This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Macroeconomics – Quiz 170 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Macroeconomics Quiz 170 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Mandatory spending A) Federal spending required by law that continues each year without the need for congressional approval. B) Spending for federal programs that must receive approval each year. C) Total market value of all final, new goods and services produced in a country during a single year. D) Material well-being of an individual, measured by how well their needs and wants are satisfied. Show Answer Correct Answer: A) Federal spending required by law that continues each year without the need for congressional approval. 2. If the government collects more in tax revenue than it spends, and households consume more than they get in after-tax income, then ..... A) Private saving is negative, but public saving is positive. B) Private saving and public saving are both negative. C) Private saving is positive, but public saving is negative. D) Private saving and public saving are both positive. Show Answer Correct Answer: A) Private saving is negative, but public saving is positive. 3. Which famous economist came up with fiscal policy theory? A) Milton Friedman. B) Adam Smith. C) John Maynard Keynes. D) Karl Marx. Show Answer Correct Answer: C) John Maynard Keynes. 4. Suppose, the velocity of money is constant, the money supply increases by 6% and GDP grows by 2%. What is the predicted level of inflation? A) 8%. B) 6%. C) 2%. D) 4%. Show Answer Correct Answer: D) 4%. 5. The total amount of money that a country's government has borrowed, by various means A) Social Security. B) Stock options. C) National Debt. D) Grants. Show Answer Correct Answer: C) National Debt. 6. What should be a future effect upon the economy if a expansionary fiscal policy continues in an economy with an increasing budget deficit and growing national debt? A) Low inflation. B) High inflation. Show Answer Correct Answer: B) High inflation. 7. Tighter fiscal policies lead to A) An inwards shift of the AD. B) An outwards shift of the AS. C) An outwards shift of the AD. D) An outwards shift of the AS. Show Answer Correct Answer: A) An inwards shift of the AD. 8. During which phase of the business cycle is production the lowest and unemployment the highest? A) Peak. B) Contraction. C) Trough. D) Expansion. Show Answer Correct Answer: C) Trough. 9. During a contraction / recession, the Federal Government should use A) A contractionary fiscal policy. B) An expansionary fiscal policy. Show Answer Correct Answer: B) An expansionary fiscal policy. 10. Goods can be classified on the basis of A) Consumption of goods. B) Production of gooda. C) End use of goods. D) 1st use of goods. Show Answer Correct Answer: C) End use of goods. 11. Suppose that people lower their expectations about inflation in an economy in a recession. At the same time, the government undertakes expansionary fiscal policy. Based on the AD/AS model, what would we expect to be the result of these two changes? A) Output will increase but inflation could go up or down. B) Output could go up or down but inflation will decrease. C) Output could go up or down but inflation will increase. D) Output will increase but inflation will go down. E) Output will increase but inflation will go up. Show Answer Correct Answer: A) Output will increase but inflation could go up or down. 12. Tanks and roads belong in which part of the GDP formula?GDP = C+I+G+(X-M) A) Consumption Expenditures (Consumer Spending). B) Government Expenditures (Gov't Spending). C) Investment Expenditures (Business Spending). D) Net Imports (Imports-Exports). Show Answer Correct Answer: B) Government Expenditures (Gov't Spending). 13. In a small open economy with a floating exchange rate, if the government increases the money supply, then in the new short-run equilibrium the: A) Interest rate falls and the level of investment rises. B) Exchange rate falls and net exports increase. C) Interest rate falls but the level of investment does not rise. D) Exchange rate falls but net exports do not increase. Show Answer Correct Answer: B) Exchange rate falls and net exports increase. 14. What is an entrepreneur? A) A leader of a country. B) A person who starts a new business. C) A student in college. D) A worker in a factory. Show Answer Correct Answer: B) A person who starts a new business. 15. During recessions all of the following usually happen EXCEPT A) GDP decreases. B) GDP increases. C) Inflation decreases. D) Unemployment increases. Show Answer Correct Answer: B) GDP increases. 