tucked up belly, straining, palpitation,
rabiform symptoms, cough, convulsions. Course: emaciation, prostration, death in
five days or two weeks according to seat of obstruction. Treatment: Oleaginous
injections, laparotomy.
Causes. The dog is especially liable to this form of trouble, in

consequence of his habit of carrying objects in his mouth and of
playing with different objects especially the playthings of children.
Marbles, pebbles, spinning-tops, corks, coins, nuts, peach stones,
pieces of rubber, cloth or leather, bits of wood, sponge, needles, pins,
potato, bone, cord, hair, bristles, feathers, wire, and a number of
other objects. Some of them like feathers, hair, and bones are
swallowed with food, and when that has been digested, they are
either vomited or failing in this, are passed on into the intestine.
Lately the author made a post mortem of a house dog with over 24
inches of the jejunum virtually blocked with fragments gnawed from
a caouchouc ball and pieces of twine.
Cats also swallow a variety of objects. Benjamin and Megnin
record three cases of intestinal obstruction by the crystal drops of
shades.
Lesions. When the lumen of the intestine is blocked with a round
solid body like a marble or peach stone there occur active congestion,
inflammation, blood stasis and hemorrhage, with in many cases
necrosis, ulceration and perforation. Similar lesions occur from cord.
In a recent case of impaction with gnawed fragments of caouchouc
and cord, the 24 inches of the bowel implicated were the seat of
extended patches of necrosis and of deep, and even perforating
ulcers on the lesser curvature of the intestine, evidently caused by
the tension of the stretched cord on the shorter attached border of
the gut. Cadeac says the lesions from cord are always at the point of
attachment of the mesentery, whereas those coming from round or
cubical solid bodies are mainly on the greater curvature. Mathis
found at the pylorus a piece of net from which a cord extended
through the small intestine and ended in a ravelled mass near the
ileo-cæcal valve. The dragging of the cord on the intestine often
causes invagination at one or several points.
Symptoms. There may be slight colic, dullness, a disposition to lie
curled up in some secluded place, loss or caprice of appetite,
vomiting, tucked up abdomen, arching of the back, straining, and
unless the bowels are distended with gas, the obstruction can usually
be felt by the two hands applied on opposite sides of the abdomen.
The matters vomited are at first alimentary, then bilious and in the
advanced stages always feculent.
The French veterinarians assure us that rabiform symptoms are
very common as the result of obstruction of the intestines with
foreign bodies. The indications are signs of fury without the barking
which characterizes genuine rabies. The patient becomes wicked,
cross and excitable, sometimes dull and morose, and snappish, his
eyes glittering and his mouth frothy. He has alternate paroxysms of
fury and torpor, at one time flying at and biting any living thing he
meets, or tearing some object to pieces, and at another hiding away
in secluded and dark corners. Massenat saw two dogs supposed to be
affected by rabies, but which recovered promptly after having
vomited the foreign bodies which they had swallowed. In a country
where rabies is so prevalent as in France, it would be interesting to
see the results of inoculation with some of the most pronounced of
these rabiform cases.
Beside the rabiform symptoms cough and epileptic seizures
occasionally result from the foreign bodies.
Course. Termination. Unless relief is obtained by vomiting or
purging, appetite ceases altogether, emaciation advances rapidly, the
animal becomes dull and stupid, being evidently poisoned by the
absorbed toxins, and death may ensue in four or five days if the
obstruction is near the stomach, or in one or two weeks if in the large
intestines.
Treatment. The general treatment advised for the horse is
applicable to the carnivora. Purgatives are always dangerous as
threatening the overdistension and rupture of the bowel above the
obstruction. Oleaginous and mucilaginous injections with
manipulations are more promising if the obstruction is in the colon
or rectum.
In many cases laparotomy is the only hopeful resort. Felizet and
Degive have been quite successful in removing corks in this way, and
Fröhner advises the operation to be performed under opium
narcosis, and with antiseptic precautions. Make an incision of 1¾
inch near the umbilicus and parallel to the linea alba, extract the
blocked loop of intestine, ligature it in front of the foreign body and
behind it, incise, remove the offending mass and carefully close by
sutures, bringing the muscular and serous coats in accurate
opposition. Remove the ligatures, disinfect, return the bowel into the
abdomen, close the abdominal wound with sutures and apply an
antiseptic bandage.
If such cases are to be operated on it is important that it be done
early, before the occurrence of necrosis, ulceration, perforation, or
general infection.
RUPTURE OF THE INTESTINE. SOLIPEDS.
Causes: overdistensions in front of obstructions, softening, friability, necrosis,
suppuration or ulceration, Duodenum from worms or perforation by pointed
bodies, exudate in verminous embolism, petechial fever. Jejunum and ileum, by
disease of walls, ulcers, abscesses, neoplasms, caustics in umbilical hernia,
clamping of hernia. Cæcum, falls, blows, kicks, blows of horn, tusk, stump, calculi,
abscesses, cauterizing of hernia. Colon, external traumas, calculi, worms,
verminous thrombosis, neoplasms, abscesses, overdistensions, violent straining,
arsenic. Symptoms: follow accident, signs of obstruction, no rumbling, tympany,
stiffness, great prostration, fever. Death in short time.
Causes. Ruptures occur as we have already seen from
overdistensions of the bowel in front of some obstruction, by ingesta,
concretions, calculi, foreign bodies, etc., and this may take place in
the most healthy organs. In other cases, however, there has been
some pathological process at work rendering the intestinal wall soft,
friable, necrotic, suppurative or ulcerative, by which its substance is
attenuated or its consistency or cohesion reduced.
Duodenum. Lacerations of the duodenum are often connected
with obstruction by tumors or the ravages of worms. These latter are
mostly the ascaris megalocephala, accumulated in mass, and
sometimes engaged in pouches outside the walls of the gut. In other
cases, the walls of the intestine have been perforated by hard woody
stalks of straw or hay (Mollereau) or of still more woody plants as in
a case observed by the author, and in which the pylorus was
perforated. Sometimes the exudate or blood extravasation attending
on petechial fever, or verminous embolism will pave the way for the
rupture. Perforations by pieces of wire (Schmidt) or other metallic
bodies are also observed. Adhesive peritonitis has also rendered the
walls friable and predisposed to rupture.
Jejunum and Ileum. Lesions are most frequent toward the
termination of the ileum and resulting from obstructions of the
bowel or the weakening of the walls by disease, or both. Ulcerations,
abscess of the closed follicles opening into the peritoneum, and
neoplasms of various kinds are to be especially noted among the
causes. The impaction of the cæcum, blocking the ileo-cæcal valve is
also among the observed factors. Other instances have been traced to
deep cauterization of an umbilical hernia, the enclosed loop of small
intestine becoming inflamed and perforated. The author has
observed one instance from clamping of a hernia in which the
contained intestine was adherent to the hernial sac.
Cæcum. From its position on the lower part of the abdomen and
from its habitual plenitude with food or water, this organ is
especially exposed to direct mechanical injuries and ruptures. A
sudden fall, more especially if the umbilical region strikes on a stone
or other projecting solid body, kicks with heavy boots or with the feet
of other animals, blows with a cow’s horn or a boar’s tusks, and
violent contact with stumps, poles and other objects may be the
occasion of the rupture. These are usually found near the base of the
viscus and across its longitudinal direction.
Inflammations, connected with punctures, calculi, parasites, etc.,
may render the walls so friable that they give way under slight strain
or injury. Abscesses have been found in the walls of the viscus
leading to perforation, and extension of inflammation from an
umbilicus cauterized for hernia has determined adhesion and
perforation.
Colon. The loaded colon is even more liable to mechanical injury
than the cæcum. Occupying as it does the more lateral parts of the
abdominal floor, it is even more exposed to kicks and blows, and
extending as it does back toward the inguinal regions, it is especially
in the way of blows of horns so often delivered in this region. From
the solid nature of its contents the presence of calculi, the presence
of blood sucking worms, and its implication in the congestions and
extravasations of verminous thrombosis, this organ is especially
liable to degenerations and inflammations which render its walls
particularly friable. Neoplasms of various kinds, cancerous,
tubercular, etc., have been found on its walls as occasions of rupture.
Abscesses of strangles have ruptured into the viscus. Overdistensions
in front of an obstruction in the pelvic flexure, floating colon or
rectum are the most frequent causes of rupture. Again, cases have
been seen as the result of violent exertions, as during straining in
dystokia. It has been a complication of phrenic hernia, of volvulus of
the double colon, and of ulceration caused by the prolonged
ingestion of arsenic. In severe impaction the necrosis of the intestinal

