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Basic Macroeconomics MCQ

1. The amount of capital equipment used up or destroyed is called the ____________.

PDI

CFC

GPDI

None of the above

Answer

Correct Answer: CFC

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2. Empiricism is a principle in economics that _________.

Aggregates data to create graphs.

Gathers data using surveys.

Uses data to test economic models.

Collects data using the scientific method.

Answer

Correct Answer: Uses data to test economic models.

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3. M2 is _ in dollar value than m1; it also contains _ assets.

Larger; less liquid

Liquidity refers to:

Near money includes:

Fiat money:

Answer

Correct Answer: Larger; less liquid

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4. U.s. imports are ___ produced in _ and sold in ___.

Goods and services; any other country; the United States

Goods and services; the United States; any other country

Both A and B

None of these

Answer

Correct Answer: Goods and services; any other country; the United States

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5. To say that economists use the scientific method means that they are using ___________.

You should run a natural experiment by analyzing bus ridership and price changes.

No, because it predicts the outcome of increased bus ridership on average.

The larger the sample size the better

An ongoing process to develop models of the world and then test and evaluate those models

Answer

Correct Answer: An ongoing process to develop models of the world and then test and evaluate those models

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6. The _______, the greater is the amount that a household decides to save.

Greater a household's disposable income and the smaller a household's expected future income

Government benefits

Economic well-being

Income

Answer

Correct Answer: Greater a household's disposable income and the smaller a household's expected future income

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7. In 1960 federal spending accounted for about ______ percent of the total economy.

Answer

Correct Answer: 15

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8. Government salaries paid to soldiers in the military are included in the ________ category of gdp.

Consumption

Investment

Government purchases

None of the above

Answer

Correct Answer: Government purchases

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9. Between 1929 and 1933, government spending _ and net exports _.

Declined; declined

Declined; stayed the same

Stayed the same; declined

Stayed the same; stayed the same

Answer

Correct Answer: Stayed the same; declined

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10. An economy grows when it does all of the following except _______.

Acquires more machines to help it produce

Lowers prices

Implements on-the-job training

Improves the quality of labor by education

Develops better technologies

Answer

Correct Answer: Lowers prices

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11. _________ refers to the technology gap that exists between different social and economic classes.

Telecommuting

Outsourcing

Nanotechnology

Digital divide

Answer

Correct Answer: Digital divide

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12. A shopper at a convenience store is ________ sensitive, but price insensitive.

Producers

Time

Elastic

Inelastic

Answer

Correct Answer: Time

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13. The two broad sources of potential gdp growth are growth of and growth of .

Hired by all the firms in the economy

The supply of labor; labor productivity

The production function shifts upward

That all the households in the economy plan to work

Answer

Correct Answer: The supply of labor; labor productivity

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14. It can be said that ____ laid the foundation for the industrial revolution.

The discovery of the Americas

Private property rights

The invention of the cotton gind

The discovery of golde

The development of a strong 4udicial system

Answer

Correct Answer: Private property rights

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15. Increases in t will reduce the economys gdp by causing a(n) ________ in the ad.

Leakage and left shift

Leakage and right shift

Injection and left shift

Injection and right shift

Answer

Correct Answer: Leakage and left shift

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16. The difference between the for a good and the is called consumer surplus.

Highest price a consumer is willing to pay; lowest price a consumer is willing to pay

Lowest price a consumer is willing to pay; price the consumer actually pays

Highest price a consumer is willing to pay; price the consumer actually pays

Price the consumer actually pays; actual cost to the producer

Answer

Correct Answer: Highest price a consumer is willing to pay; price the consumer actually pays

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17. In texas, people who fall within the top 1 percent of average income pay ____ percent in taxes.

12.5

10.4

8.7

2.9

Answer

Correct Answer: 2.9

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18. In order to take out the effect of _____________, an adjustment must be made for price changes.

Inflation

Recession

Growth

All the above

Answer

Correct Answer: Inflation

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19. By about 2050, the _ populations in ___ are expected to boom.

Elderly; high income countries

Youth; high income countries

Youth; low income countries

Elderly; low-income countries

Answer

Correct Answer: Elderly; low-income countries

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20. ________ exposure deals with cash flows that result from existing contractual obligations.

Operating

Transaction

Translation

Economic

Transaction.

Answer

Correct Answer: Operating

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21. In the _____, firms change the underlying technology while holding cumulative output constant.

Learning curve

Experience curve

Minimum efficient scale

Maximum efficient scale

Answer

Correct Answer: Experience curve

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22. A stagflation can turn into a cost-push inflation process when _______.

The money wage rate decreases

The quantity of money persistently decrease

Taxes consistently increase

The quantity of money persistently increases

Answer

Correct Answer: The quantity of money persistently increases

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23. A recessionary gap exists if (actual) real gdp is __________ natural real gdp.

Greater than

Less than

Equal to

None of these

Answer

Correct Answer: Less than

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24. A downward-moving gdp indicates that ________.

