Question :
51) For the economy of Ontario, which a major oil : 1384482
51) For the economy of Ontario, which is a major oil user and importer, an increase in the world price of oil would be considered
A) monetary validation.
B) a negative demand shock.
C) demand inflation.
D) a negative supply shock.
E) an adjustment process.
52) For the economy of Alberta, a major oil exporter, an increase in the world price of oil would be mostly
A) supply inflation.
B) a negative demand shock.
C) a negative supply shock.
D) a positive demand shock.
E) a positive supply shock.
53) For the economy of Canada, a major oil user and exporter, a decrease in the world price of oil would be considered
A) a negative demand and a negative supply shock.
B) both a negative demand shock and a positive supply shock.
C) both a positive demand shock and a negative supply shock.
D) a negative demand shock only.
E) a negative supply shock only.
54) At the end of the 1970s, the inflation rate in Canada had exceeded 10%. This high inflation was due mainly to
A) external pressures on the Canadian dollar.
B) steadily decreasing factor prices.
C) steadily decreasing factor prices and a contractionary monetary policy.
D) a substantial negative supply shock that was partly validated by monetary policy.
E) the extremely high wage increases being won by strong labour unions.
55) Suppose the economy is operating at full employment. A permanent rightward shift in the AD curve will cause inflationary pressures that will
A) cause Y to fall below Y*.
B) worsen any existing unemployment problem.
C) initiate a wage-price spiral.
D) eventually subside unless accompanied by expansionary monetary policy.
E) permanently increase output.
56) The first OPEC oil-price shock in 1973 caused the AS curves in all industrialized countries to shift upward. The Bank of Canada validated this negative supply shock with an increase in the money supply, whereas in the United States such monetary validation did not take place. The predictable result was that
A) both countries experienced large increases in price levels and almost no recession.
B) Canada experienced a large increase in its price level but almost no recession, and the U.S. experienced a smaller increase in its price level but a significant recession.
C) Canada experienced a one-time price increase and the U.S. experienced persistent inflation.
D) the U.S. experienced a large increase in its price level but almost no recession, and Canada experienced a smaller increase in its price level but a severe recession.
E) both countries experienced small increases in price levels and severe recessions.
57) Refer to Figure 30-2. The movement of the economy from E0 to E1 was likely caused by a
A) positive demand shock associated with increased investment.
B) negative demand shock due to government cut-backs.
C) negative supply shock due to a rise in input prices.
D) positive supply shock induced by developments of new technology.
E) positive supply shock caused by lower nominal wages.
58) Refer to Figure 30-2. The movement of the economy from E1 to E2 was likely caused by
A) an increase in the price level.
B) a positive supply shock induced by new technology.
C) a negative demand shock due to government cut-backs.
D) a negative supply shock due to a rise in input prices.
E) the monetary validation of an initial demand shock by the central bank, combined with ongoing inflation expectations.
59) Refer to Figure 30-2. Suppose the economy has moved from E0 to E1. If there is then no monetary validation, the adjustment process will lead to a new equilibrium at
A) E0.
B) E1.
C) E2.
D) E3.
E) E4.
60) Refer to Figure 30-2. Suppose an inflationary gap has opened and the economy is at E1. Which of the following statements best describes the movement of the economy from E1 to E2?
A) The inflationary gap puts upward pressure on factor prices and AS shifts upward. Simultaneously, the Bank of Canada validates the demand shock, thus shifting the AD curve further to the right.
B) The inflationary gap puts upward pressure on factor prices and AS shifts upward. Simultaneously, the Bank of Canada implements a contractionary monetary policy, shifting the AD curve to the left.
C) The inflationary gap causes an increase in the expectations of the future inflation. As a result, the AS curve shifts upward and the AD curve shifts to the right.
D) The inflationary gap generates excess demand for labour, which causes the AD curve to shift to the right. The adjustment process then shifts the AS curve upward.
E) The economy’s adjustment process causes the economy to move from E1 to E2.
