Macoeconomics Quiz 2023

Investment spending is likely to be high during a peak in the business cycle

• True

• False

Inflation may increase during the expansion phase of the business cycle due to shortages

• True

• False

The value of net exports (X-M) is likely to fall during a peak due to excessive import spending

• True

• False

A trough in the business cycle can occur either during times of slow economic growth or during times of negative economic growth

• True

• False

Economies are likely to experience high levels of inflation during times of Domestic Economic Stability

• True

• False

A boom or peak in the level of domestic economic activity usually exists when:

• There are generally idle resources and excess productive capacity

• There are widespread shortages of goods and services because national production is stretched beyond the economy’s capacity or speed limit

• GDP is steady or rising slowly

•  General prices are rising and there are high levels of unemployment

Typically a recession is indicated by

• Falling economic activity and rising unemployment

• Rising inflation and a falling GDP

• Weak employment growth, but rises in job vacancies

• Increase in paid overtime and the participation rate

Weaker business confidence usually means that:

 

 

• A boom is on its way

• There are fewer optimists than pessimists amongst business decision makers

• Firms will immediately increase their spending on new plant and equipment

• The economy’s productive capacity will probably increase more rapidly

Match the feature with the phase of the business cycle

• Budget deficit

• Expansion

• Supply and demand are in balance

• Trough

• Rising wages

• Contraction

• Rising underutilisation

• Domestic Economic Stability

• High job vacancies

• Peak

Match the feature with the phase of the business cycle

• Rising interest rates

• Trough

• Unemployment starts to rise

• Peak

• Low job vacancies

• Domestic Economic Stability

• Trade deficit

• Contraction

• Inflation 2-3%, growth 3-4%, unemployment 4-5%

• Expansion