QUIZ#2 business

If you do more than the required questions, only the first ones up to the required number will be graded.

PLEASE use bold font being a minimum of 14.

PART #1: 

1. You are given the the rise in minimum wage has been zero for the last twenty-five years. Yet, automobile fuel has increased by 10 percent over the same time, health care costs have increased by 70 percent, and housing costs have risen by 25 percent.

  1. How would you calculate whether the hotel maid working at minimum wage is better off or worse off? (10 Marks)
  2. Do the calculations as best you can using geometric mean to calculate the annual rate of inflation. (5 Marks)
  3. Why would you use the method in (a) or (b) over the other? (10 Marks)

PART #2:  Do two questions from the following. Please note that since this is open book you will be expected to properly cite and reference all material that is not your own. You are bound by the academic integrity guidelines of the course outline with the penalty depending on severity being redoing to failure. The length should be a minimum of 250 words (not counting diagrams or references) with no maximum. Each question is worth 25% based on material (10), critical analysis (10) and style (spelling, organization, appropriate citations and referencing) (5).

2.  You have been contracted to write a background paper for the Minister of Finance and Governor of the Bank of Canada about recommended fiscal and monetary policy for the fiscal year April 1, 2021 to March 31, 2022.

3.  As a specialist at Statistics Canada, you have been sent to Adanac, a recently formed country in Asia as they want to provide data on the well-being of their country for the World Bank, International Monetary Fund, World Trade Organization, UNESCO, and various NGOs that operate around the world (Red Cross, Oxfam, World Vision, etc.). Your first task is to write a paper on “How best to measure well-being”.

4. In the United States, the Republican Party is adamantly opposed to regulation and in particular against regulation of the Banks. In Canada, the Banks are highly regulated. What might be some of the benefits and problems associated with deregulation.

. PART 3:

For youa MC Questions, set up the answers (typed) in 3 columns of 10 each, column 1 being 5 To 14, column 2 being15 to 24, etc. Type Capital letters beside the correct number. There is ONE bonus question here for you. Do not do on your question sheet. 1 mark each.

5.  Income inequality may be desirable if:

A.  equity is achieved only at the expense of decreased economic growth

B.  it limits the desire for further education

C.  It provides a disincentive for increased entrepreneurial risk-taking

D.  it leads to discrimination

E.  it is caused by government tax policies

6.  GDP can be calculated by adding:

A.  consumption, gross investment, government purchases, exports, and imports

B.  gross investment, government purchases, consumption, and net exports

C.  consumption, net investment, wages, and rents

D.  consumption, gross investment, government purchases, and imports

7.  Ms. Eckstein has lost her job in a Quebec textile plant because of import competition. She intends to take a short course in electronics and move to Alberta where she anticipates new jobs will be available. We can say that Ms. Eckstein is faced with:

A.  secular unemployment

B.  cyclical unemployment

C.  structural unemployment

D.  frictional unemployment

8.  In terms of the aggregate demand and aggregate supply model, an expansionary monetary policy is designed to shift the aggregate:

A.. demand curve rightward

B.  demand curve leftward

C.  supply curve rightward

F.  supply curve leftward

https://media-cf.mheducation.com/MHHE/EZT/Image/521573/en-us/DEMO_13570164655482341.png 

9.  Refer to the figure above. When equilibrium occurs at point a, the economy is exhibiting a(n):

  1.  recessionary gap of ab, which calls for expansionary fiscal policy
  2.  recessionary gap of ab, which calls for contractionary fiscal policy
  3.  inflationary gap of ab, which calls for expansionary fiscal policy
  4.  inflationary gap of ab, which calls for contractionary fiscal policy

10.  According to neoclassical economists before John Maynard Keynes:

A.  both the demand and supply of labour depend on the nominal wage rate

the forces of demand and supply in the labour market will automatically eradicate involuntary unemployment

B.  involuntary unemployment can be a long-run problem

while the demand for labour depends on the nominal wage rate, the supply of labour depends on the real wage rate

C.  the demand for labour depends on the nominal wage rate but the supply of labour depends on the real wage rate

11.  When the Bank of Canada sells a bond to a member of the public:

A.  the money supply is reduced

B.  the money multiplier is not relevant

C.  the lending ability of the banking system is increased

12. If the money demand and money supply curves shift leftward, we can conclude that the equilibrium:

A.  nterest rate will decline, but we cannot predict the change in the equilibrium quantity of money

B.  quantity of money and the equilibrium interest rate will both increase

C.  quantity of money will increase, but we cannot predict the change in the equilibrium interest rate

D.  quantity of money will decline, but we cannot predict the change in the equilibrium interest rate

13.  If, in the money market, the quantity of money demanded exceeds the money supply, we would expect the interest rate to:

A.  fall, causing households and businesses to hold less money

B.  rise, causing households and businesses to hold less money

C.  rise, causing households and businesses to hold more money

14.  Suppose that real output in an economy is 20 units, the quantity of inputs is 10, and the price of each input is $4. 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

https://media-cf.mheducation.com/MHHE/EZT/Image/521848/en-us/DEMO_13570164655482266.png 

15. Which of the above diagrams best portrays the effects of a dramatic decrease in the amount of capital resources available to the economy?

