IB Macroeconomics Terms Quizs

Real interest rate

• The nominal interest rate adjusted for inflation, representing the true cost of borrowing.

• The interest rate before inflation is taken into account.

• The rate at which money can be borrowed without any fees.

• The rate of return on investments without considering taxes.

Recession

• A period of negative economic growth for two consecutive quarters or more.

• A time of rapid economic expansion and growth.

• A situation where inflation rates are extremely low.

• A phase where unemployment rates are at an all-time high.

Economic growth

• An increase in the real output of goods and services in an economy over time.

• A decrease in unemployment rates in a country.

• A rise in the inflation rate affecting purchasing power.

• A reduction in government spending on public services.

Wage rigidity

• A situation where wages decrease to match the labor supply.

• A situation where wages do not fall despite a surplus of labour, often due to contracts, minimum wage laws, or social norms.

• A scenario where wages are flexible and adjust according to market conditions.

• A condition where wages are set by government regulations only.

Expansionary monetary policy

• A policy that involves lowering interest rates or increasing the money supply to stimulate economic activity.

• A strategy to reduce government spending and increase taxes to control inflation.

• A method of increasing interest rates to curb excessive spending.

• A framework for balancing the national budget by cutting public services.

Seasonal unemployment

• Unemployment that occurs at certain times of the year due to seasonal variations in demand for labour.

• Unemployment that occurs due to economic downturns and recessions.

• Unemployment that is caused by technological advancements and automation.

• Unemployment that happens when individuals voluntarily leave their jobs.

Monetary policy

• The process by which a central bank controls the money supply, interest rates, or both, to influence economic activity.

• A method used by governments to regulate trade and tariffs.

• A strategy for managing public debt and fiscal deficits.

• An approach to increase consumer spending through tax cuts.

Inflation targeting

• A strategy where the central bank sets an explicit inflation rate as the goal of its monetary policy.

• A method to control unemployment rates by adjusting interest rates.

• A fiscal policy approach to increase government spending.

• A technique to stabilize currency exchange rates.

Contractionary fiscal policy

• A decrease in government spending or an increase in taxes aimed at reducing aggregate demand.

• An increase in government spending to stimulate economic growth.

• A policy aimed at increasing aggregate demand through tax cuts.

• A strategy to reduce inflation by increasing the money supply.

Depression

• A prolonged and severe recession with significant declines in income, output, and employment.

• A temporary economic downturn with minor impacts on employment.

• A period of economic growth characterized by rising incomes and employment.

• A situation where inflation rates are extremely high, leading to economic instability.