BSP2001 MACRO AND INTERNATIONAL ECONOMICS SEM 1 2015/2016

Practice MCQs Set 1

1) Macroeconomics focuses on _______.
A) the effects of policies that affect aggregate consumption and savings.
B) the determination of changes in wages and prices at aggregate level.
C) the determination of interest rates.
D) All of the above.

2) Government intervention into economic activity will NOT lead to a change in the
price level in the _______.
A) short run.
B) medium run.
C) long run.
D) All of the above.

3) In the long run, the AS curve is _______ because prices are _______.
A) horizontal; rigid.
B) horizontal; flexible.
C) vertical; rigid.
D) vertical; flexible.

4) In the short run, a negative aggregate demand shock will _______.
A) affect the price level but not the output level.
B) affect the output level but not the price level.
C) affect both the price and output level.
D) not affect the price and output level.

5) In the medium run, a negative aggregate demand shock will lead to a _______ in
equilibrium.
A) lower price level.
B) lower output level.
C) All of the above.
D) None of the above.

6) When the economy goes into a recession, we can generally expect that _______.
A) inflation will decrease while output will increase.
B) inflation will increase while unemployment will decrease.
C) inflation and output will increase.
D) inflation will decrease while unemployment will increase.

1

C) goods that are used to produce other goods. B) Investment went up since you bought government bonds. government purchases = 1400. B) domestic. domestically. A) value of all final goods and services produced within the country over a period of time. C) domestic and foreign. private domestic saving = 900. domestically and abroad. A) final goods that are sold. C) value of all final goods and services sold within the country over a period of time. B) value of all final goods and services produced for the market by citizens of the country over a period of time. which of the following is true? A) Investment went up since you purchased a newly-built house. and bought some government bonds. D) second-hand goods that are sold. imports = 400. 2 . 9) Which of the following can affect the size of the output gap? A) Changes to potential GDP B) Changes to actual GDP C) Changes to aggregate demand D) All of the above. When calculating GDP.BSP2001 MACRO AND INTERNATIONAL ECONOMICS SEM 1 2015/2016 7) Gross Domestic Product is defined as the _______. domestically and abroad. B) final goods that remain unsold. 10) Assume exports = 300. 8) Consumer spending is spending by ________ households on final goods and services produced ________. C) Government purchases went up since you bought government bonds. tax = 1100. Then the level of private domestic investment is A) 500 B) 600 C) 700 D) 900 11) Assume you purchased a newly-built house. D) value of all goods and services produced and sold within the country over a period of time. 12) Intermediate goods are _______. bought a used car. D) Consumption went up since you bought a new house and a used car. A) domestic. domestically. D) domestic and foreign.

3 . D) the market value of all goods produced by domestically-owned resources in a given year. 14) If nominal GDP decreased from $500 billion in the base year to $400 billion in the following year and real GDP stayed the same. D) number of people who are not looking for jobs divided by the labor force. D) Inflation remained unchanged. 15) The unemployment rate is defined as the _______.BSP2001 MACRO AND INTERNATIONAL ECONOMICS SEM 1 2015/2016 13) Nominal GDP is correctly defined as _______. which is true? A) Inflation decreased by approximately 20%. A) fraction of the labor force that cannot find jobs and are not looking for jobs. C) number of unemployed divided by total population. C) Inflation decreased by approximately 80%. B) the monetary value of all wealth that is accumulated in a given year. produced in a given year. C) the monetary value of all final goods and services currently produced in the economy in a given year. B) fraction of the labor force that cannot find jobs but who are actively looking. B) Inflation decreased by approximately 25%. final and intermediate. A) the monetary value of all goods and services.