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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- A. changes in industrial structure over time
- B. specific barriers to development and how to overcome them
- C. The impact of international trade structures on developing countries
- D. the caste of class structure and discrimination in the labor market
Explanation: Structuralist economists examine the specific institutional and economic barriers that keep developing countries from growing, then…
Correct answer: specific barriers to development and how to overcome them- A. Food shortages
- B. Foreign debt
- C. Rapid population growth
- D. Labor shortages
Explanation: Food shortages, foreign debt and rapid population growth are common development problems, whereas developing countries generally have…
Correct answer: Labor shortages- A. mechanization
- B. land reform
- C. import substitution
- D. produce marketing boards
Explanation: Land reform can raise agricultural output by giving cultivators stronger incentives to invest, work efficiently and improve the land.
Correct answer: land reform- A. The constraints imposed by dependency on the already-developed nations
- B. A steady rate of capital formation
- C. An adequate level of social overhead capital
- D. The supply of human resources is too high
Explanation: Dependency theory argues that poor nations can remain underdeveloped because their economic relationships with richer countries limit…
Correct answer: The constraints imposed by dependency on the already-developed nations- A. the prices of the goods they imported were falling
- B. the price of goods they exported were increasing
- C. their terms of trade were deteriorating
- D. their terms of trade were improving
Explanation: Import substitution became attractive when developing countries faced deteriorating terms of trade, meaning export prices weakened…
Correct answer: their terms of trade were deteriorating- A. 80%
- B. 65%
- C. 50%
- D. 25%
Explanation: A commonly cited development statistic is that high-income countries, despite containing a small share of the world’s population, consume…
Correct answer: 80%- A. a lower rate of illiteracy
- B. a greater degree of equality in the income distribution
- C. a lower infant mortality rate
- D. a smaller percentage of the labor force in urban areas
Explanation: Developing countries generally have higher illiteracy and infant mortality, greater income inequality, and a smaller share of the labour…
Correct answer: a smaller percentage of the labor force in urban areas- A. money lent to the country being immediately invested abroad
- B. People investing their money in urban business rather than agriculture
- C. money moving around financial institutions rather than being invested in production
- D. people investing money abroad rather than in their own country
Explanation: Capital flight occurs when residents transfer or invest their financial assets abroad instead of investing them domestically.
Correct answer: people investing money abroad rather than in their own country- A. an agreement with the World Bank to turn some of a debt into other forms
- B. a change in debt repayment due to inability to pay
- C. regular payments of interest and repayments of capital
- D. a program of austerity measures agreed with the IMF to make repayment possible
Explanation: Debt rescheduling changes the timing or terms of repayment, usually because the borrower cannot meet the original schedule.
Correct answer: a change in debt repayment due to inability to pay- A. The colonial period
- B. The early 1950s
- C. most debt was incurred during the oil shocks of the 1970s
- D. the early 1960s
Explanation: A large share of developing-country debt accumulated during and after the oil shocks of the 1970s, when oil exporters deposited surplus…
Correct answer: most debt was incurred during the oil shocks of the 1970s591. When economists say that developing countries have a dualistic economy the 2 parts referred to are ?
- A. modern sector and traditional sector
- B. town and country
- C. men and women
- D. rich people and poor people
Explanation: A dualistic economy contains a modern, relatively productive sector alongside a traditional sector using older methods and technologies.
Correct answer: modern sector and traditional sector- A. encourages mechanization
- B. allows the farmers to set the prices for their agricultural products
- C. enables farmers to escape the problem of diminishing return
- D. makes farmers owners of the land instead of tenants and owners' farmers are more productive than tenant farmers
Explanation: Land reform can raise output by giving cultivators secure ownership, making them more willing to invest effort and resources in the land.
Correct answer: makes farmers owners of the land instead of tenants and owners' farmers are more productive than tenant farmers- A. shortages of inputs including land
- B. an over-investment in farm equipment
- C. migration from rural areas to urban areas
- D. a lack of effective demand for food products
Explanation: Agricultural productivity is commonly limited by inadequate inputs such as improved seeds, fertiliser, irrigation, credit and suitable…
Correct answer: shortages of inputs including land- A. stress agricultural development over industrial development
- B. promote industrial development over agriculture
- C. use a balanced strategy that promotes both agricultural and industrial development
- D. stress the importation of agricultural products and the export of manufactured goods
Explanation: Development requires complementary growth in agriculture and industry: agriculture supplies food, employment and raw materials, while…
Correct answer: use a balanced strategy that promotes both agricultural and industrial development- A. the vicious circle of poverty hypothesis
- B. the dependency theory
- C. neo-colonialism
- D. the under-consumptionist hypothesis
Explanation: The vicious circle of poverty describes how low income leads to low saving and investment, which keeps productivity and income low.
Correct answer: the vicious circle of poverty hypothesis- A. export promotion
- B. industrial promotion
- C. import substitution
- D. unbalanced growth
Explanation: Import substitution means producing domestically the goods that were previously imported, usually through protection or other support for…
Correct answer: import substitution- A. 40%
- B. 10%
- C. 20%
- D. 30%
Explanation: The 85% figure refers to the population of developing countries receiving only about one-fifth of global income, highlighting the severe…
Correct answer: 20%- A. the newly industrialized countries like Korea, Taiwan Malaysia
- B. The republics of the former Soviet Union
- C. Countries that still have a communist government like China and Cuba
- D. countries that have fallen far behind the economic advances of the rest of the world
Explanation: The Fourth World refers to countries or populations left far behind even the broader group of developing countries in economic and social…
Correct answer: countries that have fallen far behind the economic advances of the rest of the world- A. The brain drain
- B. human capital deterioration
- C. productivity
- D. labor degradation
Explanation: The migration of doctors, engineers, scientists and other highly trained workers from poorer to richer countries is called brain drain.
Correct answer: The brain drain- A. natural resources
- B. body of knowledge
- C. land
- D. quantity of labor
Explanation: Kuznets emphasized that advanced economies depend mainly on accumulated knowledge, skills and technology rather than merely on physical…
Correct answer: body of knowledge