This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Macroeconomics – Quiz 225 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Macroeconomics Quiz 225 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the desirable unemployment rate according to many economists? A) 1 to 3 percent. B) 4 to 6 percent. C) 7 to 9 percent. D) 10 to 12 percent. Show Answer Correct Answer: B) 4 to 6 percent. 2. What determine the shift in LM curve? A) Increase sensitivity of money demand. B) Decrease sensitivity of money demand. C) Increase in money supply. D) Increase in interest rate. Show Answer Correct Answer: C) Increase in money supply. 3. When aggregate supply equals aggregate demand A) Macroeconomic equilibrium. B) Demand-pull inflation. C) Cost-push inflation. D) FIscal policy. Show Answer Correct Answer: A) Macroeconomic equilibrium. 4. This is a system requiring financial institutions to set aside a fraction of their deposits in the form of reserves or vault cash. A) Fractional reserve system. B) Legal reserves. C) Reserve requirement. D) Member bank reserves. Show Answer Correct Answer: A) Fractional reserve system. 5. Natural resources used in production A) Land. B) Capital. C) Labor. D) Entrepreneurship. Show Answer Correct Answer: A) Land. 6. A government fixes the rate of income tax at $ 0.15 per dollar earned. Which word describes this type of tax? A) Indrect. B) Progressive. C) Proportional. D) Regressive. Show Answer Correct Answer: C) Proportional. 7. An important limitation of monetary policy is that A) It is conducted by people in Congress who are under pressure to get reelected every 2 years. B) When the Fed tries to buy bonds, it is often unable to find a seller. C) When the Fed tries to sell bonds, it is often unable to find a buyer. D) It must be conducted through the commercial banking system, and the Fed cannot always make banks do what it wants them to do. Show Answer Correct Answer: D) It must be conducted through the commercial banking system, and the Fed cannot always make banks do what it wants them to do. 8. Fiat money A) Is not a real money. B) Does not have any intrinsic value. C) Has a value related to comodities, such as gold. D) Is not popular, as it has a limited use (cannot be exchanged for other currencies). Show Answer Correct Answer: B) Does not have any intrinsic value. 9. The nation of Tupalow is outraged that the Republic of Congo repeatedly violates international human rights laws. As a result, Tupalow decides not to export products to the Republic of Congo until that nation shows evidence that it is obeying such laws. Which best describes the action taken by the nation of Tupalow? A) An embargo was placed on the Republic of Congo. B) An unfavorable balance of trade went to the Nation of Tupalow. Show Answer Correct Answer: A) An embargo was placed on the Republic of Congo. 10. A short-run increase in national income could be caused by a decrease in which of the following? A) Consumption. B) Investment. C) Imports. D) Government spending. E) Exports. Show Answer Correct Answer: C) Imports. 11. The proportion of total income consumed is A) APC. B) APS. C) MPC. D) MPS. Show Answer Correct Answer: A) APC. 12. In an economy, the government reduced its spending by £41bn at the same time as exports rose by £20bn. As a result of these changes, national income rose by £20bn. The size of the multiplier is A) 0.75. B) 1. C) 1.2. D) 1.25. Show Answer Correct Answer: D) 1.25. 13. The Federal Reserve sells bonds to decrease the money supply. What type of policy is this? A) Contractionary Fiscal Policy. B) Expansionary Fiscal Policy. C) Contractionary Monetary Policy. D) Expansionary Monetary Policy. Show Answer Correct Answer: C) Contractionary Monetary Policy. 14. A ..... is a situation in which conventional monetary policy is ineffective because nominal interest rates are up against the zero bound. A) Liquidity Trap. B) Solidity Trap. C) Illiquidity Trap. D) None of above. Show Answer Correct Answer: A) Liquidity Trap. 15. Monetary policy:increase in M A) Shifts IS curve to right. B) Shifts IS curve to left. C) Shifts LM curve to right. D) Shifts LM curve to left. Show Answer Correct Answer: C) Shifts LM curve to right. 16. An increase in price and the fall of purchasing power is known as? A) Recession. B) Deflation. C) Hyperinflation. D) Inflation. Show Answer Correct Answer: D) Inflation. 17. It delivers public goods and services to the people. A) HOUSEHOLDS. B) FIRMS. C) GOVERNMENT. D) BANKS. E) INTERNATIONAL TRADE. Show Answer Correct Answer: C) GOVERNMENT. 18. Is this counted in the GDP of the US?The materials (lumber, cement, bricks) used to build a house. A) Yes. B) No. Show Answer Correct Answer: B) No. 19. What monetary policy would the Federal Reserve adopt to control inflation? A) Increasing the supply of money. B) Lowering the supply of money. C) Increasing federal tax rates. D) Lowering federal tax rates. Show Answer Correct Answer: B) Lowering the supply of money. 20. How many approaches in calculating national income? A) 4. B) 3. C) 2. D) 1. Show Answer Correct Answer: B) 3. ← 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