ECON203 MOCK EXAM 2024 -
Comprehensive Study Guide
Introduction to Macroeconomics (Concordia University)
,Consider the government's debt-to-GDP ratio. A significant reason for a government
to maintain a low debt-to-GDP ratio is so that
A) the real interest rate remains high, which leads to increased investment.
B) the Canadian dollar will appreciate and net exports will increase.
C) the government has the flexibility to use expansionary fiscal policy if the economy
enters a recession.
D) the Bank of Canada has the flexibility to use contractionary policy.
E) there is no "crowding in" of investment or net exports.
Which of the following groups would benefit most in real terms from a period of high
and unanticipated inflation, as was experienced in Canada in the early 1970s?
A) mortgage companies and banks who issued fixed-rate mortgages to clients
B) banks with outstanding loans to their customers
C) seniors whose income is largely interest earnings on past savings
D) firms that maintain large cash balances for the operation of their business
E) homeowners who had long-term fixed-rate mortgages
Consider the government's budget constraint. The accumulated stock of government
debt will begin to fall
A) if the government's debt-service payments are zero.
B) if the government does not borrow money.
C) if the growth rate of real GDP is higher than the real interest rate.
D) when the government's annual budget is in deficit.
E) when the government's annual budget is in surplus.
Which of the following statements is correct? The real interest rate must be
A) high if the nominal interest rate is high.
B) high if the inflation rate is greater than the nominal interest rate.
C) low if the nominal interest rate is high.
D) positive if the nominal rate of interest is greater than the rate of inflation.
E) negative if the nominal rate of interest is greater than the rate of inflation.
Consider a government with a positive stock of debt, and suppose the real interest
rate on government bonds equals the rate of growth of real GDP. In this case, the
government's debt-to-GDP ratio will rise only if
A) the debt-to-GDP ratio is already high.
B) the primary budget surplus exceeds the overall budget surplus.
C) the real interest rate is high.
D) there is an overall budget deficit.
E) there is a primary budget deficit.
Refer to Table 4-2. What is the CPI inflation rate in 2021?
, A) 2.83%
B) 2.50%
C) 1.95%
D) 1.45%
E) 1.20%
Suppose the real interest rate on government bonds is 5% while the growth rate of
real GDP is 4%, and that the government's current debt-to-GDP ratio is 30%. If the
government has a primary budget balance of zero in the current year, the debt-to-
GDP ratio will
A) rise by 3.0 percentage points.
B) rise by 0.3 percentage points.
C) remain unchanged.
D) fall by 3.0 percentage points.
E) fall by 0.3 percentage points.
Suppose a country has an unemployment rate of 20%. If we know the population is
38 million and the labour force is 25 million, then the number of people unemployed
must be
A) 5 million.
B) 13 million.
C) 20 million.
D) 7.6 million.
E) 2.6 million.
Suppose the real rate of interest on government bonds is 4% and the growth rate of
real GDP is 2%. If the government has a positive stock of outstanding debt and its
policy objective is to hold the debt-to-GDP ratio constant at its current level, it must
A) eliminate the overall deficit.
B) run an annually balanced budget.
C) run a cyclically balanced budget.
D) run a primary budget deficit.
E) run a primary budget surplus.
Consider a simple macro model with demand-determined output and the following
specific parameter values:
a) Marginal propensity to consume out of disposable income = 0.6
b) Marginal propensity to consume out of national income = 0.48
c) Marginal propensity to import = 0.23
Comprehensive Study Guide
Introduction to Macroeconomics (Concordia University)
,Consider the government's debt-to-GDP ratio. A significant reason for a government
to maintain a low debt-to-GDP ratio is so that
A) the real interest rate remains high, which leads to increased investment.
B) the Canadian dollar will appreciate and net exports will increase.
C) the government has the flexibility to use expansionary fiscal policy if the economy
enters a recession.
D) the Bank of Canada has the flexibility to use contractionary policy.
E) there is no "crowding in" of investment or net exports.
Which of the following groups would benefit most in real terms from a period of high
and unanticipated inflation, as was experienced in Canada in the early 1970s?
A) mortgage companies and banks who issued fixed-rate mortgages to clients
B) banks with outstanding loans to their customers
C) seniors whose income is largely interest earnings on past savings
D) firms that maintain large cash balances for the operation of their business
E) homeowners who had long-term fixed-rate mortgages
Consider the government's budget constraint. The accumulated stock of government
debt will begin to fall
A) if the government's debt-service payments are zero.
B) if the government does not borrow money.
C) if the growth rate of real GDP is higher than the real interest rate.
D) when the government's annual budget is in deficit.
E) when the government's annual budget is in surplus.
Which of the following statements is correct? The real interest rate must be
A) high if the nominal interest rate is high.
B) high if the inflation rate is greater than the nominal interest rate.
C) low if the nominal interest rate is high.
D) positive if the nominal rate of interest is greater than the rate of inflation.
E) negative if the nominal rate of interest is greater than the rate of inflation.
Consider a government with a positive stock of debt, and suppose the real interest
rate on government bonds equals the rate of growth of real GDP. In this case, the
government's debt-to-GDP ratio will rise only if
A) the debt-to-GDP ratio is already high.
B) the primary budget surplus exceeds the overall budget surplus.
C) the real interest rate is high.
D) there is an overall budget deficit.
E) there is a primary budget deficit.
Refer to Table 4-2. What is the CPI inflation rate in 2021?
, A) 2.83%
B) 2.50%
C) 1.95%
D) 1.45%
E) 1.20%
Suppose the real interest rate on government bonds is 5% while the growth rate of
real GDP is 4%, and that the government's current debt-to-GDP ratio is 30%. If the
government has a primary budget balance of zero in the current year, the debt-to-
GDP ratio will
A) rise by 3.0 percentage points.
B) rise by 0.3 percentage points.
C) remain unchanged.
D) fall by 3.0 percentage points.
E) fall by 0.3 percentage points.
Suppose a country has an unemployment rate of 20%. If we know the population is
38 million and the labour force is 25 million, then the number of people unemployed
must be
A) 5 million.
B) 13 million.
C) 20 million.
D) 7.6 million.
E) 2.6 million.
Suppose the real rate of interest on government bonds is 4% and the growth rate of
real GDP is 2%. If the government has a positive stock of outstanding debt and its
policy objective is to hold the debt-to-GDP ratio constant at its current level, it must
A) eliminate the overall deficit.
B) run an annually balanced budget.
C) run a cyclically balanced budget.
D) run a primary budget deficit.
E) run a primary budget surplus.
Consider a simple macro model with demand-determined output and the following
specific parameter values:
a) Marginal propensity to consume out of disposable income = 0.6
b) Marginal propensity to consume out of national income = 0.48
c) Marginal propensity to import = 0.23
