Central Banking and Currency Demand Quiz

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30 Questions

Which approach is used to calculate GDP by summing up the value added by all industries in the economy?

Production Approach

What is the biggest sector in countries like Austria?

Tertiary Sector - Services

Why is real GDP more meaningful for time comparisons?

Price effects are adjusted for in real GDP

What are the two main drivers for economic growth?

Increases in work volume and labor productivity

Which one of these is a typical topic in macroeconomics?

Output and inflation

What is a fallacy of composition?

The assumption that what is true for one member of a group is true for all members

Which one of these is an example of a market failure?

Monopoly in the market

What happens if everyone saves more money simultaneously?

Reduced economic growth

What are the effects of unemployment?

Losses in human capital

Based on the text, which type of unemployment is caused by a shortage of jobs during recessions or downturns?

Cyclical (demand deficient)

How is full employment defined?

A state where all eligible individuals can find jobs at prevailing wage rates

In the simple neoclassical model, how is the (real) wage determined?

Exclusively by labor demand and labor supply

According to the Keynesian model, why can there be persistent unemployment?

Insufficient aggregate demand

In the Keynesian model, why don't firms invest more if saving is increased?

Increased saving leads to reduced consumption

What are passive labor market policies?

Unemployment benefits

According to the heterodox and orthodox view, what is money?

All of the above

Which of the following is NOT a duty of the central bank?

Operating payment systems

What is the purpose of legal tender laws?

To create demand for a currency

What is the topmost layer of the pyramid of liabilities?

Banknotes and coins

What is the difference between stable inflation and accelerating inflation?

Stable inflation is a continuous rise in the price level, while accelerating inflation is a one-off price rise

Which of the following is a fiscal policy measure to combat the effects of inflation?

One time payments

What is one of the fiscal policies against the causes of inflation mentioned in the text?

Investments in renewable energy production

Why might deficit rules be problematic according to the text?

They prevent necessary investments

What does the text mention as a need for massive investments?

Climate crisis

What was the rationale behind choosing the 60% public debt threshold according to the text?

Unrealistic growth assumptions

What do countries in Europe require different degrees of according to the text?

Investments for convergence

Which one of these is the most correct?

Fiscal policy refers to government decisions on taxation and spending, while monetary policy involves central bank actions.

Which one of these is the most correct?

Neoclassical economics assumes that markets self-regulate and reach equilibrium, while Keynesian economics believes that government intervention is necessary to stabilize the economy during recessions.

Which one of these is the most correct?

Stocks represent a quantity or accumulation of something at a specific point in time, while flows refer to the rate at which that quantity changes over a period of time.

Which one of these is the most correct?

GDP measures the total value of goods and services produced within a country's borders during a specific time period, including consumption, investment, government spending, and net exports.

Test your knowledge of central banking and currency demand in this quiz. Learn about the relationship between taxes, government currency, legal tender laws, and the duties of a central bank.

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