GRADE 12 ANALYSING CURRENT ECONOMIC ISSUES: CIA4U

FINAL EXAM

INSTRUCTOR: Mr. Lewis TIME LIMIT: 2 hours

DATE: PAGE 1 OF 19
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Instructions:

1. Non-programmable calculators, protractors, rulers and various writing utensils may be used.
No electronic devices will be allowed.

2. This is a closed-book exam; no written materials will be allowed.

3. Please answer multiple-choice questions by circling the correct answer directly on the exam paper.

4. Answer all other questions in the spaces provided. Please do not write on the backs of pages.

5. Please ensure that all 19 pages are included and returned.

6. Your proctor must return your exam to your instructor via email or fax immediately upon completion.
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Mark Breakdown

Part A – Multiple Choice 20 marks

Part B – Mathematical Components 20 marks
Part C – Long Answer 60 marks

Total: 100 marks

Good Luck!
Part A - Multiple Choice

1) What country is the world's largest producer of agricultural products?

a) Russia
b) Brazil
c) China
d) Canada
e) the United States

2) Which of these is NOT a factor that affects demand?

a) The market structure

b) The price of complements
c) Personal preferences
d) Expectations about prices in the future

3) For the good described by the graph below, a market surplus of approximately 400 units
would result from a;

a) price floor of $1.50

b) price ceiling of $1.50
c) price floor of $4.00
d) price ceiling of $4.00

4) What is the effect of restrictive monetary policy?

a) slower economic growth

b) increased interest rates
c) lower money supply
d) all of these

5) Which of the following would be an expected consequence of an interest rate cut?

a) the housing market will heat up

b) savings will increase
c) mortgage rates will increase
d) deflation
6) What type of protected intellectual property gives an inventor the sole right to make, use,
sell, and license out their invention for a limited period of time?

a) trade secrets
b) copyright
c) patents
d) trademarks

7) About 48% of Canada's wealth is held by the richest 10% of the population. Approximately
what percent of Canada's wealth is held by the poorest 50% of the population?

a) 1%
b) 5%
c) 10%
d) 25%

8) Okun's Law states that for every percentage point by which the unemployment rate exceeds
the natural rate, ________ of actual GDP will be lost.

a) 1%
b) 2%
c) 5%
d) 10%

9) All things being equal, when suppliers become willing to charge less, what happens to
consumer surplus?

a) Consumer surplus remains unchanged

b) Consumer surplus decreases
c) Suppliers go out of business
d) Consumer surplus increases

10) "Allocational efficiency" of labour means;

a) workers have maximized their earnings

b) workers are assigned to the tasks that match their skills
c) workers do not waste any raw materials
d) workers are equipped with the appropriate tools and environment, so as to reduce the time
taken between tasks

11) Economic efficiency occurs when all trading partners;

a) specialize in the areas where they have a comparative advantage

b) have the same level of marginal productivity
c) produce the item that they can sell at the lowest cost
d) All of these answers
12) Which of the following is NOT a characteristic of a perfectly competitive market?

a) Perfect information
b) No transaction costs
c) Increasing returns to scale
d) Many buyers and sellers

13) Which of the following is a public good?

a) Clean air
b) The stock of fish in the ocean
c) Satellite television
d) Clothing

14) Which of the following statements is true about how externalities impact economic
efficiency?

a) Economic efficiency requires that the externality is internalized.

b) Externalities do not impact efficiency.
c) Externalities have only positive impacts on efficiency.
d) Externalities do not have noticeable impacts of economic efficiency.

