Free Macroeconomics MCQs with Answers
1,499 Macroeconomics MCQs from Economics, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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1,499 questions · page 26 of 75
- A. UK net foreign investment is unchanged because only UK residents can after UK net foreign investment
- B. UK net foreign investment rises
- C. UK net foreign investment falls
- D. None of the above
Explanation: Net foreign investment equals domestic residents’ purchases of foreign assets minus foreigners’ purchases of domestic assets.
Correct answer: UK net foreign investment falls- A. depreciate and would increase UK net exports
- B. appreciate and would increase UK net exports
- C. depreciate and would decrease UK net exports
- D. appreciate, but the total value of UK net export stays the same
Explanation: Greater European demand for UK goods increases demand for pounds, causing the pound to appreciate.
Correct answer: appreciate, but the total value of UK net export stays the same- A. has no impact on the real interest rate and fails to crowed out investment
- B. decreases the real interest rate and crowds out investment
- C. None of these answers
- D. Increases the real interest rate and crowds out investment
Explanation: A larger government deficit reduces national saving, shifting the supply of loanable funds leftward.
Correct answer: Increases the real interest rate and crowds out investment504. Capital flight ?
- A. decreases a country's net exports and increases its long-run growth path
- B. increases a country's net exports and increases its long-run growth path
- C. increases a country's net exports and decreases its long-run growth path
- D. decreases a country's net exports and decreases its long-run growth path
Explanation: Capital flight sends domestic funds abroad, increasing net capital outflow and the supply of domestic currency in foreign-exchange…
Correct answer: increases a country's net exports and decreases its long-run growth path- A. Foreigners who wish to buy assets in the UK
- B. BAe Systems wishing to sell aircraft to Saudi Arabia
- C. UK residents wishing to buy foreign Produced cars
- D. Lenders of loanable funds
Explanation: A UK budget deficit tends to appreciate the pound by raising interest rates and attracting capital, making UK exports more expensive…
Correct answer: BAe Systems wishing to sell aircraft to Saudi Arabia- A. A tariff on sugar
- B. All are examples of trade policy
- C. capital flight because it increases a country's net exports
- D. an increase in the government budget deficit because it reduces a country's net exports
Explanation: A tariff is a tax on imported goods and is a direct trade-policy instrument.
Correct answer: A tariff on sugar- A. increase Pakistan's net exports and Pakistan's net capital outflow the same amount
- B. Increase Pakistan's net exports and decrease Pakistan's net capital outflow
- C. decreases Pakistan's net exports and Pakistan's net capital outflow the same amount
- D. decrease Pakistan's net exports and increase Pakistan's net capital outflow
Explanation: With investment and other conditions held constant, higher private saving increases the funds available for foreign investment.
Correct answer: increase Pakistan's net exports and Pakistan's net capital outflow the same amount- A. The pound appreciates, and UK net exports rise
- B. The pound appreciates, and UK net exports fall
- C. The pound depreciates, and UK net exports rise
- D. The pound depreciates, and UK net exports fall
Explanation: Russian purchases of UK assets increase demand for pounds, causing the pound to appreciate.
Correct answer: The pound appreciates, and UK net exports fall- A. An increase in Pakistan's net capital outflow increase the supply of rupees and the rupees depreciate
- B. An increase in Pakistan's net capital outflow increase the demand of rupees and the rupees appreciate
- C. An increase in Pakistan's net capital outflow increase the demand of rupees and the rupees depreciate
- D. An increase in Pakistan's net capital outflow increase the supply of rupees and the rupees appreciate
Explanation: An increase in Pakistan’s net capital outflow means residents are purchasing more foreign assets, supplying more rupees in the…
Correct answer: An increase in Pakistan's net capital outflow increase the supply of rupees and the rupees depreciate- A. A country's trade deficit and its government budget deficit
- B. The fact that if a country has a trade deficit, its trading partners must also have trade deficits
- C. the equality of a country's saving deficit and its investment deficit
- D. a country's trade deficit and its net capital outflow deficit
Explanation: The term twin deficits commonly links a government budget deficit with a trade or current-account deficit.
Correct answer: A country's trade deficit and its government budget deficit- A. Increase Pakistan's net exports and decrease Pakistan's net capital outflow
- B. decreases Pakistan's net exports and Pakistan's net Capital outflow the Pakistan's same amount
- C. Increase Pakistan's net exports and Pakistan's net capital outflow the same amount
- D. decreases Pakistan's net exports and increase Pakistan's net capital outflow
Explanation: A government budget deficit reduces national saving, leaving fewer domestic funds for investment at home and abroad.
Correct answer: decreases Pakistan's net exports and Pakistan's net Capital outflow the Pakistan's same amount- A. A decrease in the government budget deficit increase the real interest rate
- B. An increase in the government budget deficit shifts the supply of loanable funds to the right
- C. An increase in private saving shifts the supply of loanable funds to the left
- D. An increase in the government budget deficit shifts the supply of loanable funds to the left
Explanation: A government budget deficit reduces public saving, so national saving and the supply of loanable funds fall, shifting the supply curve…
Correct answer: An increase in the government budget deficit shifts the supply of loanable funds to the left- A. A decrease in a country's net capital outflow shifts the demand for loanable funds to the left
- B. An increase in domestic investment shifts the demand for loanable funds to the right
- C. An increase in a country's net capital outflow shifts the supply of loanable funds to the left
- D. An increase in a country's net capital outflow raises its real interest rate
Explanation: Net capital outflow is part of the demand for loanable funds because it represents funds invested abroad.
Correct answer: An increase in a country's net capital outflow shifts the supply of loanable funds to the left- A. Solow residual
- B. productivity paradox
- C. technological followership
- D. Stieglitz discrepancies
Explanation: The productivity paradox describes the observation that rapid investment in information and communications technology did not initially…
Correct answer: productivity paradox- A. Dale Jorgenson
- B. Joseph Stieglitz
- C. Robert Solow
- D. Theodore W. Schultz
Explanation: Robert Solow highlighted the productivity paradox with the observation that the computer age could be seen everywhere except in…
Correct answer: Robert Solow- A. productivity paradox
- B. absorptive capacity
- C. the residual
- D. uncertainly
Explanation: Education, training and infrastructure improve a developing economy’s ability to adopt, operate and benefit from new technology and…
Correct answer: absorptive capacity- A. maximum capital absorption
- B. factor price distortions
- C. engineering mentality
- D. intermediate technology
Explanation: An engineering mentality gives priority to technically advanced designs without adequately comparing their costs and profitability.
Correct answer: engineering mentality- A. G-7 countries
- B. countries with highest productivity growth in the world since 1960
- C. countries with decreasing TFP growth since 1990s
- D. countries with the lowest information technology equipment and software index prices
Explanation: The seven countries listed are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
Correct answer: G-7 countries- A. an industrial sector and a manufacturing sector
- B. a traditional agricultural sector and a modern industrial sector
- C. state owner ship of the means of production
- D. an industrial sector that concentrates on manufacturing and construction
Explanation: A dual economy combines a traditional, usually low-productivity agricultural sector with a modern industrial sector using more advanced…
Correct answer: a traditional agricultural sector and a modern industrial sector- A. with double capital and labor/
- B. with a modern manufacturing sector as well as traditional agriculture sector
- C. that specialize in labor intensive products more than capital intensive products
- D. with foreign owned and domestically owned capital
Explanation: Dual economies contain two contrasting sectors: a modern manufacturing or industrial sector and a traditional agricultural sector.
Correct answer: with a modern manufacturing sector as well as traditional agriculture sector