Tutorial 1

Question 1

Which of the following is NOT a topic studied in Macroeconomics?
A) gross domestic product
B) the unemploymentrate
C) the price of DELL computers
D) the inflation rate

Answer 1

C) the price of DELL computers

Question 2

Which of the following is a topic studied in Macroeconomics?
A) gross domestic product
B) the wage of auto workers
C) the price of Apple iphone 12
D) the amountof pizza produced

Answer 2

A) gross domestic product

Question 3

Which of the following is a topic studied in Macroeconomics?
A) the functioning of individual industries
B) aggregate behaviour of households and industries C) the behaviour of individual households
D) the decision-making behaviour of individual business firms

Answer 3

B) aggregate behaviour of households and industries

Question 4

An increase in the overall price level is known as
A) deflation
B) recession
C) inflation
D) stagflation

Answer 4

C) inflation

Question 5

5) Aggregate behaviour is
A) the behaviour of each household and firm
B) the behaviour of each individual.
C) the behaviour of all households and firms together
D) nonother above

Answer 5

C) the behaviour of all households and firms together

Question 6

6) Inflation is a(n)
A) decrease in the overall price level.
B) decrease in the overall level of economic activity C) increase in the overall price level.
D) increase in the overall level of economic activity

Answer 6

C) increase in the overall price level.

Question 7

7) Deflation occurs when
A) the average price level declines
B) the economic activity declines
C) the economic growth rate declines
D) the unemployment rate declines

Answer 7

A) the average price level declines

Question 8

A period of very rapid increase in the overall price level is known as
A) stagnation
B) hyperinflation
C) stagflation
D) depression

Answer 8

B) hyperinflation

Question 9

9) The term business cycle refers to the
A) short-term ups and downs in the price level.
B) long-term trends in the price level.
C) short-term ups and downs in the level of economic activity.
D) long-term trends in the level of economic activity

Answer 9

C) short-term ups and downs in the level of economic activity.

Question 10

A period during which aggregate output rises is known as a(n)
A) recession
B) inflation
C) hyperinflation
D) expansion

Answer 10

D) expansion

Question 11

A period when the economy shrinks is known as
A) a recession
B) a contraction
C) a slump
D) all of the above

Answer 11

D) all of the above

Question 12

In a business cycle, a peak represents the end of represents the end of XXXXX and a trough represents the end of XXXXX .
A) an expansion; a recession
B) a depression; an expansion
C) a trough; a peak
D) a recession; an expansion

Answer 12

A) an expansion; a recession

Question 13

In a business cycle, a peak represents the end of
A) an expansion
B) a depression
C) a trough
D) a recession

Answer 13

A) an expansion

Question 14

In a business cycle, a trough represents the end of
A) an expansion
B) an inflation
C) a peak
D) a recession

Answer 14

D) a recession

Question 15

Between a trough and a peak, the economy goes through a(n)
A) recession
B) bust
C) expansion
D) hyperinflation

Answer 15

C) expansion

Question 16

Between a peak and a trough, the economy goes through a(n)
A) expansion
B) inflation
C) recession
D) boom

Answer 16

C) recession

Question 17

Unemployment generally XXXXXX during recessions and XXXXXXX during expansions.
A) falls; rises
B) falls; falls
C) rises; falls
D) rises; rises

Answer 17

C) rises; falls

Question 18

A prolonged and deep recession is called
A) a business cycle
B) a depression
C) a stagflation
D) a hyperinflation

Answer 18

B) a depression

Question 19

Unemployment implies that in the labor market
A) there is an excess supply of labour
B) there is an excess demand for labour
C) there are too few workers for the jobs available
D) quantity demanded of labour exceeds quantity supplied

Answer 19

A) there is an excess supply of labour

Question 20

If output is rising and unemployment is falling, the economy MUST be in a(n)
A) contraction
B) expansion
C) depression
D) hyperinflationary period

Answer 20

B) expansion

Question 21

Government policies regarding taxes and expenditures are called
A) fiscal policy
B) income policy
C) supply-side policy
D) monetary policy

Answer 21

A) fiscal policy

Question 22

The Bank of England raising the short-term rate of interest falls under:
A) fiscal policy
B) monetary policy
C) growth policy
D) supply-side policy

Answer 22

B) monetary policy

Question 23

Policies designed to affect the quantity of money in the economy are known as
A) fiscal policy
B) supply side or growth policy
C) government spending policy
D) monetary policy

Answer 23

D) monetary policy

Question 24

The diagram that shows the income received and payments made by each sector of the economy is the
A) aggregate demand-aggregate supply diagram.
B) circular flow diagram
C) income flow diagram
D) income-production diagram

Answer 24

B) circular flow diagram

Question 25

25) A transfer payment is A) a bonus to get a worker to accept a transfer B) a cash payment made by the government to people who do not supply goods, services or labour in exchange for the payment C) a cash payment for transferring a good from one person to another. D) an in-kind payment for working ʺoff the booksʺ

Answer 25

B) a cash payment made by the government to people who do not supply goods, services or labour in exchange for the payment

Question 26

In the goods-and-services market, households A) only supply B) only demand C) both supply and demand D) neither supply nor demand

Answer 26

B) only demand

Question 27

In the circular flow diagram, firms XXXXX labour and households XXXXX goods and services.

Answer 27

A) demand;supply B) demand;demand C) supply; demand D) supply; supply

Question 28

Securities issued by the UK Treasury government when it borrows money are known as A) Treasury shares B) Treasury stocks C) Treasury bonds D) none of the above

Answer 28

C) Treasury bonds

Question 29

Securities issued by a corporation when it borrows money is a A) share B) corporate bond C) corporate dividend D) stock

Answer 29

B) corporate bond

Question 30

To bring the economy out of an inflationary period, Keynes argued that the government should A) cut both taxes and government spending B) increase both taxes and government spending C) increase taxes and/or decrease government spending D) decrease taxes and/or increase government spending

Answer 30

C) increase taxes and/or decrease government spending

Question 31

Rapid increases in the price level during periods of recession or high unemployment are known as

Answer 31

A) stagflation B) stagnation C) depression D) inflation