When the relative prices of American-made goods go up, the result is
A) an increase in the exports of Canadian-made goods.
B) a decrease in exports of Canadian-made goods.
C) a decrease in imports of Canadian-made goods.
D) no net change in imports or exports of Canadian-made goods.
92) If the price level increases, the value of money balances held by individuals, firms, government, and foreigners decreases, and spending decreases. This is an example of
A) the open economy effect.
B) the interest rate effect
C) the real-balance effect.
D) the deflation effect.
93) When the Federal government increases the level of taxes in the economy, this has the effect of
A) increasing AD.
B) decreasing AD.
C) increasing AS in the long run.
D) decreasing AS in the long run.
94) If the Bank of Canada were issue Canada Savings bonds to the public, we would expect
A) the AD curve to remain unchanged since this has no effect on the money supply.
B) the AD curve to shift to the right since this has the effect of increasing the money supply.
C) the AD curve to shift to the left since this has the effect of decreasing the money supply.
D) will see a marked effect from the interest rate effect.
95) If all provincial governments were to harmonize the provincial Goods and Services tax to be the same rate and cover the same items as the Federal Goods and Services tax, we would expect
A) the AD curve to shift to the right.
B) no change in the AD curve.
C) the AD curve to shift to the left
D) to not know the impact the AD curve since some tax rates may go up while others may go down.
96) The aggregate production function
A) measure aggregate demand.
B) measure aggregate supply.
C) models the relationship between the inputs to production available in the economy and the total output of an economy.
D) assists us in determining the level of full employment
97) In the long run, the level of production in the economy
A) is independent of the price level.
B) determines how much money is in the economy.
C) depends on the price level in the economy
D) does not determine the level level of potential output
98) An indirect effect of a decrease in the price level works through
A) people substituting out of domestic goods and into foreign goods as exchange rates rise.
B) changes in trade balances as domestic goods become more expensive, causing interest rates to move in the opposite direction from the change in the exchange rate.
C) interest rates as people save more as the higher prices make their money balances less attractive.
D) interest rates, increasing the quantity demanded for goods and services.
99) A significant problem with developing nations relative to their production of capital goods and consumption goods is
A) capital and consumption goods do not play a vital role in the role of determining real GDP.
B) that producing fewer capital goods invests in the future and allows for future decreases in consumption goods, but sacrifices current consumption goods which may prove beneficial to citizens in the short run.
C) that producing more capital goods invests in the future and allows for future increases in consumption goods, but sacrifices current consumption goods which may prove detrimental to citizens in the short run.
D) it is not a real problem since developing nations are not our trading partners; only the united States plays a vital role in Canadian trade policy.
100) Holding nominal money balances constant, an increase in the price level
A) causes the real value of the money balances to increase, in turn increasing the quantity of goods and services demanded.
B) causes the real value of the money balances to decrease, in turn decreasing the quantity of goods and services demanded.
C) causes the real value of the money balances to increase, thereby increasing the interest rate.
D) generates a reduction in the value of the money balances, leading to higher interest rates and a decrease in the quantity of goods and services demanded.
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