Introduction to Macroeconomics MCQs
Introduction to Macroeconomics MCQs
Try to answer these 100+ Introduction to Macroeconomics MCQs and check your understanding of the Introduction to Macroeconomics subject.
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1: A period of ____ economic expansion
A. Long
B. Prolonged
C. Short
D. Medium
2: Short-term fluctuations in the economy relative to the long-term trend in output is called
A. Market cycles
B. Business cycles
C. Proper cycles
D. Unemployment cycle
3: A measure of the cost of a market basket that represents the consumption of a typical household is called consumer price index
A. True
B. False
4: When the economy is slowing down—measured from the peak to the trough is called
A. Extraction
B. Contraction
C. Relaxation
D. Loss
5: Unemployment due to short-term cyclical fluctuations in the economy is cyclical unemployment
A. True
B. False
6: A decrease in the overall price level, which increases the purchasing power of money is called
A. Deflation
B. Depression
C. Disappointment
D. Destruction
7: A severe recession or contraction in output is called
A. Deflation
B. Depression
C. Disappointment
D. Destruction
8: An individual who has left the labor force because he or she could not find a job is known as
A. Courged worker
B. Discouraged worker
C. Extraordinary worker
D. Weak labour
9: Efficiency wage model is theory stating that ____ wages lead to greater productivity
A. Lower
B. Higher
C. Equal
D. Zero
10: When output (real GDP) is rising significantly—the period between the trough of a recession and the next peak is called
A. Contraction
B. Expansion
C. Extraction
D. Distraction
11: The unemployment that results from workers searching for suitable jobs and firms looking for suitable workers is frictional unemployment
A. True
B. False
12: GDP deflator is a price index that helps measure the ____ price level of all final consumer goods and services produced
A. Higher
B. Lower
C. Average
D. Half
13: Extremely high rates of inflation for sustained periods of time is called
A. Hyperinflation
B. Hypoinflation
C. Average inflation
D. None of these
14: The percentage change in the price level from one year to the next is called inflation rate
A. True
B. False
15: A person who quits his or her job is job leaver
A. True
B. False
16: An individual who has been temporarily laid off or fired is job loser
A. True
B. False
17: The number of people age ___ and over who are available for employment is labour force
A. 18
B. 16
C. 20
D. 22
18: The percentage of the working-age population in the labor force is called labour force participation rate
A. True
B. False
19: Leading economic indicators are factors that economists at the Department of Commerce have found typically change before changes in economic activity
A. True
B. False
20: The costs imposed on a firm from changing listed prices is called
A. Menu costs
B. Sale costs
C. High costs
D. All of these
21: An hourly wage floor set above the equilibrium wage is minimum wage rate
A. True
B. False
22: The median, or “typical,” unemployment rate, equal to the sum of frictional and structural unemployment when they are at a maximum is natural rate of unemployment
A. True
B. False
23: An individual who has not held a job before but is now seeking employment is ___ entrant
A. Old
B. New
C. Loser
D. All of these
24: The reported interest rate that is not adjusted for inflation is called nominal interest rate
A. True
B. False
25: The point in time when expansion comes to an end, that is, when output is at the highest point in the cycle is called
A. Peak
B. Slope
C. Graph
D. None of these
26: The amount of real output the economy would produce if its labor and other resources were fully employed, that is, at the natural rate of unemployment is called potential output
A. True
B. False
27: A measure of the trend in prices paid for a certain bundle of goods and services over a given period is called
A. Price review
B. Price index
C. Price value
D. All of these
28: The ____ level of prices in the economy is price level
A. High
B. Low
C. Average
D. Constant
29: Producer price index is a measure of the cost of goods and services bought by firms
A. True
B. False
30: The total value of all final goods and services produced in a given period, such as a year or a quarter, adjusted for inflation is real gross domestic product
A. True
B. False
31: A period of significant decline in output and employment is called
A. Reentrant
B. Recession
C. Reversible
D. None of these
32: An individual who worked before and is now reentering the labor force is called
A. Reentrant
B. Recession
C. Reversible
D. None of these
33: The price of a specific good compared to the price of other goods is called
A. Relative price
B. Fair price
C. Fractional price
D. All of these
34: The time and inconvenience cost incurred when individuals reduce their money holdings because of inflation is known as shoe leather cost
A. True
B. False
35: The unemployment that results from the persistent mismatch of the skills of workers and the requirements of jobs is ____ employment
A. Functional
B. Structural
C. Physical
D. All of these
36: ____ is the point in time when output stops declining, that is, when business activity is at its lowest point in the cycle
A. Crest
B. Trough
C. Slope
D. All of these
37: Under employment is a situation in which a worker’s skill level is higher than necessary for a job
A. True
B. False
38: Unemployment is the percentage of the population age ____ and older who are willing and able to work but are unable to obtain a job
A. 18
B. 24
C. 16
D. 26
39: What is meant by real in the term real gross domestic product?
