Macroeconomic Models Quiz

Which of the following best describes macroeconomics?

• The study of how individual households make decisions

• The study of market supply and demand for one product

• The study of the overall performance of an economy

• The study of pricing in specific industries

Which of the following is not a key macroeconomic goal?

• Price stability

• Full employment

• Increased consumer choice

• Economic growth

What does “full employment” mean in a macroeconomic context?

• Every person over 18 is working

• Only non-cyclical unemployment exists

• The government guarantees a job for everyone

• No one is unemployed

Which of the following is considered a leakage from the circular flow of income?

• Government spending

• Investment

• Imports

• Exports

Injections into the circular flow of income include:

• Taxes

• Savings

• Imports

• Investment

When leakages exceed injections, what is the likely impact on the economy?

• Inflation increases

• The economy grows

• Economic activity contracts

• Unemployment decreases

Which sector is not included in the expanded circular flow of income model?

• Households

• The stock market

• The government

• The foreign sector

The expenditure method calculates GDP using which formula?

• GDP = Wages + Rent + Profit

• GDP = C + I + G + (X - M)

• GDP = Total Revenue - Total Cost

• GDP = Taxes + Exports - Imports

In the GDP formula, ‘C’ stands for:

• Capital income

• Company profit

• Consumption expenditure

• Current account

Government expenditure in GDP includes:

• Transfer payments like pensions

• Public spending on infrastructure and services

• Household consumption

• Tax refunds