More goods and services are being produced and sold

Fewer goods and services are being produced and sold

Businesses are doing well

The number of unemployed people is decreasing

Answer

Correct Answer: Fewer goods and services are being produced and sold

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25. ________ a nation's production possibilities frontier represents economic growth.

An outward shift.

An inferior good.

Macroeconomics.

Marginal cost.

Answer

Correct Answer: An outward shift.

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26. Refer to the table. exports might be and imports .

$10; $0

$5; 10

$0; $5

$10; $5.

Answer

Correct Answer: $10; $5.

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27. A place where people exchange goods and services is called a _____.

Market

Mall

Home

Business

Answer

Correct Answer: Market

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28. Over the business cycle, investment spending ______ consumption spending.

Is inversely correlated with

Is more volatile than

Has about the same volatility as

Is less volatile than

Answer

Correct Answer: Is more volatile than

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29. When the economy is at full employment, _____ is zero.

Unemployment

Cyclical unemployment

Frictional unemployment

The natural rate of unemployment Term

Answer

Correct Answer: Cyclical unemployment

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30. Which would most likely shift the aggregate supply curve? a change in the prices of _____.

Domestic products

Foreign products

Financial assets

Resources

Answer

Correct Answer: Resources

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31. A currency drain bank deposits and _ bank reserves.

Increases; decreases

Decreases; increases

Decreases; decreases

Increases; increases

Answer

Correct Answer: Increases; increases

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32. The unplanned change in inventories is and real gdp will .

-700; decrease

700; increase

-700; increase

700; decrease

Answer

Correct Answer: -700; increase

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33. The cpi basket consists of items that buy and it is updated frequently to .

Urban households

Doesn't work

Is available and willing to work

None of these

Answer

Correct Answer: Urban households

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34. The circular-flow diagram shows that should equal .

Households.

Wages, Interest, Rent, and Profit.

A decrease in total production.

Total expenditure; total income

Answer

Correct Answer: Total expenditure; total income

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35. When the demand of a product increases ______

Higher interest rates

The equilibrium price and quantity will increase

A decline in the purchasing power of money

Unemployment

Answer

Correct Answer: The equilibrium price and quantity will increase

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36. The value of used goods counted as part of gdp .

Are not; because they were counted during the period when they were counted as new goods.

May be; as long as their value has risen.

are; as long as they are classified as consumption goods.

Are not; because most fall in value and would cause a decrease in the value of GDP

Answer

Correct Answer: Are not; because they were counted during the period when they were counted as new goods.

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37. The value of the consumer price index (cpi) is always equal to ______________ in the base year.

1000

100

Answer

Correct Answer: 100

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38. Increasing opportunity cost is represented by a ________ production possibilities frontier.

Linear

Bowed in

Bowed out

Vertical

Answer

Correct Answer: Bowed out

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39. In the united states today, nearly _________ of the population has attained a college degree.

40 percent

30 percent

20 percent

60 percent

Answer

Correct Answer: 30 percent

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40. In a perfectly competitive market, sellers _ and buyers _.

Make S2 higher up than S1 and label the intersection with D1 A

Cannot charge more than the market price, cannot pay less than the market price

Lose all or almost all of its customers

Plot point e2 further left on the D1 line than e1 and have S2 pass through e2, parallel to S1

Answer

Correct Answer: Cannot charge more than the market price, cannot pay less than the market price

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41. When tax revenue outlays is negative, then the government has a budget .

Divided by; surplus

plus; surplus

minus; surplus

Minus; deficit

Answer

Correct Answer: minus; surplus

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42. When real gdp increases, the change in consumption expenditure equals _______.

The marginal propensity to consume x the increase in real GDP

Decreases;increases;decreases

Aggregate planned expenditure equals real GDP

Below target; increases

Answer

Correct Answer: The marginal propensity to consume x the increase in real GDP

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43. When ________ in a market, the total net benefit to society is maximized.

Deadweight loss is maximized

A competitive equilibrium is achieved

Consumer surplus is minimized

Producer surplus is minimized

Answer

Correct Answer: A competitive equilibrium is achieved

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44. Unexpectedly high inflation borrowers and lenders.

Helps; hurts

Hurts; helps

Hurts;hurts

None of these

Answer

Correct Answer: Helps; hurts

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45. Potential gdp in the u.s. will be unaffected by ____________________.

Technology

The amount of capital available

The unemployment rate

Government institutions

Answer

Correct Answer: The unemployment rate

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46. Potential gdp and potential gdp per hour of labor .

Increase;increase

Decreases; increases;

Increases; decreases

Both of these

Answer

Correct Answer: Increase;increase

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47. Content convergence describes convergence in the design, production, and ________ of content.

Sales

Distribution

Marketing

Consumption

Answer

Correct Answer: Distribution

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48. Consumption spending refers to ________ spending on goods and services.

Household

Business

Government

Foreign

Answer

Correct Answer: Household

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49. At macroeconomic equilibrium, total equals total .

Investment ; inventories.

Spending ; production.

Consumption ; production.

