#1
What does GDP stand for?
Gross Domestic Product
ExplanationMeasurement of a country's economic output.
#2
Which of the following is NOT a tool of monetary policy?
Fiscal policy
ExplanationGovernment's use of taxation and spending.
#3
What is the name of the phenomenon where the value of currency decreases over time?
Inflation
ExplanationReduction in purchasing power of money.
#4
Which of the following is NOT a type of unemployment?
Stagflation
ExplanationCombination of inflation and unemployment.
#5
Which of the following is NOT a function of money?
Producer of goods
ExplanationMedium of exchange, unit of account, and store of value.
#6
Which of the following best describes the term 'opportunity cost'?
The cost of an alternative that must be forgone to pursue a certain action
ExplanationValue of the next best alternative foregone.
#7
What does inflation targetting aim to achieve?
Keep inflation as low as possible
ExplanationMaintaining stable prices in the economy.
#8
Which of the following is an example of expansionary monetary policy?
Decreasing interest rates
ExplanationEncouraging borrowing and spending to stimulate the economy.
#9
What is the Phillips Curve used to illustrate?
The relationship between inflation and unemployment
ExplanationInverse relationship between unemployment and inflation.
#10
Which of the following is a characteristic of a command economy?
Central planning by the government
ExplanationGovernment controls production and distribution.
#11
Which of the following is NOT a component of the aggregate demand equation?
Imports
ExplanationTotal spending in the economy, excluding imports.
#12
What is the purpose of quantitative easing (QE) in monetary policy?
To stimulate the economy
ExplanationIncreasing money supply to encourage lending and investment.
#13
What is the name of the central bank of the United States?
Federal Reserve
ExplanationRegulates monetary policy and provides financial services.
#14
What does the term 'liquidity trap' refer to?
A situation where monetary policy becomes ineffective
ExplanationInterest rates are so low that saving is preferred over spending.
#15
What is the name of the theory that suggests changes in the money supply directly affect the price level over time?
Quantity theory of money
ExplanationRelationship between money supply and inflation.
#16
What is the name of the phenomenon where an economy experiences both inflation and high unemployment?
Stagflation
ExplanationSimultaneous occurrence of inflation and unemployment.