#1
5. What is the role of the Federal Reserve in the United States economy?
Controlling the money supply and interest rates
ExplanationThe Federal Reserve regulates money supply and interest rates to stabilize the economy.
#2
9. What is the main function of the International Monetary Fund (IMF)?
Providing financial assistance to countries facing balance of payments problems
ExplanationIMF offers financial aid to countries experiencing balance of payments difficulties.
#3
1. What is the primary goal of monetary policy in macroeconomics?
Controlling inflation and unemployment
ExplanationMonetary policy aims to manage inflation and unemployment levels.
#4
2. Which of the following is considered a leading economic indicator?
Stock market performance
ExplanationStock market performance often predicts future economic trends.
#5
6. What does the term 'stagflation' refer to in macroeconomics?
A period of high inflation and low economic growth
ExplanationStagflation is the combination of high inflation and stagnant economic growth.
#6
8. How does the multiplier effect work in the context of fiscal policy?
It explains the cumulative increase in output resulting from government spending
ExplanationThe multiplier effect shows how initial government spending leads to a larger increase in output.
#7
11. What is the significance of the term 'velocity of money' in macroeconomics?
It reflects the rate at which money changes hands in the economy
ExplanationVelocity of money indicates how quickly money circulates in the economy.
#8
3. What is the Phillips curve used to illustrate in macroeconomics?
The relationship between inflation and unemployment
ExplanationPhillips curve shows the inverse relationship between inflation and unemployment.
#9
4. In the context of macroeconomic policy, what does the term 'crowding out' refer to?
A reduction in private sector spending due to government borrowing
ExplanationCrowding out occurs when government borrowing reduces private sector investment.
#10
7. What is the concept of the 'Laffer curve' often used to explain?
The impact of taxation on government revenue
ExplanationThe Laffer curve illustrates the relationship between tax rates and tax revenue.
#11
10. In macroeconomics, what does the term 'comparative advantage' refer to?
The ability of a country to produce a good at a lower opportunity cost than another country
ExplanationComparative advantage is the ability to produce at a lower opportunity cost.
#12
12. According to the classical economic theory, what is the primary driver of economic growth?
Private investment and savings
ExplanationPrivate investment and savings are fundamental to economic growth in classical theory.