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.
Last updated
1,499 questions · page 56 of 75
1101. Historically countries at early stages of rapid economic development have tender to experience ?
- A. trade deficit and an excess of investment over domestic saving
- B. trade surplus and an excess of investment over domestic saving
- C. trade deficits and an excess of domestic savings over investment
- D. trade surpluses and an excess of domestic saving over investment
Explanation: Rapidly developing countries often invest more than they can finance from domestic saving, so they borrow abroad.
Correct answer: trade deficit and an excess of investment over domestic saving- A. purchases more stocks and bonds from the rest of the world than it sells
- B. purchases more goods from the rest of the world than it sells
- C. sells more goods to the rest of the world than it purchases
- D. sells more stocks and bonds to the rest of the world than it purchases
Explanation: A trade deficit means the value of goods purchased from abroad exceeds the value of goods sold abroad.
Correct answer: purchases more goods from the rest of the world than it sells- A. the country is a net lender to the rest of the world
- B. the country is running a net capital account surplus
- C. foreign investment in domestic securities is at very low levels
- D. All of the above
Explanation: A current account surplus means national saving exceeds domestic investment, leaving funds lent or invested abroad, so the country is a…
Correct answer: the country is a net lender to the rest of the world- A. lending more money to other nations
- B. experiencing a surplus in exports of goods an services
- C. reducing its indebtedness to other nations
- D. going further into debt with other nations
Explanation: A current account deficit means a country is spending more abroad than it earns from current international transactions.
Correct answer: going further into debt with other nations- A. is equal to official reserve transactions
- B. occurs because of foreign exchange fluctuations
- C. reflects statistical discrepancies
- D. reflects the difference between flow and stock concepts
Explanation: The balance of payments records transactions during a period, so it is a flow concept.
Correct answer: reflects the difference between flow and stock concepts- A. unilateral transfers
- B. capital account
- C. merchandise account
- D. services account
Explanation: Travel and tourism are services purchased or supplied internationally, not physical merchandise.
Correct answer: services account- A. the U.S Department of labor
- B. the U.S Department of Agriculture
- C. the U.S Department of commerce
- D. the council of Economic Advisers to the President
Explanation: In the United States, the Department of Commerce, principally through its Bureau of Economic Analysis, compiles the balance-of-payments…
Correct answer: the U.S Department of commerce- A. merchandise trade flows
- B. services flows
- C. current account flows
- D. capital flows
Explanation: Capital flows move financial resources across borders, allowing savings in one country to finance investment in another.
Correct answer: capital flows- A. capital outflows
- B. merchandise exports
- C. private gifts to foreigners
- D. foreign aid granted to other nations
Explanation: Exports bring foreign exchange receipts into the country and are recorded as credit items.
Correct answer: merchandise exports- A. balance of international indebtedness
- B. balance of financial transactions
- C. balance of payments
- D. income statements
Explanation: The balance of payments is the systematic record of a country's economic transactions with the rest of the world during a specified…
Correct answer: balance of payments- A. merchandise imports equal merchandise exports
- B. capital imports equal capital exports
- C. services exports equal services imports
- D. the total surplus or deficit equals zero
Explanation: Because every international transaction has matching credit and debit entries, the balance of payments balances in accounting terms.
Correct answer: the total surplus or deficit equals zero- A. involves receipts from foreigners
- B. involves payments to foreigners
- C. increases the domestic money supply
- D. decreases the demand for foreign exchange
Explanation: A credit entry records a transaction that earns or receives foreign exchange, such as exports or income received from abroad.
Correct answer: involves receipts from foreigners- A. exporter
- B. importer
- C. debtor
- D. creditor
Explanation: The United States shifted from a net creditor to a net international debtor in the mid-1980s, reflecting its accumulated external…
Correct answer: debtor1114. The difference between the balance on current account and the balance on capital account is the ?
- A. statistical discrepancy
- B. balance of payments
- C. balance of trade
- D. trade deficit
Explanation: When the current-account and capital-account balances do not exactly offset, the balancing entry is called the statistical discrepancy.
Correct answer: statistical discrepancy- A. current account the capital account
- B. current account the trade account
- C. trade account the capital account
- D. current account the reserve account
Explanation: The balance of payments is conventionally divided into the current account, covering goods, services, income and transfers, and the…
Correct answer: current account the capital account- A. balance of trade
- B. capital account
- C. current account
- D. balance of payments
Explanation: The balance of payments records a country's transactions with the rest of the world, including goods, services, income and asset…
Correct answer: balance of payments- A. capital account transactions
- B. current account transactions
- C. unilateral transfer transactions
- D. merchandise trade transactions
Explanation: Direct investment and purchases of securities involve ownership of foreign assets and are therefore recorded as capital or financial…
Correct answer: capital account transactions- A. is true by definition in all possible circumstances
- B. is supported by recent U.S history
- C. focuses only on the overall economy and is thus always true
- D. fails to recognize that a current account deficit is matched by an equal inflow of foreign funds which finances employment increasing investment spending
Explanation: A current-account deficit is matched by a capital or financial-account surplus, meaning foreign funds flow into the country.
Correct answer: fails to recognize that a current account deficit is matched by an equal inflow of foreign funds which finances employment increasing investment spending- A. merchandise trade account
- B. services account
- C. unilateral transfers account
- D. capital account
Explanation: Tourism and travel are international services rather than physical merchandise, so their receipts and payments are recorded in the…
Correct answer: services account- A. a credit item in the current account
- B. a debit item in the capital account
- C. a credit item in the capital account
- D. a debit item in the current account
Explanation: When foreigners buy U.S. government securities, the United States receives foreign funds and records a capital or financial inflow.
Correct answer: a credit item in the capital account