This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Macroeconomics – Quiz 72 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Macroeconomics Quiz 72 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. When the Fed increases the supply of money, what does happen to value of money and price level in the interaction of money supply and demand curves? A) Decrease the value of money and decrease the price level. B) Decrease the value of money and increase the price level. C) Increase the value of money and decrease the price level. D) Increase the value of money and increase the price level. Show Answer Correct Answer: B) Decrease the value of money and increase the price level. 2. What do you call the payment the households receive from the firms? A) FACTOR INCOME. B) FACTOR MARKET. C) FACTOR BENEFIT. D) None of above. Show Answer Correct Answer: A) FACTOR INCOME. 3. ..... refers to a system in which foreign exchange rate is determined by market forces and central bank influences the exchange rate through intervention A) Flexible exchange rate system. B) Managed floating rate system. C) Floating exchange rate system. D) Fixed exchange rate system. Show Answer Correct Answer: B) Managed floating rate system. 4. Fiscal contractionary policy (decrease in govt purchases or increase in taxes) under floating exchange rates A) Shifts IS* rightraises exchange rateno effect on income. B) Shifts IS* right lowers exchange rateraises income. C) Shifts IS* leftlowers exchange rateno effect on income. D) Shifts IS* leftlowers exchange rateraises income. Show Answer Correct Answer: C) Shifts IS* leftlowers exchange rateno effect on income. 5. TRUE or FALSE:A motor vehicle manufactured in Europe but sold in the United States would represent an addition to the gross domestic product of the United States. A) TRUE. B) FALSE. Show Answer Correct Answer: B) FALSE. 6. At which phase in the business cycle is there full employment and prosperity? A) Expansion. B) Peak. C) Contraction. D) Trough. Show Answer Correct Answer: B) Peak. 7. Which type of economy is controlled by the government? A) Command. B) Market. C) Mixed. D) Democratic. Show Answer Correct Answer: A) Command. 8. Trade A) Human and physical. B) The action of buying and selling goods and services. C) Total satisfaction or benefit from consuming a good or service. D) An increase in demand with no change in supply. Show Answer Correct Answer: B) The action of buying and selling goods and services. 9. What type of unemployment is caused by contractions in the business cycle? A) Structural. B) Seasonal. C) Cyclical. D) Frictional. Show Answer Correct Answer: C) Cyclical. 10. What was the item Friedman used as an illustration o how markets both use and encourage voluntary cooperation? A) A book. B) A calculator. C) A transistor radio. D) A pencil. Show Answer Correct Answer: D) A pencil. 11. The more money that a person makes, the more they are willing to spend ..... A) Diminishing marginal utility. B) Substitute effect. C) Total revenue. D) Income effect. Show Answer Correct Answer: D) Income effect. 12. If planned investment exceeds actual investment, A) There will be an accumulation of inventories. B) There will be no change in inventories. C) There will be a decline in inventories. D) None of the above. Show Answer Correct Answer: C) There will be a decline in inventories. 13. GDP underestimates our economic wellbeing because: A) It includes the value of work done by nannies. B) It ignores the distribution of products. C) It includes the value of work done by householders. D) It includes the value of work done by illegal immigrants. Show Answer Correct Answer: B) It ignores the distribution of products. 14. What is NOT one of the three functions of money? A) Unit of Account. B) Store of Value. C) Medium of Exchange. D) Checks and Balances. Show Answer Correct Answer: D) Checks and Balances. 15. Sales tax is a ..... tax A) Regressive. B) Progressive. Show Answer Correct Answer: A) Regressive. 16. Which of the following would cause the value of a nation's GDP to increase in a given year? A) An increase in sale of illegal goods in the economy. B) Households spend more on domestic air travel. C) An increase in the sale of used cars. D) More people choose to stay at home to raise their children rather than using paid childcare. E) An increase in volunteer work. Show Answer Correct Answer: B) Households spend more on domestic air travel. 17. Which of the following best defines unemployment? A) The state of being able to work and actively seeking work, but unable to find employment. B) The state of being able to work, but choosing not to. C) The percentage of the labour force that is able and actively seeking work, but cannot find employment. D) The total number of people who do not work. Show Answer Correct Answer: A) The state of being able to work and actively seeking work, but unable to find employment. 18. This type of fiscal policy reduces aggregate demand. A) Contractionary. B) Expansionary. C) Discretionary. D) None of above. Show Answer Correct Answer: A) Contractionary. 19. Expansionary Fiscal Policy A) Output is low and unemployment is more than NRU. Actual GDP is below potential GDP. B) Laws that reduce inflation, decrease GDP (Close an Inflationary Gap)-G or + taxes (-C). C) Output is high and unemployment is less than NRU. Actual GDP is above potential GDP. D) A gap with higher prices and a decrease in GDP. E) Laws that reduce unemployment and increase GDP (Close a Recessionary Gap) + G or-taxes (+C). Show Answer Correct Answer: E) Laws that reduce unemployment and increase GDP (Close a Recessionary Gap) + G or-taxes (+C). 20. King Thranduil of the Woodland Realm is trying to rescue the kingdom from a severe recession by engaging in expansionary fiscal policy. As a result of the expansionary fiscal policy, the Woodland Realm now has a budget deficit. Meanwhile, the president of the central bank is Smaug, who wants to maintain a steady interest rate.What is the appropriate action for the central bank to take in order to reduce the impact of the expansionary fiscal policy on interest rates? A) Increase taxes. B) Decrease taxes. C) Increase the reserve requirement. D) Buy bonds. E) Sell bonds. Show Answer Correct Answer: D) Buy bonds. ← 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