Macroeconomic Principles and Monetary Policy Quiz

GDP includes consumption, investment, and government spending.

CPI measures the average change in prices paid by consumers for goods and services.

Taxation is a tool used in fiscal policy to influence the economy.

Fiscal policy involves government taxation and spending, not controlled by the central bank.

The Federal Reserve is the central bank responsible for monetary policy in the U.S.

GDP measures the total value of goods and services produced, not the money supply.

The Federal Reserve aims to maintain stable prices, controlling inflation.

The federal funds rate is the overnight lending rate between banks.

The Phillips curve shows the trade-off between inflation and unemployment.

The European Central Bank is responsible for monetary policy in the Eurozone.

M1 includes currency in circulation, demand deposits, and other liquid assets.

Expansionary monetary policy aims to boost economic activity and growth.

Open market operations involve the purchase and sale of government securities to control the money supply.

The discount rate is the rate at which the central bank lends to commercial banks.

Hyperinflation is a severe and rapidly accelerating increase in prices.

Hyperinflation occurs when the money supply grows excessively, causing rapid inflation.

Stagflation is a rare economic situation with both high inflation and high unemployment.

The Quantity theory of money posits a direct relationship between money supply changes and inflation.