Quiz  /  Macroeconomics Basics Quiz

  • 1. 
    In macroeconomics, the business cycle refers to…

  • Fluctuations in government expenditures
  • Fluctuations in the level of output
  • Fluctuations in inflationary expectations
  • Fluctuations in the general price level

  • 2. 
    If the central bank of a country decides to reduce the short-term interest rates, this likely means that…

  • The central bank is worried about the value of the domestic currency and wants to boost it.
  • The economy is booming and the central bank is trying to cool it down.
  • The central bank is worried about inflation and wants to stop it.
  • The central bank is worried about an imminent recession and wants to boost output.

  • 3. 
    In macroeconomics, the negative relationship between inflation and unemployment is summarized by...

  • The Phillips curve
  • The Engle curve
  • Okun’s law
  • The indifference curve

  • 4. 
    Printing money and distributing it to all people is not a viable solution to heal world-wide poverty because…

  • We cannot afford to print that much money.
  • It will result in inflation.
  • The money will be spent more on imported goods.
  • People won’t know what to do with the money.

  • 5. 
    The largest component of the gross domestic product (GDP) is...

  • Business expenditures
  • Consumption expenditures
  • Exports to other countries
  • Government expenditures

  • 6. 
    The exchange rate between the domestic and a foreign currency is determined by…

  • The monetary strength of the countries involved
  • The political regime of the countries involved
  • The laws of supply and demand
  • The relative tax rates of the countries involved

  • 7. 
    The school of thought in economics that believes that a government should proactively respond to economic recessions by increasing public expenditures to boost demand is…

  • The Classical School
  • The Keynesian School
  • The Chicago School
  • The Australian School

  • 8. 
    Laissez-faire economists advocate…

  • Strict inflation control by the central bank
  • Trade restrictions in export markets
  • Control of the exchange rate by the government
  • The absence of government intervention in all markets

  • 9. 
    In macroeconomics, the negative relationship between an economy’s unemployment rate and output (GDP) is referred to as…

  • The Production Possibilities Frontier
  • The Phillips curve
  • The Law of Large Numbers
  • Okun’s law
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