Let's Learn About Types Of Macroeconomics

1.

All of the following are not included in the labor force except

A.

Stay-at-home parents.
B.

Discouraged workers.
C.

Students.
D.

People looking for a job.
E.

Retired people.

Correct Answer
D. People looking for a job.

Explanation
The labor force consists of all individuals who are either employed or actively seeking employment. Stay-at-home parents, discouraged workers, students, and retired people are all considered part of the labor force, as they are either employed or have the potential to be employed. The only group that is not included in the labor force is people who are not actively looking for a job.

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2.

Unemployment is caused by

A.

Greedy people.
B.

Capitalism.
C.

Uneducated people.
D.

Communism.
E.

Socialism.

Correct Answer
B. Capitalism.

Explanation
Capitalism is the correct answer because it is an economic system where private individuals or businesses own and control the means of production. In a capitalist system, unemployment can be caused by various factors such as market fluctuations, technological advancements, or economic recessions. The pursuit of profit and competition in capitalism can lead to job losses as businesses prioritize efficiency and cost-cutting measures. Unemployment is not solely caused by greedy people, uneducated people, communism, or socialism, although these factors can play a role in certain contexts.

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3.

Policies that are intended to promote access to employment for non-dominate groups is know as

A.

Affirmative action.
B.

Transfer payments.
C.

Government support.
D.

Quotas.

Correct Answer
A. Affirmative action.

Explanation
Affirmative action refers to policies that aim to promote equal opportunities for individuals from marginalized or underrepresented groups in employment. These policies are implemented to counteract historical discrimination and increase diversity in the workforce. Affirmative action may involve measures such as preferential hiring, outreach programs, or targeted recruitment efforts to ensure that individuals from non-dominant groups have equal access to employment opportunities.

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4.

Cost-push inflation is caused by a change in

A.

Demand.
B.

Supply.
C.

Money supply.
D.

Interest rates.

Correct Answer
B. Supply.

Explanation
Cost-push inflation is caused by a change in supply. This type of inflation occurs when the cost of production increases, leading to an increase in prices. It can be caused by various factors such as an increase in wages, higher raw material costs, or an increase in taxes or regulations. When the supply of goods and services decreases or becomes more expensive, producers pass on these costs to consumers, resulting in inflation. Hence, the correct answer is supply.

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5.

Monetary inflation is caused by a change in

A.

Demand.
B.

Supply.
C.

Money supply.
D.

Interest rates.

Correct Answer
C. Money supply.

Explanation
Monetary inflation refers to an increase in the overall price level of goods and services within an economy. This increase is primarily caused by an increase in the money supply, which refers to the total amount of money in circulation within an economy. When there is more money available in the economy, individuals and businesses have more purchasing power, leading to an increase in demand for goods and services. This increased demand can drive up prices, resulting in inflation. Therefore, a change in the money supply is the main cause of monetary inflation.

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6.

The Phillips curve illustrates what type of relationship between unemployment and inflation?

A.

Direct
B.

Inverse
C.

No relationship

Correct Answer
B. Inverse

Explanation
The Phillips curve illustrates an inverse relationship between unemployment and inflation. This means that as unemployment decreases, inflation tends to increase, and vice versa. This relationship suggests that when the economy is at full employment, inflation tends to be higher, while during periods of high unemployment, inflation tends to be lower. This concept is important for policymakers to understand in order to effectively manage both unemployment and inflation rates in an economy.

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7.

The Phillips curve was proven incorrect because of what economic concept?

A.

Deflation
B.

Stagflation
C.

Inflation
D.

Monetary policy

Correct Answer
B. Stagflation

Explanation
The Phillips curve, which shows the relationship between inflation and unemployment, was proven incorrect because of the concept of stagflation. Stagflation refers to a situation where there is high inflation and high unemployment simultaneously, which contradicts the traditional understanding of the Phillips curve. This concept emerged in the 1970s when many countries experienced a combination of stagnant economic growth, rising unemployment, and high inflation. Stagflation challenged the previously held belief that there was a trade-off between inflation and unemployment, leading to a reevaluation of economic theories and policies.

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8.

The TOTAL amount of income is known as

A.

Functional income.
B.

Disposable income.
C.

Gross income.
D.

Discretionary income.

Correct Answer
C. Gross income.

Explanation
Gross income refers to the total amount of income earned by an individual or business before any deductions or taxes are taken out. It includes all sources of income such as wages, salaries, bonuses, rental income, and investment income. This term is commonly used to determine an individual's or company's financial status and is an important factor in calculating taxes and eligibility for certain financial services.

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9.

The total amount of income an individual makes after taxes is known as

A.

Functional income.
B.

Disposable income.
C.

Gross income.
D.

Discretionary income.

Correct Answer
B. Disposable income.

Explanation
Disposable income refers to the total amount of income an individual has after taxes and other deductions have been taken out. This is the income that is available for spending, saving, or investing. It is called "disposable" because it is the income that can be used at the individual's discretion. Functional income refers to the income that is earned from employment or other sources, but it does not take into account taxes or deductions. Gross income, on the other hand, refers to the total income earned before any deductions are made. Discretionary income refers to the income that is left over after essential expenses have been paid, and it can be used for non-essential or discretionary spending.

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10.

A payment of money from the government to an individual is known as

A.

A transfer payment.
B.

Affirmative action.
C.

Inflation.
D.

Gross income.

Correct Answer
A. A transfer payment.

Explanation
A payment of money from the government to an individual is known as a transfer payment. This term refers to a payment made without any goods or services being exchanged in return. Transfer payments are typically made by the government to support individuals or groups in need, such as welfare payments, social security benefits, or unemployment benefits. These payments aim to redistribute income and provide financial assistance to those who require it.

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