Taxes ; transfers

Answer

Correct Answer: Spending ; production.

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50. An inferior good is one for which a(n) _ in buyers' income causes a(n) _.

Focus on the effects of only one change at a time.

Decrease the demand for good A.

An increase in consumer incomes

Increase; decrease in demand

Answer

Correct Answer: Increase; decrease in demand

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51. ________ is the human resource that organizes labor, land, and capital.

Factors of production

Entrepreneurship

Factor markets

Human capital

National debt

Answer

Correct Answer: Entrepreneurship

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52. A rise in mpc makes the total expenditures (te) curve and the multiplier.

Steeper; raises

Steeper; lowers

Flatter; raises

All of these

Answer

Correct Answer: Steeper; raises

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53. A recessionary gap occurs when so that real gdp is potential gdp.

Aggregate supply increases; less than

Aggregate supply decreases; less than

Aggregate demand increases; greater than

Aggregate demand decreases; less than

Potential GDP decreases; greater than

Answer

Correct Answer: Aggregate demand decreases; less than

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54. The change in inventories, a component of aggregate supply, comprises roughly __________ of gdp.

10%

20%

0.6%

Answer

Correct Answer: 0.6%

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55. In the factor market, firms and households .

That the poorest 20 percent of households receive less than 4 percent of total income

Supply goods and services; purchase goods and services

The goods market and the factor market

Pay rent, wages, interest, and profit; earn rent, wages, interest, and profit

Answer

Correct Answer: Pay rent, wages, interest, and profit; earn rent, wages, interest, and profit

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56. A government budget surplus _______ loanable funds.

Decreases the demand for

Decreases the supply of

Increases the supply of

Answer

Correct Answer: Increases the supply of

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57. The money multiplier for the united states is __________.

Between 2 and 3

Between 4 and 5

Between 5 and 6

Between 6 and 7

Answer

Correct Answer: Between 2 and 3

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58. The crowding out effect refers to the from in the government's budget deficit.

Increase in investment; an increase

Increase in consumption; an increase

Decrease in employment; an increase

Decrease in consumption; a decrease

Decrease in investment; an increase

Answer

Correct Answer: Decrease in investment; an increase

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59. As income taxes rise, disposable income , causing the ad curve.

Increases; movement down along

Increases; a rightward shift of

Decreases; movement up along

Decreases; a leftward shift of

Answer

Correct Answer: Decreases; a leftward shift of

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60. According to the classical dichotomy, when the money supply decreases, _____ will decrease.

The price level

Decrease; increase

-4 percent.

Decreased 2 percent.

Answer

Correct Answer: The price level

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61. Government expenditure change potential gdp and taxes change potential gdp.

Can; can

Cannot; can

Can; cannot

Cannot; cannot

Answer

Correct Answer: Can; can

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62. A change in the price level produces a ________ the aggregate demand curve.

Shift in

Change in the slope of

Movement along

Answer

Correct Answer: Movement along

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63. Inflation that is than what is expected benefits and hurts .

Short-run aggregate supply

Natural rate of unemployment.

Less; lenders; borrowers

Natural rate of output

Answer

Correct Answer: Less; lenders; borrowers

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64. Everything else held constant, an autonomous monetary policy easing aggregate .

Increases; demand

Decreases; demand

Decreases; supply

Increases; supply

Answer

Correct Answer: Increases; demand

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65. Everything else held constant, a decrease in net exports aggregate .

Increases; demand

Decreases; demand

Decreases; supply

Increases; supply

Answer

Correct Answer: Decreases; demand

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66. During a business cycle expansion, total production and total employment .

Increases; increases

Increases; decreases

Decreases; increases

Decreases; decreases

Answer

Correct Answer: Increases; increases

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67. Demand is said to be ____ when the quantity demanded changes the same proportion as the price.

Independent

Inelastic

Unit elastic

Elastic

Answer

Correct Answer: Unit elastic

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68. Demand for a given good is inelastic, so it follows that if price rises, __________ will rise, too.

Quantity demanded

Total revenue

Total cost

Answer

Correct Answer: Total revenue

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69. An increase in wealth leads to ________ loanable funds.

Plus net investment

A decrease in supply of

Depreciation

Leftward; falls

Answer

Correct Answer: A decrease in supply of

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70. An increase in taxes on labor income shifts the labor supply curve and the .

Increases; decreases

Decreases; increases

Decreases;decreases

Increases; increases

Answer

Correct Answer: Increases; decreases

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71. An expansionary fiscal policy either _ government spending or _ taxes.

Increases; decreases

Decreases; increases

Decreases;decreases

Increases; increases

Answer

Correct Answer: Increases; decreases

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72. A tax cut aggregate demand and .

Decreases; shifts the AD curve leftward

Decreases; shifts the AD curve rightward

Does not change; does not shift the AD curve

Increases; shifts the AD curve leftward

Increases; shifts the AD curve rightward

Answer

Correct Answer: Increases; shifts the AD curve rightward

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73. ________ are financial securities that represent promises to repay a fixed amount of funds.

