#1
What is the primary focus of macroeconomics?
Aggregate economic phenomena
ExplanationStudy of overall economic behavior and trends.
#2
Which of the following is a component of aggregate demand?
Government spending
ExplanationTotal spending on goods and services in an economy.
#3
What is the difference between nominal GDP and real GDP?
Nominal GDP includes inflation, while real GDP does not.
ExplanationAdjustment for inflation in economic output.
#4
What is the multiplier effect in macroeconomics?
The proportional change in aggregate demand resulting from an initial change in spending
ExplanationAmplification of economic impact from initial spending changes.
#5
Which of the following is an example of an automatic stabilizer in fiscal policy?
Unemployment benefits
ExplanationPrograms that automatically stabilize the economy during economic downturns.
#6
What is the difference between fiscal policy and monetary policy?
Fiscal policy is related to government spending and taxation, while monetary policy is related to the money supply and interest rates.
ExplanationGovernment's use of spending and taxation vs. central bank's control of money supply and interest rates.
#7
What is the Phillips curve used to depict in macroeconomics?
The relationship between unemployment and inflation
ExplanationTrade-off between unemployment and inflation levels.
#8
In the context of fiscal policy, what does an expansionary policy aim to achieve?
Increase government spending and decrease taxes
ExplanationBoosting economic activity through increased spending and reduced taxes.
#9
What is the liquidity trap in macroeconomics?
A scenario where consumers prefer holding cash instead of investing or spending
ExplanationState where monetary policy becomes ineffective due to hoarding of cash.
#10
What is the concept of the natural rate of unemployment?
The unemployment rate that is achievable without causing inflation
ExplanationSustainable unemployment rate without causing inflationary pressures.
#11
What does the term 'crowding out' refer to in the context of fiscal policy?
A decrease in private sector investment caused by increased government borrowing
ExplanationReduction in private investment due to increased government borrowing.