#1
Which of the following is NOT a component of Aggregate Demand (AD) in macroeconomics?
Consumption
Investment
Government spending
Exports
#2
Which of the following is a component of Aggregate Supply (AS) in macroeconomics?
Consumption
Investment
Government spending
Labor force participation
#3
Which of the following is NOT a tool of monetary policy used by central banks to influence macroeconomic variables?
Open market operations
Fiscal policy
Reserve requirements
Discount rate
#4
What is the primary objective of monetary policy?
Maximizing employment
Minimizing inflation
Achieving a stable exchange rate
Maximizing economic growth
#5
In the context of macroeconomic equilibrium, what happens if Aggregate Demand (AD) exceeds Aggregate Supply (AS)?
A surplus is created, causing prices to rise
A shortage is created, causing prices to fall
Equilibrium is maintained without any impact on prices
There is no relation between AD and AS
#6
Which of the following is an assumption of the Keynesian model of macroeconomic equilibrium?
Flexible prices and wages
Rational expectations
Stable economic environment
Sticky prices and wages
#7
What is the concept of the 'natural rate of unemployment' in macroeconomics?
The level of unemployment that exists when the economy is in a recession
The level of unemployment that exists when the economy is operating at full capacity
The level of unemployment that is caused by frictional and structural factors
The level of unemployment that occurs due to cyclical fluctuations in the economy
#8
According to the Quantity Theory of Money, what is the relationship between the money supply and the price level in the economy?
Direct relationship
Inverse relationship
No relationship
Non-linear relationship
#9
In the IS-LM model, what does the LM curve represent?
Equilibrium in the goods market
Equilibrium in the money market
Equilibrium in the labor market
Equilibrium in the foreign exchange market
#10
What is the significance of the Aggregate Supply-Aggregate Demand (AS-AD) model in macroeconomics?
It illustrates the relationship between government spending and taxation
It depicts the determination of equilibrium output and price level
It explains the impact of interest rates on investment and consumption
It measures the effectiveness of fiscal policy in stabilizing the economy
#11
According to the Classical Theory of macroeconomic equilibrium, what ensures that the economy is always at full employment?
Automatic stabilizers
Government intervention
Market forces
Monetary policy
#12
What is the significance of the Phillips curve in macroeconomic analysis?
It depicts the relationship between inflation and unemployment
It explains the relationship between government spending and GDP
It measures the impact of interest rates on investment
It predicts the effects of exchange rate fluctuations on imports and exports
#13
What does the term 'crowding out' refer to in macroeconomics?
An increase in private sector spending due to government intervention
A decrease in private sector spending due to government borrowing
An increase in government spending due to private sector investment
A decrease in government spending due to an increase in tax revenue
#14
What does the term 'liquidity trap' refer to in macroeconomics?
A situation where interest rates are so low that monetary policy becomes ineffective
A situation where interest rates are so high that investment becomes unprofitable
A situation where inflationary pressures lead to a decrease in purchasing power
A situation where currency becomes scarce, leading to deflation
#15
What is the concept of 'hysteresis' in macroeconomics?
The tendency of prices to remain fixed at a certain level
The persistence of high unemployment even after a recession has ended
The process of adjusting to a new equilibrium after a shock to the economy
The fluctuation of economic output around its potential level
#16
According to the classical dichotomy, what determines real variables in the economy?
Monetary variables
Nominal variables
Interest rates
Government policies