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Macroeconomics — Test Answers

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1
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Which of these would be a good title for this diagram?

A
The Federal Debt
B
Government Spending
C
Fiscal Policy
D
The National Economy
2
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Which best describes how individuals help the economy grow?

A
They work to influence the money supply.
B
They work as part of a unified group.
C
They work to influence the economy.
D
They work in their own self-interest.
3

Which best describes the idea behind the "invisible hand"?

A
Producers decide what to make for consumers, which guides the economy.
B
Individuals seeking their own self interest benefit the economy as a whole.
C
Consumers decide what they need and want to buy, which guides the economy.
D
Government sets policy for producers and consumers, which guides the economy.
4

The aim of the study of macroeconomics is to examine

A
the relationship between supply and demand.
B
the economy’s viability.
C
the interactions between individual producers and consumers.
D
the behavior of factors affecting the economy.
5

An increase in gross domestic product (GDP) is a sign that a country’s economy is

A
depressed.
B
declining.
C
growing.
D
stagnant.
6

What happens if regulatory policies for a business are violated?

A
New business rules are created.
B
Safety classes are mandated.
C
Fines and sanctions are applied.
D
Additional inspections are required.
7

Economists studying the money supply categorize the status of the money based on

A
liquidity.
B
credit.
C
interest rates.
D
inflation rates.
8

What is the best definition of technology?

A
Technology is using fewer resources to manufacture goods more efficiently.
B
Technology is hiring workers from all over the world to manufacture goods.
C
Technology is applying scientific knowledge to find answers and fix problems.
D
Technology is replacing human workers with mechanical or electronic devices.
9

A plan for spending money that balances income with spending and shows how money will be spent is

A
a surplus.
B
a deficit.
C
an expenditure.
D
a budget.
10

Which best describes a central bank's primary role?

A
controlling inflation
B
creating monetary policy
C
increasing credit
D
printing money
11

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

A
to bolster the economy
B
to earn a profit off the interest
C
to provide capital to a business
D
to grow a business
12

People might choose to use a debit card rather than cash for purchases because

A
they do not want to carry around large amounts of cash.
B
their banking institutions charge high fees for cash withdrawals.
C
most items cost less when purchased with a debit card.
D
debit cards have a higher value than cash and can buy more.
13

The main role of banks in the nation’s economy is to

A
store, lend, and approve money.
B
store, lend, and borrow money.
C
store, lend, and invest money.
D
store, lend, and distribute money.
14

How are government regulations established?

A
Business owners agree to create regulations to better compete with one another.
B
Specialized executive agencies respond to a new policy by creating regulations.
C
Citizens agree on new regulations through annual elections.
D
The courts establish regulations in response to unfair business practices.
15

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

A
They both act as angel investors for start-ups.
B
They both invest money to earn a profit.
C
They both receive capital to use for growth.
D
They both use taxes to support a country’s growth.
16

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

A
supply and demand trends
B
the change in production cost
C
the interactions between producers and consumers
D
macroeconomic trends
17

What is one way that technology can improve the distribution of goods?

A
Businesses can hire factory workers across the world.
B
Container ships can transport a number of goods at once.
C
Workers can take Internet classes to gain new skills.
D
Automation can create goods more cheaply and easily.
18

What gives the US government the power to collect taxes?

A
an executive order
B
common law
C
the Constitution
D
laws passed by Congress
19

Who was known as the "Father of Economics,” whose ideas of free markets inspired classical economic thinkers?

A
Friedrich Hayek
B
Adam Smith
C
John Keynes
D
Milton Friedman
20

To barter means to

A
create.
B
earn.
C
sell.
D
trade.

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