Stocks

Bonds

Interest rates

Mutual funds

Answer

Correct Answer: Bonds

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74. The unemployment rate that is consistent with full employment is known as __________________.

10 percent

The artificial rate of unemployment

The natural rate of unemployment

None of these

Answer

Correct Answer: The natural rate of unemployment

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75. Economists agree that ________________ inflation reduces real output.

Cost-push inflation

Negative

Cost-push

Increases

Answer

Correct Answer: Cost-push

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76. As the interest rate rises, businesses invest and the ad curve shifts to the .

Less; left

Rises; less

Less wealthy; buy less.

Rises; falls

Answer

Correct Answer: Less; left

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77. Which of the following refers to the situation that occurs when a currency is "pegged"?

A flat tax is imposed on imported goods

A contract exists that allows households to exchange currency for a fixed amount of gold from the central bank

The central banks keeps the exchange rate between its currency and another currency fixed

The central bank allows the value of its currency to be determined by supply and demand

Answer

Correct Answer: The central banks keeps the exchange rate between its currency and another currency fixed

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78. A complement good has what kind of elasticity?

zero cross elasticity of demand

Negative cross elasticity of demand

Positive cross elasticity of demand

Answer

Correct Answer: Negative cross elasticity of demand

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79. Which of the following is NOT a characteristic of Monopolistic Competition?

Many producers and many consumers in the market

Producers have a high degree of control over price

Consumers view that there are non-price differences among the competitors' products/services

Many barriers to entry and exit

Answer

Correct Answer: Many barriers to entry and exit

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80. In the long run Philips' curve becomes

vertical

Slopes upward

Downward sloping

horizontal

Answer

Correct Answer: vertical

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81. Which is not part of the M1 definition of the Money Supply?

Holdings of traveler's checks

Checking account deposits

Savings account balances

Currency in circulation

Answer

Correct Answer: Savings account balances

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82. The term “aggregate-supply curve,” describes which of the following?

The total supply of goods and services produced within an economy at a given overall price level

Excess of spending over income for a government, corporation, or individual over a particular period of time

the relationship between price levels and the quantity of output that firms are willing to provide.

Answer

Correct Answer: the relationship between price levels and the quantity of output that firms are willing to provide.

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83. Which scenario is related to an unplanned decrease in inventories?

Aggregate Expenditure < GDP and the economy is in a recession

Aggregate Expenditure > GDP and the economy is in a recession

Aggregate Expenditure > GDP and the economy is in an expansion phase

Aggregate Expenditure = GDP and the economy is in an expansion phase

Answer

Correct Answer: Aggregate Expenditure > GDP and the economy is in an expansion phase

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84. If price level increases the LM curve will shift to

The right

The left

No shifting

Answer

Correct Answer: The left

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85. Income elasticity of demand of a good is less than 1 if it is a:

Luxury good

None of these

Necessity good

Normal good

Inferior Good

Answer

Correct Answer: Necessity good

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86. If we look at the behavior of the U.S. CPI over the last four decades we realize that inflation

was at its highest in the early 1980s

was, on average, lower in the 1990s than in the 1960s

steadily increased in the 1970s

never exceeded 10 percent

Answer

Correct Answer: was at its highest in the early 1980s

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87. Which is not a reason why the aggregate demand curve is downward sloping?

Positive Technological Change

The Interest Rate Effect

The International Trade Effect

The Wealth Effect

Answer

Correct Answer: Positive Technological Change

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88. The aggregate demand and aggregate supply model explains the relationship of

real GDP and price level

wages and employment

price an quantity of a certain good

unemployment and output

Answer

Correct Answer: real GDP and price level

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89. GDP stands for

Good Deflation Process

Granular Dedicated Purpose

Glossy Dark Paper

Gross Domestic Product

Answer

Correct Answer: Gross Domestic Product

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90. What is "crowding out"?

When government spending replaces private sector spending

When government does not add additional output to the economy

All of these

When investments are limited

When interest rates are raised

Answer

Correct Answer: When government spending replaces private sector spending

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91. According to Keynes, if government earns £1 as tax revenue and spends it as public expenditure what will be the net effect on national income?

There will be no effect

The net effect is uncertain

National income will rise by £1

national income will decrease by £1

Answer

Correct Answer: National income will rise by £1

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92. Which of the following choices relates to the decision made by congress and the president to lower taxes or increase government purchases?

Expansionary Monetary Policy

Expansionary Fiscal Policy

Contractionary Fiscal Policy

Contractionary Monetary Policy

Answer

Correct Answer: Expansionary Fiscal Policy

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93. Can the unemployment rate go below the natural rate of unemployment?