A. Relevant to economists
B. Calculated, not estimated
C. Literal, not figurative
D. Adjusted for inflation
40: Which of the following refers to the percentage of the population age 16 and older who are willing and able to work but are unable to obtain a job?
A. Labor force
B. Unemployment rate
C. Civilian labor force
D. Discouraged workers
41: Why is the unemployment rate an imperfect measure of unemployment?
A. It does not take into account discouraged workers.
B. It includes workers in the underground economy.
C. It does not take into account teenage workers.
D. It focuses too much on the condition of underemployment.
42: Which of the following groups typically has a high rate of unemployment?
A. High school graduates
B. Retirees
C. Teenagers
D. Skilled workers
43: Which type of unemployment results from the persistent mismatch of the skills of workers and the requirements of jobs?
A. Cyclical
B. Frictional
C. Seasonal
D. Structural
44: Which of the following types of unemployment is used to calculate the natural rate of unemployment?
A. Cyclical
B. Seasonal
C. Structural
D. Typical
45: The amount of real output the economy would produce if its labor and other resources were fully employed is known as ______.
A. Expected output
B. Full-time output
C. Overemployment
D. Potential output
46: In which of the following environments is the efficiency wage most likely to be effective?
A. Corporate
B. Government
C. Manufacturing
D. Nonprofit
47: Which of the following best describes the purpose of unemployment insurance?
A. To reduce economic hardship and the severity of recessions
B. To decrease the level of frictional unemployment in the economy
C. To bypass the moral hazard of seasonal unemployment
D. To combat the effects of falling inflation
48: How has automation affected highly skilled workers?
A. It has increased their demand for union jobs.
B. It has increased their overall wages.
C. It has decreased their importance in the economy.
D. It has decreased their need for technical training.
49: The price of a specific good compared to the price of other goods is known as ______.
A. Consumer price
B. Price index
C. Price level
D. Relative price
50: Which of the following is a price index based on?
A. A bundle of representative goods and services
B. A bundle of randomly selected goods and services
C. A single representative good or service
D. A single randomly selected good or service
51: What type of bias occurs when the consumer price index fails to reflect the savings that households enjoy when they change their spending in response to relative price changes?
A. New outlet
B. New product
C. Quality
D. Substitution
52: How many different phases does the business cycle have?
A. Three
B. Four
C. Five
D. Six
53: Which of the following refers to economic indicators that economists at the Department of Commerce have found typically change before changes in economic activity?
A. Coincident
B. Inverse
C. Lagging
D. Leading
54: Consumption spending refers to ________ spending on goods and services.
A. Household
B. $25 million
C. Inventories
D. Increase
55: During a period of _____, real gdp per capita can increase.
A. Economic downturn
B. Fiscal policy
C. Economic growth
D. Population explosion
56: If you borrowed $5,000 for four years, that would be a _________________.
A. Critical loan
B. Long-term loan
C. Interest-based loan
D. Short-term loan
57: In a perfectly competitive industry, a long-run equilibrium occurs ________.
A. Firms can choose to enter the industry but they cannot choose the price at which to sell their good
B. Includes the marginal cost curve at all points above minimum average variable cost
C. Sells a product that has perfect substitutes.
D. Is equal to the market price
E. When each firm is making zero economic profit and no firm has an incentive to enter the industry
58: In an ad/asad/as diagram, __________________________ could explain a rise in cyclical unemployment?
