Macroeconomics Basics

What does GDP stand for?

• Great Domestic Product

• General Domestic Price

• Growth Development Percentage

• Gross Domestic Product

Define inflation and provide an example.

• Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. An example of inflation would be when the price of a loaf of bread increases from $2 to $2.50 within a year.

• Inflation is the rate at which the general level of prices for goods and services is decreasing.

• An example of inflation is when the price of a loaf of bread decreases due to increased demand.

• Inflation is the rate at which the general level of prices for goods and services remains constant.

Explain the concept of deflation and its impact on the economy.

• Deflation leads to an increase in consumer spending

• Deflation has no impact on the real value of debt

• Deflation results in higher business investment

• Deflation is a decrease in the general price level of goods and services in an economy. It can lead to lower consumer spending, reduced business investment, and an increase in the real value of debt. This can result in a downward spiral of economic activity.

How is the unemployment rate calculated?

• Unemployment rate = (Number of unemployed individuals / Total workforce) * 100

• Unemployment rate = (Number of unemployed individuals / Total population) * 100

• Unemployment rate = (Number of employed individuals / Total labor force) * 100

• Unemployment rate = (Number of unemployed individuals / Total labor force) * 100

What is fiscal policy and how does it influence the economy?

• Fiscal policy is solely determined by the private sector

• Fiscal policy influences the economy by affecting aggregate demand, economic growth, inflation, and employment through changes in taxation and government spending.

• Fiscal policy has no impact on the economy

• Fiscal policy only affects government spending

Describe the role of the central bank in implementing monetary policy.

• The central bank implements monetary policy by controlling the money supply, setting interest rates, and regulating the banking system.

• The central bank implements monetary policy by controlling fiscal policy, managing unemployment rates, and overseeing tax collection.

• The central bank implements monetary policy by setting fiscal policy, regulating international trade, and managing inflation.

• The central bank implements monetary policy by issuing currency, managing government debt, and overseeing stock markets.

What are the components of GDP?

• exports, imports, savings, inflation

• consumption, exports, imports, government spending

• investment, savings, inflation, net exports

• consumption, investment, government spending, net exports

Discuss the difference between nominal GDP and real GDP.

• Nominal GDP is not adjusted for inflation, whereas real GDP is adjusted for inflation.

• Nominal GDP is used for international comparisons, while real GDP is used for domestic comparisons

• Real GDP is adjusted for inflation, but nominal GDP is not affected by inflation

• Real GDP measures the total value of goods and services produced in a country, while nominal GDP measures only the value of final goods

How does inflation affect purchasing power?

• Inflation only affects the price of goods, not purchasing power

• Inflation decreases the purchasing power of a currency over time.

• Inflation increases the purchasing power of a currency over time

• Inflation has no impact on purchasing power

What are the different types of unemployment?

• voluntary, involuntary, temporary, permanent

• frictional, structural, cyclical, and seasonal

• domestic, international, regional, local

• educational, technological, financial, environmental