TEST BANK FOR st st
Macroeconomics, Canadian Edition, 10th edition Andrew B. Abel Ben S. Bernanke Dean Croushore st st st st st st st st st st st st st
Ronald D. Kneebone Trevor Tombe
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Chapter 1-14 st
Chapter 1 st Introduction to Macroeconomics st st
1.1 What Macroeconomics Is About st st st
1) Which of the following is a topic of macroeconomics?
st st st st st st st st
A) why nations have different rates of growth
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B) what causes inflation and what can be done about it
st st st st st st st st st
C) why unemployment periodically reaches very high levels
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D) all of the above
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Answer: D s t
Diff: 1 st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
2) The two major reasons for the tremendous growth in output in the Canadian economy over the last
st st st st st st st st st st st st st st st st s
150 years are
t st st
A) population growth and budget deficit. st st st st
B) population growth and increased productivity. st st st st
C) low unemployment and budget surplus.
st st st st
D) low budget deficit and low trade deficits.
st st st st st st st
Answer: B s t
Diff: 1 stType: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
3) The main reason Canada has such a high standard of living is
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A) low unemployment. st
B) high average labour productivity.
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C) low inflation. st
D) low government budget deficits.
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Answer: B s t
Diff: 1 stType: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
4) Average labour productivity is st st st
A) the amount of workers per machine.
st st st st st
B) the amount of machines per worker.
st st st st st
C) the ratio of employed to unemployed workers.
st st st st st st
D) the amount of output per worker.
st st st st st st
Answer: D s t
Diff: 1 st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
1
Copyright © 2026 Pearson Canada Inc. st st st st st
,5) In analyzing macroeconomic data during the past year, you have discovered that average labour pro
st st st st st st st st st st st st st st
ductivity fell, but total output increased. What was most likely to have caused this?
st st st st st st st st st st st st st
A) Government deficit was reduced. st st st
B) The capital/output ratio probably rose.
st st st st
C) There was an increase in labour input.
st st st st st st
D) Unemployment probablyincreased. st st st
Answer: C s t
Diff: 3 stType: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
6) The business cycle describes the
st st st st
A) progression of an industry's structure from monopoly to perfect competition.
st st st st st st st st st
B) progression of an industry's structure from perfect competition to monopoly.
st st st st st st st st st
C) expansion and contraction of an individual industry within the economy.
st st st st st st st st st
D) expansion and contraction of economic activity in the economy as a whole. A
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nswer: D s t
Diff: 1 Type: MC
st st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
7) Which of the following best describes the potential impact of economic growth on different gr
st st st st st st st st st st st st st st
oups in society?
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A) Economic growth ensures that every group benefits equally. st st st st st st st
B) Economic growth can improve living standards, but some groups may experience negative co
st st st st st st st st st st st st
nsequences.
C) Economic growth is driven by equal resource distribution among all groups.
st st st st st st st st st st
D) Economic growth is only beneficial to those directly involved in production. A
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nswer: B s t
Diff: 1 Type: MC
st st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
8) When national output declines, the economy is said to be in
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A) an expansion.
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B) a deflation.
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C) a recovery.
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D) a recession.
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Answer: D s t s t
Diff: 1 stType: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
9) During recessions, the unemployment rate st and output st st st st st st .
A) rises; falls st
B) rises; rises st
C) falls; rises st
D) falls; falls st st
Answer: A s t
Diff: 1 st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
2
Copyright © 2026 Pearson Canada Inc. st st st st st
,10) The unemployment rate is the
st st st st
A) number of unemployed divided by the number of employed.
st st st st st st st st
B) number of employed divided by the number of unemployed.
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C) number of unemployed divided by the labour force. st st st st st st st
D) labour force divided by the number of unemployed. A
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nswer: C s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
11) Which of the following is a potential consequence of barriers to interprovincial trade within a co
st st st st st st st st st st st st st st st
untry?
