This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Macroeconomics – Quiz 68 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Macroeconomics Quiz 68 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Money loses its value when it A) Is divisible. B) It becomes too plentiful. C) Becomes too portabale. D) Is durable. Show Answer Correct Answer: B) It becomes too plentiful. 2. In the United States, monetary policy is determined by which of the following? A) The Federal Reserve. B) The president. C) The stock market. D) Congress. Show Answer Correct Answer: A) The Federal Reserve. 3. In response to a rising Consumer Price Index, the Federal Reserve could A) Lower the discount rate. B) Raise taxes. C) Sell securities on the open market. D) Lower government spending. Show Answer Correct Answer: C) Sell securities on the open market. 4. Which component of GDP does the following examples contain? A mechanic fixes his own transmission A) Government spending. B) Not counted towards GDP. C) Investment. D) Consumption. Show Answer Correct Answer: B) Not counted towards GDP. 5. What is the difference between a Surplus and a Shortage? A) There is a Surplus when the supply exceeds demand; there is a Shortage when demand exceeds supply. B) There is a Shortage when the supply exceeds demand; there is a Surplus when demand exceeds supply. Show Answer Correct Answer: A) There is a Surplus when the supply exceeds demand; there is a Shortage when demand exceeds supply. 6. Natasha and Bruce can produce Thing A and Thing B. Assume Natasha has a comparative advantage in producing Thing A. Who has a comparative advantage in producing Thing B? A) Not enough information to tell. B) Bruce. C) Tony. D) Natasha. Show Answer Correct Answer: B) Bruce. 7. The purpose of imposing tariffs (import duties on imported goods) is: A) To avoid price fluctuations. B) To maintain the trade balance. C) To protect local producers. D) All wrong. Show Answer Correct Answer: C) To protect local producers. 8. Which of the following is a stock variable? A) Interest on capital. B) Distance between Delhi and Manali. C) Expenditure of money. D) All of these. Show Answer Correct Answer: B) Distance between Delhi and Manali. 9. The Austrian economic school attributes the primary cause of the businesscycle to: A) Misguided government intervention. B) The creative destruction of technological progress. C) Sticky price and wage expectations that exaggerate trends. D) None of above. Show Answer Correct Answer: A) Misguided government intervention. 10. The current account of the balance of payments is in surplus. However, there are deficits on the balance of trade in goods and the balance of trade in services. It can be concluded that ..... A) The trade figures must be inaccurate. B) The primary income (income flows) balance must be positive. C) The combined primary and secondary income (income flows and transfers) balance must be positive. D) The value of services exported must exceed the value of goods imported. Show Answer Correct Answer: C) The combined primary and secondary income (income flows and transfers) balance must be positive. 11. The labor force participation rate equals A) The unemployment rate divided by the labor force. B) The labor force added to the adult populaiton. C) The adult population multiplied by the unemployment rate. D) The number in the labor force divided by the adult population. Show Answer Correct Answer: D) The number in the labor force divided by the adult population. 12. In the long run (classical LRAS-vertical line), what impact do changes in the price level have on the quantity of output in the economy? A) Significant increase. B) No effect. C) Significant decrease. D) It varies depending on the specific economy. Show Answer Correct Answer: B) No effect. 13. The concept of opportunity cost would no longer be relevant if A) All current incomes were invested in technological research. B) Resources were allocated effectively. C) Poverty in an economy no longer existed. D) The supply of all resources was unlimited. Show Answer Correct Answer: D) The supply of all resources was unlimited. 