Ch.4

Question 1

If the consumer price index was 73 in 1979 and 225 in 2011, then prices in 2011 were on average:
a) three times as high as 1979
b) half of what they were in 1979
c) double of what they were in 1979
d) 150 percent higher than 1979

Answer 1

a) three times as high as 1979

Question 2

The balance of trade is
a) can never be a negative number
b) can never be a positive number
c) equal to the difference beween exports of goods and imports of g oods
d) will always balance with the difference equal to zero

Answer 2

c) equal to the difference between exports of goods and imports of goods

Question 3

Macroeconomics focuses on which of the following topics?
a) National production, itnerest rates, and profits
b) individual firms, taxation, and industry structure
c) unemployment, inflation, growth, and trade
d) households, instrustries, and distribution of income

Answer 3

c) unemployment, inflation, growth, and trade

Question 4

A rise in the exchange rate means that it takes _________ to purchase one unit of foreign currency.
a) higher canadian inflation rates
b) fewer canadian dollars
c) lower canadian inflation rates
d) more canadian dollars

Answer 4

d) more canadian dollars - this is a depreciation of the canadian dollar.

Question 5

what is a recession?

Answer 5

• a decline in real economic activity and is represented on graph as the time between peak and through

Question 6

define structural unemployment

Answer 6

Mismatch between skills that workers have and skills needed for available jobs in the economy

Question 7

define frictional unemployment

Answer 7

people transitioning between jobs or entering the labor force

Question 8

define cyclical unemployment

Answer 8

unemployment linked to the business cycle ex. due to recessionary gaps, exansionary gaps