Macroeconomic Concepts Quiz

Gross Domestic Product measures the total value of goods and services produced within a country's borders.

CPI is an index that measures the average change over time in the prices paid by urban consumers for a basket of goods and services.

GDP measures the economic output of a nation over a given period, including consumption, investment, government spending, and net exports.

Labor Force Participation is not a component of aggregate demand; AD comprises consumption, investment, government spending, and net exports.

Inflation refers to the sustained increase in the general price level of goods and services in an economy, reducing the purchasing power of money.

The Phillips Curve shows an inverse relationship between the rate of unemployment and the rate of inflation.

The Laffer Curve demonstrates the concept that there is an optimal tax rate that maximizes revenue.

A recession is a significant decline in economic activity, often indicated by a decrease in GDP over two consecutive quarters.

Crowding out occurs when increased government spending leads to reduced private investment due to higher interest rates or limited resources.

A liquidity trap occurs when interest rates are so low that monetary policy tools become ineffective in stimulating economic growth.

Central banks aim to regulate inflation rates and maintain stable prices within the economy.

Money Supply refers to the total amount of money available in an economy at a specific time, including physical currency and deposits.

Inflation refers to a sustained increase in the general price level of goods and services in an economy over a period of time.

Ceteris Paribus is a Latin phrase meaning 'all other things being equal,' used in economic analysis to isolate the effect of one variable while holding others constant.

Depreciation refers to the decline in the value of a country's currency compared to other currencies in the foreign exchange market.