#1
What does the term 'macroeconomic equilibrium' refer to?
A state where there is no unemployment in the economy
A situation where the aggregate demand equals aggregate supply in an economy
A condition where inflation rate remains constant over time
A scenario where the government controls all economic activities
#2
Which of the following is NOT a component of aggregate demand?
Consumption
Investment
Government spending
Imports
#3
What is the primary objective of fiscal policy?
To stabilize prices
To achieve full employment
To maintain a balanced budget
To regulate the money supply
#4
Which of the following is a tool of expansionary fiscal policy?
Tax cuts
Decrease in government spending
Increase in reserve requirements
Sell government securities
#5
What is the term used to describe a situation where there is a sustained increase in the general price level of goods and services in an economy?
Recession
Deflation
Inflation
Stagflation
#6
What happens in the short run if an economy is operating above its full employment level of output?
Prices decrease due to excess supply
Unemployment decreases
Inflation increases due to excess demand
Aggregate demand shifts leftward
#7
In the AD-AS model, what happens to the equilibrium price level and real output if there is an increase in aggregate demand?
Price level increases, real output decreases
Price level increases, real output remains unchanged
Price level remains unchanged, real output increases
Price level decreases, real output increases
#8
What does the term 'sticky wages' refer to in macroeconomics?
A situation where wages rise rapidly
A condition where wages remain unchanged despite changes in the price level
A state where wages fluctuate frequently
A scenario where wages are determined solely by the government
#9
Which of the following is an example of an automatic stabilizer in the economy?
Unemployment benefits
Discretionary fiscal policy
Corporate tax cuts
Infrastructure spending
#10
According to the Phillips curve, what is the relationship between inflation and unemployment?
There is a positive relationship
There is a negative relationship
There is no relationship
The relationship is random
#11
What is the significance of the natural rate of unemployment in macroeconomics?
It represents the lowest level of unemployment achievable without causing inflation
It indicates the level of unemployment when the economy is at full employment
It reflects the unemployment rate during economic recessions
It represents the unemployment rate when the government intervenes in the labor market
#12
Which of the following is a key component of the monetary policy transmission mechanism?
Fiscal policy changes
Interest rate changes
Government spending
Exchange rate fluctuations
#13
What is the primary mechanism through which the economy self-regulates in the long run according to classical economists?
Government intervention
Changes in aggregate demand
Price flexibility and market forces
Fiscal policy adjustments
#14
What is the concept of the 'liquidity trap' in macroeconomics?
A situation where interest rates are very low, and saving is not responsive to changes in interest rates
A scenario where there is excessive liquidity in the economy
A condition where banks refuse to lend money to individuals or businesses
A state where the central bank loses control over the money supply
#15
How does the crowding-out effect impact private investment when the government increases its borrowing to finance a budget deficit?
Private investment increases due to increased government spending
Private investment decreases due to higher interest rates
Private investment remains unchanged
Private investment becomes more efficient
#16
In the context of the IS-LM model, what does the LM curve represent?
The equilibrium condition in the goods market
The relationship between real interest rates and real GDP
The impact of changes in government spending on equilibrium output
The relationship between the money market and interest rates
#17
What is the effect of an increase in government purchases on the IS-LM model?
Shifts the IS curve to the right
Shifts the IS curve to the left
Shifts the LM curve to the right
Shifts the LM curve to the left
#18
According to the Mundell-Fleming model, what happens to the exchange rate when a country implements expansionary fiscal policy?
The exchange rate appreciates
The exchange rate depreciates
The exchange rate remains unchanged
The exchange rate fluctuates randomly
#19
What is the long-run effect of an increase in the money supply according to the quantity theory of money?
It leads to a temporary increase in real output
It causes a permanent increase in real output
It results in a proportional increase in the price level
It has no effect on the economy in the long run