This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Macroeconomics – Quiz 204 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Macroeconomics Quiz 204 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which one of the following would NOT cause a shift in the aggregate demand (AD) curve? A) An increase in government spending. B) An increase in autonomous consumption. C) An increase in net exports. D) An increase in inflation. E) An increase in autonomous investment. Show Answer Correct Answer: D) An increase in inflation. 2. The balance of payments ..... A) With some nations is different than it is with others. B) Is always zero. C) Can only be expanded when the government has foreign exchange reserves. D) Is negative when the nation runs a trade deficit. Show Answer Correct Answer: B) Is always zero. 3. Hurley, a farmer, buys machinery with a fixed-rate loan to be repaid over seven years A) Harmed by unanticipated inflation. B) Benefits from unanticipated inflation. Show Answer Correct Answer: B) Benefits from unanticipated inflation. 4. If one wanted to know whether there had been inflation or not, the BEST measure to observe would be the A) GDP. B) Business cycle. C) CPI. D) National debt. Show Answer Correct Answer: C) CPI. 5. If partial crowding out takes place, what will happen to output? A) It will be greater than what the expansionary fiscal policy would intend. B) It will be less than what the expansionary fiscal policy would intend. C) It will have no effect on the intentions of the expansionary fiscal policy. D) None of above. Show Answer Correct Answer: B) It will be less than what the expansionary fiscal policy would intend. 6. GDP divided by the population. It identifies on average how many products each person makes. Best measure of standard of living. A) GDP Per Capita. B) Income Approach. C) Labor Force Participation Rate. D) Problems with the CPI. Show Answer Correct Answer: A) GDP Per Capita. 7. Everything else held constant, an increase in the required reserve ratio on checkable deposits causes the M1 money multiplier to ..... and the money supply to ..... A) Decrease; increase. B) Increase; increase. C) Decrease; decrease. D) Increase; decrease. Show Answer Correct Answer: C) Decrease; decrease. 8. Classical Theory A) "Sticky Wages" prevents wages from falling. The government should deficit spend to close the gap. B) Price levels effect purchasing power which effects spending. C) When U.S. price levels rise, then GDP decreases due to an increase in imports and a decrease in exports. D) Price levels and economy will fix itself. No Government involvement required. E) When price levels increase, lenders need to charge higher interest rates which decreases consumer and business investment spending. Show Answer Correct Answer: D) Price levels and economy will fix itself. No Government involvement required. 9. Define monetary policy. A) Involves the manipulation of monetary variables in order achieve government objectives. B) Any action taken by the government or monetary authorities (Monetary Policy Committee in the Bank of England) to shift the AD curve. C) Involves the government running a government or fiscal deficit (budget deficit). D) Any action taken by the government or monetary authorities (Monetary Policy Committee in the Bank of England) to shift the AS curve. Show Answer Correct Answer: A) Involves the manipulation of monetary variables in order achieve government objectives. 10. A deficit is A) When the government spends more than it collects in taxes and borrows to cover the difference. B) The sum of all of the money owed by the government. C) A very, very, very bad thing to have in government. D) Okay to have. Show Answer Correct Answer: A) When the government spends more than it collects in taxes and borrows to cover the difference. 11. Aggregate demand is simplified with which of these equations? A) C + I + G-(X-M). B) C + I + G-(X + M). C) C + I + G + (X + M). D) C + I + G + (X-M). Show Answer Correct Answer: D) C + I + G + (X-M). 12. Fiscal policy primarily refers to changes in A) Annual interest rates. B) The availability of credit. C) The amount of money in circulation. D) Government spending or tax revenue. Show Answer Correct Answer: D) Government spending or tax revenue. 13. If the economy is falling below potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in A) Taxes. B) Government purchases. C) The money supply and a decrease in interest rates. D) Oil prices. Show Answer Correct Answer: B) Government purchases. 14. What do you call the payment the firms received from the households? A) TAXES. B) REVENUES. C) BENEFITS. D) None of above. Show Answer Correct Answer: B) REVENUES. 15. Net exports is a measurement of GDP. How do you calculate net exports? A) Exports plus imports. B) Exports minus imports. Show Answer Correct Answer: B) Exports minus imports. 16. Macroeconomics became popular after A) 1929-33. B) 1972-73. C) 1996-97. D) 2006-07. Show Answer Correct Answer: A) 1929-33. 17. The ability-to-pay principle states A) Those with the greatest ability to pay taxes should pay more. B) Those with the least ability to pay taxes should pay more. C) Individuals receiving the benefits should pay for them. D) All of the above are true. Show Answer Correct Answer: A) Those with the greatest ability to pay taxes should pay more. 18. All of the following are excluded from GDP except A) Non-market goods and services. B) Used goods. C) Environmental quality. D) Final goods and services. Show Answer Correct Answer: D) Final goods and services. 19. There are two possible reasons for total spending to rise from one year to the next:larger output and higher prices A) True. B) False. Show Answer Correct Answer: A) True. 20. Payments or support from the government given to businesses. A) Complements. B) Substitutes. C) Subsidies. D) Costs. E) Regulations. Show Answer Correct Answer: C) Subsidies. ← PreviousNext →Related QuizzesEconomics QuizzesMacroeconomics Quiz 1Macroeconomics Quiz 2Macroeconomics Quiz 3Macroeconomics Quiz 4Macroeconomics Quiz 5Macroeconomics Quiz 6Macroeconomics Quiz 7Macroeconomics Quiz 8Macroeconomics Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books