Free Macroeconomics MCQs with Answers

• A. Clearing house
• B. Open-market operations
• C. Discount rate
• D. Issuing of notes

Explanation: Open-market operations are widely used because the central bank can adjust the money supply and interest rates by buying or selling…

• A. As a pensioner
• B. As a debtor
• C. As an entrepreneur
• D. As an equity-holder

Explanation: Deflation increases the real value of fixed nominal income, so a pensioner can buy more goods with the same pension.

• A. Taxation
• B. Bank rate
• C. Open-market operations
• D. Credit rationing

Explanation: Taxation is a fiscal policy instrument used by the government, whereas bank rate, open-market operations and credit rationing are tools…

• A. Liability
• B. Assets
• C. Both assets and liabilities
• D. None

Explanation: A bank records money lent to customers as an asset because it represents a claim from which the bank expects repayment and interest.

• A. Increased employment
• B. Increased unemployment allowance
• C. More progressive taxes
• D. More regressive taxes

Explanation: Regressive taxes take a larger proportion of income from low-income groups than from high-income groups, widening income disparities.

• A. Acceptability
• B. Divisibility
• C. Durability
• D. Portability

Explanation: Paper money is accepted, divisible into denominations and easy to carry, but it can be damaged or destroyed and is therefore not fully…

• A. Increasing demand for goods
• B. Increasing supply of goods
• C. Increasing money supply
• D. Decreasing taxes

Explanation: Inflation can be reduced by increasing the supply of goods, because greater output helps meet demand and eases upward pressure on prices.

• A. Bearish
• B. Bullish
• C. Crash
• D. Fall down

Explanation: A falling stock market is described as bearish, reflecting expectations of declining prices and weak investor confidence.

• A. Reduce the deficit on the balance of trade
• B. Reduce the repayment of loans
• C. Reduce the surplus on the capital account
• D. Reduce the volume of exports

Explanation: The current account includes the balance of trade, so reducing a trade deficit directly improves the current account position.

• A. For examine
• B. Foreign exchange
• C. Foreign exports
• D. None of these

Explanation: Forex is the standard abbreviation for foreign exchange, meaning the buying and selling of one currency in terms of another.

• A. Gross domestic product
• B. National income
• C. Gross domestic income
• D. Gross national income

Explanation: National income is the total factor income earned from labour, land and capital, usually measured as net national product at factor cost.

• A. Increase in taxation
• B. Increase in savings
• C. Increase in govt. spending
• D. Decrease in consumption spending

Explanation: Government spending directly adds to aggregate expenditure and raises income through the expenditure multiplier.

• A. A loan from a bank
• B. A loan from one's parents
• C. Gifts and donations
• D. A broker's commission

Explanation: A broker's commission is payment for a current productive service, so it is included in national output and GNP.

• A. To add up the values of goods and services for one year
• B. Add up all savings
• C. To count all imports
• D. To add up the value of semi-finished goods

Explanation: GNP is estimated by adding the value of final goods and services produced by a country's residents during a year, with appropriate…

• A. Budget for a surplus
• B. Cut taxes
• C. Encourage savings
• D. Reduce its expenditure

Explanation: Cutting taxes raises households' disposable income, allowing consumption and aggregate demand to increase.

• A. a fall in living standards
• B. a more youthful population
• C. an ageing population
• D. an increase in population

Explanation: If births fall while deaths remain unchanged, fewer young people enter the population and the average age rises over time.

• A. Net foreign investment
• B. Private investment
• C. Per capita income of citizens
• D. None of the above

Explanation: GNP is calculated from national output or income measures, including relevant investment and foreign-income adjustments, but per capita…

• A. Per capita income
• B. Industrial development
• C. Number of people who have been lifted above the poverty line
• D. National income

Explanation: The growth rate of an economy is conventionally measured by the percentage change in real national income over time.

• A. Currency traded in foreign exchange market for which demand is persistently relative to the supply
• B. Currency Which is used in times of war
• C. Currency which loses its value very fast
• D. None of these

Explanation: Hard currency is a currency that is widely demanded and trusted in foreign-exchange markets, often because its demand persistently exceeds…

• A. The taxes earned by the State
• B. The sum of all factors of income
• C. Personal incomes of all the citizens
• D. Surplus of exports over imports

Explanation: National income is the total income earned by the factors of production, including wages, rent, interest and profit.