No. The unemployment rate flucuates due to the business cycle, however it can never go below the natural rate of unemployment

Yes. The unemployment rate can go below the natural rate of unemployment in the short term and remain below the natural rate of unemployment in the long term

No. The unemployment rate is always at the natural rate of unemployment

Yes. The unemployment rate can go below the natural rate of unemployment in the short term

Answer

Correct Answer: Yes. The unemployment rate can go below the natural rate of unemployment in the short term

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94. Periods of very high inflation rates

most often occur when actual GDP is less than potential GDP

most often are caused by sharp increases in aggregate demand

can only occur in a situation when the AS-curve is vertical

can only occur if the output gap is large

Answer

Correct Answer: most often are caused by sharp increases in aggregate demand

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95. What is the interest rate stated on a loan that does not account for inflation or compounding?

Real interest rate

Nominal interest rate

Effective interest rate

Annual percentage rate (APR)

Answer

Correct Answer: Nominal interest rate

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96. When does a shortage occur?

The supply curve is nonlinear

Quantity Supplied equals quantity demanded

Quantity Supplied is greater than quantity demanded

Quantity Demanded is greater than quantity supplied

Answer

Correct Answer: Quantity Demanded is greater than quantity supplied

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97. What is Macroeconomics?

The branch of economics that focuses on the national and global economy

The branch of economics that focuses on the supply and demand of individual firms

The branch of economics that analyzes individuals buying behavior

The branch of economics that is no longer relevant and has been discredited as a whole

Answer

Correct Answer: The branch of economics that focuses on the national and global economy

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98. Which country best approximates a closed economy?

United States

Germany

Canada

North Korea

Answer

Correct Answer: North Korea

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99. Which of these is a liability?

Utility bill

House

Cash

Computer

Answer

Correct Answer: Utility bill

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100. When is the economy in macroeconomic equilibrium?

Aggregate expenditure < GDP

Aggregate expenditure = GDP

Aggregate expenditure > GDP

When the unemployment rate is high

Answer

Correct Answer: Aggregate expenditure = GDP

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101. True or False: The official measure of GDP understates the true level of national income because of the existance of the "shadow" or informal economy.

False

True

Answer

Correct Answer: True

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102. What is an inferior good?

A good that is from overseas and is taxed heavily in domestic markets

A good in which there is an inverse relationship between income and the demand for the good

A good in which there is a direct relationship between income and the demand for the good

A good that is imported and is consumed in relatively small quantities

Answer

Correct Answer: A good in which there is an inverse relationship between income and the demand for the good

Note: This Question is unanswered, help us to find answer for this one

103. Macroeconomics can be defined as:

study of individuals and business decisions

The interaction between individual buyers and sellers and the factors that influence the choices made by buyers and sellers

The study of the behavior of the economy at the aggregate level

The study of patterns of supply and demand and the determination of price and output in individual markets

Answer

Correct Answer: The study of the behavior of the economy at the aggregate level

Note: This Question is unanswered, help us to find answer for this one

104. What is recession?

Two consecutive quarters of Real GDP decline

Supply doesn't equal demand

When Real GDP and Potential GDP are the same

1 month of Actual GDP decline

Answer

Correct Answer: Two consecutive quarters of Real GDP decline

Note: This Question is unanswered, help us to find answer for this one

105. As a recession begins, unemployment

employment rises and production falls

unemployment rises and production increases

unemployment rises and production falls

unemployment falls and surplus supplies increase

Answer

Correct Answer: unemployment rises and production falls

Note: This Question is unanswered, help us to find answer for this one

106. Economists use this term to denote an ongoing rise in the general level of prices quoted in units of money.

Aggregate demand

Inflation

Consumer Price Index

National debt

Answer

Correct Answer: Inflation

Note: This Question is unanswered, help us to find answer for this one

107. A printer and a printer cartridge is an example of a:

Inferior goods

None of these

Complementary goods

Necessity goods

Supplemental goods

Answer

Correct Answer: Complementary goods

Note: This Question is unanswered, help us to find answer for this one

108. What does "ceteris paribus" mean?

Holding everything else constant

Rational expectations

Free trade

That which is to be demonstrated

Answer

Correct Answer: Holding everything else constant

Note: This Question is unanswered, help us to find answer for this one

109. The use of government spending and taxation to influence the economy is the definition of which of the following terms:

Fiscal policy

Inflation

Gross Domestic Product

Keynesian economics

Answer

Correct Answer: Fiscal policy

Note: This Question is unanswered, help us to find answer for this one

110. What relationship does the Phillips Curve specifically address?

Relationship between net exports and government spending

Relationship between the foreign exchange rate and household purchases

Relationship between the inflation rate and the unemployment rate

Relationship between the long term real interest rate and the supply of loanable funds

Answer

Correct Answer: Relationship between the inflation rate and the unemployment rate

Note: This Question is unanswered, help us to find answer for this one

111. The final value of goods and services produced in a year within the geographical boundaries of a country is known as

Gross Domestic Product

Per Capita National Income

Balance of Payments

Gross National Product

Answer

Correct Answer: Gross Domestic Product

Note: This Question is unanswered, help us to find answer for this one

112. What is the slope of the consumption function called?

Marginal Opportunity Cost

Marginal Disposable Income

Marginal Propensity to Consume

Marginal Propensity to Save

Answer

Correct Answer: Marginal Propensity to Consume

Note: This Question is unanswered, help us to find answer for this one

113. Keynesian theory is related to:

No government intervention

Government intervention in the market place for economic growth and stability

Relationship between possible rates of taxation and the resulting levels of government revenue

