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 41 of 75
- A. fiscal policies
- B. monetary policies
- C. supply-side policies
- D. incomes policies
Explanation: Supply-side policies aim to expand the economy’s productive capacity, such as by improving skills, incentives, technology, or…
Correct answer: supply-side policies802. As prices rise. People will want to keep more money as cash and in bank accounts This is called ?
- A. real balance effect.
- B. cash ratio.
- C. money illusion.
- D. menu costs of inflation.
Explanation: The real-balance effect refers to the effect of the purchasing power of money holdings on spending and money demand; when prices rise…
Correct answer: real balance effect.- A. Regional
- B. structural
- C. seasonal
- D. demand-deficient
Explanation: Seasonal unemployment occurs when demand for certain work changes predictably during the year, as with ice-cream sales outside summer.
Correct answer: seasonal804. Unemployment resulting from imperfect information in the labour market is called ____ unemployment?
- A. Frictional
- B. natural
- C. real-wage
- D. disequilibrium
Explanation: Frictional unemployment arises while workers and employers search for suitable matches, often because information about vacancies or…
Correct answer: Frictional- A. of products produced by a given industry.
- B. produced by the government
- C. of labour supplied by all households
- D. of goods and services produced in an economy.
Explanation: Aggregate supply is the total quantity of final goods and services that producers in an economy are willing and able to supply at…
Correct answer: of goods and services produced in an economy.- A. Portion of unemployment that is due to the normal working of the labour market
- B. Portion of unemployment that is due to changes in the structure of the economy that results in a significant loss of jobs in certain industries.
- C. Unemployment that results when people become discouraged about their chances of finding a job so they stop looking for work.
- D. Unemployment that occurs during recessions and depressions.
Explanation: Cyclical unemployment is linked to the business cycle and rises when recessions or depressions reduce aggregate demand and production.
Correct answer: Unemployment that occurs during recessions and depressions.- A. a discouraged worker:
- B. unemployed.
- C. hard core unemployed.
- D. unemployable
Explanation: A discouraged worker wants employment but has stopped searching because they believe suitable work is unavailable, so they are not counted…
Correct answer: a discouraged worker:- A. Pay rates within the private sector
- B. pay rates in the public sector
- C. investment in education
- D. Benefits available for the unemployed and sick
Explanation: The government can directly set public-sector pay, provide benefits and fund education, but private-sector pay is normally determined by…
Correct answer: Pay rates within the private sector- A. Spending on health
- B. Spending on defence
- C. Firms investment decisions
- D. Spending on education
Explanation: Government directly determines its own spending on health, defence and education through the budget.
Correct answer: Firms investment decisions- A. interest rate adjustment
- B. central bank intervention in the Forex
- C. domestic wage and price adjustment
- D. devaluation
Explanation: Inside the EMU, members share a monetary policy and cannot independently devalue or adjust interest rates.
Correct answer: domestic wage and price adjustment- A. low inflation
- B. low interest rates
- C. stable nominal exchange rates
- D. budget deficits and government debt under control
- E. all of the above
Explanation: The Maastricht criteria cover price stability, convergence of long-term interest rates, exchange-rate stability, and sustainable…
Correct answer: all of the above- A. European union, single market
- B. Western European, single currency area
- C. European Union, single currency area
- D. Western European, single market
Explanation: The Single European Act set the objective of completing a European single market by 1992, including the removal of barriers to the…
Correct answer: European union, single market- A. The ECU
- B. currency swap agreement between member
- C. the exchange rate mechanism
- D. all of the above
Explanation: The European Monetary System included the ECU, the Exchange Rate Mechanism and financial support arrangements such as currency or credit…
Correct answer: all of the above- A. crowds out imports
- B. crowds out public consumption
- C. crowds out exports
- D. reduces the budget deficit
Explanation: Fiscal expansion under floating exchange rates can raise interest rates, attract capital inflows and appreciate the currency.
Correct answer: crowds out exports- A. stable
- B. predictable
- C. volatile
- D. depreciating
Explanation: Floating exchange rates can respond rapidly to capital flows, speculation, interest-rate changes and expectations, making them volatile in…
Correct answer: volatile- A. interest rates
- B. competitiveness
- C. trade
- D. speculation
Explanation: In the short run, floating exchange rates respond chiefly to speculation about future currency values, interest rates and economic…
Correct answer: speculation- A. higher import prices, higher wages increases
- B. lower export prices, lower imports volumes
- C. higher import prices, lower export prices
- D. higher wage increases lower import volumes
Explanation: Devaluation makes imports more expensive and can raise domestic wages and costs, producing inflation.
Correct answer: higher import prices, higher wages increases- A. money supply targets
- B. income policy
- C. interest rates
- D. inflation targets
Explanation: With free international capital movement, central banks use interest rates to influence capital flows and provide incentives for…
Correct answer: interest rates- A. buy foreign exchange, sell domestic currency
- B. sell foreign exchange buy domestic currency
- C. buy foreign exchange buy domestic currency
- D. sell foreign exchange sell domestic currency
Explanation: A balance-of-payments deficit creates excess demand for foreign currency, so the central bank supports the fixed rate by selling foreign…
Correct answer: sell foreign exchange buy domestic currency- A. Price difference
- B. balance of payments difference
- C. current account differences
- D. expected exchange rate changes
Explanation: With perfect capital mobility, investors move funds to eliminate interest-rate advantages.
Correct answer: expected exchange rate changes