Macroeconomics — Test Answers

23 verified answers
1
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What role does the Federal Reserve play? Choose three correct answers.

A
Loan money to banks
B
Regulate the banking industry
C
Transfers any profits to the Treasury
D
Give individual loans
E
Give corporate loans
2
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Which is true about investments and risk?

A
Low-risk investments have a high return over the long run.
B
High-risk investments usually fail.
C
Safe investments are always somewhat profitable.
D
Every investment carries some degree of risk.
6

Economic interactions involving which of these would most likely be studied in macroeconomics?

A
trade at a duty-free shop on the U.S.-Canadian border
B
International Monetary Fund policy
C
a family’s finances
D
a small company’s supply contract for a local town
7

Which example best describes how a bank injects money into the economy?

A
A bank buys property in a bustling business district.
B
A bank buys a company’s rapidly growing stock.
C
A bank approves a loan for a customer.
D
A bank opens a savings account for a customer.
8

Which of the is a characteristic of prosperity in the peak phase of the business cycle?

A
high levels of production
B
ambivalence about the economy
C
stagnant prices
D
reduced incomes
10

Which is the best definition of inflation?

A
an exponential increase in the price of goods and services
B
a gradual decrease in the price of goods and services
C
an exponential decrease in the price of goods and services
D
a gradual increase in the price of goods and services
11

Which best describes the role that government and business play in investments?

A
They both invest money to earn a profit.
B
They both receive capital to use for growth.
C
They both use taxes to support a country’s growth.
D
They both act as angel investors for start-ups.
12

Which best describes what is represented in the business cycle model?

A
the interactions between producers and consumers
B
macroeconomic trends
C
the change in production cost
D
supply and demand trends
13

Why is gasoline weighted more heavily than tomatoes in a calculation of the annual inflation rate in the United States?

A
Gasoline is imported from other nations at a higher rate than tomatoes.
B
Americans spend more money on gasoline than tomatoes, on average.
C
Gasoline costs more to produce and purchase than tomatoes.
D
Americans purchase many more boxes of tomatoes than barrels of gasoline.
14

Which describes an investor’s primary goal of buying a loan?

A
to provide capital to a business
B
to grow a business
C
to earn a profit off the interest
D
to bolster the economy
16

Bank deposits help the nation’s economy by

A
providing protection for banks on investments.
B
giving consumers the ability to save money.
C
providing protection for consumers from theft.
D
giving banks the money to loan and invest.
17

Economic growth takes place when a country

A
produces a steady number of automobiles.
B
measures its gross domestic product (GDP).
C
produces more goods and services.
D
has a high unemployment rate.
18

Which federal agency calculates the Consumer Price Index (CPI)?

A
US Department of the Treasury
B
US Department of Commerce
C
US Bureau of Labor Statistics
D
US Census Bureau
20

When economists determine that a nation’s GDP has declined, they can point to this as a sign of

A
economic growth.
B
low unemployment.
C
poor leadership.
D
economic shrinkage.
22

The aim of the study of macroeconomics is to examine

A
the behavior of factors affecting the economy.
B
the interactions between individual producers and consumers.
C
the relationship between supply and demand.
D
the economy’s viability.

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