Chapter 1: Multiple choice questions

Question 1

The financial economy and the ___________ are separated in macroeconomics....

a)...monetary economy.

b)...virtual economy.

c)...normative economy.

d)...underground economy.

Question 2

During business cycles the opposite of a trough is...

a)...an inflation

b)...a hyperinflation.

c)...a trend.

d)...a peak.

Question 3

According to the analysis of the British economist John Maynard Keynes,...

a)...markets coordinate supply and demand so that a policy of laissez-faire would prevent recessions.

b)...economic fluctuations were the cumulative result of mistakes made by businesses and households in an uncertain world.

c)...government demand could be used to smooth fluctuations in aggregate output and income.

d)...supply creates its own demand through the circular flow of economic activity.

Question 4

In order to influence spending on goods and services in the short-run, monetary policy is directed atdirectlyinfluencing...

a)...unemployment rates.

b)...inflation rates.

c)...interest rates.

d)...economic growth rates.

Question 5

"Inflation is generally procyclical" means...

a)..."higher rates of inflation tend to precede periods of high economic growth."

b)..."the rate of inflation tends to rise in periods of high economic growth and fall in periods of low economic growth".

c)..."prices on average rise in an economic expansion but fall after a business cycle peak."

d)"...more inflation results in less capacity utilization."

Question 6

Economics that passes judgment, or provides advice on policy actions is called...

a)...positive economics

b)...negative economics

c)...normative economics

d)...descriptive economics

Question 7

An important indicator of a nation's well-being is...p>

a)...gross domestic product (GDP)

b)...gross national product (GNP)

c)...gross national income (GNI)

d)...the growth rate of GDP or GNP

Question 8

Until the First World War, prices...

a)...fluctuated up and down with high magnitudes but no trend

b)...showed a procyclical trend

c)...showed a countercyclical trend

d)...were as likely to fall as they were to rise (trendless)

Question 9

Which economist represents a very different point of view to that of Keynes?

a)...David Ricardo

b)...John Stuart Mill

c)...Thomas Malthus

d)...Adam Smith

Question 10

From 2010 to 2015, real income per capita in Italy declined by...

a)2%

b)4%

c)6%

d)8%

Explain your answer on every questions. /