#1
Which of the following is not considered a component of GDP?
Unemployment benefits
ExplanationGDP measures production, not transfer payments.
#2
Which of the following best defines the concept of inflation?
An increase in the general price level of goods and services
ExplanationInflation erodes purchasing power.
#3
What is the primary objective of monetary policy?
To control inflation
ExplanationMaintains price stability and economic growth.
#4
What does the term 'trade deficit' indicate?
When a country's imports exceed its exports
ExplanationMore goods are imported than exported.
#5
Which of the following is a characteristic of a command economy?
The government controls most aspects of economic production and resource allocation
ExplanationCentral planning dictates production and distribution.
#6
What is the formula for calculating GDP?
GDP = Consumption + Investment + Government Spending + Exports - Imports
ExplanationGDP sums up all spending in an economy.
#7
What does the term 'Phillips curve' illustrate?
The relationship between unemployment and inflation
ExplanationShows the trade-off between unemployment and inflation.
#8
What does the term 'fiscal policy' refer to?
Government's use of taxation and spending to influence the economy
ExplanationAims to stabilize economic fluctuations.
#9
Which of the following is an example of expansionary fiscal policy?
Increasing government spending
ExplanationBoosts aggregate demand.
#10
What is the difference between nominal GDP and real GDP?
Real GDP accounts for inflation, while nominal GDP does not
ExplanationReal GDP adjusts for price changes, reflecting true economic growth.
#11
What is the 'liquidity trap' in macroeconomics?
A situation where monetary policy becomes ineffective because interest rates are near zero
ExplanationInterest rates are too low to stimulate borrowing.
#12
What is the concept of 'crowding out' in macroeconomics?
An increase in government spending leading to a decrease in private investment
ExplanationGovernment borrowing reduces funds available for private investment.
#13
What is the primary goal of supply-side economics?
To promote economic growth through tax cuts and deregulation
ExplanationEncourages investment and entrepreneurship.