This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Macroeconomics – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Macroeconomics Quiz 5 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. In a typical business cycle, what stage immediately follows a PEAK? A) Contraction. B) Expansion. C) Trough. D) Growth. Show Answer Correct Answer: A) Contraction. 2. A progressive tax is a tax that A) Is imposed only on higher income earners. B) Will be the same for all income levels. C) Goes on increasing with income. D) Falls with the increase in income. Show Answer Correct Answer: C) Goes on increasing with income. 3. Assume the Federal Reserve Bank observes very high inflation, extremely low unemployment, and unsustainable growth in the economy. Which monetary policy would the Fed MOST LIKELY take? A) Increase interest on reserves. B) Decrease the reserve requirement. C) Buy treasury bonds. D) Decrease the discount rate. Show Answer Correct Answer: A) Increase interest on reserves. 4. When can an economy be said to be economically inefficient? A) When it is possible to make some people better off without making other people worse off. B) When the distribution of income is socially unacceptable. C) When the government sector is growing at the expense of the private sector. D) When wage rates rise faster than production. Show Answer Correct Answer: A) When it is possible to make some people better off without making other people worse off. 5. If the economy was going into an inflationary period, what would the Federal government do with government spending? A) Increase it. B) Do nothing. C) Decrease it. D) None of above. Show Answer Correct Answer: C) Decrease it. 6. According to the the Philips curve, if the inflation rate increases from 4% to 6%, and if the unemployment rate is 5% when the inflation rate was 4%, we can expect the unemployment rate in the short run to ..... A) Stay the same. B) Increase to 8%. C) Decrease to 3%. D) None of above. Show Answer Correct Answer: C) Decrease to 3%. 7. What if the government offers subsidies to companies to produce more? A) AS increases. B) AS decreases. C) AD increases. D) AD decreases. Show Answer Correct Answer: A) AS increases. 8. With regards to economic growth, what is the goal of an expansionary fiscal policy? A) Decrease economic growth. B) Increase economic growth. C) Increase trade deficits. D) Maintain current economic levels. Show Answer Correct Answer: B) Increase economic growth. 9. If you earn additional $ 500 in disposable income one week for painting your neighbor's house, A) The total of your consumption and saving will increase by more than $ 500. B) The total of your consumption and saving will increase by $ 500. C) The total of your consumption and saving will increase by less than $ 500. D) Your consumption will increase by more than $ 500, even if your MPS is 0.1. Show Answer Correct Answer: B) The total of your consumption and saving will increase by $ 500. 10. A plan to reduce aggregate demand and slow the economy? A) Contractionary Fiscal Policy. B) Expansionary Fiscal Policy. C) Contractionary Monetary Policy. D) Expansionary Monetary Policy. Show Answer Correct Answer: A) Contractionary Fiscal Policy. 11. Limited life applies to ..... A) Corporations. B) Sole proprietorships. C) Nonprofit organizations. D) Multinationals. Show Answer Correct Answer: B) Sole proprietorships. 12. Which of the following is a supply-side policy aimed at improving labor market efficiency? A) Reducing tax rates. B) Deregulating industries. C) Investing in education and training. D) Increasing government spending. Show Answer Correct Answer: C) Investing in education and training. 13. Amount of deposits that banks are required to keep on hand A) Monetary policy. B) Money creation. C) Reserve requirements. D) Prime rate. Show Answer Correct Answer: C) Reserve requirements. 14. TRUE or FALSE:The opportunity cost method of valuing household production considers the wage the individual doing the household work could have earned at a paid job. A) TRUE. B) FALSE. Show Answer Correct Answer: A) TRUE. 15. Is the amont of money circulating in the economy. A) Money supply. B) Interest rate. C) Reserve requirement. D) Treasury bills. Show Answer Correct Answer: A) Money supply. 16. The money supply includes all of the followingEXCEPT A) Metal coins. B) Paper currency. C) Lines of credit accessible with credit cards. D) Bank balances accessible with debit cards. Show Answer Correct Answer: C) Lines of credit accessible with credit cards. 17. A pair of shoes that costs $ 80 last month costs $ 100 this month. Which of the following BEST describes this economic condition? A) Inflation. B) Recession. C) Deflation. D) Expansion. Show Answer Correct Answer: A) Inflation. 18. Why might banks want to hold excess reserves in time of recession? A) To invest in high-risk assets. B) To reduce the amount of money available for lending. C) To increase the interest rates for customers. D) To ensure they have enough liquidity to meet customer withdrawals and cover potential loan losses. Show Answer Correct Answer: D) To ensure they have enough liquidity to meet customer withdrawals and cover potential loan losses. 19. Complete the Analogy.WITH JOB BUT NOT CURRENTLY AT WORK is to EMPLOYED, while NOT SEEKING FOR WORK DUE TO WAITING FOR APPLICATION RESULTS is to ..... A) Unemployed. B) Underemployed. C) STILL employed. D) Not part of the labor force. Show Answer Correct Answer: A) Unemployed. 20. Examples of payroll taxes are which? A) Social Security and Medicaire. B) FICA and state income. C) Property, sales and ad valorum. D) Gift and inheritance. Show Answer Correct Answer: A) Social Security and Medicaire. ← PreviousNext →Related QuizzesEconomics QuizzesMacroeconomics Quiz 1Macroeconomics Quiz 2Macroeconomics Quiz 3Macroeconomics Quiz 4Macroeconomics Quiz 6Macroeconomics Quiz 7Macroeconomics Quiz 8Macroeconomics Quiz 9Macroeconomics Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books