EC 250 Final Actual Exam Questions with
complete verified correct detailed
Answers/Solutions latest update 2025
(Wilfrid Laurier University)
1. The biggest economic problem at present is
a) decline in output
b) high inflation
c) bear market in stocks
d) high unemployment ---correct answer ---b) high inflation
2. The effect of last two recession on the US unemployment was,
compared to unemployment in Canada
a) greater in both the Pandemic and the Great recessions
b) greater in the Pandemic recession but not in the Great recession
c) smaller in the Pandemic recession but greater in the Great
recession
d) smaller in both the Pandemic and the Great recessions ---correct
answer ---a) greater in both the Pandemic and the Great recessions
,3. Soft landing is:
a) return of the economy to normal, without a recession
b) gradual reduction in inflation, at the cost of a recession
c) return of inflation to the Bank of Canada target over several years
d) rapid return of inflation to the Bank of Canada target (within a
year) ---correct answer ---a) return of the economy to normal,
without a recession
4. When inflation in Canada reached around 8%, the Bank of Canada
a) always raised the Bank rate at least 2% above the rate of inflation
b) in the past, Bank of Canada raised the Bank rate substantially, but
never above 6%
c) Bank of Canada raised the Bank rate to over 14%, except for the
current situation
d) Bank of Canada raised the Bank rate substantially, except for the
current situation ---correct answer ---d) Bank of Canada raised the
Bank rate substantially, except for the current situation
,5. The boom in housing in the U.S. prior to the Great Recession
a) Was not as large as the boom in housing in Canada
b) Was caused in part by the decline in lending standards
c) Was caused in part by securitization which reduced risk to banks
from nonperforming mortgages
d) Only b) and c) are true ---correct answer ---d) Only b) and c) are
true
6. Federal deficit, in the Pandemic recession
a) was about the same as in the Great recession
b) was smaller than in the Great recession
c) was around 5 times greater than in the Great recession
d) was twice greater than in the Great recession ---correct answer ---
c) was around 5 times greater than in the Great recession
7. The reduction in interest rates in Canada
a) was smaller in the Pandemic recession than during the Great
recession, because of zero lower bound
, b) was smaller in the Great recession than during the Pandemic
recession, because of zero lower bound
c) led to negative policy rate in Canada during the Pandemic recession
d) led to negative policy rate in the US during the Great recession ---
correct answer ---a) was smaller in the Pandemic recession than
during the Great recession, because of zero lower bound
8. When Lehman Brothers failed, the result was a panic in the credit
market and it was difficult to obtain credit. As a result
a) investment declined
b) output fell
c) consumers became pessimistic about the future and cut
consumption
d) all of the above ---correct answer ---d) all of the above
9. Quantitative easing
a) is a policy that permits banks to create a greater quantity of
deposits
b) means that the central bank buys more short-term bonds
complete verified correct detailed
Answers/Solutions latest update 2025
(Wilfrid Laurier University)
1. The biggest economic problem at present is
a) decline in output
b) high inflation
c) bear market in stocks
d) high unemployment ---correct answer ---b) high inflation
2. The effect of last two recession on the US unemployment was,
compared to unemployment in Canada
a) greater in both the Pandemic and the Great recessions
b) greater in the Pandemic recession but not in the Great recession
c) smaller in the Pandemic recession but greater in the Great
recession
d) smaller in both the Pandemic and the Great recessions ---correct
answer ---a) greater in both the Pandemic and the Great recessions
,3. Soft landing is:
a) return of the economy to normal, without a recession
b) gradual reduction in inflation, at the cost of a recession
c) return of inflation to the Bank of Canada target over several years
d) rapid return of inflation to the Bank of Canada target (within a
year) ---correct answer ---a) return of the economy to normal,
without a recession
4. When inflation in Canada reached around 8%, the Bank of Canada
a) always raised the Bank rate at least 2% above the rate of inflation
b) in the past, Bank of Canada raised the Bank rate substantially, but
never above 6%
c) Bank of Canada raised the Bank rate to over 14%, except for the
current situation
d) Bank of Canada raised the Bank rate substantially, except for the
current situation ---correct answer ---d) Bank of Canada raised the
Bank rate substantially, except for the current situation
,5. The boom in housing in the U.S. prior to the Great Recession
a) Was not as large as the boom in housing in Canada
b) Was caused in part by the decline in lending standards
c) Was caused in part by securitization which reduced risk to banks
from nonperforming mortgages
d) Only b) and c) are true ---correct answer ---d) Only b) and c) are
true
6. Federal deficit, in the Pandemic recession
a) was about the same as in the Great recession
b) was smaller than in the Great recession
c) was around 5 times greater than in the Great recession
d) was twice greater than in the Great recession ---correct answer ---
c) was around 5 times greater than in the Great recession
7. The reduction in interest rates in Canada
a) was smaller in the Pandemic recession than during the Great
recession, because of zero lower bound
, b) was smaller in the Great recession than during the Pandemic
recession, because of zero lower bound
c) led to negative policy rate in Canada during the Pandemic recession
d) led to negative policy rate in the US during the Great recession ---
correct answer ---a) was smaller in the Pandemic recession than
during the Great recession, because of zero lower bound
8. When Lehman Brothers failed, the result was a panic in the credit
market and it was difficult to obtain credit. As a result
a) investment declined
b) output fell
c) consumers became pessimistic about the future and cut
consumption
d) all of the above ---correct answer ---d) all of the above
9. Quantitative easing
a) is a policy that permits banks to create a greater quantity of
deposits
b) means that the central bank buys more short-term bonds
