#1
Which of the following is a measure of a country's overall economic performance?
Gross Domestic Product (GDP)
ExplanationIndicator of economic health.
#2
What is the role of the Federal Reserve in controlling money supply in the United States?
Conducting open market operations
ExplanationAdjusting money supply through market operations.
#3
What is the primary goal of monetary policy?
Stabilizing inflation
ExplanationMaintaining stable price levels.
#4
What does the term 'stagflation' refer to in macroeconomics?
A combination of high inflation and economic stagnation
ExplanationSimultaneous inflation and stagnant economy.
#5
In the IS-LM model, what does the 'LM' curve represent?
Liquidity preference and Money supply
ExplanationRelationship between interest rates and money supply.
#6
What is the significance of the natural rate of unemployment in macroeconomics?
It is the minimum sustainable rate of unemployment in the long run
ExplanationLong-term sustainable unemployment rate.
#7
In the context of fiscal policy, what does 'crowding out' refer to?
Decreased private investment due to increased government borrowing
ExplanationGovernment borrowing displaces private investment.
#8
In the context of the business cycle, what characterizes the contraction phase?
Falling GDP and rising unemployment
ExplanationEconomic decline with job losses.
#9
According to the Phillips curve, what is the trade-off relationship between inflation and unemployment?
There is no trade-off
ExplanationInverse relationship doesn't exist.
#10
What is the concept of the 'Laffer curve' in macroeconomics?
A curve showing the relationship between tax rates and government revenue
ExplanationTax rates vs. government revenue curve.
#11
According to the quantity theory of money, what is the relationship between the money supply and inflation?
Positive relationship
ExplanationDirect correlation between money supply and inflation.
#12
What is the concept of the 'Multiplier Effect' in macroeconomics?
The magnification of changes in spending through the economy
ExplanationAmplification of spending changes.
#13
What is the Phillips curve's long-run implication for the trade-off between inflation and unemployment?
There is no long-run trade-off
ExplanationLong-term inverse relationship absence.