#1
Which of the following is not considered a leading economic indicator?
Consumer Price Index (CPI)
ExplanationCPI measures inflation, not future economic activity.
#2
In which phase of the business cycle does unemployment typically reach its lowest point?
Peak
ExplanationDuring the peak phase, economic activity is high, leading to low unemployment.
#3
What is the primary tool used by central banks to control the money supply?
Monetary policy
ExplanationMonetary policy influences interest rates and money supply to manage economic growth and inflation.
#4
Which of the following is not a measure of inflation?
Gross Domestic Product (GDP)
ExplanationGDP measures economic output, not the rate of price increase.
#5
What is the duration of a typical business cycle?
Depends on economic conditions
ExplanationThe length varies based on factors like economic activity and policy interventions.
#6
Which of the following is a fiscal policy tool?
Government spending
ExplanationIt involves government actions related to taxation and spending to influence the economy.
#7
What is the main purpose of GDP (Gross Domestic Product)?
To measure the total value of goods and services produced within a country's borders
ExplanationGDP quantifies the economic output of a nation.
#8
Which of the following is not a component of GDP?
Imports
ExplanationImports are not produced domestically; they are purchases from other countries.
#9
What is the Phillips curve relationship?
There is a negative relationship between inflation and unemployment
ExplanationAs unemployment falls, inflation tends to rise, and vice versa.
#10
Which of the following is a lagging economic indicator?
Average Duration of Unemployment
ExplanationIt reflects economic trends after they have occurred.
#11
What is the formula to calculate GDP using the expenditure approach?
GDP = C + I + G + (X - M)
ExplanationIt sums up consumption, investment, government spending, and net exports.
#12
Which of the following is not a characteristic of a recession?
Increase in business investments
ExplanationRecessions are marked by decreased economic activity, including reduced investments.
#13
What does the unemployment rate measure?
The percentage of the labor force that is jobless and actively seeking employment
ExplanationUnemployment rate indicates the portion of the workforce without jobs.
#14
What does the term 'stagflation' refer to?
High inflation accompanied by high unemployment and stagnant economic growth
ExplanationIt presents a dilemma for policymakers as it combines inflation and economic stagnation.
#15
What is the primary goal of expansionary monetary policy during a recession?
To stimulate economic growth by increasing the money supply and lowering interest rates
ExplanationIt aims to boost spending and investment to revive the economy.
#16
What does the term 'double-dip recession' refer to?
A recession followed by a brief period of recovery before entering another recession
ExplanationIt indicates a downturn followed by a short-lived recovery, then another downturn.
#17
What is the primary goal of contractionary monetary policy?
To decrease the money supply and increase interest rates
ExplanationIt aims to curb inflation and cool down an overheated economy.