#1
Which of the following is considered a lagging economic indicator?
Corporate Profits
ExplanationReflects past economic performance.
#2
What is the primary tool used by central banks to control monetary policy?
Interest rates
ExplanationAdjusting lending rates to influence economic activity.
#3
Which of the following is not a leading economic indicator?
Retail Sales
ExplanationDoes not predict future economic trends.
#4
What is the main objective of expansionary monetary policy?
To stimulate economic growth
ExplanationIncrease money supply to boost economic activity.
#5
Which of the following is NOT a component of the M1 money supply?
Savings accounts
ExplanationExcluded due to limited liquidity.
#6
What effect does an increase in the reserve requirement have on the money supply?
Decreases the money supply
ExplanationReduces funds available for lending.
#7
Which of the following is an example of contractionary fiscal policy?
Decreasing government spending
ExplanationReduces government expenditure to curb inflation.
#8
What is the name of the organization responsible for conducting monetary policy in the United States?
Federal Reserve
ExplanationCentral bank overseeing U.S. monetary policy.
#9
What is the primary goal of a central bank when implementing a contractionary monetary policy?
Reducing money supply
ExplanationTo curb inflationary pressures.
#10
Which of the following is NOT a tool of monetary policy used by central banks?
Currency depreciation
ExplanationDepreciation is a result, not a policy tool.
#11
What is the main function of the Federal Open Market Committee (FOMC)?
Setting monetary policy
ExplanationDetermines interest rates and money supply.
#12
Which of the following is a characteristic of an inflationary gap?
Output exceeds potential GDP
ExplanationDemand exceeds economy's capacity, leading to inflation.