Introduction to Macroeconomics: Master the Fundamentals of Economic Growth and Development

Question 1

The concept of 'economic development' refers primarily to:

Accepted Answer

Improvements in living standards and quality of life

Answer

Increases in GDP per capita

Answer

Technological innovation

Answer

Increases in production

Question 2

Which of the following is a macroeconomic indicator that measures the rate of change in prices?

Accepted Answer

Inflation rate

Answer

Unemployment rate

Answer

Balance of payments

Answer

GDP growth rate

Question 3

What is the primary function of the central bank in a macroeconomic context?

Accepted Answer

Managing the money supply and interest rates

Answer

Setting fiscal policy

Answer

Implementing government budgets

Answer

Collecting taxes

Question 4

Which of the following is NOT a characteristic of Keynesian economics?

Accepted Answer

Belief in the self-correcting nature of market forces

Answer

Emphasis on the importance of aggregate demand

Answer

Support for government intervention to stabilize the economy

Answer

Use of monetary policy as the primary tool for economic management

Question 5

What is the term used to describe a sustained increase in the price level?

Accepted Answer

Inflation

Answer

Deflation

Answer

Recession

Answer

Depression

Question 6

According to the quantity theory of money, an increase in the supply of money:

Accepted Answer

Leads to an increase in prices

Answer

Leads to a decline in prices

Answer

Leads to an increase in output

Answer

Has no significant impact on the economy

Question 7

Fiscal policy primarily involves the use of:

Accepted Answer

Government spending and taxation to influence economic activity

Answer

Interest rates to regulate economic activity

Answer

Debt issuance to finance government expenditure

Answer

Monetary supply to influence economic activity

Question 8

The Phillips Curve suggests a relationship between:

Accepted Answer

Inflation and unemployment

Answer

Economic growth and stability

Answer

Output and employment

Answer

Monetary policy and fiscal policy

Question 9

The Keynesian multiplier effect refers to:

Accepted Answer

The tendency for an increase in investment to lead to a larger increase in aggregate demand

Answer

The tendency for an increase in government spending to lead to a decrease in aggregate demand

Answer

The tendency for an increase in exports to lead to a decrease in imports

Answer

The tendency for an increase in interest rates to lead to a decrease in economic growth

Question 10

Which of the following is NOT among the primary functions of a central bank?

Accepted Answer

Providing financial assistance to commercial banks

Answer

Maintaining price stability

Answer

Regulating the financial system

Answer

Issuing currency

Question 11

The aggregate supply curve typically:

Accepted Answer

Slopes upward from left to right

Answer

Slopes downward from left to right

Answer

Slopes upward from right to left

Answer

Slopes downward from right to left

Question 12

Which of the following is a fiscal policy tool?

Accepted Answer

Government spending

Answer

Interest rate changes

Answer

Monetary expansion

Answer

Supply-side policies

Question 13

Microeconomics focuses on:

Accepted Answer

Individual markets

Answer

The economy as a whole

Answer

Long-term economic trends

Answer

Government policies

Question 14

Which of the following is not a component of Gross Domestic Product (GDP)?

Accepted Answer

Financial transactions involving stocks and bonds

Answer

Consumption expenditure by households

Answer

Government expenditure on public services

Answer

Net exports of goods and services

Question 15

What is the term that refers to a prolonged increase in a country's real production and income?

Accepted Answer

Economic growth

Answer

Economic development

Answer

Inflation

Answer

Deflation

Question 16

How are inflation and economic growth typically related?

Accepted Answer

Inflation can sometimes contribute to economic growth, but not always.

Answer

Inflation always leads to economic growth.

Answer

Economic growth always leads to inflation.

Answer

They are not related.

Question 17

What term describes a period of prolonged economic decline?

Accepted Answer

Depression

Answer

Recession

Answer

Deflation

Answer

Stagnation

Question 18

What is the primary objective of fiscal policy?

Accepted Answer

To influence economic activity through government expenditure and taxation.

Answer

To control the money supply.

Answer

To manage inflation.

Answer

To encourage economic growth.

Question 19

Put the following stages of a business cycle in the correct order, starting with the lowest point:

Accepted Answer

Trough

Accepted Answer

Expansion

Accepted Answer

Peak

Accepted Answer

Slowdown

Question 20

Which of the following is NOT included in the calculation of Gross Domestic Product (GDP)?

Accepted Answer

Government spending on social welfare programs

Answer

Business investment

Answer

Consumer spending

Answer

Exports minus imports

Question 21

Which measure of inflation is most widely used?

Accepted Answer

Consumer Price Index (CPI)

Answer

Retail Price Index (RPI)

Answer

GDP Deflator

Answer

Producer Price Index (PPI)

Question 22

What is the ultimate objective of economic development?

Accepted Answer

To enhance a nation's overall well-being and quality of life

Answer

To attract foreign investment

Answer

To increase government revenue

Question 23

How does inflation affect economic growth?

Accepted Answer

High or low inflation can hinder economic growth and stability.

Answer

Inflation always has a positive impact on economic growth.

Answer

Inflation has no impact on economic growth.

Question 24

Which of the following is a key instrument of fiscal policy?

Accepted Answer

Government spending

Answer

Interest rate changes

Answer

Monetary supply regulation

Answer

Exchange rate adjustments

Question 25

What is the primary objective of monetary policy?

Accepted Answer

To maintain price stability

Answer

To stabilize exchange rates

Answer

To promote economic growth

Answer

To reduce unemployment

Question 26

Which of the following is a potential consequence of an economic recession?

Accepted Answer

Increased unemployment

Answer

Stable exchange rates

Answer

Higher inflation

Answer

Positive economic growth

Question 27

What is a primary responsibility of the central bank in a modern financial system?

Accepted Answer

Regulating the money supply and overseeing the banking system

Answer

Setting tax rates

Answer

Providing social welfare programs