Macroeconomic Theories and Equations Quiz

Test your knowledge on leading indicators, Phillips Curve, Solow growth model, IS-LM model, monetary & fiscal policy equations, and more.

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Which of the following is an example of a leading macroeconomic indicator?

Unemployment rate

Gross Domestic Product (GDP)

Consumer Price Index (CPI)

Stock market index

What is the equation for the simple Keynesian consumption function?

C = a + bY

C = a + bY - T

C = a + b(Y - T)

C = a + bT

What is the formula for calculating the unemployment rate?

(Number of unemployed / Labor force) * 100%

(Labor force / Number of unemployed) * 100%

(Number of unemployed / Total population) * 100%

(Total population / Number of unemployed) * 100%

Which of the following is NOT a component of the Aggregate Demand curve?

Consumption

Investment

Government spending

Imports

Which of the following is a tool of monetary policy used by central banks?

Fiscal policy

Quantitative easing

Supply-side policies

Progressive taxation

What is the equation for the investment function in the Keynesian Cross model?

I = a + bY

I = a + bY - T

I = a + b(Y - T)

I = a + bT

What does the Phillips Curve illustrate in macroeconomics?

The relationship between inflation and unemployment

The relationship between interest rates and investment

The impact of government spending on GDP

The effect of taxes on consumption

In the Solow growth model, what does the steady state represent?

Maximum level of GDP per capita

A situation where capital per worker remains constant over time

A period of rapid economic growth

A situation where investment equals depreciation

What is the equation of the Aggregate Demand curve in the Keynesian Cross diagram?

AD = C + I + G + (X - M)

AD = C + S + T

AD = Y - C - I

AD = M - X

#10

What does the IS-LM model in macroeconomics analyze?

The relationship between inflation and unemployment

The interaction between the goods market and the money market

The impact of fiscal policy on aggregate demand

The effect of changes in interest rates on investment

#11

Which of the following is an assumption of the classical macroeconomic theory?

Prices and wages are flexible

Prices and wages are sticky

The economy is always in equilibrium

Consumers have perfect foresight

#12

According to the quantity theory of money, what is the relationship between money supply and price level?

Direct

Inverse

No relationship

Indirect

#13

Which of the following represents the concept of the 'natural rate of unemployment'?

The unemployment rate that exists when the economy is at full employment

The unemployment rate that exists during a recession

The unemployment rate that exists during a boom

The unemployment rate that exists during a deflationary period