A. Steep portion of the AS curve
B. A shift to the left in either AS or AD
C. Have no effect on AS or AD.
D. Flat portion of the AS curve
59: In free and competitive markets, shortages always lead to _______
A. Real GDP
B. Higher prices
C. Private consumption
D. Decrease
E. Increase exports
60: In the diagram, the economy's short-run as curve is line ___ and its long-run as curve is line ___.
A. 2; 1
B. 4; 1
C. 2; 4
D. 1; 4
61: Inflation results in _____.
A. A measure of the aggregate price level that is used to estimate the rate of inflation.
B. Changes in taste lead to changes in demand.
C. Is very beneficial to an economy, by increasing the amount of capital available.
D. A decline in the purchasing power of money
E. The value of output produced within a country at constant prices
62: Labor productivity will increase if the ________ increases and ________.
A. The supply of loanable funds increases.
B. The real interest rate.
C. Quantity of capital per hour worked; technology improves
D. An increase in expected profits from firm investment projects.
E. An increase in technology
63: Most hyperinflations end with _____ reforms that eliminate the need for _____.
A. Fiscal; currency
B. Monetary; currency
C. Fiscal; seigniorage
D. Monetary; taxes
64: Most inflation episodes are caused by _____.
A. Oil price increases
B. Droughts
C. Increases in aggregate spending
D. Higher interest rates
65: Tax revenues _____ during a recession. needs-tested spending ________ during an expansion.
A. Increase; increase
B. Increase; decrease
C. Decrease; increase
D. Decrease; decrease
66: The rate of unemployment that occurs when the economy is producing its potential gdp _____.
A. Hidden Unemployment
B. Natural rate of Unemployment
C. Unemployment Rate
D. Unemployment
67: Optimization is the process that describes __________.
A. How to obtain relevant data.
B. The production of resources.
C. How to maximize wealth
D. The choices that businesses make.
E. The budgeting process for businesses
68: The ratio of the increase in ________ to the increase in ________ is called the multiplier.
A. Equilibrium nominal GDP; autonomous expenditure
B. Equilibrium real GDP; autonomous expenditure
C. Autonomous expenditure; equilibrium real GDP
D. Induced expenditure; equilibrium real GDP
69: The circular-flow diagram shows that ________ should equal ________.
A. Total expenditure; total income.
B. Total income; total expenditure.
C. None of the above
70: The demand for dvd players does not change when a change in _______ occurs.
A. Decreases the quantity of DVD players demanded and results in a movement up along the demand curve for a DVD player
B. 5 boxes of ramen noodles And the relative price of a can of shave gel is the money price of a can of shave gel divided by the money price of a box of ramen noodles
C. Price quantity demanded changes when a change in price occurs. the point will change along the demand curve.
D. Decrease; and the demand curve will shift leftward
71: The environment in which service is delivered is referred to as the ________.
A. Service encounter
B. Servicescape
C. Commercescape
D. Operational factor
E. Locational factor
72: The utility of a good is determined by how much _____ a particular consumer obtains from it.
A. Satisfaction.
B. Cost.
C. Usefulness.
D. Need fulfillment.
73: ____________________ will not cause a shift of the as curve in a keynesian framework.
A. Prices of inputs
B. Changes in input prices
C. Changes in output prices
D. Changes in inputs
74: A change in _____ has the most direct effect on aggregate demand.
A. Taxes
B. Interest rates
C. The money supply
D. Government spending
75: A decrease in aggregate demand results in a(n) ________ in the ________.
A. Expansion; short run
B. Recession; short run
C. Expansion; long run
D. Recession; long run
76: A government budget surplus _______ loanable funds.
A. Increases
B. Decreases
C. Equals
D. None of the above
77: An economy is experiencing a recessionary gap. the government can ______.
A. Increase expenditure or cut taxes to increase aggregate demand
B. Raise taxes or decrease the quantity of money to decrease long-run aggregate supply
C. Raise taxes to decrease long-run aggregate supply
D. Increase expenditure or cut taxes to increase short-run aggregate supply
78: An increase in wealth leads to ________ loanable funds.
A. A decrease in supply of
B. A increase in supply of
C. A decrease in production of
D. None of the above
79: Gdp measured using base year prices is called _____.
