WorksheetsUnit 3 - Macroeconomic concern
Total questions: 35
Worksheet time: 19mins
The rate of inflation is most commonly measured by use of
a price deflator
the GDP deflator
the consumer price index
all of the above
The consumer price index measures
the cost of buying a fixed basket of goods and services, and calculating how this cost changes from year to year
the cost of buying a basket of goods and services, which changes from year to year depending on the price level
the cost of buying a basket of goods and services, which changes from year to year depending on consumer tastes and preferences
all of the above, depending on what the CPI is trying to measure
The redistribution effects of a high rate of inflation may involve losses for _____________________ and gains for _____________________.
lenders/borrows
borrowers/savers
borrowers/lenders
savers/holders of cash
A high rate of inflation is likely to have all of the effects listed below except
uncertainty for business
reduced saving
efficiency losses
greater export competitiveness
An increase in aggregate demand is likely to lead to
demand-push inflation
cost-push inflation
demand-pull inflation
cost-pull inflation
Demand-pull inflation and cost-push inflation differ in that
demand-pull leads to lower real GDP and cost-push to higher real GDP
demand-pull leads to higher real GDP and cost-push to lower real GDP
demand-pull leads to greater unemployment and cost-push to lower unemployment
a combination of the above, depending on the size of AD and SRAS shifts
An increase in aggregate demand may not always lead to demand-pull inflation in
a monetarist new classical model
the Keynesian model
the short run
the long run
Deflation may be a more serious problem than inflation because it may lead to
a deflationary spiral
a serious demand-deficient unemployment
a banking crisis
all of the above
An inflationary gap involves
cyclical unemployment greater than the natural rate of unemployment
unemployment equal to the natural rate of unemployment
cyclical unemployment less than the natural rate of unemployment
zero cyclical unemployment and unemployment less than the natural rate of unemployment
Disinflation is
a fall in the price level
a decreasing rate of inflation
an increasing rate of inflation
no change to inflation or deflation
Which of these is not a problem with the consumer price index (CPI)?
The CPI does not take into account changes of product quality over time.
The CPI does not take into account changes in consumption patterns.
The CPI does not allow for reliable inflation rate comparisons between countries.
The CPI does not measure changes in real GDP over time
Deflation is uncommon in the real world because
wages do not fall easily and firms fear price wars
competitive markets keep prices from falling
governments impose price floors
firms will be unable to sell their products
Consumers may defer consumption when
they face a rising rate of inflation
they face disinflation
the face deflation
they face lower interest rates
Which is the following is included in GDP?
an intermediate good
a service produced and used in another country
a fish that you catch and eat yourself
a fish that you buy at a store
A general increase in prices is called
inflation
purchasing power
the CPI
a price index
The inflation rate is
the ability to buy goods or services
measured in fixed dollars
not an important measure to economists
the percentage change in prices over time
Inflation reduced people's purchasing power because
the same amount of money buys ore goods and services
the same amount of money buys fewer goods and services
the market basket has to be changed every year
there is not enough money in the economy
Is this counted in the GDP of the US?
The federal government purchases a new submarine for the US Navy.
Yes
No
In which part of the GDP calculation does this fit?
You spend $15 at AMC to see the latest Avengers movie.
Consumer spending
Government spending
Investment spending
Net exports
In which part of the GDP calculation does this fit?
The US military spends $5 billion on five new helicopters.
Consumer spending
Government spending
Investment spending
Net exports
In which part of the GDP calculation does this fit?
The local taxi service purchases new vehicles for the
company.
Consumer spending
Government spending
Investment spending
Net exports
Which of the following would be included in the calculation of GDP?
Final goods
Intermediate goods
Second hand goods
Black market activity
The _______ is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
Consumer Price Index
Aggregate supply
Producer Price Index
Aggregate demand
According to the wage-price spiral, if a company gives a worker a raise in pay, what must they also do?
Raise the price of their products
go out of business
lower the price of their products
merge with a competitor
Business spending on physical capital, new homes, and inventories is counted in which component of GDP?
consumption
investment
imports-exports
government spending
Which of the following tend to INCREASE during a boom?
Imports of luxury consumer goods
Unemployment
The number of businesses going bankrupt
All of the above
Which of the following tend to FALL during a recession?
The level of consumer debt (credit card debt)
The unemployment rate
Exports
The level of government spending on infrastructure projects
When is the unemployment rate at 0%
During a boom
During a recession
Never
Which point of a business cycle describes Trough?
Lowest Point
Highest Point
Average Point
None of the Above
What is short - run contractions and expansions in economic activity called?
Expansions
Recessions
Deficits
Trade Cycle
Choose the correct phase in the trade cycle:
Employment rises and the labour market tightens, wages and salaries rise.
Peak (boom)
Contraction (downswing)
Trough (recession)
Recovery (upswing)
Choose the correct phase in the trade cycle:
•Lowest levels of income and output.
•Unemployment at its highest level.
•Consumer demand and sales at lowest levels.
Peak (boom)
Contraction (downswing)
Trough (recession)
Recovery (upswing)
Choose the correct phase in the trade cycle:
High demand causes the prices of consumer goods and services and the cost of productive resources to rise (i.e. inflation).
Peak (boom)
Contraction (downswing)
Trough (recession)
Recovery (upswing)
You consume vegetables that grow in your garden
included in the GDP calculations
excluded in the GDP calculations
Which of the following are covered under the domestic territory of India
State Bank of India in London
Google office in India
Office of TATA motors in Australia
Russian embassy in India
