This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Macroeconomics – Quiz 229 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Macroeconomics Quiz 229 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. In three sector economy, we do not include the expenditure of ..... A) Government. B) External Sector. C) Household. D) Infrastructure. Show Answer Correct Answer: B) External Sector. 2. Which of the following will occur if the money supply grows faster than the quantity of goods and services in the economy? A) Increased inflation. B) Decreased value of the dollar. C) Fall in real wages for individuals earning a fixed income. D) All of the above. Show Answer Correct Answer: A) Increased inflation. 3. What led to the creation of the Federal Reserve System? A) The stock market crash in 1929. B) The establishment of the Department of Treasury. C) A series of bank panics and failures in the early 1900s. D) The great recession of 2008. Show Answer Correct Answer: C) A series of bank panics and failures in the early 1900s. 4. Is the percentage decrease in the average level of prices A) Percentage. B) Inflation rate. C) Deflation rate. D) Rate. Show Answer Correct Answer: C) Deflation rate. 5. Which task do individuals NOT perform in circular flow? A) Purchasing goods. B) Producing goods. Show Answer Correct Answer: B) Producing goods. 6. In which one of the following situations could the UK be said to be experiencing a negative output gap? A) Output per worker is lower in the Uk than in the USA. B) Real GDP in the UK is less than the economy's productive potential. C) UK firms do not have sufficient productive capacity to satisfy customer demand. D) The skills possessed by UK workers do not match those which are required by UK employers. Show Answer Correct Answer: B) Real GDP in the UK is less than the economy's productive potential. 7. If there is an increase in feed prices what will happen to the supply curve for beef? A) There will be no change. B) A shift to the right. C) We can not determine. D) A shift to the left. Show Answer Correct Answer: D) A shift to the left. 8. If the production technology of a good improves and at the same time the number of consumers willing and able to buy the good in the market increases, which of the following will definitely occur? A) Equilibrium price will increase. B) Equilibrium price will decrease. C) Equilibrium quantity will increase. D) Equilibrium quantity will decrease. E) Equilibrium quantity will remain the same. Show Answer Correct Answer: C) Equilibrium quantity will increase. 9. How can the government use monetary policy to achieve price stability (inflation)? A) By decreasing the level of government spending. B) By selling government securities on the open market. C) By increasing the level of taxation for corporations. D) By lowering the reserve requirement for banks. Show Answer Correct Answer: B) By selling government securities on the open market. 10. Inflation in excess of 500 percent per year is called A) Demand-pull inflation. B) Cost-push inflation. C) Stagflation. D) Hyperinflation. Show Answer Correct Answer: D) Hyperinflation. 11. If the government wanted to offset the effect of a boom in consumer and investor confidence on AD, it might A) Decrease government purchases. B) Decrease taxes. C) Increase taxes. D) Do either (a) or (c). Show Answer Correct Answer: D) Do either (a) or (c). 12. The economy of Isengard is experiencing high inflation and a rate of unemployment below the natural rate.Which of the following combination of fiscal and monetary policy actions would be the most appropriate response to this output gap? A) Decrease government spending; decrease the money supply. B) Buy bonds; decrease the reserve ratio. C) Increase government spending; decrease taxes. D) Decrease taxes; increase the money supply. E) Increase taxes; buy bonds. Show Answer Correct Answer: A) Decrease government spending; decrease the money supply. 13. A country with a population of 100 million people has a labour force of 50 million people. Of these 45 million are working and 5 million do not have a job. What is the unemployment rate in this country? A) 5 million. B) 5%. C) 10%. D) 11.1%. Show Answer Correct Answer: C) 10%. 14. Jen works as a teacher. At the end of each month she puts 20% of her paycheck in her savings account to use to purchase a new car. What conclusion can you make using this example? A) Jen is using money as a store of value. B) Jen is using money as a unit of account. C) Jen is using money as a medium of exchange. D) Jen is using money as a means of deferring payment. Show Answer Correct Answer: A) Jen is using money as a store of value. 15. Which one of the following statements relating to the use of supply-side policy is correct? A) Supply-side improvements in the economy can only be brought about by government policy. B) Supply-side policies are intended to increase the long-run trend rates of economic growth. C) Supply-side policies are designed to reduce the size of the negative output gap. D) Supply-side policies ensure increased capacity utilisation in the economy. Show Answer Correct Answer: B) Supply-side policies are intended to increase the long-run trend rates of economic growth. 16. John recently quit his job to find a new one. This period of job searching is an example of which type of unemployment? A) Seasonal Unemployment. B) Structural Unemployment. C) Frictional Unemployment. D) Cyclical Unemployment. Show Answer Correct Answer: C) Frictional Unemployment. 17. What are the four types of unemployment? A) Frictional, structural, cyclical, and seasonal. B) Voluntary, involuntary, temporary, and permanent. C) Demand-pull, cost-push, technological, and natural. D) Monetary, fiscal, supply-side, and demand-side. Show Answer Correct Answer: A) Frictional, structural, cyclical, and seasonal. 18. The four sector circular flow of income does not include ..... A) World economy. B) Financial Market. C) Crude oil reserves in oil well. D) Dollars. Show Answer Correct Answer: C) Crude oil reserves in oil well. 19. Increase monetary base A) OMO:buy govt bonds to increase quantity of money in circulationdiscount rate:lower the discount rate. B) OMO:buy govt bonds to increase quantity of money in circulationdiscount rate:raise the discount rate. C) OMO:sell govt bonds to decrease quantity of money in circulationdiscount rate:lower the discount rate. D) OMO:sell govt bonds to increase quantity of money in circulationdiscount rate:raise the discount rate. Show Answer Correct Answer: A) OMO:buy govt bonds to increase quantity of money in circulationdiscount rate:lower the discount rate. 20. Which option presents the business cycle in the correct order A) Trough, contraction, peak, recovery. B) Trough, expansion, peak, contraction. C) Peak, expansion, trough, recovery. D) Peak, contraction, recovery, trough. Show Answer Correct Answer: B) Trough, expansion, peak, contraction. ← 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