16. You borrow $ 200 from the First Bank of Westeros to purchase Kraken repellant. The bank charges a fixed nominal interest rate of 18% per year and you will repay them in one year. You and the bank both anticipate that there will be 7% inflation. However, after the loan agreement is signed, the rate of inflation turns out to be 9%.Who is hurt by this unanticipated inflation, and why are they hurt by it? A) The bank is hurt because the value of what is repaid has increased. B) You are hurt because the value of what is repaid has increased. C) You are hurt because the value of what is repaid has decreased. D) We cannot tell without more information. E) The bank is hurt because the value of what is repaid has decreased. Show Answer Correct Answer: E) The bank is hurt because the value of what is repaid has decreased. 17. Goods and services sent to another country for sale A) Goods. B) Export. C) Import. D) Services. Show Answer Correct Answer: B) Export. 18. A system in which the basic monetary unit is Gold A) Gold Standard. B) Gold Money System. C) Fiat Monetary System. D) Gold Monetary System. Show Answer Correct Answer: A) Gold Standard. 19. Consumption in the economy depends on all these factors EXCEPT. A) Consumer Confidence. B) Corporate Taxes. C) Interest Rates. D) Income Tax. Show Answer Correct Answer: B) Corporate Taxes. 20. Explain the concept of GDP (Gross Domestic Product). A) Gross National Product. B) Gross National Income. C) Gross Domestic Product. D) Net Domestic Product. Show Answer Correct Answer: C) Gross Domestic Product. 21. What can cause a production possibilities curve to move to the right? A) Thousands of people move out of the country. B) A drought destroys many crops. C) New technology. D) The population is growing increasingly old. Show Answer Correct Answer: C) New technology. 22. How would Eurostat classify a 25-year old individual attending graduate school full time and not working any hours at a paid job by choice? A) A discouraged worker. B) Underemployed. C) Not in the labor force. D) Employed. E) Unemployed. Show Answer Correct Answer: C) Not in the labor force. 23. National income is..... A) Income is calculated according to the amount of remuneration received by the community as owners of production factors. B) National income that does not take into account depreciation. C) The total value of products in the form of goods and services produced by production units within the territorial boundaries of a country (domestic) during one year. D) The value of products in the form of goods and services produced by residents of a country (national) during one year. E) The amount of income received by all family households in a country from the supply of factors of production in one period, usually one year. Show Answer Correct Answer: E) The amount of income received by all family households in a country from the supply of factors of production in one period, usually one year. 24. Public sector net debt should not exceed 40% of GDP A) The golden rule (Gordon Brown 1997). B) The normal times rule (George Osborne 2015). C) The sustainable investment rule (EU). D) The arbitrary household budget fallacy rule (Post-Keynesians). Show Answer Correct Answer: C) The sustainable investment rule (EU). 25. Which of the following is not an objective of economic policy? A) Political instability. B) Price stability. C) Full employment. D) Economic growth. Show Answer Correct Answer: A) Political instability. 26. Which argument is typically associated with classical economists? A) A market economy is self-correcting and thus will not remain in a recession indefinitely. B) A market economy has stable prices and thus is usually free from inflation. C) A market economy requires a strong government to ensure the market meets the needs of the people. D) A market economy needs only moderate assistance from the government to avoid an extended recession. E) A market economy eventually results in monopolies in both the input and output markets. Show Answer Correct Answer: A) A market economy is self-correcting and thus will not remain in a recession indefinitely. 27. Is the price (cost of money) that borrowers pay to borrow money. A) Check clearing. B) Interest rate. C) Bank panic. D) Reserve requirement. Show Answer Correct Answer: B) Interest rate. 28. An economy's maximum sustained output in the long run (long run aggregate supply) is known as its A) Resource Output. B) Total Output. C) Potential Output. D) Market Output. Show Answer Correct Answer: B) Total Output. 29. The microeconomic concept of 'quantity' can be said to have the macroeconomic equivalent of ..... A) GDP. B) Aggregate demand. C) Economic growth. D) Recession. Show Answer Correct Answer: A) GDP. 30. Use information in the following table to answer questions #12-#14. Production Possibilities Alternatives Product A B C D E F Tanks 0 1 2 3 4 5 Autos 1000 950 850 650 350 0 In moving from alternative C to D, the opportunity cost of the additional tank is A) 300 autos. B) 50 autos. C) 100 autos. D) 200 autos. Show Answer Correct Answer: D) 200 autos. ← PreviousNext →Related QuizzesEconomics QuizzesFinance QuizzesMacroeconomics Quiz 1Macroeconomics Quiz 2Macroeconomics Quiz 3Macroeconomics Quiz 4Macroeconomics Quiz 5Macroeconomics Quiz 6Macroeconomics Quiz 7Macroeconomics Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books