  1.  A
  2.  B
  3.  C
  4.  D
  5.  both C and D

16.  Monetary policies that cause an increase in the money supply:

A.  raise the interest rate, decrease spending on investment and consumer durables, and shift aggregate demand leftward

B.  lower the interest rate, decrease spending on investment and consumer durables, and shift aggregate demand rightward

C.  lower the interest rate, increase spending on investment and consumer durables, and shift aggregate demand leftward

D.  raise the interest rate, increase spending on investment and consumer durables, and           Shift aggregate demand rightward

E.  Lower the interest rate, increase spending on investment and consumer durables, and shift aggregate demand rightward

17. Assume that the Bank of Canada’s policy is to keep the price level from either rising or falling. If aggregate supply decreases in the economy, the Bank of Canada:

A.  will have to decrease interest rates if it wishes to keep the price level from falling

B.  will have to increase the money supply if it wishes to keep the price level from falling

C.  will have to decrease the money supply if it wishes to keep the price level from rising

D.  can keep the price level stable without altering the money supply or interest rate

E.  will have to increase the money supply if it wishes to keep the price level from rising

https://media-cf.mheducation.com/MHHE/EZT/Image/521740/en-us/DEMO_13570164655482349.png

18.  Refer to the figure above. Before the shift of the aggregate demand curve from AD0 to AD1, the economy is facing a(n):

  1.  recessionary gap of ef
  2.  recessionary gap of de
  3.  inflationary gap of cd

https://media-cf.mheducation.com/MHHE/EZT/Image/521559/en-us/DEMO_13570164655482339.png 

19.  Refer to the figure above. As a result of the shift in aggregate demand from AD0 to AD1, equilibrium real output changes from:

  1.  ce to cf
  2.  cf to ab
  3.  cd to ab

20. When the Bank of Canada engages in a tight money policy, the price of bonds tends to:

A.  fall

B.  rise

C.  remain constant

D.  move in the same direction as the bonds’ interest rate

21.A lender need not be penalized by inflation if the:

A.  long-term rate of inflation is less than the short-term rate of inflation

B.  short-term rate of inflation is less than the long-term rate of inflation

C.  lender correctly anticipates inflation and increases the nominal interest rate accordingly

D.  inflation is unanticipated by both borrower and lender

22. Inflation is undesirable because it:

A.  arbitrarily redistributes real income and wealth

B.  is always cumulative; that is, creeping inflation invariably causes high rates of inflation

C.  reduces everyone’s standard of living

The table below shows the national accounts for a hypothetical economy, Meereen.
 

Meereen’s National Accounts (2019)
 ($ billions)
Government purchases48
Proprietors’ incomes and rents34
Exports19
Indirect taxes30
Gross investment40
Wages and salaries81
Corporate income60
Imports20
Net investment31
Personal consumption90
Statistical discrepancy


23. What is the expenditure-based estimate of Meereen’s GDP?

  1.  $168 billion
  2.  $177 billion
  3.  $188 billion

24. 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

X.  rightward shift of the aggregate supply curve

25. Public debt charges:

A.  are a relatively minor expenditure by the federal government

B.  are always equal in size to the federal government’s budget deficit

C.  are the annual interest payments by the federal government on outstanding public debt

D.  fell throughout the 1980s and early 1990s due to a reduction in real interest rates

26. In 2015, debt for all levels of government in Canada as a percentage of GDP was:

A.  lower than the comparable percentages for Germany and Sweden

B.  higher than the comparable percentages for Japan and Italy

C..lower than the comparable percentages for the United States Japan

27. Demand deposits are classified as money because:

A.  they can be readily used in the making of purchases and payment of debts

B.  banks hold currency equal to the value of their outstanding deposits

C.  they are ultimately the obligation of the government

D.  they earn significant interest income for the depositor

28. Which of the following will tend to increase bank reserves?

A.  the purchase of bonds in the open market by the Bank of Canada

B.  federal tax collections

C.  an increase in the target overnight rate

D.  the sale of bonds in the open market by the Bank of Canada

29. Assume that the reserve ratio is 5 percent and the Bank of Canada buys a $10 000 bond from a member of the public. As a result:

A.  bank reserves are decreased by $10 000

B.  the money supply immediately declines by $9500

C.  desired bank reserves are increased by $9500

D.  the money supply is immediately increased by $10 000

30. If chartered banks lower their reserve ratio:

A.  they will be prompted to reduce their lending

B.  the size of the money multiplier will increase

C.  the actual cash reserves of the chartered banks will increase

D.  the size of the money multiplier will decrease

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