#1
Which of the following is NOT a macroeconomic indicator?
Company Revenue Growth
ExplanationCompany Revenue Growth is a microeconomic indicator that focuses on the financial performance of individual companies, not the broader economy.
#2
What does CPI stand for in economics?
Consumer Price Index
ExplanationCPI measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
#3
Which of the following is a measure of inflation based on a basket of goods and services purchased by households?
Consumer Price Index (CPI)
ExplanationCPI is a key measure of inflation that tracks the changes in prices of a representative basket of goods and services commonly purchased by households.
#4
Which of the following is NOT a method used to measure inflation?
Purchasing Managers' Index (PMI)
ExplanationPMI is an indicator of the economic health of the manufacturing sector and is not used specifically to measure inflation.
#5
What is the role of the Federal Reserve in controlling inflation?
It adjusts interest rates and manages the money supply.
ExplanationThe Federal Reserve uses monetary policy tools, such as adjusting interest rates and managing the money supply, to influence inflation and economic growth.
#6
Inflation is best defined as:
A sustained increase in the general price level of goods and services
ExplanationInflation refers to the overall increase in the price of goods and services in an economy over a period of time.
#7
Which of the following is a consequence of high inflation?
Redistribution of wealth from lenders to borrowers
ExplanationHigh inflation erodes the purchasing power of money, benefiting borrowers who repay loans with money that is worth less than when they borrowed it.
#8
Which of the following is a demand-pull factor contributing to inflation?
Rapid population growth
ExplanationRapid population growth can lead to increased demand for goods and services, potentially causing inflation if supply does not keep pace.
#9
What does the term 'stagflation' refer to?
A situation of high inflation and high unemployment occurring simultaneously
ExplanationStagflation is a rare economic scenario characterized by stagnant economic growth, high unemployment, and high inflation.
#10
What is the difference between nominal and real interest rates?
Nominal interest rates include inflation, while real interest rates do not.
ExplanationReal interest rates adjust nominal rates for inflation, providing a more accurate measure of the true cost of borrowing or the real return on an investment.
#11
What is the 'core inflation rate'?
The rate at which consumer prices change, excluding food and energy prices
ExplanationCore inflation excludes volatile items like food and energy to provide a clearer picture of underlying inflation trends.
#12
What is the Phillips curve relationship?
There is a negative relationship between inflation and unemployment
ExplanationThe Phillips curve suggests that as unemployment decreases, inflation tends to rise, and vice versa, indicating an inverse relationship between the two variables.
#13
What is the primary goal of monetary policy during periods of high inflation?
To increase interest rates
ExplanationDuring periods of high inflation, the primary goal of monetary policy is to reduce inflationary pressures by increasing interest rates, which can help cool down the economy.
#14
What is the 'rule of 70' used for in economics?
To estimate the time it takes for prices to double at a given inflation rate
ExplanationThe rule of 70 is a quick way to estimate how long it will take for prices or the value of an investment to double, based on a given growth or inflation rate.
#15
What is hyperinflation?
An extremely rapid and out-of-control increase in prices
ExplanationHyperinflation is a situation where prices increase rapidly as a currency loses its value, leading to a loss of confidence in the currency.