15) When for profit and not for profit companies join forces, what is the common denominator
in their pursuits?

a) Money that represents donations for the not for profit and income for the for profit
b) Publicity
c) A shared cause that represents the mission statement of the not for profit and corporate
social responsibility for the for profit
d) Environmental sustainability

16) Before withdrawing from the Kyoto Protocol in 2011, Canada signed the non-binding
Copenhagen Accord in 2009, which required it to accomplish what by the year 2020?

a) to reduce greenhouse gas emissions by 8% compared to the base year, 2005

b) to reduce greenhouse gas emissions by 17% compared to the base year, 2005
c) to allow greenhouse gas emissions to increase by no more than 2% since the base year, 2005
d) to allow greenhouse gas emissions to increase by no more than 5% since the base year, 2005

17) What is indicated by the point of intersection of supply and demand curves?

a) The amount of shortage

b) The equilibrium price and quantity
c) The amount of surplus
d) the marginal propensity to consume
18) Fill in the blanks. According to the short-run Phillips curve, unemployment and
_______________ are ________________ correlated.

a) real GDP, negatively

b) real GDP, positively
c) inflation, negatively
d) inflation, positively

19) Using 2000 as a base year, suppose the 2010 nominal GDP is 18 trillion and the 2010 real
GDP is 15 trillion. What is the GDP deflator for the year 2000 to 2010?

a) 1
b) 80
c) 120
d) 125

20) When global data is added up, exports in the world exceed imports by about 1%. What is
the best explanation for this calculation?

a) The world is running a surplus

b) There are transactions that are not legally recorded
c) The data centre left out some countries
d) The world, as a whole, overproduces
Part B – Mathematical Components

Write full solutions to the following problems.

1) Fill in the blanks with either “positively” or “negatively” [5]

a) interest rates are ________________ correlated with inflation

b) the value of the dollar is ________________ correlated with the level of imports

c) interest rates are ________________ correlated with housing starts

d) government spending is ________________ correlated with consumption

e) consumer confidence is ________________ correlated with saving

2) Calculate the GDP gap in Canada if the actual GDP is $600,000,000,000, the natural rate of
unemployment is 5.4%, and the actual unemployment rate is 6.6%.

[4]

3) Yesterday, the price of a bag of beef jerky was $5.00, and you were willing to buy 10 of
them. Today the price has gone up to $6.25, and you are only willing to buy 8. Calculate your
coefficient of elasticity of demand for the beef jerky and state whether the demand is relatively
elastic or inelastic.

[4]
4) The government decides to spend 12 million dollars on infrastructure improvements and the
marginal propensity to consume is 0.75. Calculate the following;
a) the marginal propensity to withdraw
b) the fiscal multiplier
c) the expected impact on gross domestic product

[4]

5) Calculate economic growth where the real GDP for year 1 was 420 billion dollars and the real
GDP for year 2 was 480 billion dollars.

[3]
Part C – Long Answer

Section 1) ECONOMIC DECISION MAKING

Write a 100 to 150-word response to one of the following questions:

1) Explain how market, command, and mixed economies differ in how decisions are made
about what goods and services to produce, how to produce them, and for whom to produce
them. State which type of economy exists in Canada and justify your statement.

2) Describe a number of advantages and disadvantages of the privatization of Crown

corporations or government services.

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Section 2) ECONOMIC STAKEHOLDERS

Write a 100 to 150-word response to one of the following questions:

1) Describe the positive and negative effects of an interest rate cut by the Bank of Canada.

2) Define frictional, structural, and seasonal unemployment, and explain what is meant by the
natural rate of unemployment.

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Section 3) SELF-INTEREST AND INTERDEPENDENCE

Write a 100 to 150-word response to one of the following questions:

1) Describe a number of factors that influence the value of the Canadian dollar and explain
some of the consequences that can occur when the value changes.

2) Explain the differences among perfect competition, monopoly, oligopoly, and monopolistic
competition.

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Rough Work

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Section 4) INTERNATIONAL ECONOMIC INSTITUTIONS

Write a 100 to 150-word response to one of the following questions:

1) Explain the advantages and disadvantages of the growth of multinational corporations in

Canada.

2) Explain the advantages and disadvantages of international free trade.

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Rough Work

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