Sample Macro Economics MCQ with Answers
1)
Equilibrium in the goods market requires that:
A)
consumption equals income.
B)
production equals demand.
C)
government spending equals taxes minus transfers.
D)
production equals income.
E)
consumption equals saving.
2)
Which of the following generally occurs when a central bank pursues expansionary monetary policy?
A)
the central bank sells bonds and the interest rate increases
B)
the central bank sells bonds and the interest rate decreases
C)
the central bank purchases bonds and the interest rate increases
D)
the central bank purchases bonds and the interest rate decreases
3)
Which of the following is the correct
definition of the IS curve?
A)
The IS curve represents the combinations of
output and the interest rate where the goods market is in equilibrium.
B)
The IS curve represents the single level of output where financial markets are in equilibrium.
C)
The IS curve represents the combinations of output and the interest rate where the money market is in
equilibrium.
D)
The IS curve represents the single level of output where the goods market is in equilibrium.
E)
none of the above
4)
Which of the following will cause a shift in the LM curve?
A)
an increase in output
B)
a reduction in taxes
C)
an open market purchase of bonds
D)
an increase in consumer confidence
E)
all of the above
5)
Which of the following will occur if there is an increase in taxes?
A)
The IS curve shifts and the economy moves along the LM curve.
B)
The LM curve shifts and the economy moves along the IS curve.
C)
Both the IS and LM curves shift.
D)
Output will change causing a change in money demand and a shift of the LM curve.
E)
Neither the IS nor the LM curve shifts.
Answer:
A
6)
Suppose investment spending is NOT very sensitive to the interest rate.
Given this information, we know that:
A)
the LM curve should be relatively flat.
B)
the IS curve should be relatively flat.
C)
neither the IS nor the LM curve will be affected.
D)
the IS curve should be relatively steep.
E)
the LM curve should be relatively steep.
7)
Based on our understanding of the IS-LM model that takes into account dynamics, we know that a reduction
in the money supply will cause:
A)
an immediate drop in Y and immediate increase in i.
B)
a gradual increase in i and gradual reduction in Y.
C)
an immediate increase in i and no initial change in Y.
D)
none of the above
8)
Which of the following events will NOT cause an increase in the aggregate price level?
A)
an increase in Pe
B)
a reduction in output
C)
an increase in the markup
D)
an increase in unemployment benefits
E)
none of the above
9)
Assume a country is closed. Given this information, which of the following must occur?
A)
Demand for domestic goods will be greater than the domestic demand for goods.
B)
S = I
C)
A budget surplus exists.
D)
S + T = I + G
E)
Demand for domestic goods will be less than the domestic demand for goods.
10) Assume the interest parity condition holds
and that initially i = i*. A reduction in the domestic interest rate will
cause:
A)
a reduction in E.
B)
an increase in the demand for the domestic currency.
C)
an expected depreciation of the domestic currency.
D)
all of the above
1)
B
2)
D
3)
A
4)
C
5)
A
6)
D
7)
C
8)
B
9)
D
10) D
UOL Modules that are taught by Us:
1. Introduction to Economics
2. Principles of Banking & Finance
3. Corporate Finance
4. Financial Management
5. Principles of Accounts
6. Statistics 1
7. Statistics 2
8. Maths 1
9. Maths 2
10. Elements of Econometrics
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