#1
Which of the following is not a macroeconomic policy tool?
Microeconomic policy
ExplanationMicroeconomic policy is concerned with individual markets and entities, not overall economic trends.
#2
Which of the following economic indicators is commonly used to measure inflation?
Consumer Price Index (CPI)
ExplanationCPI tracks the average change in prices paid by consumers for a basket of goods and services, serving as a measure of inflation.
#3
What is the primary goal of expansionary fiscal policy?
To increase government spending
ExplanationExpansionary fiscal policy aims to boost aggregate demand by increasing government spending, leading to economic growth.
#4
Which of the following is a primary tool used by central banks to control the money supply?
Interest Rates
ExplanationCentral banks use interest rates to influence borrowing, spending, and investment, thereby regulating the money supply.
#5
According to the Phillips Curve, what is the relationship between inflation and unemployment?
Negative
ExplanationPhillips Curve posits an inverse relationship between inflation and unemployment, suggesting that as one decreases, the other increases.
#6
What is the meaning of a 'stagflation' scenario in macroeconomics?
High inflation and high unemployment
ExplanationStagflation describes an economic condition with simultaneous high inflation and high unemployment rates.
#7
Which of the following factors is NOT considered as a demand-side determinant of economic growth?
Currency Exchange Rate
ExplanationCurrency exchange rates mainly affect trade, which is typically considered a supply-side factor impacting economic growth.
#8
Which of the following represents a contractionary fiscal policy action?
Increasing interest rates
ExplanationRaising interest rates reduces borrowing and spending, leading to lower aggregate demand, hence considered a contractionary fiscal policy.
#9
In which of the following economic theories is the 'natural rate of unemployment' a key concept?
Monetarism
ExplanationMonetarism emphasizes the role of money supply in economic stability and sees natural unemployment as a key factor.
#10
Which of the following statements is true about an economy's natural rate of unemployment?
It represents the level of unemployment when an economy is operating at full capacity.
ExplanationNatural rate of unemployment reflects the level of unemployment consistent with full utilization of resources in the economy.