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 42 of 75
- A. deficit
- B. surplus
- C. revaluation
- D. devaluation
Explanation: Lower aggregate demand reduces domestic income and therefore reduces imports.
Correct answer: surplus822. When the $/£ exchange rate rises the pound _____ and when the $/£ rates falls the pound ________?
- A. depreciates, appreciates
- B. revalues, devalues
- C. appreciates, depreciates
- D. becomes more expensive becomes cheaper
Explanation: A rise in the dollar-per-pound rate means one pound buys more dollars, so the pound appreciates.
Correct answer: appreciates, depreciates- A. fluctuate more than it would do otherwise
- B. appreciate
- C. depreciate
- D. not be affected
Explanation: Importing many cars increases demand for foreign currency and the supply of rupees in the foreign-exchange market.
Correct answer: depreciate- A. fluctuate more than it would do otherwise
- B. appreciate
- C. depreciate
- D. not be affected
Explanation: Faster income growth usually raises demand for imports, increasing the supply of rupees in exchange markets and weakening the currency.
Correct answer: depreciate- A. depreciate
- B. not be affected
- C. fluctuate more than if it were at peace
- D. appreciate
Explanation: Participation in a war can raise uncertainty, defence-related import demand and capital outflows, weakening confidence in the currency.
Correct answer: depreciate- A. a recession
- B. a trade surplus
- C. a trade deficit
- D. an expansion.
Explanation: A country has a trade deficit when the value of its imports exceeds the value of its exports. A trade surplus is the opposite situation.
Correct answer: a trade deficit- A. financial account on the balance of payments.
- B. balance of payments
- C. balance of payments on current account
- D. capital account of the balance of payments
Explanation: Purchases and sales of shares, other financial assets and bank deposits across borders are recorded in the financial account.
Correct answer: financial account on the balance of payments.- A. free-trade
- B. autarkic
- C. open
- D. mixed
Explanation: An open economy conducts trade and financial transactions with other countries.
Correct answer: open- A. rise, fall
- B. rise; rise
- C. fall; fall
- D. fall; rise
Explanation: Higher interest rates increase borrowing and financing costs, while discouraging consumption and investment.
Correct answer: rise, fall- A. fiscal policies
- B. incomes policies
- C. supply-side policies
- D. monetary policies
Explanation: Fiscal policy uses taxation and government expenditure to influence aggregate demand, employment and economic activity.
Correct answer: fiscal policies- A. real balance effect
- B. menu costs of inflation
- C. money illusion.
- D. cost-push inflation.
Explanation: Menu costs are the administrative costs of changing prices, such as replacing price tags and reprinting price lists, when inflation…
Correct answer: menu costs of inflation- A. ratio of the frictional unemployment rate to the cyclical unemployment rate.
- B. Sum of structural unemployment and cyclical unemployment.
- C. Sum of frictional unemployment and cyclical unemployment
- D. sum of frictional unemployment and structural unemployment.
Explanation: The natural rate of unemployment consists of frictional unemployment, caused by job search, and structural unemployment, caused by…
Correct answer: sum of frictional unemployment and structural unemployment.- A. regional
- B. technological
- C. structural
- D. demand-deficient
Explanation: Structural unemployment occurs when changes in demand or supply make workers’ skills, industries or locations mismatched with available…
Correct answer: structural- A. natural
- B. frictional
- C. disequilibrium
- D. structural
Explanation: When real wages remain above the equilibrium level, the quantity of labour supplied exceeds the quantity demanded, producing…
Correct answer: disequilibrium- A. the household and government sectors
- B. the household sector.
- C. all sectors of except the rest of the world
- D. all sectors of the economy including the rest of the world.
Explanation: Aggregate demand is planned expenditure by households, firms, government and the foreign sector, represented by C + I + G + (X − M).
Correct answer: all sectors of the economy including the rest of the world.- A. not change the unemployment rate
- B. decrease the unemployment rate
- C. increase the unemployment rate
- D. have an indeterminate impact on the unemployment rate
Explanation: Discouraged workers are normally outside the labour force, so counting them as unemployed adds them to both unemployment and the labour…
Correct answer: increase the unemployment rate- A. a labour force survey.
- B. the number out of work and claiming benefit
- C. the percentage of the labour force not in work
- D. the ILO/OECD standardised unemployment measurement
Explanation: The ILO standard measures unemployment through labour-force surveys using internationally comparable criteria, rather than relying only on…
Correct answer: the ILO/OECD standardised unemployment measurement- A. Unemployment population ratio.
- B. Unemployment rate
- C. employment rate
- D. Labour force rate.
Explanation: The unemployment rate is calculated as unemployed people divided by the labour force, expressed as a percentage.
Correct answer: Unemployment rate- A. The aggregate supply curve shifts to the right by more than Rs 16 billion
- B. The aggregate demand curve shifts to the left by more than Rs 16 billion
- C. The aggregate demand curve shifts to the right by more than Rs 16 billion
- D. the aggregate supply curve shifts to the left by more than Rs 16 billion
Explanation: The initial increase in government purchases raises aggregate demand, and the multiplier expands the effect beyond Rs16 billion.
Correct answer: The aggregate demand curve shifts to the right by more than Rs 16 billion- A. supply-side economics
- B. None of these answers
- C. The crowding-out effect
- D. The multiplier effects
Explanation: Higher government purchases raise income and money demand, pushing up interest rates and reducing private investment.
Correct answer: The crowding-out effect