Download Additional Help Chapter # 3

University of Lethbridge – Department of Economics
ECON 1012 – Introduction to Macroeconomics
Instructor: Michael G. Lanyi
Additional Help
Chapter # 3 –– The Canadian Economy in a Global Setting
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CHAPTER 3
The Canadian Economy in a Global Setting
POP QUIZ
1. In the diagrammatic representation of a market economy,
a. the economy is commonly divided into three groups: households, businesses, and
international.
b. households are suppliers in the factor (resource) market and demanders in the goods
(product) market.
c. businesses supply in both the factor and goods market.
d. households supply in both the factor and goods market.
2. A firm’s:
a. profit increases when revenues fall and costs rise.
b. decision on what to produce is primarily based on what it believes is most socially
acceptable.
c. decision on what to produce is largely determined by government regulatory agencies.
d. decision on what to produce is primarily based on what it believes will sell.
3. Consumer sovereignty means:
a. that business people have virtually total control over what gets produced.
b. consumers have voting rights which can be exercised to control the regulatory environment
of business.
c. consumers do not really care what businesses produce.
d. consumers’ wishes ultimately control what gets produced.
4. Corporations:
a. are businesses with two or more owners, with each owner liable for every other owner’s
actions.
b. account for the largest number of real world businesses.
c. account for the largest share of revenues (sales receipts) relative to other types of
businesses.
d. have the advantage of not having their income taxed twice.
5. Sole proprietorships:
a. have the advantage of limited liability.
b. have the advantage of unlimited liability to raise funds.
c. have the advantage of direct control by their owners.
d. have the disadvantage of double taxation.
Page 3-1, Chapter 3: The Canadian Economy in a Global Setting
6. A quota is a:
a. tax on an imported product.
b. tax on an exported product.
c. quality standard set by government in order for the product to be exported.
d. limit on how much of a good can be shipped into a country.
7. An important way in which international trade differs from domestic trade is:
a. international trade involves potential barriers to the flow of imports and exports.
b. the use of different communication systems.
c. the use of different transportation systems.
d. time zone changes.
8. Regarding foreign exchange rates:
a. if the exchange rate for German marks is $1 for 2 marks, then (ignoring transportation
charges and tariffs) a German beer mug priced at 36 marks in Germany would sell in
Canada for $72.
b. if a Mexican peso costs .0004 dollars, then a dollar costs approximately 2,500 pesos.
c. given that a Japanese yen costs .008 dollars, a stereo that costs 150,000 yen would have a
dollar price of $750.
d. if the value of the dollar rises, this means that imports are relatively more expensive for
Canadians.
9. If a country has a trade deficit, it is likely:
a. consuming less than it is producing.
b. lending to foreigners.
c. selling financial assets.
d. buying real assets.
10. International economic institutions include:
a. the World Bank, which is an organization committed to getting nations to agree not to
impose new tariffs or other trade restrictions except under limited conditions.
b. the World Trade Organization, which is a multinational, international financial institution
that works with developing countries to secure low- interest loans.
c. the Group of Five, which includes Japan, Germany, Britain, France, and the U.S., works
to promote negotiations and to coordinate their economic relations.
d. the Group of Nine, which includes the Group of Seven plus Canada and Russia, also
works to promote negotiations and to coordinate their economic relations.
Page 3-2, Chapter 3: The Canadian Economy in a Global Setting
ANSWERS TO POP QUIZ
Please solve it first.
1. b 2. d 3. d 4. c 5. c 6. d 7. a 8. b 9. c 10. c
Page 3-3, Chapter 3: The Canadian Economy in a Global Setting