Question 1

Which of the following is NOT one of the four major concerns of macroeconomics?
A) the balance of payments
B) the circular flow of income
C) the percentage increase in prices
D) the rate of economic growth

Accepted Answer

The circular flow of income is a model that describes the movement of money, goods, and services in an economy, but it is not considered one of the four major concerns of macroeconomics, which typically include inflation, unemployment, economic growth, and the balance of payments.

Question 2

Which of the following statements is FALSE?
A) Short- term ups and downs in the economy are known as business cycles.
B) Business cycles are always symmetric - the length of an expansion is the same as the length of a contraction.
C) The rate of change in economic activity is used to assess whether an economy is expanding or contracting.
D) During a recession, output and employment are falling.

Accepted Answer

Business cycles are not always symmetric; the length of an expansion can differ from the length of a contraction.

Question 3

When injections exceed withdrawals, total output will:
A) fall
B) not change
C) rise
D) accelerate

Accepted Answer

When injections exceed withdrawals, it means more money is being added to the economy than is being taken out, leading to an increase in total output.

Question 4

Which of the following is likely to benefit from a high rate of inflation?
A) a person with $20,000 on deposit at a building society
B) a couple who have borrowed money at a fixed rate of interest to buy their home
C) a person who has retired on a fixed pension
D) a person who has bought a fixed interest bond

Accepted Answer

Borrowers with fixed-rate loans benefit from inflation because the real value of their debt decreases over time.

Question 5

Consider the household sector. According to the circular flow model, firms:
A) only demand from this market
B) both supply to and demand from this market
C) neither supply to nor demand from this market
D) only supply to this market

Accepted Answer

In the circular flow model, firms supply goods and services to the household sector and demand labor and other resources from it.

Question 6

To distinguish between nominal and real figures we must adjust for:
A) low economic growth
B) the rate of unemployment
C) a balance of payments deficit
D) inflation

Accepted Answer

Nominal figures are not adjusted for inflation, while real figures are adjusted to reflect changes in price levels over time, making inflation the key factor to distinguish between them.

Question 7

The labour force is the:
A) number of people employed plus those unemployed
B) ratio of the population to those not in the labour force
C) number of people employed minus the unemployed
D) ratio of those employed to those unemployed

Accepted Answer

The labour force includes all individuals who are either employed or actively seeking employment, which means it is the sum of the employed and the unemployed.

Question 8

The period in the business cycle from a trough to a peak is:
A) a slowdown
B) an expansion or boom
C) a recession
D) a contraction or recession

Accepted Answer

The period from a trough to a peak in the business cycle is known as an expansion or boom, where economic activity and growth increase.

Question 9

Which of the following is not regarded as an injection into the circular flow of income?
A) saving
B) investment
C) export expenditure
D) government expenditure

Accepted Answer

Saving is considered a leakage from the circular flow of income, not an injection. Injections include investment, export expenditure, and government expenditure.

Question 10

Potential economic growth is:
A) the percentage annual increase in the economy's available resources
B) the percentage annual increase in nominal GDP
C) the percentage annual increase in the economy's potential to produce
D) the percentage annual increase in real GDP

Accepted Answer

Potential economic growth refers to the increase in an economy's capacity to produce goods and services over time, which is represented by the economy's potential output.

Question 11

A household that spends less than it receives in income during a given period is:
A) running a surplus
B) investing
C) saving
D) receiving transfer payments

Accepted Answer

The answer of A household that spends less than it...

Question 12

The diagram that shows how the four objectives of macroeconomic policy are related to aggregate demand is the:
A) circular flow diagram
B) income- price diagram
C) aggregate demand- aggregate supply diagram
D) income- expenditure diagram

Accepted Answer

The answer of The diagram that shows how the four...

Question 13

Aggregate demand is comprised of:
A) C + I + G - X - M
B) C + I + G + (X - M)
C) C + I + G + (M - X)
D) C + I + G + X + M

Accepted Answer

The answer of Aggregate demand is comprised of:
A) C +...

Question 14

The annual average rate of economic growth for Australia between 2000 and 2007 was:
A) 1.6
B) 0.7
C) 1.7
D) 2.8

Accepted Answer

The annual average rate of economic growth for Australia between 2000 and 2007 was approximately 2.8%, reflecting a period of relatively strong economic performance.

Question 15

Gross domestic product measured in current dollars is:
A) nominal GDP
B) real GDP
C) current GDP
D) constant GDP

Accepted Answer

Nominal GDP measures the value of all finished goods and services produced within a country's borders in a specific time period using current prices, without adjusting for inflation.

Question 16

Inflation is:
A) an increase in the overall level of economic activity
B) a decrease in the overall level of economic activity
C) an increase in the overall price level
D) a decrease in the overall price level

Accepted Answer

Inflation is defined as an increase in the overall price level of goods and services in an economy over a period of time.

Question 17

If the number of people classified as unemployed is 20 000 and the number of people classified as employed is 230 000, what is the unemployment rate?
A) 9.5%
B) 9.0%
C) 8.5%
D) 8.0%

Accepted Answer

The answer of If the number of people classified as...

Question 18

In the circular flow diagram the net flow from households to the banking sector is:
A) savings net of borrowings and withdrawals from deposits
B) savings
C) savings minus borrowings
D) savings plus borrowings

Accepted Answer

The net flow from households to the banking sector is savings net of borrowings and withdrawals from deposits, as it accounts for the total savings minus any borrowings or withdrawals made by households.

Question 19

If the number of people employed is 120 000 and the labour force is 150 000, the unemployment rate is:
A) 8%
B) 50%
C) 20%
D) 80%

Accepted Answer

The unemployment rate is calculated as the number of unemployed people divided by the labor force, multiplied by 100. Here, the number of unemployed people is 150,000 - 120,000 = 30,000. So, the unemployment rate is (30,000 / 150,000) * 100 = 20%.

Question 20

$$\begin{array} { l l } 
\text { Employed } & 5000 \
\text { Unemployed } & 500 \
\text { Not in thelabour force } & 2000
\end{array}$$
-The labour force:
A) equals 5000
B) equals 5500
C) equals 7500
D) cannot be determined from this information

Accepted Answer

The labour force includes both employed and unemployed individuals. Therefore, the labour force equals 5000 (employed) + 500 (unemployed) = 5500.

Quiz 9: Introduction to Macroeconomics

Which of the following is NOT one of the four major concerns of macroeconomics?

Which of the following statements is FALSE?

When injections exceed withdrawals, total output will:

Which of the following is likely to benefit from a high rate of inflation?

Consider the household sector. According to the circular flow model, firms:

To distinguish between nominal and real figures we must adjust for:

The labour force is the:

The period in the business cycle from a trough to a peak is:

Which of the following is not regarded as an injection into the circular flow of income?

Potential economic growth is:

A household that spends less than it receives in income during a given period is:

The diagram that shows how the four objectives of macroeconomic policy are related to aggregate demand is the:

Aggregate demand is comprised of:

The annual average rate of economic growth for Australia between 2000 and 2007 was:

Gross domestic product measured in current dollars is:

Inflation is:

If the number of people classified as unemployed is 20 000 and the number of people classified as employed is 230 000, what is the unemployment rate?

In the circular flow diagram the net flow from households to the banking sector is:

If the number of people employed is 120 000 and the labour force is 150 000, the unemployment rate is:

$\begin{array} { l l } \text { Employed } & 5000 \\\text { Unemployed } & 500 \\\text { Not in thelabour force } & 2000\end{array}$ -The labour force: