Economics Quiz: Principles Of Macroeconomics! Trivia
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Ever wondered how well do you know the principles of macroeconomics? Macroeconomics is a division of finances that deals with implementing, building, behavior, and decision-making of an economy. It utilizes interest rates, taxes, and government spending to manage an economy’s growth and stability. Macroeconomics studies GDP, unemployment rate, national income, investments, savings, and international trade and finance generally deals with large-scale economic factors. This quiz shows you what macroeconomics entails. All the best.
- 1.
Which of the following is a capital resource?
- A.
A new car bought by the Jones family
- B.
A truck used in transporting school children to a soccer practice
- C.
A truck used in transporting steel to an automobile factory
- D.
Hamburger meat used to produce a juicy hamburger on a home grill
- E.
A sapling used to create a forest in a new national park
Correct Answer
C. A truck used in transporting steel to an automobile factoryExplanation
A capital resource refers to a physical asset that is used in the production of goods or services. In this case, the truck used in transporting steel to an automobile factory is a capital resource because it is a physical asset that is used in the production process. It plays a crucial role in transporting the steel, which is a raw material, to the factory where it will be used to manufacture automobiles. Therefore, the truck is an essential capital resource in this scenario.Rate this question:
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- 2.
The French production possibilities curve shifts to the right when there is
- A.
A decrease in the French capital stock
- B.
A decrease in the French labor supply
- C.
High unemployment in France during the previous period
- D.
Only consumer goods production in France during the previous period
- E.
Technological innovation in the production of French goods
Correct Answer
E. Technological innovation in the production of French goodsExplanation
Technological innovation in the production of French goods shifts the production possibilities curve to the right because it allows for more efficient and productive methods of production. This means that the same amount of resources can now produce more goods and services, increasing the potential output of the economy. With technological innovation, France can produce more goods and services without needing to increase its capital stock or labor supply. Therefore, it is the most likely reason for the shift in the production possibilities curve to the right.Rate this question:
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- 3.
A point inside a production possibilities curve reflects
- A.
The law of increasing costs
- B.
Technological information
- C.
Less than full use of resoures and technology
- D.
Economic efficiency
- E.
A way to increase future economic growth
Correct Answer
C. Less than full use of resoures and technologyExplanation
A point inside a production possibilities curve reflects less than full use of resources and technology. This means that the economy is not operating at its maximum potential and is not efficiently utilizing all available resources and technology. It indicates that there is room for improvement and potential for increased production and economic growth in the future.Rate this question:
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- 4.
A demand curve shows the relationship between
- A.
Price and quantity demanded
- B.
The demand and supply schedules
- C.
Demand and supply equilibrium
- D.
Leakages and injections
- E.
Price and technology
Correct Answer
A. Price and quantity demandedExplanation
A demand curve shows the relationship between price and quantity demanded. It illustrates how the quantity of a good or service that consumers are willing and able to purchase changes as the price of the good or service changes. As the price increases, the quantity demanded typically decreases, and vice versa. This inverse relationship between price and quantity demanded is represented by a downward-sloping demand curve. The demand curve helps to understand the responsiveness of consumers to changes in price and how it affects the overall demand for a product.Rate this question:
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- 5.
An increase in the demand for a good refers to a shift in the
- A.
Demand curve to the left
- B.
Demand curve to the right
- C.
Quantity demanded to the right
- D.
Quantity demanded to the left
- E.
Price of the good
Correct Answer
B. Demand curve to the rightExplanation
An increase in the demand for a good refers to a shift in the demand curve to the right. This means that at any given price, consumers are willing and able to buy a larger quantity of the good. The demand curve represents the relationship between the price of the good and the quantity demanded, and a shift to the right indicates an increase in demand. This can be caused by factors such as an increase in consumer income, a change in consumer preferences, or the introduction of new marketing strategies.Rate this question:
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- 6.
Sugar and honey are substitute goods for many cooking applications. If the price of sugar rises, we would expect the
- A.
Demand for honey to increase
- B.
Demand for honey to decrease
- C.
Quantity demanded of honey to decrease
- D.
Price of honey to decrease
- E.
Quantity demanded of honey to increase
Correct Answer
A. Demand for honey to increaseExplanation
When the price of sugar rises, it becomes more expensive for consumers to purchase sugar. As a result, consumers may choose to substitute sugar with honey as a cheaper alternative for their cooking needs. This increase in demand for honey is a direct response to the increase in price of sugar. Therefore, the correct answer is "demand for honey to increase".Rate this question:
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- 7.
A market-day supply curve is
- A.
Horizontal, summing individual supply curves
- B.
Vertical
- C.
Downward sloping
- D.
Upward sloping
- E.
Dependent on the market-day demand
Correct Answer
B. VerticalExplanation
A market-day supply curve is vertical because it represents the relationship between the quantity of a good supplied and its price. As the price of a good increases, suppliers are willing to supply more of it, leading to a higher quantity supplied. Conversely, as the price decreases, suppliers are willing to supply less of it, resulting in a lower quantity supplied. This relationship between price and quantity supplied is represented by a vertical line on a graph, indicating that the quantity supplied is not affected by changes in price.Rate this question:
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- 8.
If the price of a good is below its equilibrium level, then
- A.
An excess supply will result
- B.
Quantity supplied exceeds quantity demanded
- C.
The supply curve will shift to the right
- D.
Quantity demanded exceeds quantity supplied
- E.
The demand curve will shift to the left
Correct Answer
D. Quantity demanded exceeds quantity suppliedExplanation
If the price of a good is below its equilibrium level, it means that the price is lower than what is considered to be the market equilibrium. This situation will lead to an excess demand for the good, as consumers will be willing to purchase more of the good at the lower price. As a result, the quantity demanded will exceed the quantity supplied, creating a shortage in the market.Rate this question:
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- 9.
If more people enter medical school, we can expect
- A.
The demand for doctors to increase
- B.
The supply of doctors to increase
- C.
The demand for doctors to decrease
- D.
The supply of doctors to decrease
- E.
No effect on the supply or demand of doctors--just a movement along the curves
Correct Answer
B. The supply of doctors to increaseExplanation
If more people enter medical school, it is likely that the supply of doctors will increase. This is because more individuals entering medical school means there will be more graduates entering the workforce as doctors. As a result, the overall supply of doctors will increase.Rate this question:
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- 10.
The simultaneous occurrence of inflation and unemployment is called
- A.
Depression
- B.
Downturn
- C.
Deflation
- D.
Demand-pull inflation
- E.
Stagflation
Correct Answer
E. StagflationExplanation
Stagflation refers to the simultaneous occurrence of high inflation and high unemployment within an economy. This term is used to describe a situation where inflation rises while economic growth stagnates or declines, leading to a stagnant or worsening labor market. Stagflation is considered a challenging economic scenario as it contradicts the traditional Phillips curve theory, which suggests an inverse relationship between inflation and unemployment.Rate this question:
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- 11.
If our government cuts taxes, then we will see
- A.
An upward movement along the AD curve
- B.
A downward movement along the AD curve
- C.
The AD curve shift to the left
- D.
The AD curve shift to the right
- E.
The AS curve shift to the right
Correct Answer
D. The AD curve shift to the rightExplanation
When the government cuts taxes, it increases the disposable income of individuals and businesses, which leads to an increase in consumption and investment. This increase in spending causes an increase in aggregate demand (AD), resulting in a rightward shift of the AD curve.Rate this question:
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- 12.
Real GDP is nominal GDP adjusted for
- A.
Price changes
- B.
Intermediate goods
- C.
Business cycle fluctuations
- D.
International trade
- E.
Depreciation
Correct Answer
A. Price changesExplanation
Real GDP is a measure of a country's economic output adjusted for price changes. It takes into account the inflation or deflation that has occurred over a specific period of time, allowing for a more accurate comparison of economic performance. By adjusting for price changes, real GDP provides a clearer picture of the actual growth or decline in the economy, without the distortion caused by changes in prices. This adjustment helps to account for the effects of inflation and allows for a more meaningful analysis of economic trends and comparisons between different time periods.Rate this question:
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- 13.
The expenditure approach to GDP accounting includes
- A.
Wages and salaries
- B.
Net exports
- C.
Net interest
- D.
Corporate profit
- E.
Proprietors' income
Correct Answer
B. Net exportsExplanation
The expenditure approach to GDP accounting includes net exports, which refers to the value of a country's exports minus the value of its imports. This component is important because it represents the contribution of international trade to a country's overall economic activity. By including net exports in GDP calculations, economists can assess the impact of international trade on a nation's economic growth and determine the extent to which a country is reliant on foreign markets for its economic well-being.Rate this question:
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- 14.
When net exports are positive,
- A.
Exports are greater than imports
- B.
Imports are greater than exports
- C.
Imports are greater than investments
- D.
Exports are greater than depreciation spending
- E.
Exports are greater than net investment
Correct Answer
A. Exports are greater than importsExplanation
When net exports are positive, it means that the value of a country's exports is greater than the value of its imports. This indicates that the country is exporting more goods and services than it is importing, resulting in a surplus in its trade balance. This can be seen as a positive sign for the country's economy, as it suggests that it is competitive in the global market and generating more revenue from exports than it is spending on imports.Rate this question:
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- 15.
The "life cycle" hypothesis states that
- A.
MPC remains constant as national income rises
- B.
MPC varies with age
- C.
Transitory income determines consumption
- D.
MPC varies with permanent income
- E.
Consumption spending is independent of income
Correct Answer
B. MPC varies with ageExplanation
The "life cycle" hypothesis suggests that the marginal propensity to consume (MPC) varies with age. This means that as individuals grow older, their tendency to spend a portion of their income changes. Younger individuals typically have a higher MPC, meaning they spend a larger proportion of their income, while older individuals tend to have a lower MPC and save more. This variation in MPC with age is based on factors such as income stability, financial responsibilities, and retirement planning.Rate this question:
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- 16.
Economists refer to the simple relationship between consumption and income as
- A.
Autonomous consumption
- B.
The marginal propensity to consume
- C.
The absolute income hypothesis
- D.
Disposable income
- E.
The consumption function
Correct Answer
B. The marginal propensity to consumeExplanation
The correct answer is "the marginal propensity to consume". The marginal propensity to consume refers to the proportion of additional income that individuals choose to spend on consumption. It is a key concept in economics as it helps to understand how changes in income impact consumption patterns. By calculating the marginal propensity to consume, economists can analyze the overall effect of changes in income on the economy and make predictions about consumer behavior.Rate this question:
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- 17.
The short run consumption curve may shift upward over the long run largely because
- A.
People become wealthier
- B.
The marginal propensity to save increases
- C.
The 45-degree line becomes a 90-degree line
- D.
The demand curve for investment is upward sloping
- E.
Economic growth, although still positive, slows down
Correct Answer
A. People become wealthierExplanation
The short run consumption curve may shift upward over the long run largely because people become wealthier. As individuals accumulate more wealth, their propensity to consume also increases. This means that they are more likely to spend a larger portion of their income on goods and services, leading to an upward shift in the consumption curve. As a result, the level of consumption in the economy increases, reflecting the increased wealth and spending capacity of individuals.Rate this question:
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- 18.
The relationship between MPC and MPS is
- A.
1+MPC=MPS
- B.
1-MPC=MPS
- C.
1+MPS=MPC
- D.
MPC-MPS=1
- E.
MPS-MPC=1
Correct Answer
B. 1-MPC=MPSExplanation
The correct answer is 1-MPC=MPS. This equation represents the relationship between the Marginal Propensity to Consume (MPC) and the Marginal Propensity to Save (MPS). The MPC is the proportion of an increase in income that is spent, while the MPS is the proportion that is saved. Since consumption and saving are complementary, the sum of MPC and MPS must be equal to 1. Therefore, if we subtract the MPC from 1, we get the MPS.Rate this question:
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- 19.
When the interest rate falls, the level of investment in the economy
- A.
Falls
- B.
Is unaffected
- C.
Shifts to the left
- D.
Rises
- E.
Shifts to the right
Correct Answer
D. RisesExplanation
When the interest rate falls, it becomes cheaper for businesses and individuals to borrow money. This decrease in the cost of borrowing encourages investment in the economy as businesses are more willing to take on projects that require financing. As a result, the level of investment in the economy rises.Rate this question:
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Mar 20, 2023Quiz Edited by
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Dec 06, 2010Quiz Created by
Katereneewortman