None of these

Transactions between private parties are free from tariffs

Answer

Correct Answer: Government intervention in the market place for economic growth and stability

Note: This Question is unanswered, help us to find answer for this one

114. What is not a major goal of macroeconomics?

High sustainable economic growth

Capping supply

Low unemployment

Price stability

Answer

Correct Answer: Capping supply

Note: This Question is unanswered, help us to find answer for this one

115. What would be an example of Foreign Direct Investment (FDI)?

GDP per capita increasing faster in poorer countries versus richer countries

Countries becoming more open to foreign trade

A company buying stocks issued in another country

A corporation buying a factory in a foreign country

Answer

Correct Answer: A corporation buying a factory in a foreign country

Note: This Question is unanswered, help us to find answer for this one

116. True or False: Full employment is zero unemployment.

True

False

Answer

Correct Answer: False

Note: This Question is unanswered, help us to find answer for this one

117. True or False: It's impossible to have falling inflation and falling unemployment at the same time.

True

False

Answer

Correct Answer: False

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118. What does purchasing power parity do?

Determines trade barriers

Determines the type of goods available

Determines the elasticity of supply

Determines relative value of currencies

Determines the elasticity of demand

Answer

Correct Answer: Determines relative value of currencies

Note: This Question is unanswered, help us to find answer for this one

119. A good for which an increase in income leads to a decrease in demand is a:

Market good

Substitute

Luxury good

Inferior good

Normal good

Answer

Correct Answer: Inferior good

Note: This Question is unanswered, help us to find answer for this one

120. If the national output in one year is measured at $300 billion and a year later it is measured at $315 billion, then the rate of growth in that year is?

15%

Answer

Correct Answer: 5%

Note: This Question is unanswered, help us to find answer for this one

121. Which of these are a way of measuring production?

Marginal benefits

Unemployment rates

All of these

Net Domestic Product

Interest rates

Answer

Correct Answer: Net Domestic Product

Note: This Question is unanswered, help us to find answer for this one

122. What is the unemployment rate when the economy is at potential GDP?

It is equal to the structural rate of unemployment

It is greater than the natural rate of unemployment

It is less than the natural rate of unemployment

It is zero

It is equal to the natural rate of unemployment

Answer

Correct Answer: It is equal to the natural rate of unemployment

Note: This Question is unanswered, help us to find answer for this one

123. Which of the following would switch the aggregate demand curve to the right?

Net exports fall

Congress decreases military spending

The price level rises

Monetary policy lowers interest rates

Answer

Correct Answer: Monetary policy lowers interest rates

Note: This Question is unanswered, help us to find answer for this one

124. What does raising interest rates and reducing the supply of money do?

Reduce inflation

Reduce unemployment

Increase unemployment

Increase FDI

Increase inflation

Answer

Correct Answer: Reduce inflation

Note: This Question is unanswered, help us to find answer for this one

125. The government classification of a recession is:

Two consecutive quarters of Real GDP decline

One quarter of GNP decline

Four consecutive quarters of Real GDP decline

Five consecutive quarters of Real GDP decline

One quarter of Real GDP decline

Answer

Correct Answer: Two consecutive quarters of Real GDP decline

Note: This Question is unanswered, help us to find answer for this one

126. The ratio of the change in national income to the change in government spending is called:

Monetary multiplier

Fiscal multiplier

Consumer multiplier

National multiplier

Macroeconomic multiplier

Answer

Correct Answer: Fiscal multiplier

Note: This Question is unanswered, help us to find answer for this one

127. Negative income elasticity of demand is related to ?

Luxury goods

Inferior goods

Necessity goods

Sticky goods

Normal goods

Answer

Correct Answer: Inferior goods

Note: This Question is unanswered, help us to find answer for this one

128. The formula for which of the following quantities contains a term for "Planned Investment?"

Producer Price Index

Aggregate expenditure

Gross Domestic Product

Consumer Price Index

Answer

Correct Answer: Aggregate expenditure

Note: This Question is unanswered, help us to find answer for this one

129. The term “Balance of Payments” means:

The ratio of a country’s debt in relation to the amount of money borrowed from other countries

A record of a country’s monetary transactions with the rest of the world

A formula used to calculate a country’s economic well-being by deducting total imports from total exports

The Gross Domestic Product adjusted to take into consideration non-market activities

Answer

Correct Answer: A record of a country’s monetary transactions with the rest of the world

Note: This Question is unanswered, help us to find answer for this one

130. If money growth does not affect real GDP, and velocity is stable, an increase in the money supply creates a proportional increase in

Real GDP only

The price level and Real GDP

The price level only

Nominal GDP only

The price level and Nominal GDP

Answer

Correct Answer: The price level and Nominal GDP

Note: This Question is unanswered, help us to find answer for this one

131. The multiplier’s value can be found by using this formula.

MPS * (MPC/3)

