30 Questions
What is the main measure of how an economy is doing?
Aggregate output
What defines a recession in an economy?
Decrease in aggregate output
What happens when a recession becomes prolonged and deep?
Depression
How is unemployment rate calculated?
Percentage of the labor force that is unemployed
What do policy makers aim to do during a business cycle?
Smooth fluctuations in output
What does the existence of unemployment imply?
The aggregate labor market is not in equilibrium
What type of goods are used in the satisfaction of human wants and needs?
Consumer goods
Which type of goods are used in the production of other goods and services?
Capital goods
What type of goods satisfy the basic needs of man?
Essential goods
Which type of goods contribute to satisfaction but are not essential?
Luxury goods
What type of goods have value attached to them, are useful, and are scarce?
Economic goods
What is the main idea behind the statement 'Everyone’s expenditure is someone else’s receipt'?
One person's spending becomes another person's income.
Which process involves the physical transformation of a commodity into a finished product?
Production
In which market arena do firms and government purchase labor from households?
Labor market
Which of the following best defines 'goods' based on the provided text?
Goods include both tangible (material) items and intangible services.
Which market arena involves the exchange of goods and services between households, firms, and government?
Goods-and-services market
How are labor transactions between firms/government and households described in the text?
Households supply labor to firms/government in exchange for money.
Which statement best describes the concept of expenditure in macroeconomics based on the provided text?
'Expenditure' reflects spending that leads to receipts for others.
What did John Maynard Keynes believe about government intervention in the economy?
Governments can affect the level of output and employment.
Which of the following is NOT a major concern of macroeconomics?
Interest rates
What is deflation?
A sustained decrease in the overall price level
During periods of low private demand, what can the government do to lift the economy out of recession?
Stimulate aggregate demand
What does hyperinflation refer to?
A sustained increase in the overall price level
Why are prolonged periods of deflation considered damaging for the economy?
Deflation decreases the purchasing power of consumers.
What are the three kinds of policy that the government uses to influence the macroeconomy?
Fiscal, Monetary, and Growth or supply-side policies
What does fiscal policy refer to?
Policies concerning taxes and spending
What consists of tools used by the Central Bank to control the quantity of money in the economy?
Monetary policy
Which sector focuses on stimulating aggregate supply instead of aggregate demand?
Public Sector
What does macroeconomics focus on?
Households and Firms
What does the circular flow diagram show?
Income received and payments made by each sector of the economy
Test your knowledge on the different government policies used to influence the macroeconomy, including fiscal policy, monetary policy, and growth or supply-side policies. This quiz is based on Chapter 17 of 'Principles of Economics' by Karl Case and Ray Fair.
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