14. Frictional unemployment occurs when which of the following happens? A) A worker switches from working full-time to part-time. B) A worker is replaced by robots on factory assembly lines. C) A worker is laid off because of a downturn in economic activity. D) A worker voluntarily quits a job to search for a better one. E) A worker undergoes on-the-job training. Show Answer Correct Answer: D) A worker voluntarily quits a job to search for a better one. 15. Which of the following is an important cause of inflation in an economy A) Growth in the quantity of money in the economy. B) Increases in productivity in the economy. C) Lack of property rights in the economy. D) The influence of positive externalities on the economy. E) The influence of negative externalities on the economy. Show Answer Correct Answer: A) Growth in the quantity of money in the economy. 16. If the government adopts a contractionary fiscal policy, where it tries to reduce government debt, it might ..... A) Increase spending and taxation. B) Eliminate taxation and spending. C) Increase taxation and reduce spending. D) Increase spending and reduce taxation. Show Answer Correct Answer: C) Increase taxation and reduce spending. 17. Do you remember the accurate formula of Inflation Rate (%)? A) CPI Current Year-CPI Previous Year x 100% CPI Previous Year. B) CPI Previous Year-CPI Current Year x 100% CPI Previous Year. C) CPI Previous Year-CPI Current Year x 100% CPI Current Year. D) CPI Current Year-CPI Previous Year x 100% CPI Current Year. Show Answer Correct Answer: A) CPI Current Year-CPI Previous Year x 100% CPI Previous Year. 18. Which of the following is not included in M1? A) Currency. B) Demand deposits. C) Savings deposits. D) Travelers' checks. Show Answer Correct Answer: C) Savings deposits. 19. An inflation tax is the result of A) The federal government running a budget surplus. B) The Federal Reserve raising the federal funds rate. C) An increase in the demand for money. D) Printing money to cover a budget deficit. E) Contraction fiscal policy. Show Answer Correct Answer: D) Printing money to cover a budget deficit. 20. Causes of BOP imbalance relates to A) (a) Autonomous items. B) (b) Accommodating items. C) Both (a) and (b). D) Neither (a) nor (b). Show Answer Correct Answer: A) (a) Autonomous items. 21. Which of the following deficits indicate the borrowing requirements of the government? A) Effective Revenue Deficit. B) Primary Deficit. C) Revenue Deficit. D) Fiscal Deficit. Show Answer Correct Answer: D) Fiscal Deficit. 22. Which is a supply-side policy that would increase output in the long-run? A) An increase in the rate of tax employers pay. B) An increase in benefit payments. C) An increase in places at training colleges. D) An increase in the rate of income tax. Show Answer Correct Answer: C) An increase in places at training colleges. 23. Who is the propounder of absolute income hypothesis? A) James Dusenberry. B) Milton Friedman. C) J.M.Keynes. D) Albert Ando. Show Answer Correct Answer: C) J.M.Keynes. 24. Fiscal deficit = A) Total expenditure-total receipts other than borrowing. B) Revenue expenditure-revenue receipts. C) Capital expenditure-capital receipts. D) Fiscal deficit-interest payment. Show Answer Correct Answer: A) Total expenditure-total receipts other than borrowing. 25. In Mundell-Fleming model (IS-LM-BP), assuming that the slope of BP is flatter than LM and the exchange rate is fixed. An increase in government spending will cause ..... A) Capital outflow. B) Exchange rate will be depreciated. C) Deficit in BP. D) Surplus in BP. Show Answer Correct Answer: D) Surplus in BP. 26. When the government doesn't have enough money to cover all of the spending in the yearly budget, they can get more money by A) Printing money. B) Selling government bonds. C) Collecting donations. D) None of above. Show Answer Correct Answer: B) Selling government bonds. 27. The United States usually has an inflation rate around A) 25%. B) 450%. C) 2%. D) 100%. Show Answer Correct Answer: C) 2%. 28. The following data is extracted from the National Accounts of a country (in millions of $ ):Consumer expenditure $ 10, Depreciation $ 2, Government spending $ 3.5, Investment $ 3, Exports $ 3, Imports $ 3.5. What is the GDP of this country? A) $ 16 million. B) $ 25 million. C) $ 14 million. D) $ 18 million. Show Answer Correct Answer: A) $ 16 million. 29. What is the Federal Reserves "Dual Mandate" A) Low employment and high prices. B) Low taxes and maximum employment. C) Stable prices and maximum employment. D) Low interest rates and many savers. Show Answer Correct Answer: C) Stable prices and maximum employment. 30. A bank lends money at a fixed rate of 3%. A) Benefits from unanticipated inflation. B) Harmed by unanticipated inflation. Show Answer Correct Answer: B) Harmed by unanticipated inflation. ← 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