MPS = 1-MPC

1/MPS = 1/(1-MPC)

1/MPC + MPS

Answer

Correct Answer: 1/MPS = 1/(1-MPC)

Note: This Question is unanswered, help us to find answer for this one

132. What is it called when injections of cash in private banks by a central bank fail to lower interest rates?

Liquidity trap

Monetary crisis

Keynesian failure

Pigou effect

Interest rate trap

Answer

Correct Answer: Liquidity trap

Note: This Question is unanswered, help us to find answer for this one

133. GNP and GDP differ because:

GNP represents all goods and services produced/provided by the residents of a country while GDP represents all goods and services produced/provided within a country's physical borders

GDP represents all goods and services produced/provided by the residents of a country while GNP represents all goods and services produced/provided within a country's physical borders

GNP will always be lower than GDP due to the adjustment for foreign taxes

GDP is adjusted for inflation while GNP is not

GNP is adjusted for inflation while GDP is not

Answer

Correct Answer: GNP represents all goods and services produced/provided by the residents of a country while GDP represents all goods and services produced/provided within a country's physical borders

Note: This Question is unanswered, help us to find answer for this one

134. What does GDP stand for?

Gross Dividend Payout

Gradual Decline Process

Gross Domestic Product

Greatest Demand Produced

Answer

Correct Answer: Gross Domestic Product

Note: This Question is unanswered, help us to find answer for this one

Macroeconomics MCQs | Topic-wise

MCQ on Aggregate Demand and Supply	MCQ on Aggregate Expenditure Model
MCQ on Economic Growth in the Global Economy	MCQ on Financial Markets, Saving, and Investment
MCQ on Fiscal Policy in Economics	MCQ on Introduction to Macroeconomics
MCQ on Issues in Macroeconomic Theory and Policy	MCQ on Measuring Economic Performance
MCQ on Monetary Policy of Economics	MCQ on Money, Banking, and the Federal Reserve System
General Macroeconomics MCQs

Macroeconomics Subjects

Method of Macroeconomics MCQs

Market Efficiency and Welfare in Macroeconomics MCQs

Introduction to Macroeconomics MCQs

Measuring Economic Performance MCQs

Economic Growth in the Global Economy MCQs

Financial Markets, Saving, and Investment MCQs

Aggregate Demand and Supply MCQs

Aggregate Expenditure Model MCQs

Fiscal Policy in Economics MCQs

Money, Banking, and the Federal Reserve System MCQs

Monetary Policy of Economics MCQs

Issues in Macroeconomic Theory and Policy MCQs

More Resources

Macroeconomics MCQ

Macroeconomics Skill Assessment

Macroeconomics PDF

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Basic Macroeconomics MCQ

1. The amount of capital equipment used up or destroyed is called the ____________.

2. Empiricism is a principle in economics that _________.

3. M2 is _____ in dollar value than m1; it also contains _____ assets.

4. U.s. imports are _____ produced in _____ and sold in _____.

5. To say that economists use the scientific method means that they are using ___________.

6. The _______, the greater is the amount that a household decides to save.

7. In 1960 federal spending accounted for about ______ percent of the total economy.

8. Government salaries paid to soldiers in the military are included in the ________ category of gdp.

9. Between 1929 and 1933, government spending _____ and net exports _____.

10. An economy grows when it does all of the following except _______.

11. _________ refers to the technology gap that exists between different social and economic classes.

12. A shopper at a convenience store is ________ sensitive, but price insensitive.

13. The two broad sources of potential gdp growth are growth of ______ and growth of ______.

14. It can be said that ____ laid the foundation for the industrial revolution.

15. Increases in t will reduce the economys gdp by causing a(n) ________ in the ad.

16. The difference between the ________ for a good and the ________ is called consumer surplus.

17. In texas, people who fall within the top 1 percent of average income pay ____ percent in taxes.

18. In order to take out the effect of _____________, an adjustment must be made for price changes.

19. By about 2050, the ___________ populations in _____________ are expected to boom.

20. ________ exposure deals with cash flows that result from existing contractual obligations.

21. In the _____, firms change the underlying technology while holding cumulative output constant.

22. A stagflation can turn into a cost-push inflation process when _______.

23. A recessionary gap exists if (actual) real gdp is __________ natural real gdp.

24. A downward-moving gdp indicates that ________.

25. ________ a nation's production possibilities frontier represents economic growth.