A) They can reduce overall economic productivity.
st st st st st
B) They have no significant impact on productivity.
st st st st st st
C) They increase opportunities for international trade.
st st st st st
D) They improve internal market efficiency by limiting competition. A
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nswer: A s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
12) A country is said to be experiencing inflation when
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A) prices of most goods and services are rising over time.
st st st st st st st st st
B) prices of most goods and services are falling over time.
st st st st st st st st st
C) total output is rising over time.
st st st st st
D) total output is falling over time.
st st st st st st
Answer: A s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
13) A country is said to be experiencing deflation when
st st st st st st st st
A) prices of most goods and services are rising over time.
st st st st st st st st st
B) prices of most goods and services are falling over time.
st st st st st st st st st
C) total output is rising over time.
st st st st st
D) total output is falling over time.
st st st st st st
Answer: B s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
14) An open economy is a national economy that
st st st st st st st
A) has good relations with its neighbouring countries.
st st st st st st
B) has a stock market that is open to traders from anywhere in the world.
st st st st st st st st st st st st st
C) has extensive trading and financial relationships with other national economies.
st st st st st st st st st
D) has established diplomatic relations with most other nations. A
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nswer: C s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
3
Copyright © 2026 Pearson Canada Inc. st st st st st
, 15) A closed economy is a national economy that
st st st st st st st
A) doesn't interact economically with the rest of the world.
st st st st st st st st
B) has a stock market that is not open to traders from outside the country.
st st st st st st st st st st st st st
C) has extensive trading and financial relationships with other national economies.
st st st st st st st st st
D) has not established diplomatic relations with other national economies. A
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nswer: A s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
16) Canadian exports are goods and services st st st st st
A) produced abroad and sold to Canadians. st st st st st
B) produced in Canada and sold to Canadians. st st st st st st
C) produced abroad and sold to foreigners. st st st st st
D) produced in Canada and sold to foreigners. st st st st st st st
Answer: D s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
17) Canadian imports are goods and services st st st st st
A) produced abroad and sold to Canadians. st st st st st
B) produced in Canada and sold to Canadians. st st st st st st
C) produced abroad and sold to foreigners. st st st st st
D) produced in Canada and sold to foreigners. st st st st st st st
Answer: A s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
18) A country has a trade surplus when
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A) imports exceed exports. st st
B) imports equal exports. st st
C) exports exceed imports. st st
D) imports are zero. st st
Answer: C s t s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
19) A country has a trade deficit when
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A) imports exceed exports. st st
B) imports equal exports. st st
C) exports exceed imports. st st
D) exports are zero. st st
Answer: A s t s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
4
Copyright © 2026 Pearson Canada Inc. st st st st st
Macroeconomics, Canadian Edition, 10th edition Andrew B. Abel Ben S. Bernanke Dean Croushore st st st st st st st st st st st st st
Ronald D. Kneebone Trevor Tombe
st st st st
Chapter 1-14 st
Chapter 1 st Introduction to Macroeconomics st st
1.1 What Macroeconomics Is About st st st
1) Which of the following is a topic of macroeconomics?
st st st st st st st st
A) why nations have different rates of growth
st st st st st st
B) what causes inflation and what can be done about it
st st st st st st st st st
C) why unemployment periodically reaches very high levels
st st st st st st
D) all of the above
st st st st
Answer: D s t
Diff: 1 st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
2) The two major reasons for the tremendous growth in output in the Canadian economy over the last
st st st st st st st st st st st st st st st st s
150 years are
t st st
A) population growth and budget deficit. st st st st
B) population growth and increased productivity. st st st st
C) low unemployment and budget surplus.
st st st st
D) low budget deficit and low trade deficits.
st st st st st st st
Answer: B s t
Diff: 1 stType: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
3) The main reason Canada has such a high standard of living is
st st st st st st st st st st st
A) low unemployment. st
B) high average labour productivity.
st st st
C) low inflation. st
D) low government budget deficits.
st st st st
Answer: B s t
Diff: 1 stType: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
4) Average labour productivity is st st st
A) the amount of workers per machine.
st st st st st
B) the amount of machines per worker.
st st st st st
C) the ratio of employed to unemployed workers.
st st st st st st
D) the amount of output per worker.
st st st st st st
Answer: D s t
Diff: 1 st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
1
Copyright © 2026 Pearson Canada Inc. st st st st st
,5) In analyzing macroeconomic data during the past year, you have discovered that average labour pro
st st st st st st st st st st st st st st
ductivity fell, but total output increased. What was most likely to have caused this?
st st st st st st st st st st st st st
A) Government deficit was reduced. st st st
B) The capital/output ratio probably rose.
st st st st
C) There was an increase in labour input.
st st st st st st
D) Unemployment probablyincreased. st st st
Answer: C s t
Diff: 3 stType: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
6) The business cycle describes the
st st st st
A) progression of an industry's structure from monopoly to perfect competition.
st st st st st st st st st
B) progression of an industry's structure from perfect competition to monopoly.
st st st st st st st st st
C) expansion and contraction of an individual industry within the economy.
st st st st st st st st st
D) expansion and contraction of economic activity in the economy as a whole. A
st st st st st st st st st st st st
nswer: D s t
Diff: 1 Type: MC
st st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
7) Which of the following best describes the potential impact of economic growth on different gr
st st st st st st st st st st st st st st
oups in society?
st st
A) Economic growth ensures that every group benefits equally. st st st st st st st
B) Economic growth can improve living standards, but some groups may experience negative co
st st st st st st st st st st st st
nsequences.