A. Real GDP
B. Nominal GDP
C. Both A & B
D. None of the above
80: The supply-side effects of an income tax cut ________ potential gdp and ________ aggregate supply.
A. increase; decrease
B. decrease; increase
C. increase; increase
D. decrease; decrease
81: When the federal reserve _____ the money supply, it also _____ interest rates.
A. Increase, lower
B. Decrease, lower
C. Increase, higher
D. Increase, lower
82: An expansionary fiscal policy either _____ government spending or _____ taxes.
A. Increases; decreases
B. Increases, increases
C. Decreases; descreases
D. Decreases; increases
83: The unplanned change in inventories is ________ and real gdp will ________.
A. -700; decrease
B. 700; increase
C. -700; increase
D. 700; decrease
84: A ______ increase in autonomous expenditure increases equilibrium expenditure by $60 billion.
A. $48 billion
B. $19 billion
C. $192 billion
D. $75 billion
85: A change in _____ would cause a shift in the short-run aggregate supply curve.
A. Commodity prices
B. Output supplied.
C. Price level
D. Aggregate demand
86: A change in the price level produces a ________ the aggregate demand curve.
A. Shift in
B. Change in the slope of
C. Movement along
D. Rise in
87: A decrease in government purchases shifts the ________ curve to the ________.
A. Aggregate demand; right
B. Aggregate supply; right
C. Aggregate supply; left
D. Aggregate demand; left
88: A higher required reserve ratio _________ the value of the simple deposit multiplier.
A. Increases
B. Decreases
C. Leaves unchanged
D. Nullifies
89: A nation’s nominal gross domestic product (gdp) _____.
A. Is the dollar value of all final output produced within the borders of the nation during a specific period of time.
B. Purchases of new construction by consumers
C. Subtracting net investment from gross investment.
D. Nominal income minus the percentage change in the price level
90: A recessionary gap exists if (actual) real gdp is __________ natural real gdp.
A. Less than
B. Identical to
C. Greater than
D. Somethimes greater or less than
91: A recessionary gap occurs when ________ so that real gdp is ________ potential gdp.
A. Aggregate demand decreases; less than
B. Aggregate demand increases; greater than
C. Aggregate demand equals; less than
D. Aggregate demand nullifies; greater than
92: A tax cut ________ aggregate demand and ________.
A. Does not change; does not shift the AD curve
B. Decreases; shifts the AD curve rightward
C. Increases; shifts the AD curve leftward
D. Increases; shifts the AD curve rightward
93: Aggregate demand ________ and shifts the ad curve ________ when ________.
A. Decreases; leftward; foreign incomes decrease
B. Increases;rightwards;foreign incomes increases
C. Increases; leftwards;foreign incomes increases
D. None of the above
94: If prices fall, then real wealth __________ and the quantity of aggregate demand __________.
A. Increases; increases
B. Decreases; decreases
C. Increases; decreases
D. Decreases; increases
95: If the gdp deflator is less than 100, then for that year nominal gdp ________ real gdp.
A. Is less than
B. Is greater than
C. Is equal to
D. None of the above
96: M1 is comprised of currency held outside banks + traveler's checks + __________.
A. Credit cards
B. Savings deposits
C. Gold
D. Transaction account (checking and debit account) deposits
97: Tax cuts on business income ________ aggregate demand.
A. Would increase
B. Would decrease
C. Would nullify
D. None of the above
98: The labels for the axes of an aggregate supply curve should be _____.
A. Real domestic output on the horizontal axis and the price level on the vertical axis.
B. Real domestic output on the horizontal axis and the price level on the horizontal axis.
C. Real domestic output on the vertical axis and the price level on the horizontal axis.
D. Real domestic output on the vertical axis and the price level on the vertical axis.
99: The real wage rate definitely falls if the money wage rate ________ and the price level ________.
A. Remains constant; rises
B. Rises;remains constant
C. Remains constant;remains constant
D. Rises; rises
100: When investment increases, the ________ in aggregate demand ________ the change in investment.
A. Increase, increases
B. Decrease, decreases
C. Increase, decrease
D. Decrease, increase
List of Introduction to Macroe...
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Introduction to Macroeconomics MCQs
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