Scorcia Economics Exam Review Gr. 12

1. What are a bank’s excess reserves?

• a) Cash that the bank must keep and not lend

• b) Cash that the bank can lend to consumers

• c) The difference between a bank's total reserves and required reserves

• d) Money kept in a separate vault for security

2. Macroeconomics approaches the study of economics from the viewpoint of?

• a) The individual consumer

• b) The national economy as a whole

• c) The global market

• d) Firms and businesses

3. From whom does the Bank of Canada provide deposit accounts?

• c) Both the charter banks and the government

• b) Only the government

• a) Only chartered banks

• d) Only individual consumers

4. Suppose interest rates rise. Which one of the following results could be expected from a rise in interest rates in Canada?

• a) The Canadian dollar could expect to fall on foreign exchange markets

• d) Canadian exports will become cheaper

• c) Interest rates on loans will decrease

• b) The Canadian dollar could expect to rise on foreign exchange markets

5. If the inflation rate rises to 3 percent, will the real rate of interest rise, fall, or stay the same?

• a) It will rise

• b) It will fall

• d) It will fluctuate unpredictably

• c) It will stay the same

6. What is meant by the term “tight money”?

• b) Money is more difficult to borrow for consumers and businesses

• c) Money supply is increased by the central bank

• a) Money is easier to borrow for consumers and businesses

• d) The government prints more currency

7. Which is the following is used to measure inflation in Canada?

• a) GDP

• c) PPI

• b) CPI

• d) GDP deflator

8. Which economic law best explains why the products that we buy are manufactured by large enterprises?

• a) The law of demand

• b) The law of diminishing returns

• c) The law of increased returns to scale

• d) The law of comparative advantage

9. Which statement below best defines Gross Domestic Product?

• d) The total value of all financial transactions in Canada

• a) The total market value of all final goods and services produced in the world

• c) The market value of all final goods and services exported by Canada in a given year

• b) The market value of all final goods and services produced within Canada in a given year

10. The movement along a given production possibilities frontier will result from?

• b) A change in consumer preferences

• a) An increase in resource availability

• d) A technological advancement

• c) A re-allocation of available productive resources