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 64 of 75
- A. The French Revolution
- B. The rise of industrial and capitalist production
- C. Political and labor revolts
- D. a growing spiritual rationalism
Explanation: Marx's historical materialism was influenced by revolutionary politics, industrial capitalism, and political and labour struggles.
Correct answer: a growing spiritual rationalism- A. Adam Smith
- B. Thomas R. Malthus
- C. John Stuart Mill
- D. John Maynard Keynes
Explanation: Smith, Malthus, and John Stuart Mill are central figures of classical economics.
Correct answer: John Maynard Keynes- A. neoclassicism
- B. Marxism
- C. Rostow's model
- D. classical appraoch
Explanation: During the conservative policy period of the 1980s and 1990s, neoclassical approaches emphasizing markets, incentives, and limited…
Correct answer: neoclassicism- A. LDCs are overpopulated
- B. labor contributes nothing to output in LDCs
- C. the marginal products of labor is closed to zero in LDCs
- D. urban unemployment is high in LDCs
Explanation: Surplus-labour models, especially the Lewis model, assume that a developing economy has excess labour whose marginal product is zero or…
Correct answer: the marginal products of labor is closed to zero in LDCs- A. growing government assistance create addiction to welfare programs
- B. low income levels create pressure for money creation
- C. low income levels create pressure for cheap imports
- D. low per capita incomes creates low savings that keep incomes low
Explanation: The vicious circle of poverty links low income with low saving and investment, which limits capital formation and keeps productivity and…
Correct answer: low per capita incomes creates low savings that keep incomes low1266. According to the supply side of the vicious circle theory of development a country is poor because ?
- A. technology levels do not allow for self sufficiency
- B. it was previously too poor to save and invest
- C. underemployment is too widespread
- D. resource allocation is poor
Explanation: On the supply side, poverty persists because low past incomes prevented sufficient saving and investment, leaving the economy with little…
Correct answer: it was previously too poor to save and invest- A. much available data contradicts his thesis about the takeoff stage
- B. there is no explanation of why growth occurs after takeoff
- C. his hypothesis of the stages of growth is difficult to test empirically
- D. All of the above are correct
Explanation: Rostow's theory has been criticized because the takeoff concept is difficult to verify empirically, historical evidence does not…
Correct answer: All of the above are correct1268. Poor developing countries typically impose __________ tariffs than rich advanced nations on imports?
- A. lower
- B. higher
- C. about the same height
- D. None of the above
Explanation: Developing countries commonly use higher import tariffs to protect emerging domestic industries from foreign competition, whereas advanced…
Correct answer: higher- A. has been a matter of low priority for the Chinese government
- B. was achieved in the early 1950s
- C. has been opposed by a number of labor and human rights organizations in other countries
- D. has had negligible effect on trade between china and the United States
Explanation: China joined the WTO in 2001 after lengthy negotiations, and the accession was opposed by some labor and human-rights organizations…
Correct answer: has been opposed by a number of labor and human rights organizations in other countries- A. flying geese
- B. import substitution
- C. export orientation
- D. commodity expansion
Explanation: The flying-geese pattern describes later-developing countries following the industrial and technological path previously taken by more…
Correct answer: flying geese- A. inelastic demand for these products in advanced countries
- B. large increases in the supplies of these products on world markets because of export expansion policies
- C. sluggish demand for these products in advanced countries
- D. All of the above
Explanation: Agricultural commodities and raw materials often have sluggish or income-inelastic demand, while export expansion can increase world…
Correct answer: All of the above- A. relatively small; more difficult
- B. relatively small; easier
- C. relatively large; more difficult
- D. relatively large; easier
Explanation: A producer quota is more effective when member countries control a large share of world output, since non-members cannot easily replace…
Correct answer: relatively large; easier- A. relatively greater then
- B. relatively less than
- C. the same as
- D. any of the above
Explanation: With highly inelastic demand, a change in supply produces a relatively large price response but only a small quantity response.
Correct answer: relatively greater then- A. Px/Pm
- B. Pm/Px
- C. (Pm/Px)Qm
- D. (Px/Pm)Qx
Explanation: The net barter terms of trade are measured by the export price index divided by the import price index, Px/Pm.
Correct answer: Px/Pm- A. absolute advantage
- B. comparative advantage
- C. export-led growth
- D. import substitution
Explanation: Import-substitution policies promote domestic manufacturing by restricting imports through tariffs, quotas, or similar barriers.
Correct answer: import substitution- A. resource allocation based on the principle of absolute advantage
- B. resource allocation based on the principle of comparative advantage
- C. trade protection for import-competing firms
- D. trade protection for exporting-competing firms
Explanation: Export-led growth encourages production in industries where a country has a comparative advantage, meaning a lower opportunity cost…
Correct answer: resource allocation based on the principle of comparative advantage- A. the principle of comparative advantage
- B. the principle of absolute advantage
- C. an outward-looking growth strategy
- D. an inward-looking growth strategy
Explanation: Import substitution focuses on producing domestically what was previously imported, using barriers to reduce dependence on foreign goods.
Correct answer: an inward-looking growth strategy1278. Because supply and demand conditions for primary products are very price inelastic their prices ?
- A. have been steadily rising in recent decades
- B. have been more stable than the prices of manufactured goods
- C. fluctuate about as much as the prices of manufactured goods
- D. tend to be very unstable from year to year
Explanation: With price-inelastic supply and demand, even small changes in production or demand can cause large price movements.
Correct answer: tend to be very unstable from year to year- A. multilateral contracts
- B. production and export controls
- C. buffer stock arrangements
- D. tariff-rates quotas
Explanation: Multilateral contracts, production or export controls, and buffer stocks have all been used to reduce export-price instability.
Correct answer: tariff-rates quotas- A. a lack of substitutes for oil
- B. similar cost schedules for member countries
- C. highly inelastic world demand curve for oil
- D. economic recession for oil importing nations
Explanation: An economic recession in oil-importing countries reduces oil demand, limiting the quantity OPEC can sell at a profitable price.
Correct answer: economic recession for oil importing nations