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1. Exports have the same macroeconomic effect upon GDP as:

A. positive unplanned investment must be occurring

3. The aggregate demand curve:

A. is upward-sloping, because a higher price level makes production more profitable

A. why the aggregate demand curve is downward-sloping

A. the sole determinants of personal income

A. a fall in the real interest rate

A. shift the aggregate supply curve to the left

A. increase its GDP

A. have no perceptible impact upon our economy

A. aggregate demand curve would shift to the right

A. a change in the price level

14. The level of productivity is:

A. rise from 2.00 to 3.00

A. demand curve would not shift

A. are consumption, investment, government, and net export spending

A. an increase in labour productivity

24. Productivity measures:

A. real output per unit of input

A. real output divided by inputs

26. The aggregate supply curve:

A. increase aggregate demand and decrease aggregate supply

29. Ceteris paribus, an improvement in productivity will shift the aggregate:

A. supply curve to the right, while potential output remains constant

Consider the following table:

30. The level of productivity in this economy is:

33. The equilibrium price level will be:

A. a surplus of real output of $200 will occur

A. 250 and $200, respectively

A. increase in net exports

A. real output is at its highest possible level

A. rightward shift of the aggregate demand curve

A. a reduction in the price level

40. The changes in aggregate demand and supply produce a(n):

A. higher price level

A. 0f and 0c, respectively

43. If aggregate supply is AS1 and aggregate demand is AD0, then:

A. decrease in aggregate supply

A. increase in government regulation

A. will decrease, but real output may either increase or decrease

A. shift the aggregate demand curve rightward

48. We would expect an increase in input productivity to:

A. shift the aggregate demand curve leftward

A. real output would rise

A. aggregate supply and aggregate demand both increase

In the following table for a hypothetical country, C is consumption, I is investment, G is

A. aggregate demand is AD1

65. If the equilibrium price level is P1, then:

A. aggregate demand is AD2