#1
Which of the following is a characteristic of economic fluctuations?
They involve fluctuations in aggregate economic activity.
ExplanationEconomic fluctuations entail changes in overall economic activity.
#2
What does GDP stand for?
Gross Domestic Product
ExplanationGDP represents the total value of goods and services produced within a country's borders.
#3
What does the term 'business cycle' refer to?
The periodic expansion and contraction of economic activity
ExplanationThe business cycle encompasses alternating periods of growth and decline in economic activity.
#4
What is the name given to the phase of the business cycle characterized by declining economic activity?
Recession
ExplanationA recession signifies a downturn in economic activity.
#5
What is the term used to describe a period of sustained economic growth and rising employment levels?
Expansion
ExplanationExpansion refers to a phase of increased economic activity and employment.
#6
Which of the following is a lagging economic indicator?
Unemployment rate
ExplanationThe unemployment rate typically reflects past economic performance.
#7
What is the key characteristic of a recession?
Decrease in consumer spending
ExplanationA recession is marked by reduced consumer expenditure.
#8
What is the term used to describe a prolonged period of economic decline?
Depression
ExplanationA depression signifies an extended downturn in economic activity.
#9
Which of the following is NOT a tool of fiscal policy?
Interest rates
ExplanationInterest rates fall under monetary policy, not fiscal policy.
#10
What is the primary function of monetary policy?
Controlling inflation and interest rates
ExplanationMonetary policy aims to manage inflation levels and interest rates.
#11
Which of the following is a component of aggregate demand?
Government spending
ExplanationGovernment spending contributes to total demand in the economy.
#12
In the context of economic fluctuations, what is 'stagflation'?
High inflation combined with high unemployment
ExplanationStagflation denotes simultaneous high inflation and unemployment.
#13
What is the term used to describe a situation where an economy experiences both inflation and stagnant economic growth?
Stagflation
ExplanationStagflation involves a combination of inflation and economic stagnation.
#14
What does the term 'demand shock' refer to in the context of economic fluctuations?
A sudden decrease in aggregate demand
ExplanationA demand shock involves a rapid decline in overall demand for goods and services.
#15
What is the term used to describe a situation where the economy is operating below its potential level of output?
Underutilization of resources
ExplanationUnderutilization of resources indicates that the economy is not reaching its maximum productive capacity.