AnswersEconomicsMacroeconomics

Practice Test Answers

10 verified answers
1
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Which statement most accurately describes the trends shown on this graph?

A
When GDP falls, unemployment rises.
B
GDP and unemployment rise at times of world crises.
C
When GDP rises, unemployment rises as well.
D
GDP and unemployment have little to do with each other.
2
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Which best describes the economic impact of defaulting on bank loans?

A
The economy suffers because banks have less money to loan to others.
B
The economy suffers because businesses are scared to take out loans.
C
The economy suffers because people are scared to take out loans.
D
The economy suffers because people have less money to spend.
3

What is the difference between inflation and deflation?

A
Inflation can result from falling demand and boosts the value of money. Deflation can result from rising demand and reduces the value of money.
B
Inflation can result from rising demand and boosts the value of money. Deflation can result from falling demand and reduces the value of money.
C
Inflation can result from rising demand and reduces the value of money. Deflation can result from falling demand and boosts the value of money.
D
Inflation can result from falling demand and reduces the value of money. Deflation can result from rising demand and boosts the value of money.
4

How do consumers’ feelings about the economy help contribute to growth?

A
Positive consumer attitudes inspire increased production.
B
Positive consumer attitudes influence spending habits.
C
Positive consumer attitudes can end a depression.
D
Positive consumer attitudes increase job prospects.
5

Read the paragraph. Government officials in Country M have determined that they need to take action to encourage the growth of their economy. To do this, they have introduced an incentive policy that offers citizens free education. This is extended to all individuals who sign a contract agreeing to work within their specific industry for the next ten years. Country M hopes to encourage economic growth by investing in

A
research to develop goods that can be sold on a global scale.
B
new technologies to produce goods that are in great demand.
C
education to reduce unemployment and increase production.
D
resources that can be traded with other nations.
6

Does a depression always follow a recession?

A
No, the economy could decline quickly and bypass recession.
B
Yes, for recovery to occur, the trough must be reached.
C
No, a depression is indicated when the recession is exceptionally long.
D
Yes, the trough is always considered a depression.
7

What are the signs of low inflation? Choose three correct answers.

A
Demand steadily falls.
B
The economy stagnates and struggles.
C
Prices continue to increase.
D
Demand steadily rises.
E
The economy grows in a healthy way.
F
Prices continue to decrease.
8

Which best describes why investing can be such a challenge?

A
All investments are totally unpredictable.
B
There are no guaranteed investments.
C
All investments involve major risks.
D
There is never a sure way to protect investments.
9

How do bank loans help the nation’s economy?

A
They ensure consumer spending and confidence.
B
They allow businesses to expand and improve.
C
They allow consumers to quickly pay off debts.
D
They ensure the success of new businesses.
10

The graph demonstrates that changes in investment

A
have no relation to changes to the GDP.
B
occur only when the economy is growing.
C
can show if the economy is growing or shrinking.
D
occur only when the economy is shrinking.

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