Macroeconomic Concepts and Analysis Quiz

Exports are part of GDP

Consumer Price Index measures inflation

Unemployment rate is the percentage of unemployed people in the labor force

Central banks influence interest rates through open market operations

Current account tracks goods and services, capital account monitors financial transactions

GDP is the sum of consumption, investment, government spending, and net exports

Stagflation is high inflation coupled with high unemployment

The Phillips Curve depicts the trade-off between inflation and unemployment

Crowding out occurs when government borrowing reduces private investment

Opportunity cost is the value of the next best alternative

Real GDP accounts for inflation, nominal GDP does not

Central banks control the money supply through monetary policy

Liquidity trap is when monetary policy loses effectiveness

The Laffer Curve shows the relationship between tax rates and revenue

Comparative advantage is the ability to produce a good at a lower opportunity cost

Monetary policy controls money supply, fiscal policy controls government spending and taxation

Monetary neutrality posits that money supply changes do not affect real economy in the long term