Macroeconomic Equilibrium and Stabilization Quiz
Test your knowledge on macroeconomic equilibrium, GDP calculation, policy tools, Phillips curve, unemployment, and fiscal & monetary policies!
#1
What is the formula for calculating GDP (Gross Domestic Product)?
GDP = C + I + G + (X - M)
GDP = C + I + NX
GDP = C + S + T + NX
GDP = C + I + G + NX
#2
Which of the following is NOT a component of Aggregate Demand (AD)?
Consumption (C)
Investment (I)
Government Spending (G)
Net Exports (NX)
#3
What happens to the equilibrium level of real GDP if autonomous consumption decreases?
Equilibrium level of real GDP increases
Equilibrium level of real GDP decreases
Equilibrium level of real GDP remains unchanged
There is not enough information to determine
#4
Which of the following is a policy tool used by the Federal Reserve to stabilize the economy?
Fiscal Policy
Monetary Policy
Supply-side Policy
Trade Policy
#5
What is the Phillips curve relationship?
Inverse relationship between inflation and unemployment
Direct relationship between inflation and unemployment
Direct relationship between inflation and GDP growth
Inverse relationship between inflation and GDP growth
#6
Which of the following best describes the concept of the natural rate of unemployment?
The level of unemployment that exists when the economy is operating at full employment
The level of unemployment that is caused by structural factors in the economy
The level of unemployment that exists when the economy is in a recession
The level of unemployment that is caused by cyclical factors in the economy
#7
What is the role of the government in an economy during a recession according to Keynesian economics?
Increase taxes and decrease government spending
Decrease taxes and increase government spending
Decrease taxes and decrease government spending
Increase taxes and increase government spending
#8
According to the Keynesian perspective, what happens when there is an increase in aggregate demand in the short run?
Prices rise and output remains constant
Prices and output both rise
Prices remain constant and output rises
Prices and output both remain constant
#9
In the IS-LM model, what does the LM curve represent?
Equilibrium in the money market
Equilibrium in the goods market
Relationship between income and consumption
Relationship between interest rate and investment
#10
What is the crowding-out effect in macroeconomics?
The increase in private investment due to government spending
The decrease in private investment due to government borrowing
The decrease in government spending due to an increase in taxes
The increase in government spending due to an increase in taxes
#11
What does the term 'stagflation' refer to in economics?
A situation of high inflation and high unemployment
A situation of low inflation and low unemployment
A situation of high inflation and low unemployment
A situation of low inflation and high unemployment
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