10.1 Macroeconomic Policy Short Quiz

What does price stability in macroeconomic policy aim to prevent?

• High inflation

• Decreased investment by firms

• Both a and b

• None of the above

Why is low unemployment an important macroeconomic objective?

• It indicates high productivity.

• It reduces the economic potential of a society.

• It is directly related to economic growth.

• All of the above

Which of the following is considered the most fundamental macroeconomic policy objective according to the monetarist ?

• Price stability

• Low unemployment

• Economic growth

• Redistribution of income and wealth

The redistribution of income and wealth is primarily seen as a:

• Macroeconomic issue

• Microeconomic issue

• Both macroeconomic and microeconomic issue

• Neither macroeconomic nor microeconomic issue

What does the trade-off between economic growth and inflation imply?

• They are directly proportional.

• They are inversely related.

• There is no relationship between them.

• They are independent objectives.

Demand-side policies are related to which type of growth?

• Potential growth

• Actual growth

• Both a and b

• Neither a nor b

How do supply-side policies contribute to macroeconomic stability?

If domestic prices rise faster than those in trading partner countries, it may:

• Improve international competitiveness

• Worsen international competitiveness

• Have no impact on international competitiveness

• Increase exports

A current account deficit might put pressure on:

• The exchange rate

• The balance of payments

• Domestic prices

• Both a and b

The internal value of money is associated with:

• International purchasing power

• Domestic purchasing power

• Both a and b

• Neither a nor b