CAEC Economics and the Canadian Economy

Question 1

The price of a product goes up while supply stays the same. According to the law of demand, what usually happens?

Accepted Answer

The quantity demanded goes down

Answer

The law of demand says that, all else being equal, buyers purchase less of a product when its price rises. Price and quantity demanded move in opposite directions.

Question 2

Which institution sets Canada's key policy interest rate to keep inflation under control?

Accepted Answer

The Bank of Canada

Answer

The Bank of Canada is the country's central bank. It sets the policy interest rate and aims to keep inflation at about 2%.

Question 3

What does Gross Domestic Product (GDP) measure?

Accepted Answer

The total value of all final goods and services produced in a country in a period

Answer

GDP is the total market value of all final goods and services produced within a country's borders over a period of time, usually a year or a quarter. It is the main measure of the size of an economy.

Question 4

A government taxes imported goods to protect businesses at home. What is this tax called?

Accepted Answer

Tariff

Answer

A tariff is a tax on imported goods. It makes imports more expensive, which helps domestic producers compete. A quota limits the quantity of imports, and a subsidy is a payment to producers.

Question 5

What is the name of the trade agreement between Canada, the United States, and Mexico that replaced NAFTA in 2020?

Accepted Answer

CUSMA

Answer

The Canada–United States–Mexico Agreement (CUSMA, called USMCA in the U.S.) took effect on July 1, 2020, and replaced NAFTA. CETA is Canada's trade agreement with the European Union.

(CAEC) Canadian Adult Education Credential Practice Test

(CAEC) Canadian Adult Education Credential Practice Test

CAEC Economics and the Canadian Economy