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 49 of 75
- A. the money supply increases by more than Rs 1,000
- B. the money supply increase by less than Rs 1,000
- C. the money supply decrease by less than Rs 1,000
- D. the money supply decrease by more than Rs 1,000
- E. The money supply is unaffected
Explanation: Depositing Rs 1,000 changes the form of money from currency held by the public to a bank deposit.
Correct answer: The money supply is unaffected- A. The interest rate at Which commercial banks lend to and borrow from each other
- B. The interest rate the European Central Bank pays on reserves
- C. The interest rates the public pays when borrowing from banks
- D. The interest rates the European Central Bank charges on loans to banks
- E. He interests rate banks pay on the public's deposits
Explanation: The refinancing rate is the central bank’s lending rate on loans to commercial banks, known in different systems by names such as the…
Correct answer: The interest rates the European Central Bank charges on loans to banks- A. assets
- B. deposits
- C. loans
- D. government bonds
Explanation: Reserve requirements specify the minimum fraction of customer deposits that banks must retain as reserves rather than lend out.
Correct answer: deposits964. If the banks in an economy operate with a reserve ratio of 20 percent then the money multiplier is ?
- A. 4
- B. 20
- C. 25
- D. 5
Explanation: With a reserve ratio of 20 percent, the simple money multiplier is the reciprocal of the ratio: 1 ÷ 0.20 = 5.
Correct answer: 5- A. A debit card is not really money because it is only a means of transferring money between accounts
- B. All the wealth that people hold, in whatever form, should be considered as money
- C. Wealth held in the current account you hold with your bank is almost as convenient for buying things as wealth held in your wallet so the wealth in current accounts should be included in measures of money
- D. In a complex economy it is not easy to draw a clear dividing line between assets that should be considered as money and those that should not
Explanation: Money is a particularly liquid asset used as a medium of exchange, not all wealth held by people.
Correct answer: All the wealth that people hold, in whatever form, should be considered as money- A. Paper euros
- B. gold
- C. Silver coins
- D. cigarettes
Explanation: Paper euros are fiat money because their value comes from legal and public acceptance rather than from a valuable material backing such as…
Correct answer: Paper euros- A. Lawyer services purchased by a home buyer
- B. The purchase of a new Nissan produced in Sunderland
- C. Copper purchased by tap manufacturer Bristan
- D. A new art gallery purchased by the city of Newcastle
- E. Lawn care services purchased by a home owner.
Explanation: Copper bought by Bristan is an intermediate input, so counting its value separately would double-count its contribution when the final tap…
Correct answer: Copper purchased by tap manufacturer Bristan- A. foreign; domestic
- B. current year; base year
- C. domestic; foreign
- D. base year; current year
- E. intermediate; final
Explanation: Real GDP uses base-year prices to isolate changes in output from inflation, while nominal GDP uses current-year prices.
Correct answer: base year; current year- A. Rs50
- B. Rs100
- C. Rs650
- D. Rs500
Explanation: Because the shoes are final goods sold to consumers, their Rs500 selling value is counted in GDP, while the leather and thread are…
Correct answer: Rs500- A. intermediate goods
- B. final goods and services
- C. manufactured goods
- D. inferior goods and services
- E. normal goods and services
Explanation: GDP totals the market value of final goods and services produced within a country's borders during a period.
Correct answer: final goods and services- A. intermediate production
- B. Net National Product
- C. Investment
- D. depreciation
- E. consumption
Explanation: Depreciation is the measured loss in value of plant and equipment caused by wear, obsolescence, or use during production.
Correct answer: depreciation- A. Real GDP per capita
- B. Real GDP
- C. Real GDP population
- D. Real GDP plus depreciation
Explanation: Real GDP per capita divides inflation-adjusted output by population, so it approximates the average quantity of goods and services…
Correct answer: Real GDP per capita- A. Gross National Product adjusted for inflation
- B. Gross Domestic Product adjusted for inflation
- C. Gross Domestic Product plus net property income from abroad
- D. Gross National Product minus depreciation
Explanation: Net National Product is obtained by subtracting depreciation, or capital consumption, from Gross National Product: NNP = GNP −…
Correct answer: Gross National Product minus depreciation- A. investment
- B. net exports
- C. government purchases
- D. consumption
- E. none of these answers
Explanation: A newly built home is a newly produced capital asset, so its purchase is recorded as residential investment.
Correct answer: investment- A. Consumption in increase by Rs40,000 and net export decreases by Rs40,000
- B. Net exports increase by Rs40,000
- C. There is no impact because this transaction does not involve domestic production
- D. Investment increased by Rs40,000 and net exports increases by Rs40,000
Explanation: The imported BMW raises consumption by Rs40,000 but also raises imports, reducing net exports by Rs40,000.
Correct answer: Consumption in increase by Rs40,000 and net export decreases by Rs40,000- A. intermediate production exceeds final production
- B. foreigners are producing more in the Pakistan then Pakistanis are producing in foreign countries
- C. real GNP exceeds nominal GNP
- D. real GDP exceeds nominal GDP
Explanation: GDP counts production within Pakistan, while GNP counts production by Pakistani-owned factors, wherever they operate.
Correct answer: foreigners are producing more in the Pakistan then Pakistanis are producing in foreign countries- A. the value of taking a day off from work
- B. consulting services
- C. intermediate sales
- D. illegal drug sales
- E. housework
Explanation: Consulting services are market services produced during the period and are included in GDP.
Correct answer: consulting services- A. must have fallen
- B. must have risen
- C. must have stayed the same
- D. may have risen fallen, or stayed the same because there is not enough information to determine what happened to real output
Explanation: Nominal GDP reflects both quantities and prices, so a rise in it does not reveal what happened to real output.
Correct answer: may have risen fallen, or stayed the same because there is not enough information to determine what happened to real output- A. GNP
- B. NNP
- C. Depreciation
- D. Real GDP
Explanation: GDP measures production within a country's borders, while net property income from abroad adjusts this to income received by its…
Correct answer: GNP- A. I and III only
- B. II and III only
- C. I, II and III only
- D. I, II , III only IV
Explanation: A booming export sector can appreciate the currency, weaken other export and import-substitution sectors, and bid up factor and input…
Correct answer: I, II , III only IV