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| 1 | |
All of the following, except one, would cause the aggregate demand curve to shift to the right. Which is the exception? |
| | A) | An increase in taxes |
| | B) | An increase in government spending on goods and services |
| | C) | An increase in the money supply |
| | D) | A decrease in the exchange rate |
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| 2 | |
What is the crowding-out effect? |
| | A) | The idea that when a government borrows to finance a deficit, it crowds out private investment because it causes interest rates to fall |
| | B) | The idea that when a government borrows to finance a deficit, it crowds out private investment because it causes interest rates to rise |
| | C) | The idea that fiscal policy crowds out economic growth |
| | D) | The idea that balanced budgets crowd out economic growth |
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| 3 | |
Stagflation is the simultaneous occurrence of both |
| | A) | A recession and deflation |
| | B) | A recession and inflation |
| | C) | Inflation and rapid growth in GDP |
| | D) | Recession and rapid growth in GDP |
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| 4 | |
What characterized the economic conditions in Canada from 1990–2008? |
| | A) | Low inflation and steady economic growth |
| | B) | Stagflation |
| | C) | Rising levels of unemployment but low inflation |
| | D) | Low unemployment and high inflation |
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| 5 | |
What is the name of the curve shown in Figure 12.7? |
| | A) | Phillips curve |
| | B) | Aggregate supply curve |
| | C) | Laffer curve |
| | D) | Production possibilities curve |
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| 6 | |
Which one of the following represents one of the basic problems illustrated by the Phillips curve? |
| | A) | That the inflation rate tends to decrease as the economy moves closer to full employment |
| | B) | That the inflation rate tends to increase as the economy moves closer to full employment |
| | C) | That the unemployment rate tends to decrease as the economy moves toward price stability |
| | D) | That high levels of unemployment tend to accompany high rates of inflation |
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| 7 | |
Which of the following would neutralize the crowding-out effect? |
| | A) | An increase in tax rates |
| | B) | An increase in the money supply |
| | C) | An increase in money demand |
| | D) | A decrease in the money supply |
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| 8 | |
According to supply-siders, what is one of the keys to curbing stagflation? |
| | A) | An increase in the money supply and a cut in government spending |
| | B) | A decrease in the money supply and an increase in government spending. |
| | C) | An increase in aggregate demand |
| | D) | Convincing people to buy domestic rather than foreign-produced goods |
| | E) | A cut in tax rates |
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| 9 | |
During the last two decades, Canada has experienced all of the following, except one. Which is the exception? |
| | A) | Robust economic growth |
| | B) | A steady predictable exchange rate |
| | C) | Low inflation rates |
| | D) | Low interest rates |
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| 10 | |
Which one of the following is true about deflation? |
| | A) | It is associated with stagflation. |
| | B) | It occurs whenever an inflationary gap gets large enough. |
| | C) | It precedes periods of high investment. |
| | D) | It is a period of decreases in the general price level. |
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| 11 | |
Graphically, what is necessary for an economy to escape the grips of stagflation? |
| | A) | Shift the AD curve to the right |
| | B) | Shift the AD curve to the left |
| | C) | Shift the AS curve to the right |
| | D) | Shift the AS curve to the left |
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| 12 | |
Stagflation in North American economies during the 1970s was triggered by what event? |
| | A) | OPEC-induced oil price increases |
| | B) | A far too rapid increase in the money supply in both of the countries |
| | C) | The Vietnam war |
| | D) | Excessive government budget deficits |
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| 13 | |
In the 1990s, Japan experienced all of the following, except one. Which is the exception? |
| | A) | A decline in the real estate market |
| | B) | A decline in the stock market |
| | C) | An increase in inflation rates |
| | D) | Low or negative economic growth rates |
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| 14 | |
All of the following, except one, were policies supported by the supply-siders. Which is the exception? |
| | A) | Privatization of Canada’s crown corporations |
| | B) | Contracting out of government services |
| | C) | Government closing down labour retraining centres |
| | D) | Deregulation of government involvement in the economy |
| | E) | Reducing taxes |
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