Testing Your Economic Acumen
Our economy is becoming increasingly more competitive. As a young Canadian, you cannot afford to be
blasé about complicated fiscal and monetary matters. Understanding how the economy works, though
not always easy, is becoming increasingly more important. Take this quiz to find out how far you have
to go to be economically literate. Don’t agonize over your test score. Rather, take the time during this
course to improve your economic acumen. What really counts is how much your acumen grows during
this course. Retake the quiz after Unit 5 and compare your results. Good luck!
Circle the letter on the left side of the most correct answer.
1. GDP is
a) the total revenue of Canada’s largest 500 firms,
b) the value of all final goods and services produced annually in an economy,
c) a measure of stock market activity,
d) an index for government debt repayment.
2. The consumer price index measures
a) the change in prices of a “typical” family’s purchases,
b) changes in wholesale prices,
c) changes in the cost of necessities,
d) changes in the prices that consumers must pay for stocks.
3. The Bank of Canada
a) provides loans to small businesses,
b) is a federation of Canada’s largest commercial banks,
c) serves as a lender of last resort to banks,
d) monitors government spending.
4. The elasticity demand for a product is
a) equal to the elasticity of product supply,
b) determined by seasonal changes in employment rates,
c) determined by the product’s sensitivity to price changes,
d) controlled by the consumer price index.
5. Six continuous months of declining production and employment is called
a) recession,
b) depression,
c) inflation,
d) stagflation.
6. Opportunity cost is
a) the cost involved in creating new jobs,
b) the cost of starting a new business,
c) the cost of borrowing in venture capital markets,
d) the value of any activity that is sacrificed when an alternative activity is chosen.
Continued
© Oxford University Press (Canada) 2003. Permission to reproduce for classroom use restricted to schools purchasing Economics Now.
Reproducible Sheets
Testing Your Economic Acumen (continued)
RS 1-3
7. Corporations with operations in several countries are known as
a) oligopolies,
b) monopolies,
c) multinationals,
d) conglomerates.
8. Changes in government spending and taxation are examples of
a) discount policy,
b) fiscal policy,
c) monetary policy,
d) welfare policy.
9. If a corporation fails, which of these investors will be paid first:
a) owners of common stock,
b) owners of preferred stock,
c) owners of capital assets,
d) owners of bonds?
10. The global financial market is
a) a computerized network of some 100 of the world’s largest banks and brokerage houses,
b) a federation of the world’s 50 largest transnational corporations,
c) operated by the International Monetary Fund,
d) regulated by the World Trade Organization.
11. The idea that citizens are resources in which society should invest is known as
a) socialism,
b) human capital,
c) humanitarianism,
d) productivity.
12. When the flow of money out of a country is greater than the inflow of money from abroad, there is
a) a surplus in the balance of trade,
b) an increase in the value of the domestic currency,
c) an increase in the demand for domestically produced goods,
d) a deficit balance of payments.
13. When the global financial market lowers the value of a nation’s currency relative to that of other
nations, this is an example of
a) devaluation,
b) depreciation,
c) deflation,
d) deficit financing.
Continued
© Oxford University Press (Canada) 2003. Permission to reproduce for classroom use restricted to schools purchasing Economics Now.
Reproducible Sheets
Testing Your Economic Acumen (continued)
14. A bull market is one in which
a) stock prices are rising,
b) stock prices are depressed,
c) commodity prices are declining,
d) commodities are flooding the marketplace.
15. The Dow Jones and the TSX are
a) indicators of changes in profit levels,
b) indicators of changes in living standards,
c) indicators of changes in selected stock prices,
d) indicators of changes in all stock prices.
16. A mutual fund
a) is a type of insurance company,
b) holds stock in many corporations,
c) is another name for a conglomerate,
d) pools money intended to acquire control of profitable corporations.
17. A broker is paid commission
a) only when stocks are sold,
b) only when stocks are sold for a profit,
c) only when stocks are purchased,
d) whenever stocks are bought or sold.
18. A firm reaches its maximum profit level at the point where
a) marginal revenue equals marginal cost,
b) book value, asset value, and market value are equal,
c) increases in production costs are less than increases in sales revenue,
d) the cost of the last unit produced equals the average total cost.
19. The prime lending rate is
a) lower than the bank rate,
b) the rate that chartered banks pay on guaranteed investment certificates,
c) the rate that chartered banks charge their best customers on loans,
d) the rate charged by the Bank of Canada on commercial loans.
20. An increase in demand
a) causes a downward movement along the same demand curve,
b) causes an upward movement along the same demand curve,
c) causes the whole demand curve to shift to the left,
d) causes the whole demand curve to shift to the right.
© Oxford University Press (Canada) 2003. Permission to reproduce for classroom use restricted to schools purchasing Economics Now.
RS 1-3