26. Refer to the table. exports might be ____ and imports ____.

27. A place where people exchange goods and services is called a _____.

28. Over the business cycle, investment spending ______ consumption spending.

29. When the economy is at full employment, _____ is zero.

30. Which would most likely shift the aggregate supply curve? a change in the prices of _____.

31. A currency drain ______ bank deposits and _______ bank reserves.

32. The unplanned change in inventories is ________ and real gdp will ________.

33. The cpi basket consists of items that ______ buy and it is updated frequently to ______.

34. The circular-flow diagram shows that ________ should equal ________.

35. When the demand of a product increases ______

36. The value of used goods ________ counted as part of gdp ________.

37. The value of the consumer price index (cpi) is always equal to ______________ in the base year.

38. Increasing opportunity cost is represented by a ________ production possibilities frontier.

39. In the united states today, nearly _________ of the population has attained a college degree.

40. In a perfectly competitive market, sellers _________ and buyers _________.

41. When tax revenue ________ outlays is negative, then the government has a budget ________.

42. When real gdp increases, the change in consumption expenditure equals _______.

43. When ________ in a market, the total net benefit to society is maximized.

44. Unexpectedly high inflation ______ borrowers and ______ lenders.

45. Potential gdp in the u.s. will be unaffected by ____________________.

46. Potential gdp ______ and potential gdp per hour of labor ______.

47. Content convergence describes convergence in the design, production, and ________ of content.

48. Consumption spending refers to ________ spending on goods and services.

49. At macroeconomic equilibrium, total ________ equals total ________.

50. An inferior good is one for which a(n) _____ in buyers' income causes a(n) _____.

51. ________ is the human resource that organizes labor, land, and capital.

52. A rise in mpc makes the total expenditures (te) curve __________ and __________ the multiplier.

53. A recessionary gap occurs when ________ so that real gdp is ________ potential gdp.

54. The change in inventories, a component of aggregate supply, comprises roughly __________ of gdp.

55. In the factor market, firms ________ and households ________.

56. A government budget surplus _______ loanable funds.

57. The money multiplier for the united states is __________.

58. The crowding out effect refers to the ________ from ________ in the government's budget deficit.

59. As income taxes rise, disposable income __________, causing __________ the ad curve.

60. According to the classical dichotomy, when the money supply decreases, _____ will decrease.

61. Government expenditure ________ change potential gdp and taxes ________ change potential gdp.

62. A change in the price level produces a ________ the aggregate demand curve.

63. Inflation that is ________ than what is expected benefits ________ and hurts ________.

64. Everything else held constant, an autonomous monetary policy easing ________ aggregate ________.

65. Everything else held constant, a decrease in net exports ________ aggregate ________.

66. During a business cycle expansion, total production ________ and total employment ________.

67. Demand is said to be ____ when the quantity demanded changes the same proportion as the price.

68. Demand for a given good is inelastic, so it follows that if price rises, __________ will rise, too.

69. An increase in wealth leads to ________ loanable funds.

70. An increase in taxes on labor income shifts the labor supply curve ________ and the ________.

71. An expansionary fiscal policy either _____ government spending or _____ taxes.

72. A tax cut ________ aggregate demand and ________.

73. ________ are financial securities that represent promises to repay a fixed amount of funds.

74. The unemployment rate that is consistent with full employment is known as __________________.

75. Economists agree that ________________ inflation reduces real output.

76. As the interest rate rises, businesses invest __________ and the ad curve shifts to the __________.

77. Which of the following refers to the situation that occurs when a currency is "pegged"?

78. A complement good has what kind of elasticity?

79. Which of the following is NOT a characteristic of Monopolistic Competition?

3. M2 is _ in dollar value than m1; it also contains _ assets.

4. U.s. imports are ___ produced in _ and sold in ___.

9. Between 1929 and 1933, government spending _ and net exports _.

13. The two broad sources of potential gdp growth are growth of and growth of .

16. The difference between the for a good and the is called consumer surplus.

19. By about 2050, the _ populations in ___ are expected to boom.

26. Refer to the table. exports might be and imports .

31. A currency drain bank deposits and _ bank reserves.

32. The unplanned change in inventories is and real gdp will .

33. The cpi basket consists of items that buy and it is updated frequently to .

34. The circular-flow diagram shows that should equal .

36. The value of used goods counted as part of gdp .

40. In a perfectly competitive market, sellers _ and buyers _.

41. When tax revenue outlays is negative, then the government has a budget .

44. Unexpectedly high inflation borrowers and lenders.

46. Potential gdp and potential gdp per hour of labor .

49. At macroeconomic equilibrium, total equals total .

50. An inferior good is one for which a(n) _ in buyers' income causes a(n) _.

52. A rise in mpc makes the total expenditures (te) curve and the multiplier.

53. A recessionary gap occurs when so that real gdp is potential gdp.

55. In the factor market, firms and households .

58. The crowding out effect refers to the from in the government's budget deficit.

59. As income taxes rise, disposable income , causing the ad curve.

61. Government expenditure change potential gdp and taxes change potential gdp.

63. Inflation that is than what is expected benefits and hurts .

64. Everything else held constant, an autonomous monetary policy easing aggregate .

65. Everything else held constant, a decrease in net exports aggregate .

66. During a business cycle expansion, total production and total employment .

70. An increase in taxes on labor income shifts the labor supply curve and the .

71. An expansionary fiscal policy either _ government spending or _ taxes.

72. A tax cut aggregate demand and .

76. As the interest rate rises, businesses invest and the ad curve shifts to the .