C) Economic growth is driven by equal resource distribution among all groups.
st st st st st st st st st st
D) Economic growth is only beneficial to those directly involved in production. A
st st st st st st st st st st st
nswer: B s t
Diff: 1 Type: MC
st st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
8) When national output declines, the economy is said to be in
st st st st st st st st st st
A) an expansion.
st
B) a deflation.
st
C) a recovery.
st
D) a recession.
st
Answer: D s t s t
Diff: 1 stType: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
9) During recessions, the unemployment rate st and output st st st st st st .
A) rises; falls st
B) rises; rises st
C) falls; rises st
D) falls; falls st st
Answer: A s t
Diff: 1 st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
2
Copyright © 2026 Pearson Canada Inc. st st st st st
,10) The unemployment rate is the
st st st st
A) number of unemployed divided by the number of employed.
st st st st st st st st
B) number of employed divided by the number of unemployed.
st st st st st st st st
C) number of unemployed divided by the labour force. st st st st st st st
D) labour force divided by the number of unemployed. A
st st st st st st st st
nswer: C s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
11) Which of the following is a potential consequence of barriers to interprovincial trade within a co
st st st st st st st st st st st st st st st
untry?
A) They can reduce overall economic productivity.
st st st st st
B) They have no significant impact on productivity.
st st st st st st
C) They increase opportunities for international trade.
st st st st st
D) They improve internal market efficiency by limiting competition. A
st st st st st st st st
nswer: A s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
12) A country is said to be experiencing inflation when
st st st st st st st st
A) prices of most goods and services are rising over time.
st st st st st st st st st
B) prices of most goods and services are falling over time.
st st st st st st st st st
C) total output is rising over time.
st st st st st
D) total output is falling over time.
st st st st st st
Answer: A s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
13) A country is said to be experiencing deflation when
st st st st st st st st
A) prices of most goods and services are rising over time.
st st st st st st st st st
B) prices of most goods and services are falling over time.
st st st st st st st st st
C) total output is rising over time.
st st st st st
D) total output is falling over time.
st st st st st st
Answer: B s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
14) An open economy is a national economy that
st st st st st st st
A) has good relations with its neighbouring countries.
st st st st st st
B) has a stock market that is open to traders from anywhere in the world.
st st st st st st st st st st st st st
C) has extensive trading and financial relationships with other national economies.
st st st st st st st st st
D) has established diplomatic relations with most other nations. A
st st st st st st st st
nswer: C s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
3
Copyright © 2026 Pearson Canada Inc. st st st st st
, 15) A closed economy is a national economy that
st st st st st st st
A) doesn't interact economically with the rest of the world.
st st st st st st st st
B) has a stock market that is not open to traders from outside the country.
st st st st st st st st st st st st st
C) has extensive trading and financial relationships with other national economies.
st st st st st st st st st
D) has not established diplomatic relations with other national economies. A
st st st st st st st st st
nswer: A s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
16) Canadian exports are goods and services st st st st st
A) produced abroad and sold to Canadians. st st st st st
B) produced in Canada and sold to Canadians. st st st st st st
C) produced abroad and sold to foreigners. st st st st st
D) produced in Canada and sold to foreigners. st st st st st st st
Answer: D s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
17) Canadian imports are goods and services st st st st st
A) produced abroad and sold to Canadians. st st st st st
B) produced in Canada and sold to Canadians. st st st st st st
C) produced abroad and sold to foreigners. st st st st st
D) produced in Canada and sold to foreigners. st st st st st st st
Answer: A s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
18) A country has a trade surplus when
st st st st st st
A) imports exceed exports. st st
B) imports equal exports. st st
C) exports exceed imports. st st
D) imports are zero. st st
Answer: C s t s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
19) A country has a trade deficit when
st st st st st st
A) imports exceed exports. st st
B) imports equal exports. st st
C) exports exceed imports. st st
D) exports are zero. st st
Answer: A s t s t
Diff: 1st Type: MC st
LO: 1.1: Summarize the primary issues addressed in macroeconomics.
s t s t st st st st st st st
4
Copyright © 2026 Pearson Canada Inc. st st st st st
